How do we know it’s inequality when we see it?
Well, of course, it can be measured in terms of income, or assets. But there are some societies where it’s much harder to get data. Take the Middle East, for example, where you’re relying on household surveys to get data: the wealthiest 1% don’t respond to these surveys. So you’re actually missing an important group here, and probably under representing inequality! Similarly, asset ownership data is really hard to come by, real estate and other things like this, which is where the super-rich stick their money – and these aren't included in income measures either. So that’s another side of inequality that we’re missing.
But another point on identifying inequality is that people are perceiving inequality to be on the rise, they perceive social mobility prospects to be lower. It’s obviously not just a perception thing: wages have stagnated, quality of education has dropped, there are few jobs, and so forth. But if you look at the Middle East, we can see from the World Values Survey that people perceive their prospects to be declining. Take Egypt’s middle class, in the early 2000s they classified themselves as upper income, but by the late 2000s they started classifying themselves as lower income. In a region like the Middle East, where they don’t have very articulated welfare systems -- pensions, unemployment insurance -- so your biggest ticket out of instability is a public sector job – and there’s stagnation there, and the private sector is not rising to replace those jobs. So, identifying inequality is also social mobility prospects.
Have levels of inequality gone too far?
There’s no question that, globally, we’re seeing a rise in inequality. They’ve gone too far because they are affecting longer-term prospects for growth – on the economic side. Research shows that when you hit a certain level of inequality, growth becomes difficult to sustain, because you’re essentially losing a large chunk of potential consumers, when only the 1% (or the 0.1%) can actually afford sustainable consumption.
But also in the context of declining public services, inequality has gone too far. Increasingly we’re seeing inadequate access to basic services like health care, and those sorts of things associated with development and growth. Having a population that is educated and healthy from a purely instrumental perspective is important – but there are also normative considerations, which are of course equally important.
Where should pressure on policymakers be coming from in order to address inequality?
I would love to see pressure on policy makers coming from everywhere, but in reality, politics gets in the way. A good example is tax policy, which is very political. Most people don’t want to advocate higher taxes on themselves, especially the wealthy! So I think pressure is more likely to come from social mobilisation from below, and that’s what we’re seeing.
There will always come a point when it’s very hard for even authoritarian rulers to ignore social mobilisation. They don’t entirely rule in a vacuum, they cannot rule purely through coercion, so they are responsive to popular pressures. Interestingly, the Chinese government is particularly responsive to popular pressure and implements a lot of policies to expand social benefits – even in areas where it sees potential for unrest, like Xinjiang. But with similar models in the Middle East, aside from being normatively bad, we’ve seen social benefits decline for decades. So it’s not necessarily sustainable.
And in democracies, electoral accountability push politicians towards a more responsive course. But obviously, there are also a lot of interest groups who have an impact on policy, and it doesn’t always work as perfectly as the pluralistic view of democratic politics would have us think.
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