The equality effect

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The Equality Effect

Politics does not look very positive at the moment. But the rightwing populism and neoliberalism will probably not last long. There is more and more evidence that economic equality is better for everyone in all societies. When everyone understands this, politics will have to change. Danny Dorling explains.

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Cartoon by Ella Furness

For thirty years before 2008, some countries, including the US and the UK, chose to develop more inequality, often thinking there was no other option. But even with more globalization, many other countries have chosen more equality. Today, we can compare these to see the equality effect.

The equality effect can look like magic. In more equal countries, people are generally happier and healthier; there is less crime, more creativity, more productivity, and – overall – higher education levels. There is so much evidence for how good it is to be equal that it will soon start to change politics and societies all over the world. People will soon accept this as easily as women’s right to vote.

More equality is not the only thing we need for more happiness, but it is necessary. We can see this from statistics from all over the world – and from looking at history.

More economic equality does not mean that all people do very similar work, or live in very similar types of families, or similar homes. It does not mean all schools will be the same or all people will earn the same. It means starting to respect all people and giving everyone fair money for the work they do, for how they help society and for their needs. Money is relative. If some people earn too much, others earn less.

Equality means having the same rights and freedoms as other people. Believing that we should all have this equality is not at all the same as saying we would all do and be the same if we had more equal opportunities.

Leftwing and green politicians usually fight for more equality more loudly, and rightwing and fascist politicians are usually against it, but equality does not have to be only for some areas of politics. There has been a lot of inequality in systems with socialist and communist labels. Some free-market systems have developed more equality. Anarchy can develop very equal or very unequal societies.

Planning for inequality

At the beginning of the 20th century most rich countries were unequal. They then all became more equal by the middle of that century, so it was very difficult to see the effects of equality. But since the 1970s the richer countries of the world have become different, so we can see these effects.

44 years ago, in 1973, inequality in the US was the lowest ever: the richest one per cent of people earned only 7.7 times the average US wage – very high economic equality. The table below shows the earliest and latest records on inequality in 12 major countries as well as highest and lowest points since the records started.

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These figures are really important because they show how much inequality has varied in different times and also that it varies greatly between rich countries at any point in time. When people tell you that we have to have high inequality, you need a table like this to prove they are wrong.

Most people can remember a time when almost everywhere was more equal than it is today. If you live in the US, it is difficult to imagine a world where the boss earns only 7.7 times more than the average worker – but this was true in 1973. People in the Netherlands or Finland, would be shocked if inequality in their countries increased to this. The most recent data for the US, UK and Germany show the average pay of the top one per cent is 18 (US), 13 (UK) and 12 (Germany) times the average salary.

I grew up in a more equal UK. I was 10 in 1978 when the rich were least rich (the richest one per cent earned only 5.7 times the average income - in 2007, the number rose to 15.4 times). Almost every year since I was aged 10 I have watched the very rich get richer. So there is less for most people, especially the poorest. The table shows how inequality has grown in some rich countries, but other countries have chosen to keep it lower.

Greed of the rich worldwide

At the start of the last century, almost everywhere in the world, the richest one per cent received between 10 and 30 per cent of all the personal income. The richest people change eg. in China from feudal lords to communist officials (and their friends); in India from the Raj to local businesspeople (and the most corrupt politicians). But there is always a top one per cent.

From 1900 to 1960, nearly all countries became more equal. It is a good way to see inequality by looking at what percentage the top 1% earn, and how rich people behave. The real problem is rich people being greedy, not poor people being lazy. In the past, people have looked at the poor as the main problem – now academics believe that it is more important to look at the rich.

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In 1980, in nearly all countries, the top 1% earnt less than 10 per cent. But by 2010, there was a lot more inequality.

Most rich countries of the world still have about the same level of equality that Canada, the US and the UK had when they were at their most equal. It is much easier to treat other people equality when there is more equality around. Then you do not have to be a saint to not cheat. It is easier to behave well when you are all more equal. And we have known this for many centuries. This led to what the US Declaration of Independence said about the right to be equal, healthy, free and happy:

‘We hold these truths to be self-evident, that all men [sic] are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.’

US Declaration of Independence, 1776

Today, on the US House of Representatives website, they say how great it is to have more equality:

‘The House’s first African-American member was elected in 1870. The first Hispanic member took office in 1877, the first woman member in 1917, the first Asian-American member in 1957, and the first African-American woman member in 1969. In 2007, Representative Nancy Pelosi of California was elected as the first woman Speaker of the House.’

They do not say it is good that we have lost equality. They will add the 2008 election of Barack Obama to that list, but probably not the election of Donald Trump. Progress never goes in a straight line.

We often win more equality after problems. In the future, people might ask why we didn’t think about the rights of children more, or people at the end of life, prisoners of war, criminals, animals, nature, or of future generations and their rights to the earth, or of other groups we haven’t thought about yet. If we do something now, people in the future might say we were living in the years when things changed and that we helped the change.

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Poverty wages in the world’s biggest economy. Cooks, cashiers and other minimum-wage earners join anti-Trump activists on a march for an increase in the minimum wage during a ‘March on McDonald’s’ in Chicago, Illinois in May 2017. © Frank Polich / Reuters

Where nothing can change wealth and poverty

If we are unlucky to live in unequal countries, but lucky to live in the rich world, we have to remember the equality of before the 1980s. When people were more equal in the US, more people found it easier to stay married to someone they loved, to find a job they liked and to stay longer at school than their parents. It was similar in Britain, but Britain is now almost as unequal as the US and, between 2011 and 2015, there were tens of billions of cuts to the public sector, which affected poorer people. There will be more cuts in the future.

Then, in 2016, a small majority in the UK voted to leave the European Union and in the US a minority voted in President Trump. Reports say both events are linked to the very high rates of economic inequality. We can see high economic inequality in the high inequality between men and women, by race and by class and other ways.

In the US today, there is a lot more inequality between white households and black or Hispanic households.

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This increase in inequality in wealth began before the economic crash of 2008, but got worse afterwards. The top charts above shows that, by 2009, the average white family had 19 times more wealth than the average black family.

The average wealth of all black households in the US was only $5,677 in 2009. In 2005, it had been $12,124. The housing-market crash affected black families a lot. And also Hispanics: their average wealth fell from $18,359 per household in 2005 to only $6,325 by 2009. This is a very big decrease, over a short time, for millions of poorer people.

But the wealth of the average US white family decreased less: from $134,992 in 2005 to $113,149 in 2009. Most white families are not that rich – (the average is higher because of a few very rich people) – but the average white family was still much richer than the average black or Hispanic family. It’s not a good feeling to be poor in the richest country on earth.

The ‘American Dream’ is based on the idea that anyone poor can become rich. But ‘social mobility’ is very low in all the world’s most unequal rich countries. There, the income of parents is really important to decide how much you will probably earn in the future. It is not difficult to understand why. Rich parents usually help their children, pay for them to go to better schools, or live in areas where the teachers are not so stressed because they have to teach fewer children experiencing extreme poverty. These economically unequal societies are also a lot more divided.

But social mobility is high in more economically equitable countries because in those countries children can get more similar opportunities in education and work. More equal countries are also less divided socially. Parents worry less about who their children mix with and what job they will do, because how much someone earns in not so important. The rich are less rich and the poor are less poor. So everyone is freer to do the job they want.

Equality: Change has started

Today even rightwing politicians sometimes say they want to increase economic equality. They often say they worry about people who are left behind, but maybe they just want votes. This shows that people accept that we need to change. Politicians before them said we should encourage people to get richer (and that this would be good for everyone). But now, even people who increase inequality say they are against it.

Maybe things are changing now to more economic equality, but we need to make the reasons clearer – or rightwing politicians will stop it. They will say they are against inequality but will quietly work for more inequality.

The case for more equality is not just the opposite of the case against income and wealth inequality. If we have more equality, we get many positive effects on a society; we can call this ‘the equality effect’. More economic equality makes us all less stupid, less afraid and more satisfied with life. It might more positive effects too. We are not sure because we have lived with so much inequality for so long that we can’t be sure of everything that is possible when we finally treat each other with economic respect.

There is so much evidence of the effect of this positive equality now. But the politicians, and the people who choose them have not yet understood the message. We all need to tell them.

NOW READ THE ORIGINAL: https://newint.org/features/2017/07/01/equality-effect

(This article has been simplified so the words, text structure and quotes may have changed).