How much is wealth inequality to blame for society’s ills? BTW NZ is relatively unequal

One of the earliest ideas behind BigCake was that wealth is relative – if NZ wasn’t becoming less wealthy (or if you like, poorer) compared to the nations we usually liked to rate ourselves against, then no worries, no need to catch Australia by 2025.

A slightly newer idea was that wealth alone wasn’t a great way to measure how we’re doing as a country. A more accurate state of the nation would have to include life style factors such as the environment, education, health etc.

Economic growth is a means to an end, not just an end. And the end?…maybe just being happy.

And just arrived on the BigCake agenda is equality, mostly based on the book “The spirit level – Why equality is better for everyone”.

The guts of this book is that wealth inequality is tearing some Western societies apart. The greater the difference between rich and poor, the greater the problems such as crime, obesity, smoking, drinking…

The scary thing here is that NZ, relative to many Western countries, is a very unequal society.

Of the 23 nations the authors look at, NZ has the 6th highest income gap – as measured by the difference between the richest 20% of citizens and the poorest 20%. Worse than us were: Australia, UK, Portugal, the US and Singapore (with the biggest difference).

The book’s big weapon is a series of graphs that show the relationship between income inequality and a bunch of ‘bads’ such as health problems and social issues. (For the wonks, the graphs have regression lines). Basically countries with high levels of inequality are likely to have high incidences of health and social problems.

And mostly this is true of NZ.

Of course the opposite is true also –countries with low levels of inequality (such as Japan and the Scandinavian countries) enjoy better health and so on.

A lot of the time the ‘bads’ of the poor get dismissed as the result of poor housing, poor diets etc, so fix these and you’ll fix the big issues.

The challenging bit of “The spirit level” is the claim that this won’t work because they are symptoms not causes. “The problems in rich countries are not caused by society not being rich enough…but by the scale of material differences between people within each society being too big. What matters is where we stand in relation to others in our society.”

What corrodes society is high levels of inequality. The active ingredient at work here is the way we humans rate and compare ourselves. The thing that causes us greatest stress is being evaluated by others – what we wear, where we live, what cars we drive…

And how we measure up in these tests mostly depends on how much money we have.

As theBigCake moniker implies, I’m not much into a redistributive fix, but this is food for thought.

Anyway, still working my way through the book.

Expect more posts on inequality.