For instance, one of the major drivers of social upheaval is large-scale immigration. Winston Peters uses this fact to good effect, while ignoring all the benefits of immigration. One of those benefits is that immigrants are often prepared to start their lives in a new country in a very low-paid career. The very availability of low-wage immigrant workers holds down low wages while increasing productivity, thus increasing the apparent income gap. Large income gap; social upheaval. Must be income inequality that is causing this, right?

Another hidden driver is overall affluence. In countries such as America and Singapore, the large wage gap is driven by the fact that the wealthy are, in fact, mega-wealthy, increasing the income gap. However, a cursory glance at some of the graphs in The Spirit Level would show you that Singapore does extremely well in social metrics but the US does very badly. This should immediately suggest that there is much more to the story than income disparities.

The most obvious thing is the heterogenous nature of the nations that do badly in social metrics and the homogenous nature of those that do well. Japan (low income gap) and Singapore (high income gap) have relatively similar societies (yes, I know I have offended both countries by saying that!), but their social metrics are quite similar. Instead of income gaps, it seems much more likely that a multicultural society experiences considerably more strain on it than a monocultural one. This would seem like a self-evident and very obvious conclusion. It does not mean that multiculturalism is necessarily bad, but it does mean that the benefits of multiculturalism has a downside. And the largest downside occurs when the income gap accentuates the cultural divide. Adding racial and cultural differences to large gaps in income is a dangerous mix.

Social upheaval itself is a driver for income disparities. Large scale immigration has already been mentioned, but welfarism actually drives income disparity by maintaining a subset of the population dependent on state handouts. No government can take sufficient money away from the “wealthy” (more likely the well-off) in order to elevate the poor in this way. Such a government would normally be voted out at the next election. Lindsay Mitchell points out that counting welfare as “income” distorts the wage gap even further as this money is not earned in employment.

Some homogenous countries such as Denmark may tolerate very high tax rates which contributes to their low level of income inequality, but this is a function of the cohesive nature of their society, rather than a cause of it. Tapu Misa is looking at the problem from the wrong angle. Create a cohesive society and you may reduce the income gap. Attempting to reduce the gap in a non-cohesive society will simply cause massive resentment.

The Spirit Level attempts to argue that what is important is not growth but equality. This is a conclusion that can only be reached by a person looking at First World data. Clearly the authors are not talking about the uniform poverty of the world’s poorest nations (though they might be tempted to argue that there is massive inequality here – but this is not measurable on standard metrics such as GINI).  Unfortunately their conclusions fall down in a number of areas, even on First World data alone.

If you look at the growth of nations over time, you will clearly see that growth improves social metrics in nearly all areas. In those areas, such as mental health, where growth appears to make the metric worse, this is usually a function of new interventions available, rather than a direct effect (in the case of mental health, it is because we are better able to diagnose and treat, rather than an actual increase in disease). In addition, a simple examination of standards of living over time will show that, regardless of the size of the income gap, the poor are far better off today than they were 30 years ago. For a clincher argument, simply compare the standard of living available to a person in New Zealand on the average New Zealand wage to the standard of living available to an person in the US on the American average wage. Prosperity has its perks.

To advocate equality over growth is to say that the pie is static and must be divided equally. This is to ignore everything that we have learned over the past century or so about how to make the pie bigger. It is to call Adam Smith a liar when his theory (most of it anyway) has been demonstrated empirically on thousands of occasions. It also flies in the face of sensible thought.

I am a doctor. I studied hard for seven years, forgoing income and racking up debt, to become one. I then had to gain experience, working 70-80 hour weeks for many years before I was ready to start my own practice. To suggest that I do not deserve my high income is, frankly, insulting. To suggest that my high income is somehow an exploitation of the poor and is damaging to the fabric of society is purest drivel. Income disparity is how we mark achievement and  scarcity value. Without it we have nothing to strive for and no reason to excel.

Mediocrity will be our epitaph.

Related posts:

1. Equals Zero
2. Unequal Data
3. Equal Rates

The book is well reviewed by David Runciman, who points out that the book may be merely demonstrating average improvement, rather than overall improvement (i.e. increasing equality may only improve the lot of the low-income group, improving the average). There is also the problem of comparing countries who may collect data in very different ways. The book does get over this problem somewhat by demonstrating a similar correlation amongst US states, although I note that the scatter in the US state graphs is much broader. I also noticed that some of the international graphs have fewer countries than others and I wonder if the data was limited to those countries or whether outlying data was removed (I have not read the book, only seen the graphs). There is also the common question as to whether this correlation represents causation (viz. does inequality cause social and health problems or does the social construction of a nation lead to inequality and social and health problems?)

We already know that inequality is not the only thing that matters when it comes to health parameters. There is a well-established link between wealth as measured by GDP per capita and longevity. Clearly, the wealth of a country matters far more than the equality of income. The people of Zimbabwe are almost universally poor and therefore have great equality of income. They are also dying of malnutrition and have a life expectancy of half that of New Zealanders. Equality of income only becomes meaningful when a nation is prosperous enough to be concerned about wellbeing as opposed to mere survival.

I have not read the book, so this is not meant to be a criticism of the material, simply a caveat on drawing overly enthusiastic conclusions from it. And on that note, I could extend the same caution to the UNDP report. Metiria Turei should have read the footnotes of the table she was eagerly using:

Because the underlying household surveys differ in method and type of data collected, cross-country comparisons should be made with caution as the the distribution data are not strictly comparable across countries.

So gleefully declaring that we are the sixth worse in income equality is essentially completely meaningless. Worse still, Turei is apparently using the Gini coefficient to get that figure and I don’t think she quite knows what it means. The Gini coefficient is a measure of distribution of inequality, rather than plain inequality, with 0 meaning a perfect, straight-line distribution and 100 meaning, essentially, rich and poor people only and no middle class. New Zealand’s score of 36.2 is actually quite reasonable and denotes a healthy middle class. It is also very far from the bottom of the table – it is only the sixth “worst” in the “Very High Human Development” section. It is also no accident that the countries with the lowest Gini scores are socialist havens with a large middle class.

Finally, the data used in the UNDP table is based on 2007 figures. This means that anything disagreeable on that table can be laid directly at the door of the previous Labour government. This may explain why the Greens are leading the charge on this one.

Related posts:

1. Equal Blights
2. Equals Zero
3. Give Me a Phone Where the Data Doth Roam…

AdamSmith1922 at Inquiring Mind posted on the nomination of Sonia Sotomayor for the supreme court and linked to an article by Clive Crook. Crook writes about one of the more controversial judgements of Ms. Sotomayor and touches on the subject of affirmative action. The article concludes:

Pollsters at Quinnipiac University found that voters disagreed with Ms Sotomayor’s ruling in the firemen case by 71 per cent to 19 per cent. By margins of three to one, voters oppose racial preferences in public and private sector hiring. “Whether it’s a belief that the statute of limitations on past wrongs has run out or economic pressures on workers, programmes that supporters call affirmative action and opponents label racial preferences are unpopular with most American voters,” said one of the polling team. Whatever you call them, it’s time to roll them back.

I have heard that sentiment expressed in many situations both here and in South Africa, where much bigger disparities lie. To my mind, it reveals the fundamental problem with all forms of affirmative action – the question of when it should cease.

Affirmative action is there to correct a wrong. A wrong that has usually been perpetrated by historical, institutional racism. But affirmative action is, in itself, institutional racism,  and cannot be supported by society in the long term. It is therefore essential that affirmative action has some sort of goal and that that goal is reasonably achievable.

It is, of course, the “reasonably achievable” part that we have such difficulty with. Take Maori education, for instance. Dr. Sharples rightly points out that only 7.1% of Maori  (as opposed to 17.6% of europeans ) have bachelors degrees, hence his original suggestion of open access to university. Yet the number of Maoris with degrees would certainly not increase to 17.6%, simply because there is no racial discrimination in the selection process for university. The issues causing the lower levels of tertiary education are happening well before the university level. Affirmative action in this case would merely extend this form of institutionalised racism with no prospect of achieving the goal set for it. It is exactly this sort of issue that raises the ire of the average Kiwi as they perceive it’s innate unfairness and discrimination.

This is not to suggest that there is no inequality in our society, nor is it to suggest that there are no past wrongs to be righted. But it is necessary to recognise that affirmative action is blunt tool when it attempts to right these things beyond the point where discrimination is eliminated from a society. Once a society has moved beyond discrimination as a limiting factor, furtherance of discrimination using affirmative action techniques is invariably perceived as unfair. The lesson behind the resonance of Don Brash’s Orewa speech is not that Pakeha are inherently racist, despite what the left may wish to portray, it is that affirmative action is inherently racist and Kiwis, white and brown, instinctively understand that.

The question Dr Sharples should really be looking at is what can be done to help Maori achieve equality on their own merits, because nothing less will suffice. Affirmative action can provide some immediate redress, but is a solution that soon loses its utility and quickly generates division. Government handouts do little more than plaster over the gaps between the two peoples and can seriously demotivate the struggling culture. The only lasting solutions are generated within a culture not for a culture.

Sotomayor thinks that equality will be achieved when equitable numbers of black people are employed in all walks of life. That is simply not true. History shows that equality is achieved when it does not matter who is employed where or who has what. America is a long way from that (witness the catharsis experienced because a black man is President of the US). New Zealand is a little closer to that ideal. It seems to me to be very silly to squander that hard-won egalitarianism  on a new set of privileges for the Maori people.

Don’t misunderstand me here. I am not saying that all the wrongs of the past have been redressed, or that there is no inequality between Maori and Pakeha. Clearly, there is. I am saying that there is little that Pakeha can do to address this and attempting to legislate equality is doomed to fail. It is now up to Maori to find their own solutions to uplift themselves. If Pakeha can contribute to this uplifting, then they shall. But that contribution should not be forced or legislated. The only way to achieve a true equal society is through a proper partnership – and a partnership always requires two willing sides. The only way a partnership can survive is if each participant considers the other worthy of trust and worthy of investment of time and energy. The partnership between Maori and Pakeha still has some way to go to attain this.

“Can two walk together unless they be agreed?” Amos 3:3

Related posts:

1. University Access
2. Core Belief
3. The Blight of Racism

Now, I too find the idea of inequality of pay for women reprehensible. If a woman is doing the same work as a man, it stands to reason that she should be paid the same. I have already blogged here about how gender discrimination in pay scales often reflects other things rather than actual pay-scale differences. Having said, that, if there really is a proper difference in pay scales, then this is something that should be corrected immediately as this is the right thing to do. In this respect, I think that Tony Ryall needs to thinks again – this is not an area that we can morally save money. 

Of course, the immediate question that springs to mind is: After nine years of Labour government, six of them with large surpluses, why has this inequality not been fixed long ago?

We await your answer with great anticipation, Mr. Goff.

Related posts:

1. Cold Periphery
2. Equal Blights
3. Spam Journalism #44