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Boringly Familiar and Wildly Utopian

This plebian reviewer read Professor Sir Anthony Barnes Atkinson’s Inequality: What Can Be Done? so you wouldn’t have to. Inequality inadvertently persuaded me that its topic is even less important than I’d thought it was when I began. But make no mistake, Atkinson’s a celebrated lion of the Left—the economist whom Thomas Piketty called “the Godfather of historical studies on income and wealth.” If he can’t persuade us inequality is a problem, no one can.

There are at least three questions a book written against inequality can ask and answer: First, there’s the question of whether inequality is bad. Second, whether inequality exists. Finally, there’s the question of whether or not, if inequality is bad and actually exists, there’s a solution to inequality that isn’t worse than the inequality itself. Inequality: What Can Be Done? fails on all fronts.

Is inequality bad? Atkinson thinks so. He broods (presumably with furrowed brow) over the “voluntary exclusion” of “rich people” who “opt out of state provision into private schooling and health care.” There’s even inequality at the grocery store: “As societies have become richer, shops may have ceased to stock cheaper varieties or qualities of products.” Hmmm. Does it make me terribly wicked if I don’t see why the Whole Foods in West Hollywood should carry Hot Pockets, or why parents who can afford to send their children to private school (via the tuition they pay) even as they help others send their children to public school (via the taxes they pay) should think that what they are doing is a form of “voluntary exclusion”?

Atkinson obviously thinks inequality causes greater problems. “Social evils, such as crime and ill-health, are attributed to the highly unequal nature of societies today,” he tells us, without—in a book replete with footnotes—giving any reference to statistical data supporting such a claim. But sticking to Gini coefficients—a measure of inequality that he explores at length (and at times very helpfully)—the United States has a higher Gini coefficient than Afghanistan, and Israel has a higher Gini coefficient than Iran. It isn’t really a stretch to suggest that the United States and Israel are better places to live from a crime and health point of view. The social case against inequality is inadequate.

Nor is there a moral argument against inequality, though Atkinson thinks there is a moral problem: “And there are those, like me, who believe that the present levels of economic inequality are intrinsically inconsistent with the conception of a good society.” The book offers no way of accounting for the moral rightness and wrongness of inequalities, much less a “conception of a good society.” Atkinson tells us male and female college graduates were the same for people born in 1910 and earlier. Does he think social conditions were better for women in the late 19th century? I assume not, but he never offers even a sketch of how to understand these things from a moral point of view.

Anyway, how significant is income inequality? Here the famed economist’s exhaustive knowledge of the subject matter is helpful, but his honesty (a commendable attribute, certainly) works against him. Consider the following example from Inequality:

Today there is a profusion of data-sets. This represents a great improvement and is a tribute to the substantial effort of statistical offices and individual researchers. At the same time we risk being overwhelmed. Just to give one illustration, the December 2012 issue of the Journal of Economic Inequality includes one article that starts from the observation that income inequality is higher in the US than Japan . . . and goes on to provide an explanation. But a reader of the Journal would be puzzled that another article in the same issue uses a dataset that shows no real difference in the Gini coefficients of the two countries.

So let’s be clear: The same issue of a journal devoted to economic inequality offers two different assessments of income inequality. Question: Are Japanese more or less equal to one another than Americans? Answer: Who knows? To be fair, in a footnote, Atkinson tells us the articles use two different data sets (321n2), but I don’t see how that bolsters our confidence in expert judgments on this subject.

Who counts as poor varies from country to country, and some measurements guarantee the existence of poverty by definition. In the United Kingdom, for example, “the percentage living in poverty . . . is the percentage of individuals who live in households with equivalised disposable income below 60% of the UK median.” The poor you will always have with you. Median incomes in Britain could rise to an astonishing level—say a million pounds a year—and there will always be, by definition, people below the median, for example, the poor schmucks laboring away in social isolation for a mere three hundred thousand.

Are people counted individually or as families? Atkinson notes the problems of pursuing either course. Consider an adult child living at home who, after taking a first at Cambridge, decides to work as an artisan woodworker for a year before starting his banking career. His parents bought him a new car and let him live rent free in their spacious central London home. Count him as an individual, and he’s utterly destitute—but it’s hard to think he’s poor. Atkinson sees these thorny issues as problems to be solved, but to this reader, they show just how messy everything is.

One could object that it isn’t fair to demand arguments for what the author forthrightly assumes. “I start with the pragmatic concern that current levels of inequality are too high,” he writes. Also: “This book has been written in an attempt to answer the question, If we wish to reduce the extent of inequality, how can this be done?” But here’s the problem: If inequality is so obvious, and so obviously bad, then it’s clear that radical—even destructive—proposals should be considered. But if inequality is stubbornly hard to measure and we can’t articulate why it’s bad, taking a wait-and-see approach is the most rational course.

Now Atkinson by his own admission offers such “radical proposals” that “require us to rethink fundamental aspects of our modern society”—proposals that “at first sight appear to be outlandish and impractical.” He lists them, along with ideas to pursue, on pages 303 and 304. They are not for the libertarian faint of heart. Before he presents them, he freely admits, “I can already hear critics dismissing them as either boringly familiar or wildly utopian.”

If inequality is indeed the economic equivalent of Stage Four cancer and we know—that is, with a certainty that has so far eluded us—that we are there, then the political chemotherapy of guaranteed public employment at the minimum wage and the alternative medicines of a minimum inheritance and a global tax regime may be the best we can do, even if problems of implementation abound. If, however, inequality is as stubbornly difficult to measure as he indicates—if the experts themselves have competing conclusions and differing data sets—then we ought to be cautious.

We can certainly ask whether the cure is worse than the disease. Atkinson forthrightly (and commendably) recognizes the problems inherent in his proposals, but I think he believes both that the tradeoffs won’t be too costly and that inequality has gotten so perilous that many other social evils should be permitted to combat it. In fact, he says so. The fact that “there are losers as well as gainers is not a decisive argument against redistribution. If governments are serious about reducing inequality, then there have to be trade-offs.”

When it comes to analyzing these tradeoffs, though, he becomes cavalier. For example, he recognizes the explicit concern that people will work less if taxed more, and that employers will hire fewer people if forced to pay more. Then he writes: “But there is no general conclusion that this is the case. Each situation has to be considered on its merits.” That strikes this reader as something akin to a cigarette company saying that, sure, one brand may cause lung cancer, but let’s not jump to any conclusions.

When Atkinson does offer specific responses to objections, they resemble appeals to magic more than anything else. For example, if someone implements a “significant rise in the national minimum wage,” employers will see that “by paying more they get greater productivity.” Just like that. Shazam! To be fair, Atkinson does say partial monitoring and higher wages will “induce workers to choose to work hard, the threat of the loss of the better-paid job acting as an incentive not to ‘shirk.’” But this analysis ignores, astonishingly, the context of his argument: There will be no “threat of the loss of the better-paid job,” if people are already working in the better-paid job not because of market forces but because of the significant rise in the national minimum wage forced upon corporations by the government.

It would seem the author doesn’t care about the particular results of his proposals, because he thinks the problems are so grave. Take his word for it:

Even with considerable leakages, through corruption and diversion of funds, aid ‘works’ if some part at least trickles down to those whose current consumption is so far below that of the typical OECD taxpayer.

But this ignores, as Frédéric Bastiat would say, what is unseen. If corrupt and oppressive regimes subjugate their peoples only because foreign aid allows them to do so, aid doesn’t work—or even “work.” Additionally, foreign aid obscures the true solution to global poverty and economic isolation: growth.

That’s what’s curiously absent from the worldview of Sir Anthony Barnes Atkinson: economic growth. He doesn’t expect it at all, offering asides such as this one: “If we now expect the growth of average incomes to be slower, or nonexistent, as we seek a sustainable path . . . ” Though he says he’s “not totally pessimistic about our economic future,” he focuses his hopes on governments and on cooperation between governments. He certainly doesn’t look to growth. “The expectation for the future,” he writes, “is one of slower growth in household spendable income than we have seen in the past.”

Marvelously, Chinese farmers being lifted out of poverty by global free trade and African entrepreneurs hustling to bring goods to market do not have time to listen to such pessimistic balderdash. Innovation, entrepreneurship, and growth feature neither in Atkinson’s hopes nor in his analysis, but I’m glad they’re still active in some corners of the world. May that always be the case.

Reader Discussion

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on October 21, 2015 at 12:23:49 pm

Niall Ferguson has been a stimulating historian with his use of "counterfactuals" and his close examination of what has been factual in economic (particularly "financial") history.

So we might faintly imitate one of his approaches (and even that of the current Nobelsist, Angus Deaton) and ask some questions NOT about the conditions of *in*equality, but rather those conditions that may exist, or have in fact existed, in conditions of equality - or more likely conditions when the "equality" being discussed was “better” (greater or more widespread) than it appears currently.

A first enquiry and examination might be: Given some period selected for "better" levels of equality (less "inequality"), did more people, overall, in that "economy" have more of what they needed; have better means (or require less efforts) to obtain those needs, than the same proportions of people in our more "unequal" current conditions? Was there not, in the overall populations, in fact, a lower level of needs met, with greater efforts required?

The same enquiry could be applied to "wants" (desires beyond needs) of various sectors of populations, in those periods of "better levels" of equality.

In those presumed periods of "better" equality, what were the "equalities" of *comparative* needs in the segments of populations? What are those in the current conditions.

Given the various mechanisms that might be selected to attain "better" equality, what would that equality "look like;" and what would be the "side effects" of the mechanisms used to effect it? What would be gained, for whom, to what ends - and at what costs to individual liberty?

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Image of R Richard Schweitzer
R Richard Schweitzer
on October 21, 2015 at 13:09:51 pm

In other words. is it preferable, for the sake of *equality* that we all live under the conditions of medieval peasantry where, while wealth for the overwhelming preponderance of the population was equally distributed (perhaps, absent is a better descriptor), there was a corresponding "equality' of malnutrition, sickness, disease and general illiteracy?

No, today, even the poorest of us live lives that are markedly richer than the Kings of old with far greater choices and superior outcomes in health, wealth, education and entertainment (OK, so we don't have the Roman Coliseum).

It strikes me that this entire business of "inequality" reduces itself into a quixotic quest to satisfy the *psychological* harms experienced by those who do not have sufficient "EXCESS" to display and as a consequence feel slighted. In another sense, it may be that, to use another term in vogue today, these are the economic version of *micro-aggressions * - "I feel bad / slighted AND you must do something about it." It is all about my psyche - my needs; so you must give up or share the fruits of your better choices in order that I, too, may display my own distinct self.

Gimme a break!!!!!

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gabe
on October 21, 2015 at 13:20:24 pm

What Gabe refers to as - “equality’ of malnutrition, sickness, disease and general illiteracy?

are the levels Angus Deaton examines.

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Image of R Richard Schweitzer
R Richard Schweitzer
on October 21, 2015 at 15:13:14 pm

What happens to the people who don't want to go along with the "inequality" movement? Who don't want to pay the taxes or pay the minimum wages or refuse to obey the regulations that the Left has gotten into law? In the end the only way the Left can enforce their worldview is with force or the threat of force backed up by guns and gulags. Enforcing a worldview with fear and terror. In the end,the "equality movement" is about achieving power for the Left by using the power of the vote to vote away people's property rights. In the end it is the use of class warfare
to gain wealth and power. To divide,conquer and rule.

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Image of libertarian jerry
libertarian jerry
on October 21, 2015 at 15:19:21 pm

Indeed - I suppose I will have to read this Deaton fellow.

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gabe
on October 21, 2015 at 16:19:45 pm

Well L J,

Your questions go to what mechanisms are sought by the differing sectors of the "equality movement."

There are some (in fact a lot of) indicators that the mechanisms will continue to envelope the relationships and determinations of circumstances that are open (and to remain open) to individuals in our society (and to its economic activities).

Property is simply one of those relationships. At base it is the human relationship to "material" substances ( that would include products of humans - "intellectual property").

The increasing constraints and controls on relationships and determinations and controls of the circumstances in which they take place are the Trade Marks of Administrative States.

Individuality is suppressed under the guise of opposition to perceived self-aggrandizement of "individualism." Advancements stem from innovations; innovations from imaginations; imaginations from individuals. The impacts of that suppression in the quests for "less inequality," "social justice," or whatever are accumulating throughout the West as it drifts away from the recurrent individuality course of the past 500 years, marked with periodic regressions. The current regression can probably be dated to 1914 and the beginning (in the West) of the mass denigration of the value of individual life, which has not notably abated. We must now all be included in "the masses,." That is the message of "decreed" equality.

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Image of R Richard Schweitzer
R Richard Schweitzer
on October 21, 2015 at 17:26:10 pm

Richard:

"We must now all be included in “the masses,.” That is the message of “decreed” equality."

Not only the message but the avowed ambition of the social justice types.

So long as there are no tell-tale badges of distinction amongst the masses, all is well!!!

Oops - with the notable exception of the distinction of being one of the branded cadre of morally superior elite!

However, they are, at times, an inclusive bunch as evidenced by their willingness to include amongst the *cadre* those, whom in years past, would have been termed ambulance and crime chasing reporters - now branded "Specialists." A rather interesting mechanism (the media and its deployment) for the advancement of the governing class.
One could cite more examples but why bother?
Remember what that great American philosopher Yogi Berra said: "You can observe a lot just by watching." Keep your eyes open and then make observations. Thank you, Yogi!

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gabe
on November 04, 2015 at 17:26:45 pm

The quickest way to make everyone equal, if say we were comparing height, would be to start sawing off from the feet up until everyone is the same! Of course that just leaves us all crippled. It's remarkable how similar the economic solutions presented seem to have the same kind of effect...

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Mike
on November 09, 2015 at 08:55:42 am
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wayne
on November 09, 2015 at 08:56:59 am

The whole issue of inequality smacks of whining.

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wayne
on November 09, 2015 at 08:58:37 am

Yep. Exactly. That's why, for example, guns threaten the left so much. They can't have their way if we do.

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wayne

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.