Oxford economist, Max Roser, has tested the nature of structural income inequality in England and found the arguments as to ‘inevitability’ and ‘the play of market forces’ to be wanting. In his highly detailed and closely argued article, Roser signposts other economic models, and countries, where political will and economic structures are bent to its defeat.
Max Roser (2015) – ‘Income Inequality’. Published online at OurWorldInData.org. Retrieved from: http://ourworldindata.org/data/growth-and-distribution-of-prosperity/income-inequality/ [Online Resource]
Roser makes some interesting and telling observations about inequality, setting his argument, as he does, across a broad swathe of economic data, by time and country.
England is interesting in that income data, defined by social group, or set out in ‘social tables’, goes back a long way. Flawed, is the Roser argument, citing the lack of scientific discipline in Gregory King’s Social Table for 1688.
However, Roser cites Milanovic, Lindert and Williamson (2008) who have graphed longitudinal data in pre-industrial societies, using the Gini Index to measure ‘inequality’ and GDP per capita to measure ‘prosperity’.
(The Gini coefficient – or Gini index – is a measure of the income distribution of a population. It was developed by Italian statistician Corrado Gini (1884-1965) and is named after him).
This longitudinal view of inequality, by Roser, incisively demonstrates that it is political and institutional structures which enforce inequality. It is not, he argues, the market or efficiencies of capital which promote inequality as a mechanism for distribution of income. We quote his summation at length…
‘A lesson that that we can take away from this empirical research is that political forces at work on the national level are possibly important for how incomes are distributed. If there was a universal trend towards more inequality it would be in line with the notion that inequality is determined by global market forces and technological progress where it is very hard (or for other reasons undesirable) to change the forces that lead to higher inequality. Inequality would then be inevitable. The reality of different inequality trends within countries suggests that the institutional and political framework in different countries play a role in shaping inequality of incomes‘. (Roser, 2015)
In his well illustrated and closely argued article, Roser compares and contrasts the data for non-English speaking European countries and Japan. All examined countries reached fairly low levels of income inequality in the 1970’s, with significant increases in inequality returning after that decade. With the exception of Japan, where socio-political institutions press for equality in a way that is not available in the Euro-economic matrix.
‘…we can see the correlation between increases in the income share of the top 1% and the decrease of the marginal income tax rate since 1960. The graph confirms the hypothesis that in general as tax rates decrease, the income share of the most wealthy citizens increases. The US and the UK are both extreme examples of this happening. France, Germany, Finland, Netherlands and Switzerland all contradict this trend. While the marginal income tax rate on the most wealthy has decreased, the government has implemented other means to decrease income inequality‘. (Roser, 2015)
Ths is economic analysis of a high order, which does not set out to find an answer to a pre-conceived position, rather it uses diverse, broadly sourced data across long time spans to argue for a new mode of thought, to diminish the corruscating effects of inequality.
We are most interested in educational outputs, but see how social justice outcomes and the well-being quotient of so many could also be raised by a new economic mind-set.