What would you think if someone could show that they knew just what it would take to improve our physical and mental health, reduce crime and violence, increase civic trust and participation, reduce teenage pregnancy and drug abuse? What if they could show you that this was also the recipe for greater upward mobility based on merit – and even for enhanced productivity and sustainability?
While not exactly providing a recipe, British researcher, Richard Wilkinson is on a mission to put equality back on the agenda because he is convinced and convincing that equality is the key to, well, just about everything. He was in Canada last week laying out page after page of data that show that more equal societies are more successful societies against almost any measure of well-being that matters to us, and that almost everybody benefits from greater equality, not just the poorest.
His book, written with Kate Pickett, provides reams of data comparing countries, regions, states along with a handy introduction on how to read the tables. Critics will point out that income is only one way of measuring inequality and that many countries are not included because data are not available and they may dispute this indicator or that. But the sheer weight of data, the consistency, measure after measure after measure, is pretty compelling. And as Wilkinson points out, no one has been able to provide contradictory data – indeed Wilkinson incorporates new data as it becomes available – and no one has come up with a plausible alternative explanation for his findings. Equality works.
While economic development is essential to improve well-being in poor countries, for developed countries, there is a point of diminishing returns when more and more income and consumption no longer contribute to greater personal and social heath and happiness. What does matter for these countries is how income and wealth are distributed. Over and over again, countries with greater equality, for example the Scandinavian countries and Japan, do better on measures of well-being than do more unequal societies such as the U.S., the U.K. and, interestingly Portugal – and the differences are big, impossible to dismiss. Equality works.
After the Second World War in North America and even before that throughout Europe, most developed countries took steps to constrain excessive inequality in part at least to achieve some measure of social tranquility. Then, the benefits of economic growth were widely shared through expanded employment and better wages and this continued into the seventies largely because of the addition of women into the paid labour force. This began to change, however, with Reagan/Thatcher “trickle down” or, better, “rising tide” economics which assumed that the gap between rich and poor wouldn’t matter so long as most people’s absolute circumstances improved. Their focus was single-mindedly to put economic growth at the pinnacle of public policy after the stagnation of the seventies. Get the economy growing and everything else would follow. The Reagan tax cutting years did see an impressive economic expansion. But the rising tide does not lift all boats. Some folk drown. And the gap between rich and poor just keeps widening in good times and bad. And, as it turns out, inequality does matter. (This is to say nothing of rising debt and deteriorating environment which I will leave for another day.)
Canada has historically been pretty successful in avoiding some of the worst excesses of inequality. According to Wilkinson’s data we come out pretty much in the middle on the size of the gap between top and bottom and therefore on all the major social indicators – crime, longevity, literacy, mental health, children’s health, civic participation and voting, etc. But in an important recent study, Armine Yalnizyan shows that while Canada is “awash in money” more and more is going to fewer and fewer; “Canada’s elites are breaking new frontiers in income inequality.” Says Yalnizyan, you would have to go back to the 1920s and 1930s to see the richest Canadians take such a big share of Canada’s total income. Their after tax share has probably never been higher. And never have the rich taken such a disproportionate share of the benefits of economic growth. Inequality is increasing in Canada at an unprecedented rate .
If Wilkinson is right about the consequences of inequality, and all the evidence suggests he is, then Canadians are in for a rocky ride. We all know that poverty has real consequences for quality of life and for life chances and that we cannot afford the levels of poverty that somehow we have learned to tolerate. But Wilkinson is saying something more than that. He is saying that relationships of sharp inequality are dangerous, they diminish us all, they erode trust and fellow-feeling, and all of this plays out in dysfunctional behaviour and social pathology. And Wilkinson has been collecting the evidence. If this all sounds too soft and airy fairy, check out the latest study on how inequality is playing out in Toronto. What is happening is simply unsustainable.
Over the past week or two I came across several pieces on the absence of a left or centre-left narrative that works, that convinces and inspires Canadians. Cowed by the persistent dominance of neo-liberal, free market thinking, even after the meltdown, aware that environmental stewardship remains a difficult sell, and constrained by the stimulus-created deficits and uncertain economy, the left has in many jurisdictions portrayed itself as a nicer version of the right and not surprisingly, the right prevails. But Wilkinson provides a useful reminder that above all else what it always means to be “on the left”, what it has always meant, is a commitment to equality as well as freedom, or indeed equality as prerequisite to freedom.
Every important theorist has understood that democracy can only work in a society which has secured some measure of equality. The American sociologist, Herbert Gans, warned thirty years ago that the very idea of the public interest is fractured if inequality becomes too great. Plato counseled Aristotle that no person should make more than five times the pay of the “lowest” member of society. Contrast that sage advice with William Davies’ account of a top executive who paid himself 1,148 times the average salary of his firm. Highly unequal societies have too many such stories. How can one conceive of the common good when the gap between top and bottom is so wide? Inequality, suggests Wilkinson, is a social pollutant.
I can already hear the restless right flinging accusations – socialist, statist, satanist. But Wilkinson is no ideologue. He does not propose that there is only one way to achieve greater equality. For example, he shows that low tax, low spending New Hampshire and high tax, high spending Vermont are the most equal of the U.S. States, New Hampshire through strong unions and labour laws, Vermont through social spending. Similarly, while Sweden has relied on social spending, Japan has avoided great wage differences in the first instance because of how Japanese firms are organized. Executives, promoted from within, are not paid nearly the kinds of salaries that we see here in North America. In Japan it is not at all unusual for executives to cut their own salaries rather than cut jobs. Contrast that with the bonuses North American executives draw even while the firm melts down.
In fact, William Davies, in related research (available for free in the spirit of equality), has shown that more equal firms, for example through meaningful employee ownership, are more productive, innovative and sustainable, more able to take a long view, freeing themselves from the obsessive preoccupation with demonstrating shareholder value every quarter. Davies sets out a government agenda for reinventing the firm through tax incentives, equity investment and regulatory change. He also explores the potential of some of these ideas for public service provision. The point here is that there are many routes to greater equality depending on circumstances and political culture and we ought to be finding the contemporary Canadian way. A commitment to equality is not a simple policy prescription – it is, to use the dreaded term, a vision, a progressive vision of a just Canada that works. It is a commitment to recover our sense of common purpose and to demand from every sector and every level of government that they play their part for the good of us all. And we have the data that show it can be done.
And for those who worry about economic freedom, even here the data have a surprise. Says Wilkinson, if you want to live the American dream, move to Denmark. The just society puts equality, democracy, sustainability at the centre of its policy agenda – and it works. In his next edition, let’s have Wilkinson say “move to Canada”. On that note, this site goes quiet til after the holidays. Best of the season to you.