Wednesday, 27 January 2010

Inequality is Inevitable, but Useable

This morning I turned on the radio, to hear an interviewee on the news complaining about Britain's growing inequality. However, I felt his case came across rather weakly. He did set me to thinking about what I already know on the subject, though.

Social and economic inequality is another of the many things in life that look different, according to which angle you approach them from. Polemics can be more focussed and passionate by ignoring other aspects, but they are also less credible; so much less that it can rob them of their persuasive force.

The most fundamental basic fact is what is sometimes called Pareto's Law. This is that the pattern of personal wealth in a society tends towards a “power-law distribution”, in which small amounts are commonplace, and ever-larger amounts are ever-rarer. Thus we read of various studies estimating that 10% or so of people have 90% or so of the wealth in nations, or even 5% having 95% of the world's wealth. There is a simple mathematical underpinning to Pareto's Law, and I have seen it shown that it would rapidly and inevitably re-emerge, were the whole world somehow to be be transformed to a perfect “level playing field” as a starting condition. The asymmetry arises mathematically from the insight that someone on a random lucky streak can go on getting richer and richer, but someone on a random unlucky streak can not get broker than broke.

Pareto's Law is a fact of life we have to deal with. Doing so is complicated by human nature being shaped for other purposes. I sometimes think that evolutionary psychologists push their ideas too far, and forget that we have already had several hundred generations of something like civilisation as we now know it, to temper our primeval instincts. Even so, I cannot reject the truth, that we got to where we are from where we have been. Our distant ancestors were troops of monkeys, and then apes, with no property and flat, mobile hierarchies in which the alpha-male got to be boss for a spell in his prime. Our more recent ancestors were tribes of nomads with scant possessions and flat hierarchies usually respecting the wisdom of elders and sometimes the strength of bullies. In neither case would tolerating the unfair hoarding of resources by certain individuals particularly enhance the groups long-term survival overall. So, instead, we share with other primates innate tendencies toward envy and covetousness, when we see others flaunting more than we have ourselves.
Unlike a baboon or chimpanzee, though, we have the ability to cognitively control our behaviour, according to concepts our minds can hold and communicate through the software of language. We learn from infancy that we cannot just act on whatever instinct comes to the top of our minds, but we must measure our desires against social values. Of course, there are those who, by brain pathology or plain negligent upbringing, lack the full set of social values, and do indulge themselves without respect for their fellows. These are criminals, and it would be a grave error if we were to look to them for our moral leadership. For the rest of us, respect for society's other members is an essential value for social animals like ourselves, and respect means curbing those dark envious instincts and substituting more positive ones, like admiration, aspiration and ambition.

And yet, despite believing that one should respect the right of others to have more than oneself, I find that those dark instincts eventually get unlocked when having more becomes so egregious that it itself constitutes a disrespecting of the rest of society. I can live with entrepreneurs like Richard Branson or Kevin Leech reaping their rewards for providing work for their employees and goods and services for their customers. I can live with creators like JK Rowling or Paul McCartney receiving tangible thanks for the hundreds of millions of hours of pleasure they have given the world. I hit a personal sticking point at Victoria Beckham mincing through Heathrow airport with yet another £2,000 bag and a thunderous expression suggesting she is still not satisfied. I am pushed way beyond it by Fred the Shred Goodwin trousering a king's ransom for catastrophically ruining a multi-billion pound bank.Your sticking point may lie somewhere else. I expect you have one, though. So, I would contend that it can be generally agreed that the right to property does not bear extension to a right to appropriate an unfair share of society's resources. How much is unfair is a matter of subjective opinion, of course. The best way to achieve a working consensus is to have democratic elections between candidates with different opinions, and see who the most people agree with.
It is not only the top of the power-law curve that needs artificial constraint for social justice. More important than a few people having excess wealth are the many having insufficient. Even Adam Smith, hero of the cynical hard-right, had strong words to say on the obligation to keep people above a threshold income on which they can not only subsist, but take part in life. One of the most essential features of the many that make humans such special creatures is our instinctive drive to look after all members of our community, even and especially those who would not be viable without assistance. Left-wing sociologists sometimes bang on about an absurd concept of “relative poverty”, where if you are comfortably off in a rich place you should count as a pauper for not reaching some arbitrary fraction of the average wage. Much less amusing is real poverty: Not being able to provide oneself and any dependants with adequate food and shelter to survive in good health, or able to provide only that, with minimal quality of life. Unless we deny our own humanity, it is incumbent on us all to share sufficient of our society's resources that even the losers can survive and enjoy, at least, modest and basic comforts.

I have said that some people would not have enough, without help. I have also suggested that others achieve an unfair and unjustifiable share of wealth. The solution to both of these thing lies in progressive taxation. We all need to contribute to the costs of maintaining our civilisation and the fairest and most reasonable way is to extract the largest contribution from those who will have the most left for themselves afterwards. And, as that remainder grows, the amount skimmed by taxation can grow by more, without any hardship for the taxpayer, or appreciably greater injustice than they would themselves have shown society by keeping the surplus to themselves.

Although I believe that inequality is natural and inevitable, it can and should be constrained at the margins by welfare and taxation. All it needs is progressive taxation, and economic inequality becomes the means by which the strong fulfil their human destiny to look after the weak.

To be fair, the man on the radio was also concerned with inequality of opportunity. This is another matter, but if you applied what I have written above to families, rather than individuals you come to the root of it. Some families are winners generation upon generation, rather more get stuck at rock bottom, and most of us have ups and downs in between them. To keep society functional, the hereditary rich have to keep the tradition of noblesse oblige and look after the poor, or else it all falls down.

Monday, 18 January 2010

Gift Aid In Jersey

"Tony the Prof", an online correspondent of mine, and Deputy Monty Tadier are launching a campaign to bring UK-style "Gift Aid" to Jersey charities.
It is a tax relief scheme, that you can find an excellent explanation of at Tony's Musings - link in the Blogs box on the left.
Monty has started a Facebook campaign at . If you can read this, you can visit that. I suppose some sort of argument could be made against it, but I think it is an excellent scheme, and I recommend that you, too, support it.

Wednesday, 13 January 2010

End Compulsory Retirement in Jersey, too.

Harriet Harman's call for a ban on compulsory retirement in mainland Britain needs to be echoed here in Jersey. For those whose circumstances permit it, it is a fine thing to be able to devote one's life to leisure and, maybe, voluntary work before one has grown too frail. On the other hand, there are many more who can still work, when they reach nominal retirement age, and would rather continue to earn a real wage than struggle on a pension.

There are a lot of employers who follow good practice in allowing the willing to work on past their official retirement age. Sadly, there also plenty more with no shame in taking an “ageist” approach to their human resources management. There would be benefits both to the individuals concerned and to Jersey as a society and economy, if there were to be legal constraints placed on employers' freedom to put their workers on the street just for exceeding an arbitrary number of birthdays.

For individuals, the fall in income spells at best a sharp reduction in their standard of living, and quite possibly real hardship, especially for those whose employers insist on retiring them before States Pension age.
For Jersey as a whole, maximising the years of work from each person helps to address two perennial problems. Firstly, to fill the job that has been vacated, another worker must be found, and that person may have to be imported, aggravating the overpopulation: Keeping people as economically active instead of replacing them as employees and adding them to the pension burden makes economic sense. Secondly, Social Security and Pension funding has long been difficult. A parallel change to ending compulsory retirement, in which the many who have not spent their entire working life in Jersey could continue to pay contributions to add to their credits beyond their eligible retirement date, instead of claiming the pension, would both help the fund's income, and improve the lot of the workers, when they do decide that they are ready to retire.

I take quite a personal interest in this subject, as my own employer warned me a couple of years ago that I would be terminated at 60, when the company pension scheme matures. However, only having a few years contributions to this scheme will give me nothing like a living income from it, for the five years before I can get state pensions from Jersey and the UK. And 60 year-olds tend not to go to the front of the queue in applying for new jobs. So, already, I am having to look around for lower-paid work, just to be able to stay until I am 65 or more. I am still likely to have dependent children in further education to support then, let alone myself. My wife's career is secure enough, but it is hardly fair to expect her to keep me as a house husband in her own middle age. It would be a weght off my shoulders if I no longer had to worry about the sack for a 60th birthday present.

Perhaps the “establishment” and “anti-establishment” groupings in the States could take a break from the point-scoring and get together on this matter, as something where they could make a positive difference for many islanders, for once.