Reflections on The Spirit Level
The Spirit Level: Why More Equal Societies Almost Always Do Better, by Richard Wilkinson and Kate Pickett, is an important book. It is not a huge tome, as one might expect from such a broad topic, weighing in at just 265 pages of text (including lots of figures mapping inequality against some health and social statistic, and some clever cartoons). That space, however, offers up a rich synthesis of empirical findings and some theorizing about how unequal societies – largely (except for the poorest countries) irrespective of per capita income – do worse on almost every important health and social indicator we might care about.
But first off, I need to once again question the title. In spite of the gravitas and policy importance of the subject matter, the Spirit Level just sounds kinda hokey, in a way that many people will never pick the book up. I hope I’m wrong about this, having been persuaded to pick it up (at the local library) after being mentioned by a number of people whose opinion I deeply respect. But there is NO discussion of “the spirit level” in the book. I could envision some text that would talk about the end of consumerism and materialism that inevitably leads to a higher form of consciousness (the spirit level) among us humans that reshapes the very foundations of how we think about and design economies – but in fact, I don’t think the word “spirit” appears in the text, even once (though perhaps for the best). So I’m left wondering if some publisher decided to change the title after the manuscript was accepted for publication, or whether the authors thought that the title should hang there to induce deep thoughts among readers.
That quibble aside, at least there is the subtitle, which gives us a very clear statement about what this book is about. Before getting into the hows and whys, it is worth summarizing the breadth of empirical findings, which typically are addressed as within-country inequality for the 50 richest countries in the world, and for the 50 US states, with the occasional time series. Inequality is negatively correlated with trust, women’s status, spending on foreign aid (ch. 4); positively correlated with mental illness and drug use (ch. 5); negatively with life expectancy and infant mortality (ch. 6); positively with obesity (ch. 7); negatively with average math and literacy scores, and positively with high school drop out rates (ch 8); positively with teenage birth rates (ch 9), homicides, children’s experience of conflict, perceptions of how well one would do in a fist fight (ch. 10), and imprisonment rates (ch. 11); and negatively with social mobility (ch. 12).
Putting it together, they create an index of social and health problems, which is positively correlated with inequality. The Nordic countries and Japan almost always appear at the healthy end of the scale, while the USA (by a large margin) is the worst, followed by Portugal and the UK; Canada is middling. The same empirical relationship holds for US states, with new Hampshire, Minnesota, North Dakota and Vermont doing the best; Mississippi, Louisiana and Alabama the worst.
The authors consider a number of causality issues and competing explanations, but arrive at one key explanation for why inequality has this effect: social status. They write:
It’s hard to disregard social status because is comes so close to defining our worth and how much we are valued. To do well for yourself or to be successful is almost synonymous with moving up the social ladder. Higher status almost always carries connotations of being better, superior, more successful and more able. … [T]he further up the social ladder you are, the easier it becomes to feel a sense of pride, dignity and self-confidence. … Pride is the pleasure and shame the pain through which we are all socialized, so that we learn, from early childhood onwards, to behave in socially acceptable ways.
… Greater inequality seems to heighten people’s social evaluation anxieties by increasing the importance of social status. … If inequalities are bigger, so that some people seem to count for almost everything, and others for practically nothing, where each of us is placed becomes more important. Greater inequality is likely to be accompanied by increased status competition and increased status anxiety.
… Not only do large inequalities produce all of the problems associated with social differences and the divisive class prejudices which go with them, but, as later chapters show, it also weakens community life, reduces trust, and increases violence. (pp. 40-45)
That inequality should be reduced is inescapable, and polling suggests that people would like this (save for the very richest few percent). This is more than just the right thing to do morally, but is likely to produce a healthier economy and may indeed be a precondition for action on climate change. But because of the linkage to health and social problems, the book argues that reducing inequality would improve quality of life – most notably for the poorest, but due to “gradients” also for the richest – by much more than could be achieved through economic growth. The latter point builds on work on happiness and life satisfaction (Richard Layard’s excellent book, Happiness: Lessons from a New Science, is highly recommended, and he in turn gets the cover quote) that above a minimum amount of income, our happiness is determined by a range of other things like our health, education, the quality of our communities and family relationships.
How a radical reduction in inequality should be achieved is perhaps the weakest part of the book. The authors note that there are different routes, one of which involves large redistributive efforts through taxes, transfers and public services (the Nordic model); another is by achieving greater equity in incomes before taxes and transfers (Japan). Economists of social democratic persuasions have been more enamoured of the Nordic model, and generally make the argument to simply transfer resources to those who need them. I’m up for this, but I have always thought that it would be a superior outcome for the labour market to do more of the heavy lifting. Given the role of social status as stated above, this would seem to make sense, and such moves would be more difficult for a right-wing government to dismantle in a fury of spending cuts. The two strategies, of course, need not be mutually exclusive.
So, in the dying pages of the book, the authors cite greater unionization, reducing corporate power, and empowering the non-profit and cooperative sectors, with a big plug for worker ownership. There is clearly a lot more that could be said, but perhaps the authors figured they had already taken on enough. The point is that, having made the case for greater (though not necessarily perfect) equality, if we were to accept it as a fundamental plank of political strategy and public policy development, and focus our attention on what really would change the nature of the game, the authors will have made a substantial contribution to a better world.
I’m a huge fan of this book. Robert Reich recently picked up on the theme of inequality as instrumental in America’s economic collapse:
“…Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation’s total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America’s total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928—with 23.5 percent of the total.
“Each of America’s two biggest economic crashes occurred in the year immediately following these twin peaks—in 1929 and 2008. This is no mere coincidence. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don’t have enough purchasing power to buy what the economy is capable of producing. America’s median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class can boost its purchasing power is to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn’t pay their bills, and banks couldn’t collect.”
Reich contends that America’s income inequality dooms his country to a future of bubble economics.
Spirit Level is a truly important book. Yet the economic imbalance is not self-correcting. Surely income inequality is matched by political inequality bolstered by an ascendant right. Reversing the impact of the far right in our societies will be anything but easy. Take Iggy for example. The man is far more conservative than liberal and he’s dragged his party out on a limb to perch right next to Harper’s. I’m convinced the solutions lie in progressivism, something that’s been all but extinguished within the Liberal Party.
A method for bringing about greater economic equality would be to link the highest incomes within any organization to the lowest. Start, say, with a requirement that no-one can earn more than 500 times what any other employee can earn. Stipulate in the legislation that no-one is assumed to work more than 60 hours a week. Require an annual return on the hourly breakdown (including all bonuses, share options, etc.). The simple remedy for the rich at the top would be to pay the lowest more so that the ratio is not breached.
I would be interested in whether the least unequal societies are also those that have collective bargaining at the highest level. By that I mean, I wonder if the more equally societies are those in which collective bargaining is done at a more centralized level – across industry with organizations of employers – rather than at plant level. Japan appears to be a society in which collective bargaining is done at plant or enterprise level, but that is misleading because the bargaining is more like industry bargaining because a pattern is set. A preference for more centralized levels of collective bargaining may correlate with greater economic equality.
Marc: The book’s title has nothing to do with consciousness or spirit in that sense. A “spirit level” is a very common tool used by builders, carpenters asnd others to determine whether a given surface is level — horizontally or vertically. It is sometimes called a bubble level or carpenter’s level.
The authors were obviously mistaken in assuming that their metaphor to hand tools would be universally understood.
See http://en.wikipedia.org/wiki/Spirit_level
Thanks, Ian. I find the misinterpretation totally hilarious.
A quick note from one of the authors:
Sorry! We didn’t choose our book title: our UK publishers chose it, and our UK readership of course understands it; but our American publishers chose not to change it, nor did they use an image of a spirit level tool on the cover, hence the confusion. In foreign language translations, of which there are now 12, things get even more confusing. But we hope that the message of the book’s content is simple and straightforward in any language.
Best wishes, Kate
@ Ian @ Marc
That’s the right reference Ian, but it wasn’t actually the authors’ mistake – the publishers chose the title!
A number of researchers have noted difficulties with the book. You might want to look at:
(http://en.wikipedia.org/wiki/The_Spirit_Level:_Why_More_Equal_Societies_Almost_Always_Do_Better)
before concluding that the policy prescriptions in the books should be followed.
Marc I think you mischaracterize the Nordic model. Jonas Pontusson, Lane Kenworthy and many others who have looked at the comparative dynamics of income distribution emphasize that the relatively egalitarian distribution of wages produced by high union density and traditionally centralized bargaining goes a long way to achieving a high level of income equality, and reduces the redistributive task of t ve generous EI and child benefits but transfers to the working age population are not huge as a share of GDP compared to central European welfare states such as France and Germany, and the tax systems are not wildly progressive compared to eg Canada.
Here is the reference to Pontusson – a much needed social democratic prescription to cure the disease of inequality
Pontusson, Jonas. 2005. Inequality and Prosperity. Social Europe vs. Liberal America. Ithaca and London: Cornell University Press.
Andrew, thanks for the reference. Probably worth a blog post unto itself.
This post by Stephen Gordon notes that market inequalities in the Nordics are similar to Canada but they get more equality after taxes and transfers (and not counting public services):
http://worthwhile.typepad.com/worthwhile_canadian_initi/2007/08/cross-country-c.html
Those are gini’s, which tend to be more sensitive to the middle of the income distribution, so perhaps there is some action in the tails that is pertinent in this case.
I’ll have to dig further. However, there is no doubt that earnings inequality and the incidence of low pay in the Nordic countries are FAR lower than in North America even if the market ginis are comparable. (see OECD employment outlook 208 Table H.) I suspect that moving from the individual to the family level makes a difference and that the picture would look different using polarization measures like p90/p10.
Pontusson’s work is excellent and he is one of the few well respected social scientists who has not thrown in the towel on conflict based explanatory frameworks (It helps to be at Princeton).
His basic hypothesis is that union density has effects on redistribution not simply through collective bargaining but more importantly through the pressure they put on democratic institutions for redistributive programs. So Sweden for example can higher regressive taxation (flat taxes) but because of a strong social democratic party with strong unions backing them they have been able to ensure a more egalitarian redistribution of that tax revenue. A concise presentation of his argument can be found here:
Pontusson, Jonas. and Kwon, Hyeok Yong. “Power Resource Theory Revisited and Revised: Unions and Welfare Spending in OECD countries”, 2006.
One of the interesting trends in Sweden is the divisions that have opened up between white collar and blue collar unions and between domestic and export producing sectors. These divisions have placed strain on the degree of centralization in bargaining and thus on redistribution via collective bargaining. It has also opened up opportunities for the “bourgeois parties” (what they are called in Sweden –got to love it–) to exploit these divisions and undermine some of the consensus on the progressive redistribution of tax revenue in Sweden.
For a right social democratic (neoliberal) take on Sweden see:
Iversen, Torben. “Decentralization, Monetarism, and the Social Democratic Welfare State.” Unions, Employers, and Central Banks : Macroeconomic Coordination and Institutional Change in Social Market Economies. Eds. Torben Iversen, Jonas Pontusson and David W. Soskice. Cambridge; New York: Cambridge University Press, 2000. xvi, 339 p.
I flipped through my Pontusson. The data on individual earnings equality show huge differences between the Nordics and us. At the level of gross earnings at the household level, the Nordic gini is 34.9, significantly lower than that of Canada (39.6) This measure is driven not just by individual earnings but also by differences in employment (eg level of part time work) and by patterns of household formation. I may have overstated it in my first comment, but the key point that the Nordic model is based on wage equality and not just redistribution remains. And as Travis underlines, union power operates at the level of bargaining and the level of redistributive policy.
Galbraith’s “Culture of Contentment” makes some important points on the relationship between governing elites, those who actually vote and outcomes in terms of inequality.
Interesting too is that the book was written in the early 90’s, and yet mentions “too big to fail” several times in the early chapters. (And they say no one saw the economic crisis coming).