The necessity of equality | Harry Shutt

October 24, 2023

Taken together, recent postings on this blog have pointed to the conclusion that the long-term global survival of human civilisation requires that

• global economic growth must be eliminated if not reversed, and
• the growing problem of international mass migration must be dealt with by means of collective, international state intervention favouring the most disadvantaged communities which are the main source of migrant flows.

However, it is evident that under the existing world order the application of such ideological principles can scarcely be contemplated. This is because

1.) The global economic system is based on capitalistic principles that demand both perpetual growth and unrelenting competition to assure its survival.
2.) Power is disproportionately in the hands of a few wealthy Western countries, corporations and individuals who are most unlikely to share it voluntarily.

Presented thus starkly, the dilemma facing our species might seem beyond hope. Yet the purpose of thus dramatically posing the issues at stake is to highlight the necessity for a rapid ideological shift such as would surely be without historical precedent. On the other hand it is perhaps equally unprecedented for a society to get advance warning of impending disaster – based on science rather than primitive superstition – such as is now the case in respect of global heating, which on present trends is now clearly destined to render many communities in different parts of the world physically unsustainable in very short order..

Arguably the same could be said of the spread of mass poverty, which continues to plague the “Global South” despite several decades of “development aid”. Remarkably, the Western establishment continues to exude complacency, reflected in statements such as that, globally, 2 billion people (equal to around 25 per cent of the world’s population) were lifted out of extreme poverty between 1990 and 2015 (according to the UN Development Programme). Whatever the reality behind such unverifiable (and essentially meaningless) estimates, world leaders are actually confronted with “facts on the ground” that indicate a much less rosy reality – which in fact suggest the problem is getting even worse than when there was supposedly a concerted resolve to ”make poverty history” early in the century. This takes the form of a manifest total breakdown – economic, social and political – of order in many parts of the developing world.

While this has been ongoing for several decades, its worsening symptoms have only now forced governments and the public in the developed world tu pay attention. This is particularly the case with intensifying civil disorder in many countries – notably Afghanistan, Pakistan, Syria and other Arab countries as well as those in sub-Saharan Africa and Central and South America too numerous to mention. The most conspicuous manifestation of this malaise, particularly in Europe, is the exponential growth in the floods of refugees increasingly willing to risk everything in their desperate search for a better life – and escape from the utter hopelessness induced by endemic poverty, climate disaster and civil war.

This is a phenomenon which the developed countries that are the usual destination for such refugees have struggled tu come to terms with. In fact it may appear self-evident that there is ultimately no way of physically preventing such population flows altogether, particularly under a supposedly globalised economic order – especially where the pressures in the source countries are too powerful to resist, as demonstrated by the thousands of refugees now trying to cross the Mediterranean and the English Channel every summer – often at serious risk to their lives.

What would be a more rational approach to solving this very real problem and thereby alleviating the mounting chaos which otherwise seems bound to engulf so many countries, developed and developing alike? The weakness of virtually all suggested strategies to date has been that they depend, explicitly or implicitly, on an assumption of continued economic growth. This is considered necessary in order to accommodate the anticipated extra output of poor countries. Only if that assumption – now rendered totally implausible by pressures to minimise global carbon emissions – is removed does it become possible to envisage the kind of radical restructuring of the global economy and society that is needed.

This is something which may have hitherto been implicitly assumed to be the natural concomitant of global growth but which clearly can no longer be inferred to be so – if only because the very desirability or possibility of growth is no longer tenable in face of global warming. If that premise is accepted we may properly view the climate crisis as a positive catalyst for necessary change which it has not been possible to achieve by other political means.

This puts the spotlight more firmly on the need for income redistribution, something that will not be easily achieved, not least because of the difficulty of quantifying it over time and space. Measuring comparative income distribution levels in terms of GDP per head of population is fraught with difficulty.1 Nevertheless available data appear sufficiently robust to allow comparisons at least between more industrialised (OECD) countries having broadly similar distribution profiles. This assumption justifies the comparisons made by Kate Pickett and Richard Wilkinson in their well known study The Spirit Level [1], in which they analyse the impact of inequality on the incidence of such social indicators as mental illness, teenage pregnancy, educational failure, crime or drug addiction, leading to the convincing conclusion that more equal societies – such as the Scandinavian countries – enjoy better, more stable outcomes than less equal ones such as the USA and UK.

How is redistribution to be achieved both within and between these countries, not to mention the scores of those comprising the “developing” world for which meaningful data on the existing pattern of distribution are not available?

Universal Basic Income

In light of the catastrophic failure of traditional approaches in developing countries, supposedly based on the principle of promoting economic growth, it must be concludedi that only some mechanism akin to the welfare benefits provided to the more disadvantaged members of society in most industrialised countries would meet the requirement. However, in order to avoid the complexity and potentially massive scope for corruption associated with means testing that is inherent in such schemes – particularly in countries with a typically underdeveloped administrative capacity – it would be preferable to institute a form of Universal Basic Income (UBI). Such an approach, it may be noted, is in line with a growing number of trial / pilot schemes that have been initiated in different parts of the world – albeit hitherto none of them have been adopted at national level or for more than limited time periods (although Barbados and South Africa have both recently announced their intention to introduce national schemes shortly).

Perhaps the most important lesson to be derived from these experiments is that cash transfers to individuals in poor communities are a much more effective way of enhancing living standards than loans or technical assistance targeted at specific programmes or projects rather than individuals. In this context is encouraging to note that this point is evidently starting to be grasped by UN agencies such as the Office for the Coordination of Humanitarian Affairs (OCHA) [2], which is increasingly applying the principle in its interventions, such as (for example) relief following a typhoon in the Philippines. However, clearly there can be no guarantee of transition to a long-term UBI in such cases, given that UN agencies currently lack the substantial fiscal resources that would be needed to finance such a scheme on any scale over the long term.

The merit of UBI in such conditions is that it is a flat-rate weekly / monthly payment to every adult regardless of other sources of income. This means that it can be included in total taxable pay, and thus largely clawed back from the more affluent who have less need of it. This should help to ensure that post-tax income of the highest paid corporate employees would be less than 100 times that of the lowest paid – in contrast to many current instances where it is found to be closer to 150 times, albeit still far above the ratio of 20:1 once supposedly recommended by Henry Ford (no social radical). It would perhaps be fanciful, at the present stage of world social evolution, to suggest what might be an appropriate global target ratio. Yet it surely behoves the UNDP, World Bank and other institutions concerned with enhancing living standards among the still swelling ranks of the world’s poor majority to focus on efforts to harmonise income levels through a mechanism such as UBI – rather than on “global development indicators” such as lowering the incidence of perinatal mortality (important as that is).

Moreover, it should be obvious that in a world with diminished scope for growth it is only rational for countries to move towards more equal distribution of income and living standards if the danger of conflict – both within and between communities – is to be reduced rather than intensified. Hence, notwithstanding the difficulties, it would be desirable for the United Nations to adopt a target ratio of highest-to-lowest paid workers of, say, 25:1 on the understanding that the aim would be progressively to reduce it over time.

Thus a two-pronged strategy for reducing global inequality – combining establishment of a UBI with restraint on excessively high pay – appears the optimal approach to reducing inequality. To many this may seem unrealistically utopian in the world as it presently exists. On the other hand, given the intensifying global disorder, there may seem to be few alternatives.

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1 The most commonly used indicator – known as the Gini coefficient or ratio – is supposed to reflect the spread orf incomes as between the highest and lowest paid members of society in a given community or country, with a high ratio (on a scale of 0 to 100) signifying relatively unequal distribution. However, given the weaknesses of the data, it is not surprising that comparative estimates appear highly questionable. Indeed the only trans-national estimates of Gini coefficients that are available (from the World Bank) are clearly too irregular and incomplete to form the basis of any general conclusions.

[The above article [3] is reproduced with permission of the author ]