How bad is social inequality?

  How Bad is Social Inequality?

       Paul Johnson (director of  the 'Institute for Fiscal Studies') gave a talk at Clare College, Cambridge, on Thursday 2nd May 2024, titled:

 "Inequalities: what they are, why they matter, and how to address them". 

I was disappointed. I did not think he showed at all clearly why inequalities are bad. And he provided few ideas on how to sort them. 

He presented many inequalities; of income, education, wealth, health, inheritance, ethnicity, gender, geography. And he showed correlations; the unhealthy are poor, and the poor are unhealthy. But he was neither curious nor analytical about the causes of these inequalities, and their correlations. He seemed to assume a mechanism – the usual suspects; poor people are badly educated, are sick, die young and live in the north. It seemed to me insufficiently analytic; more like journalism than academia. And he scarcely touched on remedies.

It is not self-evident to me that inequality itself is a 'bad thing'. Some inequality could be called variety. Some people are tall, some short, some fast, others slow, some numerate others literate. 

Some inequality may be by choice. Some people may choose to live on a croft on Raasay, keep a cow and fish for lobsters. Some seek paid work, others may choose to remain unemployed in the north east of England, preferring that life to any alternative that they can imagine. After all, I do not want to make money on the Stock Market, nor by flying planes, nor by cutting people open. We should beware of making choices for other people. 

We are not all born equal. Inequality is inevitable. It can often seem 'unfair', and that unfairness can be painful to contemplate. Our idealism feels let down. Some people feel we have an inherent right to two legs, etc.; and that society has a duty to level up. I do not. But we do have an opportunity to correct the oversights of providence. Inequality can be mitigated, but not abolished. 

What, then, is positively bad for society about this God-given inequality, and how far should we go to lessen it? Does inequality simply indicate a wrong, or does it actually cause damage? Does it indicate cruelty; or actively breed indifference; or lead to bad government?

I believe that great disparity of wealth is bad for society in two different ways. The existence of very poor people dehumanises us. Their poverty hurts and rebukes us, unless we look away.  The very rich can also offend by causing envy in the less fortunate, as man is susceptible to envy. But envy alone is not enough reason to dispossess the rich. 

We are beginning to see how the very rich can cause positive harm. They can be hard to control. They can corrupt. Money confers power in so many ways. We are careful to give each adult an equal vote, but pay little attention to the fact that some voters can deploy a thousand or a million times the resource of the average voter. We are governed by the rich, as well as guided; we buy their newspapers, and watch their television channels. 

In particular, excessive wealth provides excessive means of making more wealth. Without explicit limits, the situation is mathematically explosive. Most people will use most of their resource most of the time. A billionaire will not; his wealth does not trickle down, significantly, to his hairdresser, or butler; it is salted away for his heirs. An inheritance tax (like the feudal 'fee') is essential. Unspent wealth should revert to the state. This has been said many times before. 

At a more mundane level, we should look for action points? Perhaps identify a metric that would indicate where state interference with the free market could be beneficially applied – for example we could monitor 'the increase in GCSE grades per GB£ spent, on the grounds that a pound spent in Ashington, Northumberland, would yield more marginal benefit than a pound spent in Haslemere, Surrey. Perhaps implement a focussed improvement of the transport infrastructure, e.g. in areas remote from London?

I was hoping Paul Johnson would have thought himself into such territory. He must be well informed on all aspects of taxation, and could, I am sure, make a significant contribution. I hope he can be encouraged to do so.

Sincerely, Ian West

(See also my post of 12 Mar 2012 –– "Taxing the Wealthy")