Productive societies are more equal
Socialist societies are least equal : Russia and Mexico had the highest inequality in the world
Chalcedon Report : June 97 Professor Don Mathews
Real Income per capita is 4.5 times what it was in 1900 ( the free market lifts all boats- the poor don't get poorer). At the same time hours dropped.
2.5 times what it was in 1947 By the current definition of poverty 56% of US was poor in 1900, by 1947 27% , by 1967 13%
Most of the decrease in poverty before the welfare state
Rising inequality can be some of the poor becoming a lot richer and some of the rich growing poor, the poor are not a static group. US 1973-1995 GDP/head up 36% but real wages for non supervisory work -14% (less than 1% per year!) (they are still better off because what they can buy is better and cheaper now) 80s earnings gains went to the top 20% who had been taxed at huge rates before. ( once off can't cut taxes from 60 to 28% again) UK av income rose 33% 89-93, bottom 10% fell 17% (remember most of them are working as well ) Its the elderlies share of income that has doubled in the last 10 years Widening differences in income are within groups rather than between them. Ie differences between different graduates, differences between different school leavers. The relationship beween the two groups staying the same. Inequ: promotion comes neither from the East or from the West but from the Lord Equality happens when the majority of citizens respond quickly to incentives and learn to do the most productive things Even when the income of the poor falls, their standard of living is still going up through increases in the quality of goods of the same price UK av income rose 33% 79-93, poors fell 17% OECD Average :Wage gap top to bottom increased form 7.5 to 11.1 to 1from 1969 -92 Highest difference is in America ( which has highest since WW2) -top 20% have 47% of income Ec Aug6th 97 US has the highest skilled and paid top end and the lowest paid and skilled top end Its mid skilled workers whose price has gone down recently Differences between regions tend to equalise over time , southern states used to be much poorer 100 years ago - now the same. N Italy used to be 70% higher than south, now 32%. Tend to close gap at about 2% pa. (Getting it Right p14) Higher inequality figures after tax cuts may have more to do with income declared than actually earned, people declare more if tax rates are lower. The amount of income tax paid by the top 0.5% in the US reached 22% in the last year of the Reagan administration, and averaged about 16%. If this at nearly 30 times the share the average person pays is not a "fair share" what is The Laffer curve worked for this group 14 -18% after the cut (even if it didn't work for the economy as a whole)((Getting it right : Baro p120) The rise in the top rate in 1990 led to fall in % paid by top 0.5% from 20 to 19% We must separate the effects on the transition to the free market and the effects on equality of the free market itself. Societies are a lot less unequal than the statistics show because they don't include pensions- occupational or state rights which are a high % of most people's worth ,they don't include the value of human capital: people's skills which again are a high % of what most people are worth, Higher income are a rightful reward to those who take higher risks, invest better in their skills, work harder Also chance, natural ability, intelligence or beauty. And who are we to argue with God ! God gives different people different gifts to do particular callings .He knows some will therefore have more than others in order to fulfill this and as a by product of their calling. We must conclude that even if a nurses job is intrinsically as worthy as a businessman this doesn't necessarily mean she should get the same money. As Christians we say worth and wealth are not the same "a mans life does not consist in the abundance of the things he possessess" The attempted elimination by government of inequality creates in the process certain inequalities intrinsic in the apparatus for redistribution. Inequality resulting from violence, corruption,etc. should be eliminated. Inequality and freedom are inseperable. Steps towards equality are inevitably steps away from freedom. Rising inequality and falling poverty are not always together e.g. Decreasing poverty and decreasing inequality (high growth): Taiwan (50s-70s), Singapore(1966-75), Costa Rica,(61-71), Pakistan (63-70); low growth sri Lanka 53-73 Decreasing poverty and increasing inequality:Brazil(60-70), Puero Rico (53-63) , Mexico (62-69) (high growth), low growth (63-74)-- Bangladesh Increaing poverty and decreasing inequality- India (low growth)(60-79) Inreasing povery and increasing inequality Argentina ( 53-61), Phillipines (61-71) Source : Gary S Fields Cambridge U.P. 1980 Poor countries have higher income inequalities than rich ones. The key thing is not equality but that everyone has a valued place in society. People only feel that if they have valued jobs to do in their communities. And that can only happen if the state does less. Figures in 93 showed that from 79 to 90 the share of the bottom 10% had fallen 4% to 2.1% furthermore their share of national income fell 14% after they had paid housing costs but : they have far more consumer durables now, 69% vs. 29% in 79 have central heating, 73 to 47% had phones and the figures includes the under reporting self employed whose number had grown greatly ( but even excluding them the poors income had dropped 6%) ignoring housing costs (to exclude temporary downs with mortgage defaults) it had dropped 1%. Many on benefits are not in the bottom 10% since is had risen 15% since 79 But : the reforms to UK have not been great enough to have a tricke down effect yet Economist July 10/93