Inequality and the spirit level

The Economist magazine, while having published many interesting articles on various topics, has for years been a defender of tax havens and a brazen supporter of inequality ("the politics of envy" is one way they typically demonise those seeking politics of greater social equality.) We are pleased to note, however, that they review a new and thoroughly researched book by Richard Wilkinson and Kate Pickett on the subject of inequality. As the review notes:

"Within the rich world, where destitution is rare, countries where incomes are more evenly distributed have longer-lived citizens and lower rates of obesity, delinquency, depression and teenage pregnancy than richer countries where wealth is more concentrated."

and it adds:

"the evidence, here painstakingly marshalled, is hard to dispute."

The book's publicity adds more, noting that it is based on more than thirty years' worth of research.

"The remarkable data the book lays out and the measures it uses are like a spirit level which we can hold up to compare the conditions of different societies.
. . .
Almost every modern social and environmental problem - ill-health, lack of community life, violence, drugs, obesity, mental illness, long working hours, big prison populations - is more likely to occur in a less equal society. The book goes to the heart of the apparent contrast between the material success and social failings of many modern societies."

And The Economist adds this:

"What to do about this sickness caused by other people’s wealth? Swingeing taxes on the rich, or smaller differences in pay in the first place, say the authors, citing Sweden and Japan as instances of the two alternatives. A decade ago even left-wing politicians were “intensely relaxed about people getting filthy rich”. Now, as it becomes clearer that some of the rich got that way by theft, the idea that they have also caused injury more subtly will gain a readier hearing."

The Economist then veers off to question this conclusion, saying that the price of greater equality could be slower growth, which stimulates innovation. Given the spirit of the times, that could be taken with a large pitcher of salt. And the graph on the right, from Jeffrey Owens of the OECD, might give some pause for thought (we're not making a point here about correlation vs. causation; just noting in a different way that higher taxes clearly don't have to be harmful as many people seem to think.) For those interested in investigating further, this December 2006 report comparing social outcomes between high-tax Scandinavian countries and low-tax Anglo-American ones might be of interest.

We should add one more thing. How does one measure the justice of tax systems? Well, nobody has yet done so in any meaningful or useful way. But hope is now at hand. A new TJN project overseen by Professor Edmund Valpy Fitzgerald, director of Queen Elizabeth House at Oxford University and a Senior Adviser to TJN, is now working on this. It is going to produce a new way to measure tax justice via a revolutionary new tool - The Plato Index.