Don’t I get a say?

That’s where the real constitutional debate needs to be – around a radical constitutional option that puts Scotland back into the hands of its people: devo-local, if you like. Trevor Davies, The Scotsman 10/5/2012

 [Politicians] see themselves as propping up something which is tottering rather than letting citizens build anew something that is soundly based. Charles Moore, Daily Telegraph 13/7/2012

Power wielded from the centre is slow to react, inflexible and discriminates poorly. Yet political power at all levels has been steadily eroded as a consequence of the economic demands of global corporations and the economic strain on central government to provide for these corporations and mop up the damage they cause. No redistribution of political power from centre to periphery can be sustainable without addressing the centralisation of economic power. The willingness to address the latter is surely what will separate the left ‘devo-localist’ from the right.

The threefold errors of modern society are the politics of brand management; the economics of revenue and profit; and administration by information packet. What these share is an attempt to streamline society, in the supposed interests of efficiency, by limiting the scale and scope of human transactions. In politics, instead of messy engagement with people’s real lives to find solutions, policies, parties and their leaders are molded to fit current (or anticipated) media demands. In business, real needs go unmet and social and environmental damage are done because wage contracts, prices and marketing cannot translate the complexity of human life. Management is driven by the need to rapidly transfer small context-less pieces of information across over-large government and business organisations. Yet the mismatch between real human reality and these limited forms of transactions adds up at every stage. So we end up with a dysfunctional society, a paralysed economy and increasingly unsatisfactory experiences of both public and private services.

Broadening the channels of communication requires a recognition that all citizens should have a right to be heard on the policies adopted in their local community, the activities of the businesses that employ them, operate in their local communities and affect our environment as well as how services that affect them are implemented. It also requires the understanding that everyone else will benefit from the greater cohesion and targeting of resources that will result. Instead of streamlining these concerns into narrower and narrower channels in which the voices of the poorest, weakest and least eloquent are rapidly dropped, we need to broaden them.

Politicians must have to and must be able to engage directly with all groups, not just those able to raise funds and express their views most loudly. Businesses must engage with their employees, consumers and local communities by aiming to understand what their needs are, what advances their interests and avoids damage, not just by paying the lowest possible wage, charging the highest possible price and creating the most persuasive (while staying within the law) advertising. All services, public and private, must develop and maintain expertise in dealing face-to-face and responsively with the individuals they purport to serve.

This all-encompassing requirement to seek and enable meaningful contact between organisations and people, I have called ‘equality of voice’. This is something more meaningful and more achievable than either ‘equality of outcome’, which attempts (usually unsuccessfully) to eliminate all differences whatever collateral damage this causes, or ‘equality of opportunity’ that attempts to eliminate some differences, often on arbitrary criteria and usually omitting many that are self-perpetuating.

It is vital to understand in advance that many of the processes required to fulfil this agenda may on the surface appear untidy, inefficient and time-consuming – real conversations between people often are. Yet the long-run benefits in achieving first-time the best possible solutions that have the maximum possible ownership will outweigh more ‘efficiently’ achieved, but poorly conceived, understood and supported, short-term ‘fixes’ that are frequently revisited and replaced.

Future Economics - People, Money and Power

This is a response to ‘The Spirit Level’ and the response to it, with discussion of the implications to be drawn for tackling inequality. You can download it as a pdf (67kb).

This article is on 5 pages, and you can go to the next page you want by clicking on the relevant  number at the bottom of each page.

Introduction – Selling Equality to the Rich

‘The Spirit Level’ is a book-length distillation of the work of Richard Wilkinson and Kate Pickett on the statistical relationship between standard measures of economic inequality and various social ills, such as ill-health, lack of social trust and crime. Its importance, and the controversy surrounding it, derives from its apparent ‘scientific’ justification of what might otherwise be instinctive or ‘moral’ beliefs in the desirability of equality.

The significance of the work is in the prospect it raises of a new dimension to the clash between rich and poor – clear-cut evidence showing that social factors affecting the whole population (rich and poor alike) are beneficially affected by a smaller spread between the highest and lowest incomes. These benefits come over and above the individual advantage of a higher rather than lower income.

While not necessarily disputing their conclusion, in this essay I point out the potential weaknesses that cast doubt on their particular analysis, and so render it a less than potent political weapon for egalitarians. At the same time I emphasise the importance of tackling overall inequality, not just inequality of income and wealth, for the benefit of the vast majority who would certainly gain.

Inequality as ‘Social Pollution’

From the point of view of those with high incomes, if greater equality improves their absolute welfare no intrinsic social conscience is necessary to see this as desirable. This clearly broadens the potential appeal of egalitarian policies that involve the redistribution of incomes and wealth. We can illustrate the argument diagrammatically.

Figure 1 above shows the share of incomes (and assuming a direct relationship between the level of income and welfare, the latter also) plotted on the vertical axis, against the population ordered from lowest to highest income on the horizontal axis. The red curve shows the income level rising slowly from person to person for those with lower incomes, then much more rapidly for those with higher incomes. The total income is given by the area under the curve, and the total income received by any group is indicated by the area under the part of the curve on which that group is situated. Under the red curve the area belonging to the poorer half of the population (on the left of the graph) is much less than that belonging to the richer half (on the right of the graph). This red curve therefore represents a high level of inequality of income, and consequently of welfare.

The blue curve on the diagram represents a more equal distribution of the same total income. Assuming no direct effect of the reduction of equality, the welfare levels would also be distributed according to the blue curve. While the majority of the population are therefore better off with the blue curve – since their welfare levels lie above what they would have been with the red curve – there are a small number of the rich who are now worse off. This is likely to be a block to motivating political support for inequality reduction, firstly because the economic power of the rich can be translated into political power in disproportion to their numbers, and secondly perhaps because of aspirational beliefs of some of those who would currently be better off but calculate according to a positive probability of one day being among the rich. The extent to which these beliefs are fostered by organisations and media outlets controlled by the rich serves their current interest in maintaining the red curve.

Future Economics - People, Money and Power