There’s no argument so bad that people won’t try to resurrect it again and again, especially when it’s one that is convenient to a certain worldview and a certain strain of political thought. One such claim is that inequality itself makes us all miserable, creates most of the problems in society, even starts to kill us all off.
It isn’t true. But here is that claim being made again, that inequality is what ails us all. It’s not, in fact, how much we’ve got that matters, it’s what we have in relation to what we might covet that others have. Having little isn’t the problem, others having more is. This time around, the book telling us all this is The Broken Ladder. It includes such hoary favorites as we’d all be better off if we were poorer and more equal, better off psychologically, and even physically healthier as a nation.
The problem with all of this is that we just had the same claims made a decade ago in a book called The Spirit Level. It just so happens that book is the source of much of the information in The Broken Ladder. That’s something of a real problem, because these claims were comprehensively debunked a decade ago. The best disproof of the claims came from a colleague of mine in London’s think-tank world, Chris Snowdon.
It simply isn’t true that societies with more inequality have worse social outcomes. The evidence that they do is created by being highly selective in which countries will be compared across which outcomes and influences. In many cases, the correlations run the other way. Societies where people are very much more equal, like Finland and Sweden, have high suicide rates among men (Not that I would then use that as an argument against social democracy, of course).
At which point, I must move away from fact and off into supposition. Why is it that this idea, that inequality is what ails us, is so popular? I assume it’s to deal with the problem that inequality is both a necessary precondition of economic growth and an outcome of it. If working hard, saving, and taking risks lead to the same outcome as not doing so, then fewer people will do any of the the three. The result of that will be economic stagnation. Growth also creates inequality, as some people luck out in that growing economy.
We also know that redistribution (taxing the successful to give to the poor) above some minimal amount reduces economic growth. Therefore, if you really don’t like inequality (and there are those who are morally affronted by it) then you’ve got to find some compelling reason why we should all be poorer but more equal. Thus the invention of the idea that really, deep down, we’re made poorer by that inequality.
Again, the problem with this argument is that it isn’t true. Inequality doesn’t kill us, poverty does. Having nothing makes us unhappy – others having more than us, not so much. Our being unequal isn’t what ails our society, despite the fact that many wish it were and tell us so repeatedly.
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
