Are We Very Rich and Very Poor?

The Spirit Level” (Penguin Books, 2010)


Chris gave us this very interesting book, which looks at income inequality in different countries. It presents two main facts.


First, more wealth no longer means more well-being. Richer countries are not happier or healthier than poorer first-world countries. For the first time in history, poor people are fatter than rich people.


Second, the more unequal the pay structure, the less well the society. Income inequality varies from 4:1 (Scandinavia, Japan) to nearly 10:1 (UK, USA), comparing the richest and poorest 20% of each country. Crime, teen pregnancies, drug abuse, obesity, and (perhaps) mental illness are least frequent in Scandinavia and max in UK/USA. For all these Pearson's r is about 0.7, which means that about half the variance is related to inequality.


Life expectancy, murder rates, education, also show a (smaller) relation to inequality (r=0.5).


The book is flawed by two errors (committed on almost every page). The authors believe that “All men are equal”. They also assume that to co-vary proves that one CAUSES the other. Both errors are nicely illustrated in the conviction that day-care is good for toddlers, because they more often grow up to attend university. ... But the facts are still fascinating.


Surveys show that people in all countries dislike inequality and would prefer an equal society – even rich people feel this way.


The authors note that, over the past 2,000 years, human societies have steadily become more equal, from kings to democracy. Sadly, they do not see any connection between this and a world-shaking event 2,000 years ago, despite the fact that Christians have been at the forefront of just about every improvement – slavery, universal franchise, justice, education, health-care, welfare, women's rights, children's rights, etc.


The cause of inequality is not discussed, sadly. (Greed? Fear?) The authors note societies become more equal in war-time (UK, Japan) and in financial depressions (USA, twice). Certain powerful individuals have pushed their nation to greater equality (Hansson in Sweden, Bismarck in Germany). The threat of communism galvanized governments towards greater equality (notably in Singapore, Hong Kong, Taiwan, Korea). Conversely, the fall of communism was accompanied by loss of trade union power everywhere, and greater inequality.


Even individual modern politicians make a big difference. Bush and Reagan increased inequality in the US, while Clinton and Carter reduced it. The same was true in Britain under Thatcher, compared to Blair and Brown.


And what is the remedy? How can we make our society less unequal? The authors have only one suggestion – but quite a good one. Concessions and tax-breaks can encourage industries to adopt the “employee-ownership” model, where employees not only share profits, but have some say in management. This model seems to work well, be free from the malaise that afflicts government-owned corporations, and promote more equal salaries.


We need more remedies! All suggestions welcome. Tony, 2012