Yes, we are all in this together

Yes, we are all in this together
Richard Wilkinson and Kate Pickett, New Statesman
11.11.10

Our book The Spirit Level was first published  in March 2009, about six months after the start  of the worst financial crisis since the Second  World War. Much of the blame for the crisis  was rightly attributed to extraordinary risks  taken by people in the financial sector whose excesses were matched only by their grotesquely  high salaries. Although our research pre-dates  the crisis by many years, the book’s generally  positive reception clearly owes something to  its timing. Many people who, before the crash,  had assumed that huge salaries and bonuses reflected the unique contributions and brilliance  of their recipients changed their minds as they  learned about the lack of relationship between  performance and reward.   

But the reception of the book cannot be attributed wholly to the moment at which it  appeared. Since its publication, we have given  well over 350 lectures in many different countries. Although we have often been invited to  speak to groups that were predisposed to be  sympathetic to the idea of greater equality, that   has not always been the case. Yet audiences  have been so uniformly positive as to suggest  that there is a hunger for the evidence we present – as if, under the surface, the world was full  of closet egalitarians.  A recent report confirms empirically the impression we have formed – that the general  public is averse to the high levels of inequality  in very unequal countries. In a random sample  of more than 5,500 Americans, researchers from  Duke and Harvard Universities investigated  views of the distribution of wealth (rather than  income) in society.

People were shown three  pie charts illustrating three different distributions of wealth – one in which each fifth of the  population got the same, another that showed  (unlabelled) the distribution of wealth in the  United States and another (also unlabelled)  based on the distribution in Sweden.  Ninety-two per cent said they would prefer  to live in a society with the Swedish distribution – and the percentage only varied from 89  to 93 per cent depending on whether they were   rich or poor, Democrats or Republicans. When  asked what they thought the distribution of  wealth is in the US, the average estimate was  that the richest 20 per cent of Americans control 59 per cent of the wealth. In reality, they  control 84 per cent. Asked what they thought  the ideal distribution would be, people preferred the top 20 per cent to have 32 per cent  of all wealth. 

Nevertheless, The Spirit Level has also attracted criticism and has been the subject of  strident political attacks. Some reviewers of the  book were not convinced we had shown that  the vast majority of the population benefited  from greater equality. They seemed to think  that the evidence did no more than establish  that average performance across the whole  population is worse in more unequal societies.  In one section, we show no fewer than five  sets of data illustrating that, whether you classify people by education, social class or income,  people in each category are healthier (or have  higher literacy scores) if they are in a more ~ equal society than people in the same category  of income, education or class in a less equal socity.

We also refer to studies that reach the  same conclusions using statistical models that  enable researchers to look at the effects of inequality after controlling for the effects of all  individual incomes throughout society.  We do not argue that everyone in a more  equal society does better than everyone in a less  equal one. We are not saying that even the lowest social class or the leat well paid or educated  category in a more equal society does better  than the highest category in a less equal society.

Rather, we show that when people in the same  social class, at the same level of in come or education, are compared across countries, those in  more equal societies do better. So, at any given  level of personal income or education, someone’s quality of life will be higher if he or she  has the same level of income or education but  lives in a more equal society. The conclusion is  that greater equality usually makes most difference to the least well off, but still produces  some benefits for the well off. 

The ties that bind
  Since we finished writing The Spirit Level in the  spring of 2008, there have been many more  studies reporting relationships between inequality and health. Nine of the new studies  look specifically at rich, developed countries.  Seven find, as we do, that health is worse in  more unequal societies. Both of the ones that  differ look at income inequality in relation to  self-reported health – where, instead of death  rates, people are typically asked to say whether  their health has recently been excellent, good,  fair or poor.

Although self-reported health is  predictive oflongevity within a country, comparisons between countries find that self-rated  health is actually better in countries where  life expectancy is lower: so rather than contradicting the relation between greater inequality  and worse health, the studies of self-reported  health tell us something about the way people  perceive their health. But why is self-rated  health not related to levels of actual health in  cross-country comparisons? Could it be that,  in more unequal societies, with more status  competition, asserting that one has excellent or  very good health might be part of maintaining a  hardier self-image? Or perhaps people in more  equal societies are less inclined to rate themselves at the top of a scale? We can only guess.

Throughout The Spirit Level, we also discuss  the vital importance of social relationships to  human health and well-being and show that  higher levels of income inequality dama’ge the  social fabric that contributes so much to healthy  societies. Now, a major new review of the evi:lence from almost 150 studies confirms the  important influence of social relationships on  health. People with stronger social relationships were half as likely to die during a study’s  oeriod offollow-up as those with weaker social  :ies.

The authors of the report found that the   influence of social relations on survival was at  least as important as that of smoking, and much  more important than heavy drinking, physical  activity or obesity. The effects were strongest  when researchers combined measures of different kinds of relationships, such as marital  status, feeling lonely, size of social network,  participation in social activities, and so on.  We also showed that there is a large and consistent body of evidence on income inequality  and violence. More recent studies continue to  confirm this link.

One study of 33 countries,  published in 2010, also showed that social cohesion – as measured by levels of trust – seemed  to provide the causal link between income inequality and homicide rates, whereas public  spending on health and education did not.  The weight of the evidence, and its continued rapid accumulation, make the important  link between income inequality and social  dysfunction inescapable. But ill-founded and  politically motivated criticism can muddy the  waters and leave people with the impression  that the evidence is less clear than it is. Imagine  if someone were to assert (with no justification  whatsoever) that climate science had not taken  account of, say, the effects of variations in the  salinity of different oceans. Unable to evaluate  this claim, the inexpert listener mightassume  thatitwasan important factor, and that perhaps  it had not been properly considered.  What often appears to be "balanced" discussion in the media can be misleading. This happens even in areas of science where the accumulation of evidence leaves little legitimate  room for doubt.

For example, if 98 per cent of  climate change scientists agree on an issue, and  2 per cent disagree, inviting one person from  each camp to take part in a news programme or  public debate can leave people with an impression that the matter is much more controversial  than it is. Only those viewers or readers who are  particularly diligent or highly motivated will be  able to pursue the issues in detail.  In their book Merchants of Doubt , the American academics Naomi Oreskes and Erik Conway suggest that the defence of a kind of freemarket fundamentalism is the most plausible  explanation of why the same individuals and  institutions are often involved in attacks on research in areas as diverse as tobacco control and  the evidence on climate change. As well as defending the free market, they see themselves  as countering tendencies to big government  and protecting democracy. The same beliefs are  likely to guide the attacks on the evidence of inequality’s socially damaging effects. 

If that is the motivation, then it is based on a  serious misconception, one that is almost the   opposite of the truth. Greater inequality, on the  contrary, increases the need for big government – for more police, more prisons, more  health and social services of every kind. Most  of these services are expensive and only very  partially effective, but we shall need them for  ever if we continue to have the high levels of  inequality that create the problems they are  designed to deal with. Several states of the US  now spend more on prisons than on higher  education. In fact, one of the best and most  humane ways of achieving small government  is by reducing inequality.

Similarly, theassumption that greater equality can only be achieved  through higher taxes and benefits, which presumably led the Taxpayers’ Alliance to publish  its criticism of The Spirit Level, is also a mistake.  We have been at pains to point out that some  societies achieve greater equality with unusually low taxation because they have smaller  earnings differences before taxes.  There are few things more corrosive of a  properly functioning democracy and of the  market than corruption and unbridled greed.  Although the international measures of corruption currently available were designed primarily to assess levels of corruption in poorer  countries, they strongly suggest that one of the  likely costs of greater inequality is increased  corruption in government and society more  widely.

We show in the book that trust and the  strength of community life are weakened by  inequality, and this is true not only ofinterpersonal trust, but also of trust in government the difference between the attitudes of Americans and Scandinavians to their governments  is well known.  In addition, international data suggests that  people trust government less in more unequal  states. There is also evidence from societies  where voting is not compulsory (as it is, for  instance, in Australia) that voter turnout may  be lower in more unequal countries.

Whether  or not this reflects a greater separation ofinterests and an increasing sense of "us and them"  between people at opposite ends of the social  ladder, it certainly suggests that too much inequality is a threat to democracy.  Economists sometimes suggest that the  market is like a democratic voting system: our  expenditure pattern is, in effect, our vote on  how productive resources should be allocated  between competing demands. If this is true,  someone with 20 times the income of another  in effect gets 20 times as many votes.

As a result, inequality gravely distorts the ability of  economies to provide for human needs: because  the poor cannot afford better housing, their  demand for it is "ineffective", yet the spending  of the rich ensures scarce productive assets are  devoted instead to the production ofluxuries.  As well as these more general effects of  large income differences, there is now evidence  that inequality played a central causal role in  the financial crashes of 1929 and of 2008. We  suggested that inequality leads to increases in  det.

It turns out that they are intimately related. Using figures for the 40 years from 1963  to 2003, the economist Matteo Iacoviello has  recently shown a very close correlation between increasing debt and increasing inequality in the US and concludes that the longerterm increases in debt can only be explained by  the rise in inequality. Using the latest international data on debt from the Organisation for  Economic Co-operation and Development, we  have also found that both short-term household debt as a proportion of household assets  and government national debt as a proportion  of gross domestic product are higher in more  unequal countries.

The crashes of both 1929  and 2008 happened at the two peaks of inequality in the past hundred years after long  periods of rising inequality which had led to  rapid increases in debt. Their trends over time  are strikingly similar. It has been estimated that  growing inequality meant that, in the years before the 2008 crash, about Si.gtrn per year was  being siphoned from the bottom 90 per cent of  the US population to the top 10 per cent.  As a result, the richest people had more and  more money to invest and to lend, but people  outside the very wealthiest category found it  increasingly difficult to maintain their relative  incomes or realise their aspirations.

Both for  speculators and for ordinary householders, rising property prices made investment in property look like a bandwagon everyone had to get   on. People bought into the housing market  wherever they could and remortgaged precariously as prices rose. The financial sector handling and speculating on these debts found its  share of all US corporate profits rising from 15  per cent imoxo t040 per cent in 2003. The bigger the bubble grew, the worse its eventual and  inevitable burst became.  A question of preferences 

Earlier, we cited research showing that over 90  per cent of the American population say that  they would prefer to live in a society with the  income distribution that exists in Sweden rather  than that of the US. Research in Britain also  shows that people think income differences  should be smaller, even though they hugely  underestimate how large they are. The world  really is full of people who have much more  egalitarian preferences and a stronger sense of  justice than we tend to assume.

However; the  rise of neoliberal political and economic thinking in the 1980s and 1990S meant that egalitarian ideas disappeared from public debate and  those with a strong sense of justice became, in  effect, closet egalitarians.  It is now time egalitarians returned to the  public arena. We need to do so confident that  our intuitions have been validated and found to  be truer than most of us ever imagined. Because  the evidence shows that few people are aware  of the actual scale of inequality and injustice in   our societies, or recognise how it damages the  vast majority of the population, the first task is  to provide education and information. 

Understanding these issues is already changing attitudes to inequality among politicians.  In Britain, The Spirit Level has been endorsed  across the political spectrum. In a major speech  at the end of 2009, David Cameron said the  book showed "that among the richest countries, it’s the more unequal ones that do worse  according to almost every quality-of-life indicator". In September this year, in his first major  speech as leader of the Labour Party, Ed Miliband  said: "I do believe this country is too unequal  and the gap between rich and poor doesn’t just  harm the poor, it harms us all … " 

Words are a start, but changing policies and  politics, changing the way our societies organise themselves, will require the evidence to be  recognised even more widely. Few tasks are  more worthwhile than this: as we think The  Spirit Level shows, the health of our democracies, our societies and their people, is truly dependent on greater equality .•  Extracted from a new and updated edition  of”

The Spirit Level: Why Equality Is Better  for Everyone" by Richard Wilkinson and  Kate Pickett (Penguin, £10.99). To buy the  book at a special offer price of £8.99, call the  Penguin Bookshop on 08700707717 and quote  "NS/Spirit" and the ISBN: 978-0-241-95429-4  newstatesman.com/topics/society