Economists ought to be very careful what they say about inequality

Keith Hudson

Sam Bowman is the Deputy Director of the Adam Smith Institute (many of whose economic policies I agree with) but he has written a most astonishing blog in the ASI’s posting of today.  It’s entitled “The case against caring about inequality at all”.

Now that’s ominous enough.  Look now at what he’s written as his first paragraph in an attempt to make himself entirely clear:

“Readers of this blog will probably not need convincing that inequality is not something to worry about.   We’re more interested in reducing absolute poverty. If you become £100 richer, and I become £50 richer, I say that’s a good thing. But because we’ve become less equal, someone who is concerned with inequality alone would not.” [KH: my emphasis]

In other words, Dr Bowman is quite happy about relative inequality — so long as absolute inequality doesn’t exist — meaning that the people at the bottom are not literally starving to death.

But what about the position of the poor in England, America and quite a number of other advanced countries where the legally-defined poor can even afford television, microwave cookers, washing machines, subsidised child care nurseries and, in many cases a car?  Dr Bowman is, apparently, quite happy about this.

Well, he may be happy — but then he isn’t a politician, is he? — only an economist.  If he were a politician he would be very worried indeed because people who are only relatively poor, and not absolutely poor, have been known to walk down the street and take over the government.  The Rose Revolution in Georgia (2003) is a recent demonstration of that, and a similar revolution could happen in Greece at any time from now onwards.  (In fact, people who are abolutely poor — that is, starving — are totally unable to walk down the street because they don’t have enough food and therefore not enough energy even to walk.

The relatively poor people of France walked down the street in 1789, took over the government and, in due course, after much guillotining, produced such social and political chaos in every sector of the counry that they needed Naopleon Bonaparte to come along and restore all sorts of civilized codes of practice that gave France a chance of becoming a sensible country again.  He didn’t quite succeed actually because the Bourbon royalty resumed after Wellington defeated him and began to plunge the country into chaos again — although this time not anywhere near as badly as before because Napoleon’s reforms had been extraordinarily constructive.

Dr Bowman ought to read some elementary biology.  Yes, there will always be inequality of abilities.  It’s also reasonable to say that there will always be inequality of earnings.  But what the evolution of man has always been about is that someone who is born poor should not have to remain there.  People of ability — or born with the potential to gain high skills — should have the opportunity to rise through the social ranks to the top, if that’s what they want to do.

However, as the large Oxford University social survey team under Prof Erzsebet Bukodi’s supervision has recently shown, social mobility in this country [as it is in America] has been declining for the past 50 years.  Somebody born poor today has only half the chance of rising to the top of the social-economic heap than 50 years ago.  Some of those born poor are not exactly the sharpest tools in the box because their parents weren’t very bright either,  but many babies born poor are quite as bright as those who are born in the highest social circles (because of the random mixing of genes) but, because of the divisive structure of our society, are held back  by poor schooling.

And this situation, as any politician who has read any history books at all, knows that if the richer part of society can’t afford to look after the poorer part any longer — or decided not to — then this will only lead to either revolution or economic collapse sooner or later.  So those who attempt to advise politicians, particularly economists such as Dr Bowman, ought to be more careful in what they say.  Yes, inequality will always be with us because of the natural distribution of ability,  but relative inequality will lead to trouble if it becomes extreme. Today, most young people can’t afford to  buy or rent a decent house to raise a family in.  It’s not yet extreme but it’s getting that way.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s