BY ADAM MEMON 14/10/2014
In a recent debate I had on the BBC World Service (CPS, 2015) with David Graeber, the anthropologist who apparently came up with the phrase “We are the 99 percent,” I quoted official figures showing big falls in extreme poverty and rises in life expectancy. His response was predictable but nonetheless disappointing. “All these figures are contested,” he said. No, they are not. They are verifiably and undeniably true.
Listening to Graeber and other commentators, one could be forgiven for thinking that the last 25 years of rising prosperity had not happened. The reality of the economic and social progress brought about by the expansion of global capitalism is apparently too much for them to bear. So they simply deny it has happened and talk about inequality instead. A plethora of stunningly misrepresentative reports which deliberately conflate inequality with poverty are a particularly egregious example of this (Oxfam, 2015).
What most of the commentators who engage in this kind of discourse seem to have in common is an adherence to some woefully misguided beliefs about inequality. Firstly, that inequality is rising with the poor becoming poorer. Secondly, that inequality is always and everywhere a bad thing. Thirdly that more state intervention is required to reduce this rising inequality. All these beliefs are misguided.
A recent piece on CapX by my colleague Zac Tate (2015) shows in detail how much progress there has been in recent years. Extreme poverty is falling at the fastest rate in human history. The population of the developing world increased by 59 percent from 1981 to 2010 and over the same period, the proportion living with less than $1.25 per day fell from about half in 1981 to 21 percent in 2010. Amazingly, two-thirds of American adults thought that poverty had doubled, 29 percent thought it had remained stable over the period and only 5 percent knew it had fallen.
Global hunger has fallen by 39 percent since 2000, life expectancy is rapidly increasing, child mortality is tumbling, child labour is plummeting, real per capita incomes are rising, leisure time is rising and more than half the world’s population lives in a democracy compared to just 10 percent at the beginning of the 20th Century. These are not opinions but facts. Joyous, heart-warming facts which show the World is becoming a better place.
On inequality, the rescuing of hundreds of millions of people from absolute poverty in China, India and elsewhere in developing countries means that globally, income inequality is falling as poorer countries catch up with richer countries (Cowen, 2014). Health and education inequalities have also fallen as more schools are built in poorer countries and more girls receive tuition. In the UK, there does not seem to be strong evidence of rising wealth inequality especially given that the Office for National Statistics (ONS) Wealth and Asset Survey (2014a) shows flat inequality. On income inequality, the ONS (2014b) compiled Gini Coefficient also suggests no significant rise in inequality over the last few years.
Moreover, the existence of some level of inequality is not in itself evidence of an innate immorality. The reality is that people make different decisions and lead different lives. People have different training, skills and talent. Some people work 70 hours a week, most work fewer hours. Some people spend years to master their trade, others leave school young and become genius business people. Some people take risks, others do not. Does it seem just for everyone, despite our many different choices to have the same outcome?
The argument against inequality is often code for an attempt to cap the aspirations of the ambitious. Yet a society which curtails the ambitious or in which we are all cocooned from the consequences of our decisions cannot be free or prosperous. Furthermore, the conflation of poverty and inequality is leading to a perverse logic. Extreme poverty, wherever it exists, is an economic and moral catastrophe. Yet poorly targeted policies used to cut inequality, almost invariably involving a heavier tax burden, can often cut economic growth which exacerbates poverty.
In response, the advocates of inequality reduction argue that inequality damages growth. As Matthew Lynn (2015) argues so well, this is in many ways a seriously flawed line of argument. I would add that anyone who thinks that the reduction in growth from higher taxes is outweighed by the increase to growth from reduced inequality needs to explain the mechanism by which that could happen. As Matt Lynn makes clear, multipliers and post-war recoveries are not enough.
We are living in the most amazing period of human history. Malnutrition is falling, literacy is rising and new technology is radically improving our way of life. The War on Poverty is not yet won; there is still so much to do before extreme poverty is banished. First and foremost must be the total liberation of girls and women from antiquated, misogynistic constraints. Developing education, expanding trade, opening markets, improving government and extending property rights are all also crucial. Even so, the relentless pessimists are wrong to deny the progress of recent years. The data is there for all to see.