the bonds (and bounds) of trust

October 26, 2011 6:54 AM

Richard Wilkinson: How economic inequality harms societies (ted/yt) - "We feel instinctively that societies with huge income gaps are somehow going wrong. Richard Wilkinson charts the hard data on economic inequality, and shows what gets worse when rich and poor are too far apart: real effects on health, lifespan, even such basic values as trust." (previously)
posted by kliuless (18 comments total)

It's simple, really:

Any sufficiently unequal distribution of property will be indistinguishable from monarchy.
posted by gauche at 7:06 AM on October 26, 2011 [9 favorites]

That "charts" links points to Chartists, not to actual charts.
posted by CheeseDigestsAll at 7:17 AM on October 26, 2011

Maybe this chart is a good one to illustrate this issue.
posted by CheeseDigestsAll at 7:29 AM on October 26, 2011

I found the book ('The Spirit Level') fascinating. The arguments make a lot of sense and I found them convincing and well presented. I am interested in reading some well-formulated counter arguments as it really wasn't discussed properly in the last thread. The talk is a great summary of the book - thanks for posting.

One of the aspects that I think is surprising, is how the scale of measurement influences the results (often referred to as the Modifiable Areal Unit Problem). Hans Rosling shows similar patterns when he breaks out country level measures into quartiles. What surprises me, is how long it has taken for these arguments to be made using empirical data. I suppose part of it is due to the difficulty in assembling data-sets to do this analysis that are measured at a sufficiently high spatial resolution.
posted by a womble is an active kind of sloth at 7:56 AM on October 26, 2011 [1 favorite]

Any sufficiently unequal distribution of property will be indistinguishable from monarchy.

But it is equally just as simple that any equal distribution of property will be indistinguishable from communism and only a fool would want to go there - if he were even allowed into North Korea. The 19th and 20th centuries proved neither monarchy nor communism are viable economic systems - although monarchy must be given a slight advantage over communism.

Unlike in Europe, crude redistribution from rich to poor is still highly unpopular in America—and even more so in the last few years. Americans still rightly want merit to be rewarded and don’t like class warfare. But raising taxes on those who have benefited the most from the past 30 years to help reduce the debt is not class warfare. It’s an obviously pragmatic attempt to get some fiscal sanity back, which is why the Republicans have been sounding a little less intransigent on Capitol Hill lately.

Andrew Sullivan needs to get out more. There is no crude "redistribution of wealth" in Europe, but rather a more fair distribution in the first place. The tax systems on the continent are not punitive on the rich and beneficial to the poor - they are a heavy burden on everyone. A shared sacrifice that provides a modicum of social stability across the board.

Social Democracy, which is what European "socialism" is more accurately known as, is not built on "taxing the rich" as American Democrats so hungrily call for. It is built on everyone contributing to a welfare system that provides for the everyone. The result of decades of this system is that in countries like Sweden (where I live) and in the Netherlands (where I work) you do not see poverty like you see in the US or even in the UK. But neither do you see wealth as you see in the US and UK. Yeah, I concede that Wassenaar isn't Rotterdam, but neither is Rotterdam like Detroit.

It's a balance between encouraging the strong and helping the weak so that each are equally unhappy and neither feels so put upon as to withdraw from society.

Economic equality is a way of life - it isn't a tax system - and that's what makes it so hard for Americans Democrats who are clueless as American conservatives. America isn't Europe, it never will be, it exists because Americans don't want to be Europeans. And that's fine.

This American pulled up stakes for Europe a long time ago. I await the rest of the reverse migration back to Europe. Mary Robinson has left the light on for you.
posted by three blind mice at 8:15 AM on October 26, 2011 [6 favorites]

A communist style state monopoly isn't much different from capitalist state encouraged oligopolies, three blind mice.
posted by jeffburdges at 8:37 AM on October 26, 2011 [2 favorites]

So outcomes are correlated with inequality within a nation, but not globally. This seems like great fodder for the folks demanding a wall be built to keep the Mexicans out....
posted by pwnguin at 8:42 AM on October 26, 2011

A communist style state monopoly isn't much different from capitalist state encouraged oligopolies, three blind mice.

That's a very interesting point and diagram, jeffburdges. The problem of capitalist oligopolies (as we are seeing with the current financial problems) is not necessarily bounded by national boundaries either.
posted by a womble is an active kind of sloth at 9:04 AM on October 26, 2011

But it is equally just as simple that any equal distribution of property will be indistinguishable from communism and only a fool would want to go there - if he were even allowed into North Korea.

"Monarchy" describes the situation in North Korea far better than "Communism" does, whatever they call themselves. They've got leadership through genetic succession, starving peasants and fat royals and everything.

One thing they manifestly do not have is "equal distribution of property."
posted by Western Infidels at 9:07 AM on October 26, 2011 [13 favorites]

"Monarchy" describes the situation in North Korea far better than "Communism" does, whatever they call themselves. They've got leadership through genetic succession, starving peasants and fat royals and everything.

One thing they manifestly do not have is "equal distribution of property."

This. Many times over.
posted by knapah at 9:46 AM on October 26, 2011 [1 favorite]

Richard Wilkinson charts the hard data on economic inequality,

This link isn't relevant.

Are his hard data about households rather than individuals? (I can't watch the video now to find out.) That seems to be the usual practice. The higher-income households tend to have a lot more people per household, so that dramatically skews the data toward making it look like there's more inequality than there really is. Thomas Sowell makes this and other critiques of data on income inequality in his book Economic Facts and Fallacies.
posted by John Cohen at 10:42 AM on October 26, 2011

But it is equally just as simple that any equal distribution of property

Good thing nobody's said anything about redistibuting property equally.

The keywords for healthy income/wealth distribution in a capitalist system are "rational" and "proportional," in the mathematical senses of those words--not equal.

A smoother, less steep distribution curve of income inequality is all that's necessary to maintain a healthy capitalist economy. I think half of our problem is some folks are seeing communist bogeymen everywhere they look just because they're too conditioned to seeing every economic issue in terms of that cold-war-era dialectic. (And also, on the political fringes: Neo-Nazis!)

That seems to be the usual practice. The higher-income households tend to have a lot more people per household, so that dramatically skews the data toward making it look like there's more inequality than there really is.

That's flatly not true. And the situation's gotten dramatically worse since the recession. Here's the CBO's recent report on the growing gap. There are plenty of other data sets out there that show the same effect, and it's much too dramatic an effect to be accounted for by some minor adjustment like you're proposing anyway.

And why on earth should we trust any analysis put out by a weaselly, conservative think tank operative from the Hoover Institute? Their whole reason for existence is to generate spurious analysis to justify crackpot supply-side economic policies!

Why do some of us seem perpetually at a loss to understand how we got here?

Basically eliminating investment income taxes for hedge fund managers and giving the $250,000+ crowd two tax cuts while everyone else only got one--because, you know, that group got both the middle tax bracket cuts the rest of us got and additional cuts on their income above $250,000, not to mention further reductions in the capital gains taxes on their investments as well under Bush II--is just obviously going to redistribute more of the wealth of the nation up the ladder, rather than spreading it around equitably and proportionally up and down.

Also, there are major conflicts of interest in the area of executive compensation in the corporate world that need to be addressed, and myriad other examples of regulatory capture.
posted by saulgoodman at 11:37 AM on October 26, 2011 [3 favorites]

Thomas Sowell makes this and other critiques of data on income inequality in his book Economic Facts and Fallacies.

Thomas Sowell is a right-wing ideologue whom no one but right-wing tools take seriously. Sowell and authers like him are actually cottage industries which put out reliable BS which justifies brutal misgovernment by criminal elements.
posted by goethean at 2:14 PM on October 26, 2011 [1 favorite]

I interviewed Wilkinson and Sir Michael Marmot (guy who did the Whitehall studies that showed the socioeconomic gradient) for this article I wrote summarizing the data on the health effects of inequality last week for TIME.

What's hard to capture in a brief story is how interestingly the data links what we know about how humans modulate each others' stress systems via social contact and how high inequality makes human's hierarchical tendencies harder on the body and brain. It's really neat and connects neuroscience, sociology and evolution and a whole lot of other areas of research in fascinating ways. My book Born for Love: Why Empathy Is Essential and Endangered is basically a book length exploration of these ideas.

The chapter on Marmot, Sapolsky and Wilkinson is called something like From Baboons to British Civil Servants, because it looks at the stress/hierarchy research on both.
posted by Maias at 3:14 PM on October 26, 2011

The Spirit Level has been taken apart by various critiques.

The Australian Left Wing economist John Quiggin points out that the inequality vs bad things relationship does not hold over time as it should if it were a general relationship and that the US is an outlier for many of the things they claim that drags the results where they want.

The British Sociologist Peter Saunders has a longer and more in depth critique available here (2.6MBpdf).

There is a transcript of him talking about the errors in the Spirit Level here.

They include, but are not limited to:

1) Relationships that only hold because of 1 or 2 outliers.
2) Exclusion of countries that undermine the relationships they want to show.
3) Internal US assessments that show 2 distinct groups for social outcomes, those in the old South and those not in the old south. Within each of those 2 groups the relationships no longer hold.
4) Selection of data for income inequality for some countries that support their conclusion while excluding alternative data that would undermine their hypothesis.

Too much inequality and a lack of income mobility and critically intergenerational income mobility are a bad thing, but selective statistics that make dubious claims for the evils caused by income inequality are not wise.
posted by sien at 5:25 PM on October 26, 2011 [1 favorite]

sien, I'm not entirely convinced by those critiques. For one, it's not Peter Saunders who published that critique - it is Policy Exchange, who wikipedia describe as a British conservative think tank. Hence, it is definitely not un-biased and the first few pages criticise left-ist policies.

Here is a particularly disturbing quote from Suanders/Policy Exchange:
In the US, for example, the proportion of African-Americans in a state is often a much stronger predictor of social outcomes than the level of income inequality, but Wilkinson and Pickett never take ethnic composition into account in their models.
Is he really suggesting race alone explains social outcomes?

Again, this critique seems motivated more by ideology than anything else (pg.19):
It is clear from comments like these that The Spirit Level is more than just an academic book. It is a manifesto. Its apparent ‘scientific’ backing for a core, traditional element of left-wing ideology is being used to spearhead a new political movement aimed at putting radical income redistribution back at the heart of the political agenda.

I have not finished reading his report (I will, as I am interested in his method), but I am very skeptical due to his political motivations.

if you read the last section in 'The Spirit Level' they explain the criteria that they use for choosing their sample. If you believe them, they say that they applied a blind criteria for selecting the data, without considering the outcome.
posted by a womble is an active kind of sloth at 9:01 PM on October 26, 2011 [1 favorite]

On Ideology, economics and the compatibility of Chartalists and Austrians
On government, regulation, over-regulation and free markets
posted by kliuless at 6:39 AM on October 27, 2011 [1 favorite]

Social Democracy, which is what European "socialism" is more accurately known as, is not built on "taxing the rich" as American Democrats so hungrily call for. It is built on everyone contributing to a welfare system that provides for the everyone. The result of decades of this system is that in countries like Sweden (where I live) and in the Netherlands (where I work) you do not see poverty like you see in the US or even in the UK. But neither do you see wealth as you see in the US and UK. Yeah, I concede that Wassenaar isn't Rotterdam, but neither is Rotterdam like Detroit.

You can't have a lower class contributing that isn't paid very well. When your most vulnerable members of society are only making $7.25/hour and a living wage runs $12/hour for the Bay Area for one person taxing them would not just be kicking someone while they're down; it's also pissing on their face for good measure.

If you want to "spread the burden" you need to make sure the lower classes have something to give in the first place.
posted by Talez at 10:32 AM on October 28, 2011