‘why greater equality makes societies stronger’ richard wilkinson and kate pickett, bestselling...
TRANSCRIPT
What World Leaders are saying…
Income inequality is the “defining challenge of our time”. “…rising inequality and declining mobility are also bad for our families and social cohesion – we…trust our institutions less (and) trust each other less when there’s greater inequality. And greater inequality is associated with less mobility between generations.” President Barak Obama, 4th Dec 2013
“Inequality is the root of social ills.” Pope Francis, 24th Nov 2013
“…the economics profession (has) downplayed inequality for too long. Now all of us have a better understanding that a more equal distribution of income allows for more economic stability, more sustained economic growth, and healthier societies with stronger bonds of cohesion and trust.” Christine Lagarde, Director, IMF, 23rd Jan 2013
“Social and economic inequalities can tear the social fabric, undermine social cohesion and prevent nations from thriving. Inequality can breed crime, disease and environmental degradation and hamper economic growth.” Ban Ki-Moon, UN Secretary General, 9th July 2013
Why Greater Equality Makes Societies Stronger
Pretoria, June 2015
Richard Wilkinson and Kate PickettProfessors of Social Epidemiology
A lecture in three parts:-
• How and why large income inequalities damage us all
• The relevance of greater equality to achieving sustainability
• What can be done to reduce inequality
4Bagehot, On equality. The Economist, 19 Aug 2010
Social Relations
• Child conflict• Homicide• Imprisonment• Social capital• Trust
In summary... bigger income gaps lead to deteriorations in:-
Human Capital
• Child wellbeing• High school drop outs• Math & literacy scores• Social mobility• Teenage births
Health
• Drug abuse• Infant mortality• Life expectancy• Mental illness • Obesity
Income per head and life expectancy: rich and poor countries
Source: Wilkinson & Pickett, The Spirit Level (2009)
National income per person ($)
‘‘Cross-country data show almost no relation between changes in life expectancy and economic growth over 10, 20, or 40-year time periods between 1960 and 2000. Many countries have shown remarkable improvements in health with little or no economic growth...’’
Cutler D, Deaton A, Lleras-Muney A. The Determinants of Mortality. J Economic Perspectives 2006; 20: 97–120.
Health is related to income differences within rich societies but not to those between them
Source: Wilkinson & Pickett, The Spirit Level (2009)
Least deprived
Most deprived
Within societies
www.equalitytrust.org.ukWilkinson & Pickett, The Spirit Level
Neither health nor social problems are related to national income per head
Index of: • Life expectancy• Math & Literacy
• Infant mortality• Homicides• Imprisonment• Teenage births • Trust• Obesity• Mental illness
– incl. drug & alcohol addiction
• Social mobility
Ind
ex o
f h
ealt
h a
nd
so
cial
pro
ble
ms
Wilkinson & Pickett, The Spirit Level
Index of: • Life expectancy• Math & Literacy
• Infant mortality• Homicides• Imprisonment• Teenage births • Trust• Obesity• Mental illness
– incl. drug & alcohol addiction
• Social mobility
www.equalitytrust.org.uk
Health and social problems are worse in more unequal countries
Ind
ex o
f h
ealt
h a
nd
so
cial
pro
ble
ms
3.7 3.94.3 4.6 4.8
5.2 5.3 5.6 5.6 5.6 5.76.1 6.2
6.7 6.8 6.87.2
8.5
9.7
4.0
8.0
7.0
3.4
Income gapsHow many times richer are the richest fifth than the poorest fifth?
Wilkinson & Pickett, The Spirit Level www.equalitytrust.org.uk
Inequality...How much richer are the richest 20% in each country than the poorest 20%?
www.equalitytrust.org.ukWilkinson & Pickett, The Spirit Level
Child well-being is better in more equal countries
Pickett & Wilkinson, Pediatrics, 2015, doi:10.1542/peds.2014-3549E
Wilkinson & Pickett, The Spirit Level www.equalitytrust.org.uk
People in more unequal countries trust each other less
Wilkinson & Pickett, The Spirit Level www.equalitytrust.org.uk
People in more unequal states of the USA trust each other less
Male mortality (25-64 yrs) and income inequality in US
states and Canadian provinces.
Source: Ross NA, Wolfson MC, Dunn JR, Berthelot JM, Kaplan GA, Lynch JW. British Medical Journal 2000;320:898-902
www.equalitytrust.org.ukWilkinson & Pickett, The Spirit Level
Mental illness is more common in more unequal societies
Homicide Rates in relation to Income Inequality
0
30
60
90
120
150
180
Income Inequality
Ho
mic
ide
s p
er
mill
ion
pe
op
le
Low High
Daly M, Wilson M, Vasdev S. Income inequality and homicide rates in Canada and the United States. Can J Crim 2001; 43: 219-36.
Homicide rates are higher in more unequal
US states and Canadian provinces USA states
Canadian provinces
www.equalitytrust.org.ukWilkinson & Pickett, The Spirit Level
Imprisonment rates are higher in more unequal countries
Income inequality and school bullying by 11-year-olds in 37 countries (r = .62)
Elgar FJ, Craig W, Boyce W, Morgan A, Vella-Zarb R. Income Inequality and School Bullying: Multilevel Study of Adolescents in 37 Countries. J. Adolescent Health 2009; 45(4): 351-359 .
Social Mobility is lower in countries with bigger income differences
27
Literacy Scores of 16-25 year olds by Parents' Education
-1.5
-1
-0.5
0
0.5
1
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Parents' Education (years)
Lit
era
cy
sc
ore
Sweden
Canada
United States
Source: Willms JD. 1997. Data from OECD Programme for International Student Assessment.
Relation between infant mortality and GNP p.c. at high, medium and low income inequality
Hales S, Howden-Chapman P, Salmond C, Woodward A, Mackenbach J.. Infant mortality, gross national product & income distribution. Lancet 1999;
354: 2047
Bigger material differences create bigger social distances and increase social class differentiation
Layte R, Whelan CT. Who Feels Inferior? A Test of the Status Anxiety Hypothesis of Social Inequalities in Health. European Sociological Review, 2014.
Status Anxiety across income deciles for high, medium and low inequality countries
Sta
tus
An
xiet
y
Income deciles
Societies with:-
High inequality
Medium inequality Low inequality
Two recent studies show that inequality increases conspicuous consumption
and consumerism
•People in more unequal areas of the USA are more likely to buy high status cars
•Data from internet searches shows that people in more unequal states are more likely to search for status goods
Source: Bowles S, Park Y. Economic Journal 2005; 115 (507): F397–F412. 2005.
Working hours are longer in more unequal countries
Iacoviello M. Household Debt and Income Inequality, 1963–2003. Journal of Money, Credit and Banking 2008;40(5):929-65.
Household Debt and Income Inequality USA
0
0.2
0.4
0.6
0.8
1
Other tasks
Tasks with ‘social evaluative threat’ (uncontrollable)
Co
rtis
ol
resp
on
se (e
ffec
t si
ze)
Dickerson SS, Kemeny ME. Acute stressors and cortisol responses. Psychological Bulletin 2004; 130(3): 355-91.
What kind of stressful tasks raise stress hormones most?
Stereotype Threat
The effect of caste identity on children's performance
Caste Unannounced
Caste Announced
0
1
2
3
4
5
6
High Caste
Low Caste
Num
ber
of m
azes
sol
ved
Source: Hoff K, Pandey P, World Bank Policy Research Working Paper 3351, June 2004
Robert Sapolsky, Neuro-anatomist at Stanford with a friend from the Serengeti
Johnson SL, Leedom LJ, Muhtadie L. The Dominance Behavioral System and Psychopathology: evidence from self-report, observational, and biological studies. Psychological Bulletin. 2012; 138(4): 692-743.
ABSTRACT: “We begin by describing psychological, social, and biological correlates of the Dominance Behavioral System. Extensive research suggests that externalizing disorders, mania proneness, and narcissistic traits are related to heightened dominance motivation and behaviors. Mania and narcissistic traits also appear related to inflated self-perceptions of power. Anxiety and depression are related to subordination and submissiveness, as well as a desire to avoid subordination. Models of the DBS have received support from research with humans and animals; from self-report, observational, and biological methods; and use of naturalistic and experimental paradigms.”
Messias E, Eaton WW, et al. . Economic grand rounds: Income inequality and depression
across the United States: an ecological study." Psychiatric Services, 2011; 62(7): 710-2.
Depression is more common in more unequal statesP
erce
nt
of
po
pu
lati
on
d
epre
ssed
in
pas
t 2
wee
ks
Income Inequality (Gini)
Loughnan S, et al. Economic Inequality is linked to biased self-perception. Psychological Science, 2011; 22: 1254
Self enhancement increases in more unequal societies
Inequality data from World Top Incomes DatabaseNarcissism data from Twenge JM, et al., Journal of Personality 2008; 76(4): 875-901.
Na
rcis
sim
Sco
re (
NP
I)
Rising Narcissism & Income Inequality in the USA
Reducing carbon emissions is seen as an unwelcome belt-tightening exercise…But it is an opportunity to increase the real quality of life for all of us
Wilkinson, Pickett, De Vogli. BMJ 2010; 341:1138-1140
CO2 emissions per head (tonnes)
Lif
e ex
pec
tan
cyLife expectancy and CO2 emissions per head
A Convenient Truth
•material standards are no longer critical determinants of wellbeing in the rich world
•but research on health and happiness shows that the quality of social relations and the social environment has become critical.
More equal countries recycle more waste
Source: Wilkinson & Pickett, The Spirit Level (2009)
Australia
France
Germany
Italy
Japan
Portugal
Spain
Sweden
Switzerland
UK
USA
Best
Worst
Re
cycl
ing
(a
vera
ge
ra
nk)
Low HighIncome Inequality
More Unequal Countries Emit More C02
From: Wilkinson RG, Pickett KE. The impact of income inequalities on sustainable development in London. A report written on behalf of The Equality Trust, commissioned by the London Sustainable Development Commission, 2010, http://www.londonsdc.org/lsdc/research.aspx.
Business leaders in more equal countries give a higher priority to complying with international environmental agreements
With permission from R De Vogli & D Gimeno
48
“Growth is a substitute for equality of income. So long as there is growth there is hope, and that makes large income differentials tolerable.” - Henry Wallich, former governor of the US Federal Reserve Bank and professor of economics at Yale.
But...if growth and equality are substitutes, then equality maybe a precondition for a steady-state economy.
% o
f a
ll in
co
me
ta
ken
by
ri
ch
es
t 1%
Data: Atkinson A, Piketty T, Saez E. Drawn by Acemoglu D, Robinson J, Why Nations Fail.
Changing share of all income taken by the
richest 1% USA
UK
Germany
SwedenNetherlandsFrance
Colin Gordon’s analysis of Historical Statistics for the US, unionstats.com, Piketty and Saez 2003, and World Top Incomes Database. Economic Policy Institute, Washington DC.
Trade Unions membership (% workforce) and Share of Income going to top 10% (USA, 1918-2008)
50
Countries with stronger Trade Unions are less unequal(data for 16 OECD countries 1966-1994)
Ineq
ualit
y (G
ini )
% of labour force in trade unions
Gustafsson B, Johansson M. In search for a smoking gun: what makes income inequality vary over time in different countries? LIS Working Paper 172; 1997.
Mishel L, Sabadish N. Economic Policy Institute Brief #331. Washington, May 2012
Changing ratio of CEO pay to average pay of production & non-supervisory workers in top 350 US companies
Between 1979-2007 the income of the:-Top 0.1% increased by 362%Top 1% increased by 156%Bottom 90% increased by17%
Pay differentials
• Pay ratios in British public sector usually between 1:10 and 1:20
• Average pay ratio in largest 100 UK companies 1:300
• Mondragon Cooperatives (employing 75,000) 1:6
• Swiss Referendum (Nov 2013) on limiting pay differentials to 1:12
Fairness Commissions Set up in 17 major UK cities to report on reducing income differences locally.
Living Wage CommissionChaired by the Archbishop of York. 1480 companies have become living wage employeers.The Scottish Government signed up today!
The Problem of Tax Havens
In 2005, the Tax Justice Network estimated that wealthy individuals may hold $11.5 trillion of wealth in off-shore tax havens. This is about a quarter of all global wealth, or about equal to the Gross National Product of the USA.
Tax havens handle (on paper) as much as half of all world trade and banking assets and a third of all foreign investment.
In 2010 the IMF estimated that the balance sheets of small island financial centres added up to $18 trillion (about 1/3 of world GDP)
In 2008 the US Government Accountability Office reported that 83 of the USA’s biggest 100 corporations had subsidiaries in tax havens.
The Tax Justice network said 99 of Europe’s largest 100 companies also used tax havens
34 tax havens, including Switzerland, Singapore, Cayman Islands and Jersey, reached agreement with OECD in 2014 to share information on bank accounts with national governments for tax purposes. (Operative from 2017)
13 other tax havens remained without agreement.
Plans were being drawn up for sanctions against non-compliant countries.
Brands owned by the ‘big ten’ food multinationals
Oxfam and www.behindthebrands.org
“And so, while the end-of-the-world scenario will be rife with unimaginable horrors, we believe that the pre-end
period will be filled with unprecedented opportunities for profit”
An impossible task?
Reducing CO2 emission and environmental damage while
business continues to maximise sales and consumers continue to
maximise incomes and consumption
61
Naomi KleinThis Changes Everything: capitalism
versus climate
Anti-social actions of multinational corporations
•Undemocratic concentrators of wealth and power•Maximising sales and consumption - throughput•Tax avoidance•Protecting profits against scientific evidence safeguarding the public interest (climate change, pharmaceuticals, tobacco, guns, pesticides, food standards etc.•Regulatory capture•Subverting the democratic process – buying politicians•Running rings round national governments
Trade Union Congress pamphlet, Workers on Board, on employee representation.
In 1960s most shares were owned by individuals with a longer term interest in a few companies. But…
“UK institutional investors… spread their investments across hundreds, if not thousands of companies, increasingly relying on short-term share trading to generated gains.” TUC Gen Sec Frances O’Grady:
“the shareholders of a large listed company will number in the thousands (or) tens of thousands. …it can be difficult for a company even to get full information on who owns their shares.” Janet Williamson (pamphlet author)
Economic democracy (employee owned companies, coops, mutuals)
•“turns companies from being pieces of property into communities”•reduces pay ratios within companies•transforms the experience of work•redistributes wealth & reduces unearned income•improves productivity •is more socially & environmentally responsible …Boards might include employee, community and consumer representatives
Employee Owned Companies in the UK
The number of employee owned companies has increased by 9% in each of the last three years (under a Conservative led coalition government)
Employee Owned Companies are on target to make up 10% of UK GNP by 2020.
How to expand the democratic sector (i.e. employee owned companies, coops, mutuals)
• Stronger legislation for employee representation on company boards (as in some EU countries)
• Government loans for employee buyouts
• Tax concessions for democratic businesses
• Take our custom to the democratic sector
• If each year 2% of company shares were transferred to an employee controlled trust, they would be majority shares holders in 25 years
Building a leisure society
•Richer countries should use increases in productivity to increase leisure rather than consumption.
•Just as greater inequality increases working hours and consumerism, greater equality will give us more leisure
•More time for friends, family and community will increase the real qualityof life
We can…
•Transform social relations and community life by increasing equality
•Transform experience of work by more democratising economic institutions
•use productivity gains to increase leisure rather than income by decreasing inequality
•Raise the quality of life by meeting social needs
•Achieve sustainability
71
http://www.equalitytrust.org.uk
For more information:
… a book
and a website…
http://www.fabians.org.uk/publications/a-convenient-truth/
The contextual effect of income inequality in the 50 states of the USA is stronger for death rates with
steeper social gradients
Wilkinson & Pickett, American Journal of Public Health, 2008; 98(4): 699-704
r = -0.814; p = 0.004
“Take me as an example. I happen to have a talent for allocating capital. But my ability to use that talent is completely dependent on the society I was born into. If I'd been born into a tribe of hunters, this talent of mine would be pretty worthless. I can't run very fast. I'm not particularly strong. I'd probably end up as some wild animal's dinner.”
Warren Buffett ….to Barack Obama in 2006