So said Seneca, in a quotation I found via the consistently-excellent New Philosopher magazine. In my experience, ‘wealth’ is a relative concept. I’ve met people who are, to my mind, fabulously well-off, but don’t feel it because their peers are wealthier. Likewise, I’ve met people who aren’t materially well-off, but don’t realise they’re poor because their friends and colleagues are too.
Let’s talk about inequality. Cory Doctorow, writing for BoingBoing, points to an Institute for Fiscal Studies report (PDF) by Robert Joyce and Xiaowei Xu that is surprisingly readable. They note cultural differences around inequality and its link to (perceived) meritocracy:
A recent experiment found that people were much more accepting of inequality when it resulted from merit instead of luck (Almas, Cappelen and Tungodden, 2019). Given the opportunity to redistribute gains to others, people were significantly less likely to do so when differences in gains reflected differences in productivity. The experiment also revealed differences between countries in people’s views of what is fair, with more Norwegians opting for redistribution even when gains were merit-based and more Americans accepting inequality even when outcomes were due to luck.
This suggests that to understand whether inequality is a problem, we need to understand the sources of inequality, views of what is fair and the implications of inequality as well as the levels of inequality. Are present levels of inequalities due to well-deserved rewards or to unfair bargaining power, regulatory failure or political capture? Can meritocracy be unfair? What is the moral status of luck? And what if inequalities derived from a fair process in one generation are transmitted on to future generations?Robert Joyce and Xiaowei Xu
Can meritocracy be unfair? Yes, of course it can, as I pointed out in this article from a few years back. To quote myself:
I’d like to see meritocracy consigned to the dustbin of history as an outdated approach to society. At a time in history when we seek to be inclusive, to recognise and celebrate diversity, the use of meritocratic practices seems reactionary and regressive. Meritocracy applies a one-size-fits-all, cookie-cutter approach that — no surprises here — just happens to privilege those already in positions of power.Doug Belshaw
Doctorow also cites Chris Dillow, who outlines in a blog post eight reasons why inequality makes us poorer. Dillow explains that “what matters is not so much the level of inequality as the effect it has”. I’ve attempted to summarise his reasons below:
- “Inequality encourages the rich to invest not innovation but in… means of entrenching their privilege and power”
- “Unequal corporate hierarchies can demotivate junior employees”
- “Economic inequality leads to less trust”
- “Inequality can prevent productivity-enhancing change”
- “Inequality can cause the rich to be fearful of future redistribution or nationalization, which will make them loath to invest”
- “Inequalities of power… have allowed governments to abandon the aim of truly full employment and given firms more ability to boost profits by suppressing wages and conditions [which] has disincentivized investments in labour-saving technologies”
- “High-powered incentives that generate inequality within companies can backfire… [as] they encourage bosses to hit measured targets and neglect less measurable things”
- “High management pay can entrench… the ‘forces of conservatism’ which are antagonistic to technical progress”
Meanwhile, Eleanor Ainge Roy reports for The Guardian that the New Zealand government has unveiled a ‘wellbeing budget’ focused on “mental health services and child poverty as well as record investment in measures to tackle family violence”. Their finance minister is quoted by Roy as saying:
For me, wellbeing means people living lives of purpose, balance and meaning to them, and having the capabilities to do so.
This gap between rhetoric and reality, between haves and have-nots, between the elites and the people, has been exploited by populists around the globe.Grant Robertson
Thankfully, we don’t have to wait for government to act on inequality. We can seize the initiative ourselves through co-operation. In The Boston Globe, Andy Rosen explains that different ways of organising are becoming more popular:
The idea has been percolating for a while in some corners of the tech world, largely as a response to the gig economy, in which workers are often considered contractors and don’t get the same protections and benefits as employees. In New York, for example, Up & Go, a kind of Uber for house cleaning, is owned by the cleaners who provide the services.
People who have followed the co-op movement say the model, and a broader shift toward increased employee and consumer control, is likely to become more prominent in coming years, especially as aging baby boomers look for socially responsible ways to cash out and retire by selling their companies to groups of employees.ANdy Rosen
Some of the means by which we can make society a fairer and more equal place come through government intervention at the policy level. But we should never forget the power we have through self-organising and co-operating together.
Also check out:
- Why High-Class People Get Away With Incompetence (The New York Times) — “Even researchers who specialize in social class struggle to agree on the weight to give income, family wealth, professional prestige and other factors.”
- “Is it unethical to not tell my employer I’ve automated my job?” (Fast Company) — “The fear that people are disposable if their productivity can be bested by technology may lead to a confidence of trust as well as unpleasant and unintended consequences.”
- Should You Tell the World How Much Money You Make? (The New York Times) — Secrecy is one reason accurate salary data is hard to find. It also benefits companies if employees underestimate their value.”