Transcript: Thom Hartmann discusses inequality with Will Wilkinson, 04 August 2009
The astroturf is rolling on energy reform, phoney letters to Congress coming from lobbying firms presenting themselves as non-profits. We’ve got the teabaggers out in force, that’s being orchestrated by Dick Armey and Freedom Works and several other right-wing groups in the background, to shout members of Congress down all across the country, at their town-hall meetings. Katherine Sibelius also a victim of this. This is amazing. Senator Durbin says, “We will not fall for a sucker-punch like this.”
This is fundamentally anti-democratic. Over at democraticunderground.com they’ve got a link back to a photo from 2000 of all the folks who showed up in Florida to demand that the vote gets stopped, and it looked like it was a citizens uprising, and they’ve identified the top ten people in the front of the photo, and they’re all members of Tom DeLay’s staff, who were flown in. You can see their names, you can see the photo, it’s all over, democraticunderground.com, it’s one of the top links.
So, this is ongoing, and we will get back to this in more detail as the programme goes on. But, you know, in large part it’s emblematic of a larger problem that we have across American society, and that is that, mind-boggling amounts of research, Richard Wilkinson’s most recent book, it’s only available in the UK, it’s called "The Spirit Level," although he’s written previously, books have been published in the United States, the last one about three years ago, showing that as inequality in a society, the difference in income or wealth between the top twenty percent and the bottom twenty percent. That ratio is about eight to one in the United States; it's about three and a half to one in Japan, it’s about three and a half to one in Sweden. Japan reduces inequality by simply having lower levels of pay, as a cultural phenomenon. Sweden reduces inequality by having higher levels of taxes on the very rich, and a strong social safety net. It doesn’t matter.
When inequality is reduced, society becomes more civil. Homicide rates go down. Use of antidepressants and prescription psychoactive drugs goes down. Drug abuse goes down. Child abuse goes down. Spousal abuse goes down. Divorce goes down. Homicide rates go down. All of those social ills, that we tend to associate with poverty, actually the correlation with poverty is fairly weak. The correlation with inequality is profound. Also, what goes up are levels of education, levels of job satisfaction, survival of marriages, the ability of children to graduate from school. All these things, and yet there are still folks out who are there saying “No, no. Inequality, got nothing to do with it, and in fact, we got the proof.”
One of them is with us right now, Will Wilkinson, with the Cato Institute, and Will is a Research Fellow at the Cato Institute. The website, of course, cato.org. He recently wrote a piece called “Does Inequality Still Matter?”
Thom Hartmann: Will, I would say yes, it does. You would say ... ?
Will Wilkerson: I would say it depends on what kind of inequality you’re talking about. Now, the paper that I wrote for Cato was about how to speak clearly about economic inequality in particular. Partly because the various statistics that measure economic inequality can be very confusing, and lead people to draw incorrect conclusions about how things are going. So I set out to clarify what they actually show us.
Thom Hartmann: Well, if we, I’m using here statistics from the United Nations, and this isn’t a conclusion from the UN, this is just drawing from the raw data. And we’re looking at an index that combines, that aggregates, life expectancy, math and literacy, infant mortality, homicide, imprisonment rates, teenage births, the willingness to trust strangers in society, obesity, mental illness, drug and alcohol addiction (legal and illegal) and social mobility (the ability to move socially).
And what we find is that the countries that do the very best on all these indexes are Japan, Norway, Sweden, Finland, Belgium, Denmark, the Netherlands, Switzerland, Germany and Austria. Those countries do the very best. They all have a gap of less than four to one between the richest twenty percent and the lowest twenty percent.
The countries that do the very worst, on the aggregate of all these lists, and this information is no secret, but it’s from Wilkinson and Picket’s book “The Spirit Level”, but you can find this all over the Internet. You can go to the United Nations and find the information. The country that does the worst is the USA. We are the most unequal, actually, Singapore is slightly ahead of us, but of the major industrialized worlds, we are the most unequal nation in the world. And we do the worst, far and away, we’re not even part of the line. I mean, Portugal’s on the line. We do the worst. Us, Portugal, the United Kingdom, New Zealand, Greece, Australia, and Italy do the worst on this, and we are the countries where the spread between the richest and the poorest is the highest. How can you refute that ?
Will Wilkerson: Well, the data is the data. One thing that, you know, that you’ll notice, that you’re giving a list of the wealthy countries, the OECD countries.
Thom Hartmann: No, no. This is, Japan is not an OECD country, I don’t believe.
Will Wilkerson: Ok. So it's a list of some of the wealthier countries.
Thom Hartmann: Well, let’s pull Costa Rica into this. You know, Costa Rica which has an average GDP of nine thousand dollars, under nine thousand dollars. It has a better life span than the United States, lower homicide rate than the United States, higher physical. You know, across the board, it’s not the wealth of the nation, if that’s the argument that you’re trying to make.
Will Wilkerson: Well, in general, it is. You’ll see that there’s a very strong relationship between the measured level of income inequality, and the overall well-being, the overall wealth level of a country, the overall GDP per capita. So, as a trend, you know, it tends to indicate that as places get wealthier, they tend to vote for a higher level of redistribution, and that tends to bring down the rate of income inequality, the level of income inequality.
The United States is, as you point out, it’s a peculiar place. Partly because it is so wealthy but has not, in the way that so many other countries have done, it has not voted for the level of fiscal redistribution that most wealthy countries have implemented.
Thom Hartmann: Then let’s compare the United States to the United States. Within the states of the United States, and this is information from the US Census Bureau. Ok, no political agency involved at all. This is from the US Census Bureau. The states that have the worst inequality, the largest gap in inequality, in the United States, are Louisiana, Mississippi, Alabama, Texas, Kentucky, Tennessee, Georgia, West Virginia, Arkansas, and South Carolina. They also do the worst on that index that I read you a little earlier, the ranges from homicide, to depression, to drug abuse, to teenage pregnancies, to adversity. They do the worst.
The states that have the closest, the least inequality, where the richest twenty percent are less than five times richer than the poorest twenty percent, are New Hampshire, Utah, Nevada, Iowa, Wisconsin, and North Dakota, and in those states, you find that they have higher rates of school graduation, lower rates of homicide, lower rates of drug use, half the rate of antidepressant use, of the states that I mentioned earlier. I mean, it’s a dramatic difference, and this is within the United States.
Will Wilkerson: Absolutely. One of the points of my paper was that the level of inequality. The same level of inequality can be caused by many, many different mechanisms. The important thing to look for is how the level has been achieved, what mechanisms underlie it. In all those states that you mentioned, for example on the bottom of the survey that you are mentioning, those are all places in the South; they have a history of racial segregation.
Thom Hartmann: New York City is not in the South. It’s got one of the highest levels of inequality and it’s not doing all that well.
Will Wilkerson: New York City was in that ?
Thom Hartmann: New York state. Florida is in that level, is inequal. California is inequal. They all have worse outcomes than New Hampshire, Iowa, Wisconsin, Utah, Vermont, and Minnesota.
Will Wilkerson: And so it’s very true. You see it as a trend all across the world that levels of redistribution are positively correlated to the sort of ethnic or racial homogeneity of the society.
Thom Hartmann: No, not true, because Mississippi and Louisiana are doing just as badly as New York state.
Will Wilkerson: So you got two different kinds of sets of states. One set are former slave states, that have a high degree of sort of black / white descension and tension in the society,
Thom Hartmann: This doesn’t have to do with race. Can you stick around for over the break ?
Will Wilkerson: Yeah, yeah, I’m happy to.
Thom Hartmann: OK, great. Cause I’d like to get into how do we bring about equality, which is really, I think, the main issue here.
We’re talking with Will Wilkinson, Research Fellow at the libertarian Cato Institute, cato.org
Will Wilkinson on the line with us. He is a Research Fellow at Cato Institute, cato.org is the website. Our question is “Is Inequality Killing Americans ?”
Will, before we get into this, let me just toss a couple of quick numbers at you. And by the way, let me give you the source. Cause I would love to have you look at the stuff, and maybe we can revisit this conversation a few weeks down the road. This is all from equalitytrust.org.uk.
Will Wilkerson: Sure.
Thom Hartmann: When you look at income per head, and life expectancy, what you find is that there’s this radical drop-off below about seven thousand dollars per person per year. In other words, per capita. And, those countries that do very poorly, the Ugandas, the Burundis, the Cape d’Ivorie [Côte d'Ivoire?], the Congo, the Liberia, Mozambique, they are all like under four thousand dollars per year. But when you get above around eight thousand dollars a year, you get up to Albania, Ecuador, Costa Rica, Cuba, Uruguay, Belize, Panama, Mexico, Chile, Portugal, Malta, Cyprus. Now, we’re between ten and twenty thousand dollars, and by the way, all these countr1es have life expectancies that equal or exceed that of the United States.
And then you get up to twenty thousand dollars a year. Cyprus, New Zealand, South Korea, Slovenia, Czech Republic, Bahrain, Greece. They’re all equal or above the United States. Thirty thousand dollars a year. Germany, Israel, Spain, Japan, Australia, Sweden, Italy, Finland, Belgium. They’re all at or above the United States.
We’re at forty-four thousand five hundred, along with Norway, the richest countries in the world. And yet, many of these countries where people are making an average of twenty or thirty thousand are living as long as or longer than we do. Japan is longer than we are. And, countries like Costa Rica, at nine thousand dollars a year are doing better than we are.
It seems that there is this drop-off point at around six thousand dollars or seven thousand dollars per year, where below that there’s just not enough for the core stuff, and people start dying young. I mean, average life expectancy in Mozambique is forty-three years. In Zimbabwe, forty-one years. And their average income is under three thousand dollars a year. So when you get above, this isn’t about, you know, there is relationship between life expectancy and rich and poor. But when you look at all these other indexes, then the relationship has to do with inequality. So the question is, if we agree, and maybe we don’t agree on this, that reducing inequality in a society is a desirable thing. First of all, do we agree on that or not ?
Will Wilkerson: It depends on what kind of inequality. If there is a kind of inequality in standing or status, such as, you know, institutionalized or systematic, you know, racial inequality or gender inequality, I think, you know, absolutely, emphatically. We need to weed those kinds of inequalities out.
Thom Hartmann: I’m talking about financial inequality here. All these statistics have to do with income.
Will Wilkerson: Right, so if it’s nominal income inequality, what was my argument in the paper was that that doesn’t matter as much as people think, because the statistics can change based on things that are an improvement in the injustice of a society, so if the United States becomes more welcoming to extremely poor immigrants, that automatically shoots up the inequality level. But, those poor people have been made much better off by having been given the opportunity to participate in our wealthier institutions.
So, a number that is so sensitive to things like that, or they're very sensitive to the age composition of a population, so, you know, people earn more money when they’re in their forties and fifties, and much less when they’re in their twenties, or when they’re retired. And you know, the shifting of the demographic balance of society can change the inequality numbers.
Thom Hartmann: Right. I’m not going to argue with that. But I would submit to you, that that’s a small variable. But whether it’s small or large, let’s go with that. Let’s just say that that’s real. We want to reduce inequality in the society. There’s three ways that I know of to do that.
There’s the Japanese way, which is to have cultural power, and legal power, actually, that prevents the very rich from getting very rich. In other words, pay is capped. The average CEO in Japan makes about sixty times, the very top CEO’s in Japan, you know, the President of Sony, makes about sixty times what the janitor makes. And, they have a strong social safety net at the bottom. So, everybody has free health care, everybody has a free retirement, they have old-age hospices. So there basically is no profound poverty on the bottom, and there’s no profound riches on the top. They do it through cultural pressure and law.
Sweden does it by high taxes. You pay ninety percent tax, like we used to do during the Eisenhower, the Republican Eisenhower administration in the United States, when we had half the inequality we have now, and half the social problems that we have now.
And then, the third way, is what they do in the Basque region of Spain, which is where they don’t have private corporations. They have the Mondragón cooperatives, which is a five billion dollar corporation, you know, hundreds of stores and businesses, and they’re all worker owned. And so that produces equality. You know, high levels of unionization.
Do you have some other way to produce equality, that you know of ?
Will Wilkerson: To produce income equality ?
Thom Hartmann: Yes, sir.
Will Wilkerson: Well, sure. You can take a larger portion of rich peoples income, throw it in a hole, and light a match, and that increases inequality.
Thom Hartmann: No. I’m talking about equality.
Will Wilkerson: Yeah, that increase income inequality. You take away the wealthiest peoples income and destroy it. This increases inequality, but that doesn’t help anybody.
Thom Hartmann: No, it doesn’t.
Will Wilkerson: The question is, what makes poor people better off ? What increases economic mobility ? And looking at the income inequality statistics is a distraction from those more fundamental questions.
Thom Hartmann: Ok. Will, people can read your piece over at cato.org. It’s very well written, Will Wilkinson. Thanks for being with us.
Will Wilkerson: Thanks for having me on, Thom.
Transcribed by Gerard Aukstiejus.