We need to tackle the very top and bottom, and drop our preoccupation with the Gini coefficient and moralising about victimhood.by Paul Collier / April 23, 2015 / Leave a comment
Published in May 2015 issue of Prospect Magazine
Inequality has replaced house prices as a fashionable topic for discussion. But anyone looking for a serious treatment of the problem, rather than just a dinner party conversation, should turn to these books by eminent economists who have made the study of inequality their life’s work. They complement each other: Anthony Atkinson focuses on rising inequality in post-1980 Britain, while François Bourguignon analyses global inequality.
Both writers balance their diagnoses with concrete proposals for achieving a more equitable distribution of wealth and income. Bourguignon, a former Chief Economist at the World Bank who now teaches at the École des Hautes Études en Sciences Sociales in Paris, makes what is perhaps the most important point: that the same forces of economic globalisation that are rapidly reducing inequality between countries are increasing it within them. Atkinson, a professor at the London School of Economics who has a measure of inequality (the “Atkinson index”) named after him, laments the “turn to inequality” that occurred in the United Kingdom after 1980. However, globally during the same period we have seen a remarkable “turn to equality.” The inexorable rise in global inequality of the past two centuries has been reversed. So much so that the credible future dystopia is no longer Brave New World or 1984, it is Dubai—where the super-rich rub shoulders with the super-poor or, more accurately, have their shoulders rubbed by them.
Inequality is an emotive term for a slippery concept. A classic dispute is whether what matters is equality of outcomes or equality of opportunities. Looming technological changes may make these increasingly incompatible. But what struck me most forcibly from reading these analyses is that what economists mean by inequality (and what their various formulae measure) is not what most non-economists have in mind when they say that they are concerned about it. To achieve a significant reduction in inequality as measured by economists, incomes in the central range of the distribution must be compressed: bus drivers must become better off relative to headteachers. But what people actually worry about are the tails of the distribution: children without life chances and the undeserving super-rich. As Jonathan Haidt has recently argued in his book The Righteous Mind, modern social science is radically out of touch with popular morality.