Today's eternal truth - free markets reduce inequality

This can't be said too often - but too many folk from left, right and centre seem incapable of grasping the cause of inequality:

But extreme inequality is in fact caused by insufficient competition. Given that competition is the lifeblood of capitalism, it follows that inequality is the result, not of capitalism, but of a lack of capitalism.

This is why we need free markets (and why equal societies like Denmark and Sweden have them) - not so evil business people can make bigger profits but because they lead to fairer societies. Big business - you only have to look at the CBI's enthusiasm for mercantilist, protectionist policies - loves the sort of back-slapping, lobby-dominated, regulation-heavy arrangements that the US federal government and the EU are so keen on.

....

Effective measures to address social mobility and inequality are politically unpopular

A great deal is spoken about equality and, as a result, we have two concepts that are seen as core to the resolution of inequalities: social mobility and income redistribution. In the case of the latter, we've tended to look at redistribution in terms of social class but now there is a fashionable concern that that we should be looking at intergenerational inequalities:

But while there are strong grounds for optimism in some areas, pessimism dominates overall. Pessimists about young adults’ chances of improving on their parents’ lives outnumber optimists by two-to-one. That marks a dramatic, and very rapid, turnaround in outlook. As recently as 2003, optimists outnumbered pessimists by nearly four-to-one. The gloom that has settled across our society since then is common across advanced economies, though Britain is more pessimistic than most.

The Resolution Foundation's work is pretty comprehensive, so it's disappointing when their resolution to the problem identified (today's young people having a better life than their parents) is to give them £10,000 - collected by taxing the existing older population. For me this illustrates the problem we have with developing political solutions to core social problems like equality - the winners in the game of inequality these days want solutions that do not mean them giving up their advantage. You might be able to sell them the Resolution Foundation's bung (although the track record of political responses to inheritance taxes aren't good - as Ed Milliband and Theresa May have found out to their cost) but it really does little or nothing to address the central concern that young people won't be rich enough to buy a stake in our society.

The same applies to social mobility. This is pretty much the subject of Robert Putnam's Our Kids where he explores the barriers to social advancement faced by American young people - driven less by race or location and more by a reborn social class divide (Putnam uses parental education as a proxy so you could argue it's a test of education effect rather than class effect). It's hard to cram a whole book into a sentence or two but, it seems to me that Putnam's findings - for all that we can't get a perfect transfer to UK circumstances - are a better reflection of the social realities facing our next generation than those from the Resolution Foundation.

The problem for the Resolution Foundation is less that working class kids are falling further and further behind middle class kids because of collapsing social capital (essentially Putnam's argument) and more that middle class kids can't afford to buy the assets - typically houses - that their parents were able to buy. For sure the report talks of pay stagnation and job insecurity but its primary thrust is that the resolution of the inequality (ie young people are less able to buy assets than their parents' or grandparents' generation) comes via higher taxes on wealth and specifically real estate wealth.

Not only do I think that the Resolution Foundation's answer is overcomplicated, state-driven and divisive, I'm also pretty sure it won't work. Young people may, at the end of it be a little better off but giving them £10,000 on their 25th birthday isn't going to get most of them onto the housing ladder. Moreover, the Resolution Foundation's proposals for dramatic hikes in property taxes will benefit squeezed local council budgets far more than they will the housing options of young people. And local councils - at least if what they say is a guide - are more interested in building council houses for rent than they are in helping young people buy houses. The result of the report's policies will be some cheery councillors not happier young people - this is not progress.

The problem we have is that the most obvious policy response to the problems of intergenerational inequality and social mobility are not politically easy to deliver. These might include:

Scrapping the strategic planning system including the 'green belt' - nearly everyone says there are too few houses, allowing people to build more homes seems an obvious solution. What would a world without planning look like?

Replacing locational bases for school place allocation with a lottery - most children are in urban areas but, even here, school allocation makes a huge difference. We know that when children from lower social class (as measured by parental education level) are educated alongside their middle class neighbours they achieve better. Our locational system of allocation results in social sortition and less social mobility

Making divorce more difficult and promoting a culture where the order is "get married, have children" not "have kids and maybe sometime later get married, perhaps if he's still around" - yes folks, the children of single parents and children born outside marriage do less well at school. This is the case even when we control for other variables (and, yes, not every child of a single parent fails, just on average such children are more likely to perform less well)

Tax incentives or subsidy for single income households - the effect of a household where one parent doesn't work is also positive. Just as we should encourage marriage, we should encourage stay at home mums or dads - pay them the money we're already allocating to childcare maybe?

Not sending so many young men to prison - Putman reports again and again that the struggling young people he interviews have a father in prison. Again the evidence tells us this forced form of family breakdown results in poorer achievement, lower income, increased child delinquency. It's also a disaster for the young men we lock up - instead of 90,000 in prison we should aim to (at least) half that number

You see the problem? Put forward a manifesto saying scrap the green belt, end parental choice in school places, make divorce harder, subsidise stay-at-home mums and stop locking up so many young men. Go on. It'll be fun. Except for your candidates. It's much simpler to say "my government will pay x to y" or "we'll make it easier to dump you hubby because he snores" or even "we'll tax an unspecified bunch of rich people and companies so we can give you a tasty little cash bribe". This doesn't solve the problem but is more likely to get you elected.

.....

Why we need faith in The Market

Now Thomas (also known as Didymus), one of the Twelve, was not with the disciples when Jesus came. So the other disciples told him, “We have seen the Lord!”

But he said to them, “Unless I see the nail marks in his hands and put my finger where the nails were, and put my hand into his side, I will not believe.” John 20: 24-29

This is the dilemma of faith. You will, I'm sure recall when Arthur Dent is introduced to the babel fish in Douglas Adam's 'Hitchhikers Guide to the Galaxy':

The speech patterns you actually hear decode the brainwave matrix which has been fed into your mind by your Babel fish.

"Now it is such a bizarrely improbable coincidence that something so mind-bogglingly useful could have evolved purely by chance that some thinkers have chosen to see it as a final and clinching proof of the non-existence of God.

"The argument goes something like this: 'I refuse to prove that I exist,' says God, 'for proof denies faith, and without faith, I am nothing.'

'But, says Man, the Babel fish is a dead giveaway, isn't it? It could not have evolved by chance. It proves you exist, and, by your own arguments, you don't. QED.'

'Oh dear,' says God, 'I hadn't thought of that,' and vanishes in a puff of logic.

'Oh, that was easy,' says Man, and for an encore goes on to prove that black is white and gets himself killed on the next zebra crossing.

And, as many have observed, faith does matter because it represents the unprovable premises on which we build our arguments. We are right to, as St Thomas did, doubt but if we only accept that which is before our eyes, what we can see, feel, taste or hear, then we deny things that are really important - love, honesty, creativity, hope.

Here, in a critique of something called 'neoliberalism' (the existence of which I doubt but that's another story) we see the denial of the transcendent, refusing to accept something exists because it is abstract, incorporeal:

The market, which is essentially a useful tool (and like all tools limited) has been converted into a false god The Market. Markets make poor gods for many reasons, but primarily because they don’t exist. A market is a space, not a thing; it is a vacuum; it is a space within which human beings trade stuff. Trading stuff is also useful preparation for doing other stuff, like making, healing, building, growing and creating. The market does not do any of those things - people do - but the market helps people by because people can use trade to get the useful things they need from others. Markets can help people be productive, but they are not productive in themselves.

So The Market exists because people want to exchange. The accumulation of all those exchanges, however conducted, is The Market. And the benefit we get from this exchange - trade as the writer rightly calls it - is that we can focus on the things we're best at, on what David Riccardo called comparative advantage. Here's Don Boudreaux:

...the only economic reason for trade is that each of us produces some goods or services at costs lower than the costs that our trading partners would incur to produce those same goods or services. That is, each of us has a comparative advantage in supplying the goods or services that we sell to others, and a comparative disadvantage in supplying each of the many goods and services that we buy from others.

So The Market does exist (whether or not you use capitals) even though we can't take your hand and plunge it into the spear wound so as to prove its existence. Even where, as with some very important things like health and housing, the state has tried to control (or even abolish) the market, The Market still exists. The best examples here are criminal markets. We have for all sorts of 'good' reasons made some products illegal yet there still exists a market for those products - this is the dilemma of public health's approach to smoking. We are nearing the point, may even have reached it, where further increases in the price of tobacco only act to increase the illegal part of the market - with all the risks associated with criminal markets (we see these with the market in illegal drugs, for example).

The question that our writer poses (although mostly fails to answer) isn't whether or not markets exist or even whether they are a good thing. Rather the question is whether we should 'worship' those markets. Since there is, so far as I'm aware, no actual ritual worship of The Market, I have to assume that this is meant metaphorically and refers to the viewpoint that The Market is the most efficient way to allocate scarce resources. But is the belief that the market, under most circumstances, is the fairest means to allocate resources an act of 'worship'? It may be faith just as a belief in the efficacy of democracy, government or the 'rule of law' is an act of faith but it is not worship.

The debate that prompted the comment about markets began with a simple question: if it wasn't the liberal belief in markets that led to the fastest decline in absolute poverty the world has ever seen then what was it? Inevitably this discussion became one about the UK rather than the world and, as these things do, resulted in the assurance that inequality and poverty are essentially the same, and that government is the primary agent of poverty reduction (more specifically that taxation is essential to poverty reduction).

As a conservative I am not a market fundamentalist but I do not believe that, in the long run, taking money forcefully off one set of folk to give it to another set of folk represents any sort of solution to poverty. I'm also a pragmatist and this means that, given the evidence, open markets deserve our support as they are better able to meet human needs than planned systems managed by government. This doesn't preclude regulation or even direct government provision, it merely recognises that we have to balance the social benefits of such actions against the disbenefits of interfering with the market.

We live in a world largely created by the action of markets, by that specialisation that is central to Adam Smith's ideas and to the concept of comparative advantage. The Market is not an end in itself worthy of worship but rather, for all its abstract nature, a means by which we make for a better world. Without our faith in the efficacy of markets there would be no specialisation, no free exchange and less innovation. Believe!

....

Housing and inequality

****

It's a truism to say that housing costs are one cause of inequality in developed societies and that some places - London, San Francisco, Auckland, Sydney and New York for example - have reached the point where housing unaffordability is undermining growth and development. It's also resulting in exploitative landlord practices, higher levels of homelessness, overoccupation and 'sofa surfing'.

We also know the reasons for this unaffordability - restrictive planning and land use policies. Every study tells us that this is the case yet politicians in all these places claim that can wave some sort of magic wand and build loads of extra housing without changing zoning policies or other restrictions on land availability and development.

One result of this restrictive policy environment is that poorer people are moving to less well of places - against the historic (and beneficial) direction of travel away from poorer places:

It used to be that poor people moved to rich places. A janitor in New York, for example, used to earn more than a janitor in Alabama even after adjusting for housing costs. As a result, janitors moved from Alabama to New York, in the process raising their standard of living and reducing income inequality. Today, however, after taking into account housing costs, janitors in New York earn less than janitors in Alabama. As a result, poor people no longer move to rich places. Indeed, there is now a slight trend for poor people to move to poor places because even though wages are lower in poor places, housing prices are lower yet.

The result of this - plus the evidence that internal migration to richer places has slowed - is that geographical inequalities are heightened, social mobility is reduced and economic growth is slowed.

....

Quote of the day - on planning and inequality

****

From Maximizing Opportunity Urbanism with Robin Hood Planning by
Tory Gattis for the Center for Opportunity Urbanism:

All in all, the net effect is a suffocating restriction on new housing supply even as demand increases, leading to skyrocketing home prices. This has the effect of making affluent NIMBY homeowners, who are disproportionately white and older, quite happy since their homes prices, sans new competition, are almost certain to increase. But the system works like a “Robin Hood in reverse” for younger, middle and working class families that lose out. This is a major driver of inequality - in fact, recent analysis indicates that homeownership completely accounts for the rise in inequality in recent decades. Planners have to take a hard look in the mirror and face an uncomfortable truth: whether they have been conscious of it or not, they have been direct accomplices in the rise of inequality and the decline of the middle and working class.

It really is time we recognised the cost of planning to our economy - not so as to abolish it but in order that we, and the planners, understand that planning controls are ipso facto anti-growth.

....

If you want to control something you need its right name - a problem with poverty and inequality

"Now you know the Rules of Names already, children. There are two, and they're the same on every island in the world. What's one of them?"

So said the teacher in Ursula Le Guin's short story "The Rule of Names" as she explained how knowing something or someone's true name gave power over them. And there is truth in this if we but look - if we describe something other than as its true nature then the resulting policies and strategies will be misplaced and will likely fail.

I've said again and again that we need to talk about poverty. About how, in a land of abundance, there are some who really go go without things we'd all consider essential. If we are to look seriously at our welfare state and ask about its effectiveness then it is this simple fact - people going without - that tells us the system doesn't work. This is not to say that the system is, as too much rhetoric wants to suggest, set so these people go without because it isn't. But it remains a terrible truth that a system designed to deliver care and support fails a lot of people who it was designed to assist.

I watched a presentation from some housing officers about the simple economics of life for these people who stumble through the torn and badly repaired safety net of welfare. Set out in stark numbers was the reality of the trap such people are living in - a spiral of dependence, debt, ill-health and ignorance. A world where getting a job can make matters worse not better, where the short-term loan quickly becomes a loan shark and where a bewildering array of 'agencies' and 'key workers' creates more confusion than they clear and more trouble than they solve.

Now I don't know precisely what should be done for these people - there's a short-term fix involving making sure they get food on the table, medical support and a house they can afford to heat and light. But there's a longer term fix needed which is about employment, education and health. There isn't a magic wand to wave, we've demonstrated that the poor gain little from expensive government programmes and that the welfare system, no matter how we tinker with it, also provides a hit-and-miss kind of respite.

I've said all this - and I mean it too. But none of it is about the headlines, infographics, data-laden tomes and think-tank reports of the 'poverty' industry. Or rather to correctly name that collective of researchers, charities, academics bodies and Labour MPs - the 'inequality industry'. And it is here that the problem is found. We're told repeatedly that the problem is 'inequality' giving us the impression that poverty and inequality are interchangeable terms meaning essentially the same thing.

Throughout my life - or the politically-aware part of it, at least - the left, in its many manifestations, has wrapped itself in the mantle of caring for the poor and that concern has made us all aware of these issues. But today the left has stopped and instead concerns itself with the non-problem of inequality, with the idea that our problems stem from the fact that one man has more stuff or more income than another man. And this obsessing with inequality has meant that the attention has shifted from the question of helping those people going without to the question of how much another group - 'the rich', 'the 1%', 'the elite' - has.

At a Bradford Health and Well-being Board meeting not so long back, I made the observation that many of Bradford's health challenges derive from poverty and their solution lies in reducing that poverty. The Chairman, and Leader of Bradford Council, chose to agree except that his response talked about 'health inequalities' rather than 'ill-health that results from poverty' - these are not the same thing at all yet we are moving inexorably to a strategy based on health inequality, a strategy that simply won't work because it is responding to the wrong thing - to difference rather than lack.

I do not lay claim to a policy or strategy that would eliminate poverty. Indeed, the nature of poverty is that the reasons for it are many and varied, not simply some failure of system but also a consequence of human frailty, inadequacy and foolishness. But I do know that if we continue to call 'poverty' by the name 'inequality' our policies will not have the desired effect. If we want to resolve, reduce or control poverty then we must begin by seeing poverty and not something else as the problem. And this isn't just a question of arcane ideology but a choice that, if we name the problem wrongly, will result in more poverty even while we claim less inequality.

....

Social immobility...

****

Fascinating this:

Seven to ten generations are required before the descendants of high and low status families achieve average status. Thus in modern Sweden the descendants of the eighteenth-century nobility are still heavily overrepresented -- 300 years later -- among higher social status groups: doctors, attorneys, the wealthy, members of the Swedish Royal Academies. In the United Kingdom, the descendants of families who sent a son to Oxford or Cambridge around 1800 are still four times as likely to attend these universities as the average person. Social mobility rates have also been relatively impervious to government policy. They are no higher in societies like Sweden, with generous interventions in favor of the children of disadvantaged families, than in the more laissez-faire United States. For that matter, they are no higher in modern Sweden than in eighteenth-century Sweden, or medieval England.

It reminds me of a friend, a scion of an old and wealthy family, whose self-description was "downwardly mobile".

....

It's poverty not inequality that should concern us...

****

Although Fraser Nelson falls foul of some factual errors (when will people stop using mortality statistics to say things like "a boy born in Liverpool is expected to live five years less than one born in Westminster" when it simply isn't true), he does get to the heart of a big challenge - poverty:

As our politicians enjoy summer drinks on Parliament’s terrace, they can hear Big Ben echoing from buildings in a part of the city that badly needs their help. But they will have known this for years, and grown inured to it. Our poverty is hiding in plain sight. 

And can we be clear about something else here - the issue isn't 'inequality' either it is simply and straightforwardly poverty. What we have allowed to happen, first with that pseudo-academic tract, "The Spirit Level" and now with the more substantive and rigorous work from Thomas Piketty is to replace concern about absolute conditions with concern about relative conditions - inequality is more important to policy-makers than poverty. More importantly, one specific and tightly-defined pair of inequalities are more important - income inequality and wealth inequality.

So other inequalities - of provision, of opportunity and of attention - are pushed aside by a torrent of largely purposeless debate about this king pair of inequalities. And the result of this is that the problem becomes systemic rather than personal, a concern of think tanks and sternly proclaimed generalisations rather than a question of what we do for the single mum trapped in a sink estate, the semi-orphan lad roaming the street half the night and the 50 plus bloke who finds no-one wants the skills he spent three decades perfecting. Instead, 'inequality' will be solved by an international wealth tax, more income redistribution, clamping down on big businesses dodging taxes and generally squeezing the rich until blood drips from their pips.

The assumption in all this debate - the premise of "The Spirit Level" - is that if we fix inequality of income and/or wealth (it's not always clear) then, as if by magic, that poverty will disappear. Well I've a message for the inequality campaigners - it really ain't that simple. And instead of fussing about Gini Coefficients and such guffle, we should fuss about developing proposals that really do help get people out of poverty. In the short term we can (and do) redirect money and other resource so, in the main, people do not go without. The problem is that, as the foodbank story shows, this system of redistribution doesn't work very well.

The solution is not to have the poverty in the first place and to do this we must recognise that some people get into such a tangle - "chaotic lifestyles" as the  jargon would have it - that they lose the capacity and ability to escape. And into such tangles of poverty, addiction, crime and ill-health are drawn whole families. Bradford's 'Families First' programme (part of the wider government-supported 'troubled families' programme) has successfully supported over 1000 families getting important changes and a little bit of order - kids attending school regularly, the right medical support and intervention to address addictions. People's lives aren't transformed and this isn't a fairy tale where Eric the Good Witch waves his wand and everything is fine. But from a situation where the only expectation would be grinding poverty, ill-health, the courts and the mortuary slab, we now have for some of the most troubled people some degree of hope.

None of this is about inequality. Making the wealthy less wealthy won't sort out the problems of these families. We should be talking about poverty - whatever Fraser Nelson may say, the fact of living in Southwark doesn't make you live less long than living in Westminster. What make people live less long and the reasons they end up in places with the worst housing and the highest crime is because they are poor.

Fraser Nelson is right when he points to the impact of better schools - the entire purpose of Michael Gove's campaigning leadership - on poor communities. We can be cheered by the incredible performance of places like King Solomon Academy in central London but what we can't afford is to let go the mission to see every school aspire to those standards. It is the best hope for those people living in poverty.

But in the meantime we have to do more about that poverty. Not by taking money from one set of people to spread around another set. Not by making out that the problem is greater than it is so as to make a cheap political point about inequality. Rather it's about actions that reduce poverty. And about stopping those things that make poverty worse - levies that increase the price of fuel, tariffs that make food more expensive, business rates that drive retail out from poor communities and public health policies that demonise the poor's choices.

But first for Conservatives it is time to start talking about poverty. And to start that conversation by saying that it is poverty that should concern us not inequality.

....

How talk of inequality skews our debate about poverty.

****

Through the medium of Twitter, I was directed to this article about 'poverty' - or rather it was about income inequality:

Using figures from the OECD Better Life Index, the report shows that average UK household incomes of $53,785, which makes up the wealthiest 20 percent in the UK, ranked third in EU countries, lagging behind Germany and France.

But that is where the economic similarities between the UK and the EU come to a screeching halt.

The OECD estimates the average income of the bottom 20 percent of UK households at just $9,530, which is significantly lower than the poorest 20 percent in France ($12,653), Germany ($13,381), Belgium ($12,350), the Netherlands ($11,274) and Denmark ($12,183).

The problem here is a simple one. The figures used are figures prior to taxes and benefits - it's true that the bottom 20% of UK earners take home something around the figure quoted (the UK figure in sterling is £5,400). But when taxes and other benefits are accounted for the figure becomes a more acceptable £15,400. This is still just a quarter of the average income for the top 20% of earners (after tax and benefits) which is some £57,300 but suggests that, yet again, the obsession with focusing on inequality glosses over the debate about poverty. It may still be that case that after taxes and benefits the UK's lowest earners still lag behind those of other European countries but the real lesson of the figures is that for most people in that bottom earning bracket the system is working - at least in terms of them getting close to what the Joseph Rowntree Trust folk see as the minimum income needed for a civilised life.

What this number doesn't tell us is how many people are in dire poverty - without the means to provide the absolute basics of food, clothing and shelter. We get a little glimpse of this world from people like the Trussell Trust who support food banks and we know most of the dire need is temporary rather than structural. Nevertheless, we should begin to ask whether the tendency to present ever larger numbers of people "living in poverty" prevents us responding to the central challenge of making a system that doesn't fail and doesn't create real material deprivation.

We also get this fruitless debate about inequality with one set of figures showing inequality has declined and other showing it to have risen. And the focus on inequality leads to an emphasis on taxing the rich rather than on seeking to end poverty. There is lots of shouty accusation about tax dodging and fingers pointed at big businesses but none of this even starts to answer the 'why are some people poor' question. Nor do we look at the decisions of government that make poverty worse - the green levies on energy production, the high taxes on petrol that make food more expensive, the regulation of childcare that raises its costs beyond normal affordability, the planning regulations that make housing expensive and the obscene tax on jobs that is national insurance.

My point in all this isn't to suggest an end to progressive taxation or to reject a degree of redistribution, rather it is to say that the evil in all this is poverty not the fact that one person has more stuff than another person. And if we want to eliminate poverty, we should focus on poverty and on removing the barriers - regulatory, tax, social and economic - that prevent people escaping from real poverty. Inequality isn't one of those barriers and our anti-poverty work needs to start with this fact.

....

Merit, opportunity and the reduction of poverty in Bradford

****

Yesterday I was at a 'development session' for Bradford's Health and Well-being Board and getting a bit irritated by the interminable mission creep (not to mention bucketloads of nannying fussbucketry). I appreciate that we have to 'tick everyone's box' in drawing up a five year strategy but there seems an almost wilful blindness to the big challenges facing Bradford's health economy. The first of these is a challenge everywhere - the rising cost of healthcare is outstripping society's ability to pay - but the second, while not unique to Bradford, is more specific. It is poverty.

And I say this in capital letters with flourishes and knobs on - the main reason for Bradford's poor health outcomes is poverty. It's not drinking. It's not smoking. It's not a big south Asian population. It's not obesity. It not illegal drug use. It's not road safety. It's not air quality. It is quite simply that being poor, always and everywhere, leads to a shorter and less healthy life.

Then I was corrected. Oh no, it's not poverty but something called "health inequality". Mostly, it seems because we have a strategy on combating "health inequality" but no strategy for reducing poverty. And this raises a very important issue by exposing again the conflation of poverty and inequality. With the result that we attend too much to enviously looking at how much richer, happier and healthier the residents of Burley-in-Wharfedale are compared with their counterparts in Barkerend.

What we should be doing is attending to the fact that people in Barkerend are poor not to the gap between their circumstances and the circumstances in Ilkley. But the conceit of the left (and of too many public services planners and managers) is the view that inequality and poverty are either inextricably linked or essentially the same thing. With the consequence that policy becomes about withdrawing from universal services in wealthy areas rather than the intelligent direction of resources to the alleviation of - with the end of eliminating - poverty.

This conceit - and its associated false dichotomy - is exemplified by this profile of Simon Willis who runs the Labour-supporting think tank, The Young Foundation:

"Let's say that we had a vigorous debate," he says. "The most important point Young made is that the opposite of inequality is not equality, it's fraternity … it's community and cooperation."

There we have our essential error about inequality. To say that the opposite of inequality is something other than equality is a deceit. It may be that fraternity, community and cooperation are more prevalent in a more equal society but it does not follow that equality leads to these things - nor do I see any supporting evidence. It also repeats the myth - a myth exposed time and time again only to be warmed over and reissued - that your riches are the cause of my poverty. But this time it is worse - Willis argues that the problem is 'meritocrats' because:

"They mistakenly think all their power and money and success is down to their own individual brilliance and hard work."

Again a familiar argument. Except that I've never met a successful person who didn't credit his or her success to a whole host of exogenous factors - from schools and parents through great colleagues to sheer good fortune.  Moreover we should consider what the alternative to meritocracy might be - presumably this is the 'fraternity' Willis alludes to as the opposite of equality. But isn't that a pretty stagnant society, a sort of land of 'meh'.

So I return to my earlier point. It is poverty that should challenge us not inequality. In the short-term part of the response to poverty is redistribution but over a longer period we need to alter the opportunities available to poor people, to allow them to play the meritocratic game along with everyone else. And these solutions are educational and economic - put bluntly better schools and better jobs. To say, as Willis is saying, that meritocracy is a problem is to deny the poor opportunity. Or rather to replace the chance to be independent, self-reliant and achieving with a sort of commune-like fraternal society.

This is just the intelligent articulation of the problem with community development - the idea that we can 'work with' communities from outside and that growing vegetables on roundabouts is somehow a substitute for education, skills and jobs. This is the world of the cuddly left where hugging the poor and saying 'there, there' is seen as a satisfactory response to the fact that they failed at school and haven't got a job. Or worse still giving them a hug and saying their problems are all the fault of those rich people in Ilkley (or bankers, or big business).

So back to Bradford and its health challenges. To make a difference we have to do a couple of things well - target interventions where they work best and recognise that improving the economic lot of people in Holme Wood or Barkerend is the best way to improve their health. For the targeting it's not about nannying because we know nannying doesn't work. Instead it's about real improvements - warmer homes, fewer chances to trip and fall, more pedestrianised areas, support for self-employment, training in today's skills and better outcomes at school. But this wouldn't suit The Young Foundation because what we're saying to those people is that they have skill, talent - genius even - and that we're going to release it, to allow them to achieve. Not from entitlement but from merit.

....

Is this why equality is important?

****

I've just re-read Gordon Dickson's 'Necromancer', a novella providing some context for the author's Childe Cycle series of novels. In the book a future world is described where man's material needs are met, where technology has solved the problems of weather, food production and much else besides. Dickson doesn't go into details - the novella's purpose is to make a point not to create a future world - but his world isn't utopia.

At one point the hero read the newspapers and sees that, despite the meeting of needs, mankind is unhappy, thrashing about looking for purpose in a world of material satisfaction:

"The publications were full of the statistics of distress. Testing of grade-school children revealed that seven per cent of those under the age of eight were headed for major mental illnesses. The world crime rate had been climbing steadily for fifty years and this last year had jumped twenty-three per cent again. And this in a world in which nobody needed to lack for the necessities, and even most of the luxuries, of life. The world suicide rate was climbing sharply. Cultism was commonplace. Hysteria such as the marching societies exemplified was growing steadily. The birth rate was down."

Dickson wrote his novella in 1962 and described a world that, for us today, is surprisingly familiar. Even down to the ennui that pervades society, the sense of dissatisfaction and sometimes anger at some percieved injustice. And at the heart of all this is the sense that, in some manner, inequality is unfair. For some this has been turned into a pseudo-science, the picking away at statisitcs to prove that the ennui of modern society is a consequence of inequality - the mental ill-health, the suicide, the overindulgence would all fade were we but equal. Yet, despite our wish for equality, we know this cannot be so.

However, this doesn't mean that we shouldn't give people the chance to be equal. More importantly there is a real need for society to seek lower levels of inequality - not because of some perception of fairness but because high levels of inequality cause society to break down. And once people break from the bounds of law and democracy they are wont to find violent, oppressive resolutions to their envy.

I don't really want to comment on the economics of Thomas Piketty here but rather to say something about the sociological implications of his argument. If Piketty is right and the accumulation of wealth exceeds the rate of economic growth with the consequence that society's stock of wealth becomes concentrated in a small elite, then at some point society ceases to function. We either become an oikos state as Finer defined ancient civilisations - where the entire endeavour of society is to meet the needs of the god-king - or else order breaks down entirely with its associated economic collapse.

In the former case we would need a reason for people to remain in de facto slavery. Bread and circuses won't do over the long term, we would need the 21st century equivalent of that god-king ensuring the Nile floods every year. We must believe we would all die if that wealthy elite failed. I do not feel that such circumstances exist, which makes social breakdown inevitable - envy will triumph before Piketty's wealth gatherers achieve dominance.

We can call the envy of others' wealth different things - injustice maybe, inequality certainly, unfair often - but this doesn't detract from the central fear that the envy will lead to violent revolution. At the end of Necromancer, Dickson leaves us with a collapsing society - he has made his point that courage, faith and creativity are essential traits in man and that technology crushes these traits preferring a drab homogeneity.

But I just see that collapse. And wonder if the obsession of some with inequality reflects a fear that human envy - I want what he has - will create such a collapse?

....

Note on the causes of health inequality...

****

This is from the ONS statistical bulletin entitled "Life Expectancy at Birth and at Age 65 by Local Areas in the United Kingdom, 2006-08 to 2010-12". It talks about possible reasons for health inequality - including this one:

One factor that has received less attention is the selective migration of healthy individuals from poorer health areas into better health areas or vice-versa. This type of migration has been shown to play a significant role in increasing or decreasing location-specific illness and mortality rates, which then consequently impact on life expectancy figures. Norman, Boyle and Rees (2005) demonstrated that the largest absolute flow within England and Wales between 1971 and 1991 was of relatively healthy people moving from more deprived into less deprived areas. The impact of this migration was to raise ill-health and mortality rates where these people originated from and lower them in the destination areas. The authors also noted that the benefit to less deprived areas was reinforced by a significant group of people in poor health who moved from less to more deprived locations.

Migration explains a lot of the variation it seems. So area-based approaches to reducing 'health inequality' may be addressing entirely the wrong target problem.

H/T Tim W

So much for equality, eh!

****

Paul Krugman, lefties favourite Nobel laureate economist, has a new source of income - researching inequality. And a nice little earner it is too:

According to a formal offer letter obtained under New York’s Freedom of Information Law, CUNY intends to pay Krugman $225,000, or $25,000 per month (over two semesters), to “play a modest role in our public events” and “contribute to the build-up” of a new “inequality initiative.” 

Yes folks, quarter of a million bucks moaning about how the world is unequal. There's a word for this sort of hideous explotiation - hypocrisy. Krugman is getting ten times what poor Americans pull in a month simply to turn up to a few events and help with the PR.

....

Quote of the day: on the distribution of wealth...

****

From Tim:

If you've no debt and a £10 note then you, yes just you on your lonesome, has more wealth that the bottom 20% of British society in its entirety.

Worth remembering this for next time some left-wing numptie confuses wealth and income.

....

In which the North/South divide proves (again) that "The Spirit Level" is bunkum

****

The Work Foundation (pdf), in one of those studies that seem much cleverer than they actually are, has pronounced that, the further you get from London, the more “equal” places become:

What you're seeing there is a near perfect correlation between distance from London by train, and inequality. The further away you are from the capital, the more equal your city is.

Which rather begs the question doesn’t it? For what we see here is that income inequality (as an aside this is not ‘wealth’ as the New Statesman rather ignorantly puts it) is much higher in London than anywhere else in England. And this really isn’t a surprise, not even a little one – there are relatively few multi-millionaires in Bradford but a significant smattering all across London.

The problem is that we’ve been told – relentlessly by acolytes of Wilkinson & Pickett – that more equal places are more successful. It seems to me that, in little old England, we have a microcosm of why “The Spirit Level” is so utterly wrong and probably misguided.

People in London and the South East live longer,

Life expectancy in the south-east is 79.7 for males and 83.5 for females, while in the north-west it stands at just 77.9 for males and 81.1 for females.

Although life expectancy has grown in every region of the UK over the past four years, in some areas the growth has been considerably faster than in others. 

Growing differences appear to reflect increasing wealth in the South - particularly in the capital.

And have better mental health:

Many of the risk factors for mental illness are linked to deprivation, so a general pattern occurs with the three northern regions (North East, North West and Yorkshire & Humber), showing worse measures than the three southern regions (South East, South West and Eastern England) and the two midlands regions (West Midlands, East Midlands) in between.

Only in crime rates does London top the pile and it would be easy to suggest that its size and the problems with policing in a large city make that inevitable.

Yet, in reporting on the Work Foundation’s little calculation, the New Statesman misses the point (quite staggeringly):

But the really interesting question is whether you want to reduce urban inequality. The "Spirit Level" argument – that high inequality causes a number of bad outcomes – has only been shown to apply on the national level. Is there anything bad about inequality in cities on its own terms?

It seems to me that the “Spirit Level” argument cannot be true at one spatial level and untrue at another. Since it isn’t true at the level of the city  - no-one would claim Liverpool or Newcastle as more successful, happier or better places than London (blind local pride aside) - it cannot be true at the level of the nation.

Not that this will stop people trying to argue that all the world’s ills can be laid at the door of the wrong Gini co-efficient.

...