October 13, 2013


The future of inequality (John McDermott, Financial Times)

"Life is better now than at almost any time in history", Angus Deaton writes in The Great Escape. The Princeton economist's account of health and wealth is a fundamentally positive story. Lives are longer, healthier, richer and more satisfying than ever before. To take one statistic from this compendium of progress: in every country in the world, infant and child mortality is lower than it was in 1950. On average, humankind is having a pretty good run.

Our incomplete flight from deprivation and early death is, however, more than a story of averages. Deaton's lucid book celebrates the riches brought by growth while judiciously explaining why some people are always "left behind". He draws a distinction between the inequalities that are opened up by advances in knowledge and those caused by flawed political systems. For it is humanity's lot that, ultimately, "inequality is the handmaiden of progress".

Does this matter? Yes. But inequality is a knotty subject. There is little agreement on what ought to be equal. Should it be a measurable outcome such as income or wealth; a hazier outcome such as power or freedom; or a vague aspiration such as "equality of opportunity"? It is often said that the world is becoming more unequal. But it is less than clear what is meant by that. As Deaton notes, income inequality between countries has grown over the past three centuries but it may now be narrowing between the world's people as a whole.

Regardless of the precise metrics, what matters most is the dynamics of inequality. Complete equality of income is neither practical nor desirable, but the consequences of inequality can be highly corrosive, as Deaton shows. He explores how it took a long time for humanity to acquire this problem. Ninety-five per cent of our time on earth has been spent as "egalitarian" hunter-gatherers. There is no clear evidence that agriculture marked a material advance; this only came definitively with the scientific and industrial revolutions.

And with them came the widespread inequalities that have marked the modern world. Deaton uses medical innovations as an example. The application of new knowledge, such as inoculation and germ theory, was first available to the rich before becoming cheaper and popular. In his telling, these material inequalities are temporary, justifiable side-effects of material progress.

Deaton adds that these differences did not narrow by chance. Politics matters. The implementation of germ theory required sanitation, which in turn "required action by public authorities, which required political agitation". A similar argument could be made concerning the bans on smoking in public places now common in Europe and North America. Functioning democracy helps ensure fewer people are "left behind".

Significantly, the reforms that conservatives propose to things like health care--Ryan/Wyden for instance--are universal and result in a lessening of inequality [or, at least, making "poverty" even more lucrative than it already is].

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Posted by at October 13, 2013 9:58 AM

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