Tuesday, September 23, 2014

Why focus on horizontal inequality undermines efforts to reduce overall inequality

Goran Therborn in his important new book “The Killing Fields of Inequality” lists, among the three key puzzles of the past 30 years of social and economic developments, this one: Why were rich societies much more successful in reducing “existential” inequality between various  groups (blacks-whites; men-women; heterosexual-homosexual; immigrants-natives etc.) than in reducing overall income and wealth inequality? Actually, the very opposite happened: both income and wealth inequality increased substantially.

            A focus on “existential” or “categorical” inequality is what in the 19th century Europe used to be called a radical position, associated with the post-1789 developments. Once all formal distinctions of class between clergy, aristocracy and people were abolished, there was, it was argued, no need to focus on the existing income differences. This view reached its peak under the French Third Republic when inequality was increasing by leaps and bounds, while formal equality was left untouched.  (The socialist position at the time was that formal equality is just the first step towards real equality which requires also the diminution of economic inequalities.) The same radical position holds fast and true today: once you see the world as primarily composed of various groups, you quickly slip into “identity” politics whose main objective is to equalize formal legal positions of the groups—and basically let everything else the same.

            According to Thorborn, that’s what the world has been remarkably successful in doing in the past 30 years. There are well-known and substantial advances in the equal treatment of different groups (listed above); there was also a strong push for “horizontal” equality, which is the term used in economics to indicate that on average there should  be no wage differences between men and women, blacks and whites etc. (that is, at  least no differences that cannot be explained by better skills or experience). The progress there, although not as substantial as in legal equality, has been real too.

            But the quasi single-minded focus on “existential” inequality was not always helpful, and I think in some cases was outright harmful, to the general reduction of income and wealth inequalities. The success in the latter would—I think it could be argued—also reduce income differences due to racial or gender discrimination. In other words, pushing for reduction of inequality in general would make lots of sense even if our primary objective is to reduce specific gender or racial income inequalities. But this is not how things worked out. Rather, the focus was on “horizontal” inequalities while the overall, general inequality was left to its own devices, namely was allowed to increase.

            The focus on “existential” inequality is wrong, in my opinion, for at least three reasons. 

            First, the emphasis of group differences quickly spills into identity politics, splintering  the groups that do have an interest in fighting for change. The joint front crumbles. The groups end up by caring just about the change in their own positions and become indifferent to the rest. I am unaware for example that gays or immigrants, once their objectives of legal equality achieved, have shown particular interest to fight for economic equality in general, be it in the United State or the world. Splintering has made people focus on their own complaint; once that complaint is solved, they are indifferent to the rest. 

            Second, the focus on “existential” inequality leaves the basic problem unsolved because the way it poses the issue is wrong. I noticed this in a recent discussion regarding legalization of prostitution.  For feminists, prostitution is a reprehensible activity that they would like either to ban, discourage through some ill-defined teach-ins of women, or curb its demand by  punishing clients who are predominantly males. Not only do these approaches just drive the problem underground without solving it, they are futile because the root case of prostitution is not addressed. The root cause today (and perhaps in history) is income and wealth inequality. There are many (mostly) men with huge incomes and there are many (mostly young) women with poor job prospects and no money. This drives prostitution nationally and globally (as in sex tourism). So,  the point is not to address gender inequality only (men vs. women) but its economic cause. Consider what would happen even if horizontal equality between men and women were achieved, a thing which, with higher enrollment and graduation rates among women than men, and rising number of rich women, man soon happen. The problem will simply become that instead of 90% of customers being men we shall have a “fair” and “gender-neutral” distribution of customers with 50% men and 50% women. Will such gender equality solve the problem? Obviously not: prostitution, a reprehensibly activity in the eyes of the gender-focused activists, will merely become gender-balanced.  Is this all they really want to achieve? No. But, of course, it reveals that the real cause of the problem lies elsewhere, in inequality, and that their approach is misdirected.

            Third, the emphasis on “existential” equality is politically easy because it is not serious. It faces no  real opposition from the right-wing politicians and conservatives because it does not affect the underlying structure of economic inequality and political power. Instead of fighting for meaningful general changes (e.g. increased vacation time for all, shorter work-week for all, more favorable working conditions for parents, longer maternity and paternal leave, higher minimum wage for all etc.)—the issues on which the success has been quasi nil, but which would cut into the profits and thus face a strong economic opposition from the businesses, proponents of the “existential” equality care only up to the point where legal equality is established. Strictly speaking, such equality is also in the well-understood interest of capitalists. We know at least since Gary Becker that, economically, discrimination is inefficient for those who practice it.  But general measures that improve the position of the employees will not of course please those who have economic power. So the proponents of “existential” equality stop midway again. Formal equality is surely a necessary condition for overall betterment, but it is not sufficient. A movement toward more generalized equalization of human condition requires not only legal equality but also substantively greater (income and especially wealth) equality.

            Their approach (“formal equality and then nothing”) is what Rawls calls “meritocratic equality”, the lowest level of equality where all participants are legally free to pursue whatever career they choose  but where their starting positions are vastly different. All those who care exclusively about “identities” do only that: they aim to place everybody on the same starting line, but do not care if some come to the starting line  with Ferraris and others with bicycles. Their job is done once everybody is on the same starting line. Case closed: just when the real issues begin.  

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