Stumbling and Mumbling

Globalization and equality

Tom Miller points to evidence that globalization is increasing inequality, and asks what if anything the left can do to resist the tendency.
Plenty. A fantastic place to start is this paper (pdf) by the great Sam Bowles, called Does globalization preclude egalitarian redistribution?
There are (at least) five ways in which globalization is compatible with egalitarianism.
1. Egalitarian redistribution can attract inward investment by increasing the security of property rights. You get fewer riots, revolutions and less corruption in countries where workers are better off. Just look at FDI statistics. Latin America and sub-Saharan Africa get surprisingly little inward investment.
2. Spending on infrastructure, such as health and education, can attract inward investment by improving the quality of the workforce. For this reason, this paper (pdf) shows that there's a positive correlation in OECD countries between corporate tax rates and inward investment.
3. Higher wages can induce greater effort, thus allowing firms to save upon middle-managers who can extract rents at the expense of shareholders. "Supervisory labour input is strikingly lower in countries with more equal earnings distributions" says Bowles, pointing to Sweden and Japan.
I suspect a key mechanism here is trades unions rather than a minimium wage. Unions (at least in their traditional continental form) can help police workers and scrutinize or legitimate management.
4. A citizens' basic income can reduce poverty without blunting work incentives.
5. Globalization only prevents the high taxation of mobile factors of production. It doesn't stop the taxation of immobile factors like land. 
Certainly, there are many examples of how countries have successfully integrated into the global economy whilst having lowish inequality; think of Sweden, South Korea or Japan.

On hating the rich

As if to vindicate Ross Clark's claim that it's become fashionable to hate the rich, Polly Toynbee speaks of the "filthy rich."
Now, insofar as the term "left" has any meaning, I'm probably to the left of most people, including Polly. But I really don't like this development, for two reasons.
1. What matters is not whether someone is rich, but the source of that wealth.
I've no animosity at all to people who have got rich through free market forces - entrepreneurs (as distinct from bureaucratic CEOs, City folks, entertainers or sportsmen (unless of course they play for ManYoo, S****s or the money launderers).
Instead, I hate wealth that's either inherited - it's something for nothing that comes from opportunities not available to others - or is the result of the (ab)use of power. A middle manager who owes his £50,000 a year salary to hierarchy and rent-seeking offends me more than a trader who's made much more in competitive markets.
Herein lies something really weird. People like Polly and Harriet Harman support a government that has covered up a £1 billion bribe to a functionary of a tyranncial regime - and then speak the language of class hatred. This is just stinking hypocrisy.
2. You don't need to hate the rich to think they should pay more tax.
Take the "legitimate" rich. None of these are self-made. Instead, their fortune comes from the luck of being born in the right time and place. Wayne Rooney wouldn't have become a multi-millionaire 50 years ago, when even the best footballers faced a maximum wage of £20 a week. And Steve Jobs or Bill Gates probably wouldn't have become billionaires had they not had the luck to be born in a capitalist economy.
This raises the question: would rational risk-pooling behind a veil of ignorance lead to the inequalities we see now? I suspect not, and that there's a moral case (which might or might not be offset by efficiency considerations) for taxing the rich more.
We don't therefore need the language of hatred to justify higher taxes. In giving the impression that we do, Polly discredits the left. But, then, I've long thought that discrediting the left is part of the Guardian's mission.

"Legitimate entitlement"?

Margaret Hodge, contrary to previous form, has opened up an awkward issue:

We should look at policies where the legitimate sense of entitlement [to social housing] felt by the indigenous family overrides the legitimate need demonstrated by the new migrants...If you choose to come to Britain, should you presume the right to access social housing?

The question this raises - which Hodge doesn't answer - is: why should indigenous families have a legitimate claim to social housing when foreigners don't? Two possibilities come to mind.
1. British people form a society of people with legitimate obligations to, and demands upon, each other. The non-British are excluded from these.
2. The British are entitled to housing at the expense of other Britons because it's a means of restitution. The process of primitive accumulation by other Britons - enclosures, clearances and state-sanctioned theft - deprived their ancestors of the means of housing. Poles, however, were not victims of British theft and so have no such claim to restitution.
Both possibilities raise tons of questions. But which does Hodge believe, and why? What are the chances of a coherent answer?   

Is Willetts right?

If you want academic evidence on David Willetts' decision to abandon support for grammar schools, you could try this paper (pdf), presented to the recent RES annual conference. It says:

Children educated in grammar schools do substantially better [equivalent to  3.5 GCSEs being raised from grade C to grade B] than their peers in similar non-selective areas....Children not making it into grammar schools are disadvantaged by half a grade point.

This suggests that "overall there is little or no impact on attainment" as a result of selection.
What's more, it seems Willetts is right to say that "not many" poor kids get into grammar schools. Children who are poor and bright have roughly only half the chance of getting to grammar school than those who are bright and richer:

Of high ability children only 32% of those who are eligible for free school meals  attend grammar schools as opposed to 60% of non-free school meal children.

My view here, though, is rather different from Willetts. I suspect this shows that managerialist efforts to increase equality of opportunity are very expensive. This is because it requires enormous effort to give poor kids the same opportunities that rich ones get - partly because even huge (pdf) rises in education spending have little impact upon attainment.
Instead, I'd suggest two alternatives.
1. Equalize exam results across schools - in a way similar to Texas's 10 per cent law. This would ensure that bright pupils in poor schools get the same results as those at the best schools, thus ensuring that no-one is penalized for attending a poor school.
2. Pay less attention to equal opportunity, and more to equalizing outcomes. What's the point of ensuring that the most talented people are at the top of hierarchies, if bounded rationality and knowledge mean that hierarchies are unmanageable even by the best minds? Wouldn't it be better to focus on breaking hierarchies down?

Equality under Blair

What has been Blair's impact upon income equality? This little table, taken from this pdf, gives the answer.
It shows that very little has changed. The Gini coefficient for post-tax incomes has fallen just two percentage points. But at 36%, this is higher than it was between 1980 and 1987. Inequality, then, is greater at the end of Blair's premiership than it was under most of Thatcher's premiership.

What's more, all the fall in inequality since 1996-97 was due to a fall in "original" (market) incomes. State intervention today cuts the Gini coefficient by 15 percentage points, exactly the same as it did in 1996-97.
Why has there been so little movement? It's not, perhaps, for want of trying. In this speech, Blair declared:

Our goal is a Britain...in which we continue to re-distribute power, wealth and opportunity to the many not the few, to combat poverty and social exclusion,

And many policies - the minimum wage, the pensioners' minimum income guarantee, tax credits - have been aimed at cutting inequality.
Nor is it because the Gini coefficient mismeasures poverty. The share in post-tax incomes of the bottom quintile has not changed since 1996-97, at 7%.
Could it be instead that managerialist efforts to redistibute income are doomed to fail, because they retain a big state and fail to argue explicitly for overtly redistributive taxes? Or that there's an inherent trade-off between democracy and income equality? Chapters 9 and 12 of a certain book discuss this in more detail.
Shouldn't one lesson of the "Blair era" be that conventional efforts to increase income equality (assuming this to be a desireable goal) will fail?

Two exploitations

Bryan Caplan directs us to John Calhoun's theory of class - which raises a point which should embarrass quite a few people.
Calhoun says:

The necessary result, then, of the unequal fiscal action of the government is, to divide the community into two great classes; one consisting of those who, in reality, pay the taxes, and, of course, bear exclusively the burthen of supporting the government; and the other, of those who are the recipients of their proceeds, through disbursements, and who are, in fact, supported by the government; or, in fewer words, to divide it into tax-payers and tax-consumers.

There's an obvious parallel here with Marx's theory of exploitation.
To Marx, bosses deny workers the full fruits of their labour. To Calhoun and anti-statists, the state does so. Both believe these relations of exploitation are accompanied by relations of domination and loss of freedom for the exploited.
Which raises the questions. Why have Marxists traditionally been relaxed about state exploitation? Why have anti-statists been relaxed about capitalist exploitation? Is the difference a mere empirical one (capitalist exploitation is/is not efficient whereas state exploitation isn't/is)? Or could it be that exploitation isn't an interesting or morally relevant concept? 

Sexual equality and well-being

Increasing economic equality between men and women doesn't make us happier. That's the message of this paper:

Equality in economic and family matters does overall not affect life satisfaction.

The authors estimate that, across 66 countries, changes in women's economic rights between the early 1980s and 2000 had no significant link with changes in subjective well-being, for either men or women.
This doesn't mean gender inequality is entirely irrelevant. Sexual equality in the early 80s was associated with higher women's well-being later - perhaps because discrimination in their youth forced women into unfulfilling careers.
Also, the authors found that both men and women get happier on average as women gain more political rights.

What's wrong with equality of well-being?

What exactly is the problem with welfare egalitarianism? I ask because my claim that married people should be taxed more than singletons because they are happier has been called silly and sinister.
I don't see this. First, this claim is the same as the claim that single people should be taxed less, to compensate for their greater unhappiness. Though logically identical, I suspect this latter view would attract less opprobrium.
What's more, many people do pay heed to welfare egalitarianism. If you have a friend or child who is unhappier than your other friends or children, you'll pay them more attention - you'll try to raise their well-being to that of your other children or friends.
Indeed, one popular (and partly plausible) defence of income inequality appeals to welfare egalitarianism - the claim that the rich work harder or have saved more than the poor, and so have suffered more disutility.
This intuitive appeal of welfare egalitarianism rests upon a sensible principle - that what matters about people, to a large extent, is their well-being. Why else do we greet them with the question: "how are you?"
Put it this way. Most people in the world own fewer economics books than I do. But no-one cares about this inequality, because a lack of economics books is not associated with low well-being. But we do care that millions live on a dollar a day, because this is associated with low well-being. If it could be showed that such people were in fact very happy, demands to help them would weaken.
Most inequalities - of resources or opportunities or whatever - trouble people (insofar as they do) largely because they imply inequalities of well-being. In this sense, the appeal of other forms of egalitarianism derives from the strength of welfare egalitarianism.
All this said, there are big problems with the concept. Pushed to an extreme, it denies any role for individual responsibility - though whether this matters depends largely upon whether freewill exists, which is an open question. Also, in its simplest form, welfare egalitarianism would give too much to people with affluenza and too little to happy slaves.
However, it's not obvious that these problems make welfare egalitarianism silly or sinister. I suspect it's no less unattractive, in principle, than equality of resources or opportunity.
Instead, the biggest problem with welfare egalitarianism is the same as bedevils any substantive equality - the question of whether state-imposed patterned distributions are attractive at all. 
More: here are two arguments (pdfs) for equality from Thomas Christiano and Carols Rosenkrantz. Many more papers on equality are here.

Slavery, and inheritance

Some of the arguments of the last few days have strengthened my support for inheritance tax. Here's what I mean.
1. The communitarian argument: sharing our historical legacy. Calls for the UK to apologize for the slave trade rest upon the idea that we have significant links with our ancestors, by virtue of our shared membership of society. Some who oppose such calls claim variously: that slavery did not leave such a bad legacy; that the UK spent a fortune restricting the slave trade after 1807; that some Africans were slave masters or traders themselves; and that there were countless other historic injustices - enclosures, highland clearances, child labour, exploitation, state-sanctioned monopolies and price-rigging.
What both sides here agree upon is that wealth and poverty today are the result of history.
For me, this gives us an argument for inheritance tax. It's wrong that some should benefit today because of past injustices. And the principle of insufficient reason suggests that, as we can't identify  precise winners and losers, we should tax inherited wealth and redistribute it equally.
It's a way of acknowledging that we are a society which is shaped by the past.
2. The atomistic argument; people are independent of history. Others who oppose apologizing for slavery do so on individualistic grounds; it's just dishonest to apologize for  things we personally have not done.
This too suggests a case for taxing inheritances. After all, if you've no connection with your forebears, how can you complain when you don't get their money? Longrider, who's expressed the individualist argument well says: "I plan to keep what I’ve earned."
But don't think  you can keep what others have earned.
3. "You can't blame people for their past." The Conservative Party Reptile and  Mary Ann Sieghart agree that  we shouldn't hold it against David Cameron that he comes from a privileged background. Mary Ann says:

Since nobody chooses their parents, it is as unfair to tease someone about their class as it is to pick on them for being black or ginger-haired.

But why is the above statement correct but the following one wrong:?

Since nobody chooses their parents, it is as unfair to allow someone to be wealthy because of their class as it is to allow them to be poor because they are black or ginger-haired.

If we shouldn't impose costs upon people because of something they are not responsible for, why should we tolerate them getting benefits? Again, there's an argument for inheritance tax.

Poverty: always with us?

Yesterday's news that the numbers of children living in poverty rose last year (p19 of this pdf) prompts this  statement at the Difference magazine:

By the very definition of relative poverty there will always be poverty.

This is plain false. The definition of relative poverty is such that it can be eradicated almost overnight. By simply setting benefits equal to 61% of median equivalized household income (the poverty line is 60%), you could lift everyone out of relative poverty in theory. The only problem would be the administrative one of ensuring benefits were taken up.
There's only one legitimate reason why the government doesn't do this - it fears that such high benefits, and the taxes required to pay for them,  would reduce work incentives and so cut average incomes. People would then be absolutely poorer, but there'd be no relative poverty. If everyone lived on a dollar a day, there'd be no relative poverty at all - by definition.
The Difference goes on to make another strange claim:

The more significant question...is not whether everyone has equal wealth, but whether everyone enjoys equality of opportunity. That surely is the definition of true poverty.

Now, it's trivial that we are a long way from equality of opportunity. What's more, it is impossible to achieve equality of opportunity - though we can easily make great strides towards it - without a horrible loss of liberty. True equality of opportunity requires that no parents gives their children more advantages than others. This would require the state to criminalize good parenting.
So, the Difference has got it 100% wrong. Relative income poverty can be abolished easily - albeit at a cost. It's genuine equality of opportunity that's impossible to achieve.