The Blog

The Myths That Justify Inequality Are Harming Us All

One day we will look back on the myths that propped up this system with the same incredulity and scorn that we now do of claims of a superior race or race- the sooner that day comes, the better it will be for all of us.

Every society has its myths that justify the social order. In pre-abolitionist Europe and America it was that blacks were somehow subhuman and whites biologically superior, in pre-suffragette times it was that men were more 'rational' and less 'emotional' than women. In the social sciences Social Dominance Theory describes such 'legitimising myths' as inherent in justifying hierarchy and sustaining order and as the driving force at the heart of group-based discrimination.

It might be tempting to think that in modern-day Britain we have moved beyond such antiquated prejudices, and yet just five days into the year such a belief is proven false. January 5th holds the dubious honour of being dubbed 'Fat Cat Tuesday'- the day of the year in which the average FTSE 100 CEO has accumulated what the average worker in Britain will take a year to earn. This was followed by the even more ludicrous revelation on Monday that the global 1% now have more wealth than the other 99% combined. Whilst many respond to such a state of affairs with incredulity and outright outrage, the myth-propagators were also out in force to defend society's entrenched and obscene inequality.

Inequality is described as the driver of growth- we have to have large levels of concentrated wealth to encourage people to work harder. Talk of the ludicrously rich being 'wealth creators' that create a 'rising tide that lifts all boats' also abounds, suggesting that not only is inequality necessary, but a just deserts for harder working and more responsible entrepreneurs that have embraced the conservative dream and pulled themselves up by their gold-plated bootstraps.

The problem of inequality stems from a misguided preoccupation with economic growth instead of the wellbeing of citizens. The focus on growth that most major Western economies have fallen into the trap of over the last several decades inherently ignores the problem of fairly allocating resources and instead seeks to rampantly create and consume as much as it can: concerns about inequality are more than ignored, inequality is actively encouraged to fuel this growth.

Sidestepping the debate of whether we should be aiming for growth at all on a planet of finite resources and a precarious climate (a huge debate we cannot do justice to here), the point here is that focusing on growth is putting the cart before the horse. It assumes that wellbeing and happiness will naturally flow from a steady level of economic growth, and so inequality and redistribution of wealth are not of much concern- 'a rising tide lifts all boats'. As long as everyone's lot is improving, what does it matter that some are getting more than others?

For starters we cannot even be sure that everyone actually is benefitting: measuring growth by GDP increase, even per capita, ignores one of the basic rules of averages in statistics, namely that data sets with large outliers (in this case, an enormously wealthy few at the top) often distorts the value of the mean given, leading to a poor estimate of how well the average family or individual is doing. This will always be a problem if we accept the presence of a high level of inequality.

Secondly, it is often pointed out that the rise of capitalism (driven by a focus on growth and not bothering about inequality) has seen the greatest advancement of wellbeing in human history, massively increasing the wellbeing of even the very poorest in society. Yet can growth alone really claim credit for the increase in life-quality? Numerous factors have contributed to this increase in health and wealth, such as the rise of the scientific method, technological prowess and most importantly government reforms and welfare provision. For many the Industrial Revolution and a swtich to large scale capitalist industry actually produced a worsening in their quality of life until government regulation and provision came in to help. This is not to neccessarily say that growth has never been useful, but rather than focusing on this only is simply not enough: proactive policy on inequality is required regardless of how much our economy is growing.

But perhaps the biggest issue with a focus on growth over and above distributing wealth fairly amongst a society is that even if you accept some limited virtues to growth, these are only tangible up until a point. Economists Richard Wilkinson and Kate Pickett in their bestselling book 'The Spirit Level' have shown that once a society has passed a certain minimum threshold for basic wellbeing, growth has absolutely zero impact on wellbeing and happiness. In fact, they go further than this and highlight how rising levels of inequality are strongly correlated with a whole slew of societal issues, such as increased health problems, higher levels of crime and lowering levels of public trust. Recent research by the Joseph Rowntree Foundation has confirmed these findings, showing deep inequalities in health and infant mortality between socio-economic groups- a failure to deal with inequality is quite literally killing people.

Neither are the rich the wealth creators they are often heralded as being. Numerous studies have shown that wealth distributed to the poor is more economically viable, perhaps going some way to explaining the claim that our levels of inequality have held our economy back some 20% in recent years. Local businesses thrive when demand is high, and demand will always be better provided by a fairer distribution of wealth going into the pay packets of local consumers, not rich tycoons that spend it elsewhere or invest it in non-socially beneficial hedge funds.

It's not just economics that cautions against excessive wealth in the hands of a few: psychology does too. Studies have shown that 'earning' a higher pay packet only brings increased happiness and wellbeing to individuals up until a certain point: beyond that there's even some evidence that earning more money can actually lead to people losing some of their ability to show compassion and empathy, distorting their view of reality and compromosing their moral judgements. The same is true for companies: paying top managers and CEO's past a certain point has been shown to damage their performance, with theories ranging from overconfidence in their own ability to it encouraging them to focus on materialistic, selfish gains rather than the wellbeing and longevity of the company.

Even on the surface the idea of wealth being somehow proportional to merit is ridiculous- how on earth can someone work 100 times harder than someone else? Or squeeze into 5 days of the year the amount of work the average Brit will manage over the next 12 months? As Paul Buchheit demonstrates, there's a good chance that many (though, it must be said not all) of the 1% will actually work considerably less than you and if anything have a net negative effect on the economy: many will make huge sums out of investments in land or property but offer very little of value for society as a whole. It's also worth considering, as business and economics lecturer Anthony Orlando points out, that often the mega rich will be working in jobs that are far less exploitative or physically demanding than their poorer counterparts, a point often missed when only crude 'hours worked' estimates are used.

Nor does having to pay such a high amount to secure the best talent always ring true- as noted above, high wages, past a point, can actually reduce productivity. Imagine if you didn't offer gigantic cash piles to people vying for the top spot- you might actually get a load of people running our companies, our universities and even our country, because they are passionate about their work and their community, rather than passionate about their pay packet.

The deservedness of the mega rich and the necessity and desirability of inequality is at the heart of how we currently approach our economy and our society. It is born of a dangerous and divisive conception of a lazy, feral and undeserving working class that has only itself to blame, and limits our critique and rhetoric to the level of the individual, missing out the role of systemic and pervasive forces stacked against many of us from birth. It is the defining myth of our age that prevents the obscene opulence of a few being called into question, and the crippling poverty of many from being alleviated. Although the dangerous levels of inequality we currently harbour allow the rich unfair influence over our markets, our governments and our press, their position of power ultimately depends upon the many accepting the lies and myths of the few: as soon as we call into question their unfair social order, it implodes in on itself.

As a society we should be repulsed and infuriated in equal measure at the ludicrous levels of inequality have reached on our planet. Inequality is harmful not just for those at the bottom, but for the whole of society: it is not envious to say so, merely good economics and compassionate politics. One day we will look back on the myths that propped up this system with the same incredulity and scorn that we now do of claims of a superior race or race- the sooner that day comes, the better it will be for all of us.