Written By: - Date published: 11:04 am, May 19th, 2010 - 70 comments
Categories: budget 2010, capitalism, class war, equality, john key, national, Social issues - Tags: aspiration, envy, inequality, spirit level
Inequality is immensely damaging to society. Over a huge range of important social indicators, the more unequal a society is, the sicker it is. The case is best made by a book called “The Spirit Level”, and by the organisation behind it, The Equality Trust. Here’s the case in summary:
Why More Equality?
Our thirty years research shows that:
1) In rich countries, a smaller gap between rich and poor means a happier, healthier, and more successful population. Just look at the US, the UK, Portugal, and New Zealand in the top right of this graph, doing much worse than Japan, Sweden or Norway in the bottom left.
2) Meanwhile, more economic growth will NOT lead to a happier, healthier, or more successful population. In fact, there is no relation between income per head and social well-being in rich countries.
3) If the UK were more equal, we’d be better off as a population. For example, the evidence suggests that if we halved inequality here:
– Murder rates would halve
– Mental illness would reduce by two thirds
– Obesity would halve
– Imprisonment would reduce by 80%
– Teen births would reduce by 80%
– Levels of trust would increase by 85%
4) It’s not just poor people who do better. The evidence suggests people all the way up would benefit, although it’s true that the poorest would gain the most.
5) These findings hold true, whether you look across developed nations, or across the 50 states of the USA.
For more details see the evidence page: “Details of the data and statistical techniques we use are available on the Statistical Sources and Methods page and the international dataset can be downloaded here.”
Phil Twyford wrote on this research at Red Alert. I think it’s fair to say that an understanding of these facts is in our DNA here at The Standard. And the Greens just released an entire alternative budget based on an understanding of the damage caused by inequality.
It is shocking to me that New Zealand has such high levels of inequality and such high levels of social problems. The last Labour government had begun to turn it around at last (according to the Ministry for Social Development and the OECD). In their budget tomorrow National are set to go back to the old ways, and deliberately widen the gap.
Tory governments have only one tiny fig leaf to hide behind when nakedly redistributing wealth from the poor to the rich. That fig leaf is the “aspiration” argument:
‘Finance Minister Bill English today confirmed Budget 2010 will be delivered on May 20 and will set out important policies to lift economic growth and give hard-working New Zealanders incentives to get ahead’
Making the rich richer is supposed to give the rest of us, the huge majority, “incentives”. It will make us aspire to work harder and get ahead. I’ve written on this before. This argument supposes that all we hard-working New Zealanders don’t currently have enough incentive to get ahead. We just work hard every day for the hell of it I guess. But suddenly some how the knowledge that those on huge incomes will pay a few percent less in taxes will suddenly fire up the ‘get ahead’ spirit that we had previously been lacking, and we will all go out and work even harder, or suddenly have brilliant ideas, found companies, and all become millionaire CEOs in a nation where no one cleans the toilets. Hurrah!
This argument is absurd. It’s bollocks. We have aspiration already. We have incentives already. We’re hard-working already. Capitalism depends on a supply of cheap labour and most people will never be rich. Knocking a few percent off the taxes for the rich won’t change any of these facts. What it will do is give more money to those who don’t need it by taking it from the poor. There’s no honest way to justify such robbery, so it’s hidden behind the flimsiest nonsense about “aspiration”. How do they get away with it?
But National’s story gets even more incoherent. As the country wakes up to the nature of this budget for the rich, the Nats are getting nervous. Key is telling us not to be jealous, to avoid the sin of envy:
We can be envious about these things but without those people in our economy all the rest of us will either have less people paying tax or fundamentally less services that they provide
So, how are envy and aspiration different in end effect? Both are based on wanting what we don’t have. On the one hand we are being told that we’re giving more to the rich to give us all incentives to get ahead, and on the other hand we’re being told that we shouldn’t want their wealth. Aspiration Good Envy Bad. So are we supposed to want what we don’t have or not? National – which is it?
National’s profoundly confused messages and “aspirational” arguments for rich tax cuts make no sense at any level. We’re already motivated to work hard, we already want to get ahead, tax cuts don’t change that. If making the rich richer was good for society then all the inequality indicators at the start of this post would point the other way. But they don’t. Increasing the gap between rich and poor is bad for society, not good.
The aspirational figleaf is in tatters and the naked redistribution of wealth is revealed. The Nats are about what they have always been about, making the rich richer at the expense of the poor.