2009 – first published2011 - published with revisions and new postscript
Over recent decades NZs wealth overall has increased yet social problems likewise have increased.Currently, each social problem is being addressed separately with little regard to other problems in society.If a single underlying reason can be identified to explain some or most of these problems, it should be possible to develop a coherent plan to address the problems in a logical, coordinated manner.
LSE=London School of EconomicsThese authors have been collecting data for decades.
For USA data (comparisons between the 50 states), US census data were used.
For poorer countries, increasing average income increases longevity, health, wellbeing, happiness etc.For rich countries, increasing average income adds little to life expectancy (shown here) or other indices of health and social wellbeing. This is the flat part of the curve where countries are selected for studies in Spirit Level.The data may or may not be relevant to countries on the steep portion of the curve.
1. As noted, these are “rich” countries on the flat portion of the curve – developed market economies.2. Not all 23 countries are represented on all graphs – only countries where valid data have been obtained.3. <3 million indicates countries with less than 3 million population are excluded to avoid anomalies such as tax havens (Monaco etc).
Data used household income after tax & benefits adjusted for # people in the household.Length of bar represents how much richer the richest 20% are than the poorest 20% (ranging from less than 4-fold in Japan to over 9-fold in Singapore).Similar outcomes are seen using alternative but similar indices – Gini coefficient (USA) or Robin Hood Index.Question: What effect does the GAP have? Correlate size of GAP with health, societal indices…..next slide.
This is a combined index (with 10 components) of Health & Social Problems (r=0.87 p<0.01).Comparable data were collected from 21 countries on indices above – each item carrying equal weight.The greater the income gap between countries (NOT the average income of the country) the worse the outcome.Note throughout the lecture, there is a tendency for some countries to do badly on individual indices shown above (USA, UK, Portugal, NZ) while other countries do well (Scandinavian, Japan).The differences cannot be explained by religion (Portugal & Spain), language (remove USA, UK, NZ – the correlation remains), race (Sweden=Japan) or HOW the gap is narrowed (Japan – equality of income; Sweden – tax & welfare).We will look at some of these indices separately – see where NZ falls, but first..As a check on this inter-country data, we can look at similar data comparing income gap vs above indices between states in the USA……next slide.
Data not as tight but +ve and statistically significant (r=0.59 p<0.01).Emphasize – income gap within societies is pivotal – not the average per capita income of the country or society.Next slide emphasizes this fact……..
LEFT: No relationship between life expectancy and national average income.RIGHT: Close relationship using income difference within countries (England & Wales).The GAP within a society/country looks to have an impact on…….now look at some of the indices noted earlier which made up a composite index of health & social problems……..first, infant mortality rates…….next slide.
r=0.42 p=0.041. New Zealand’s rates are nearly double those in most Scandinavian countries and Japan.2. In the 1960s, NZ ranked among the top 5 countries for infant mortality. We now rank near the bottom among rich countries.
Log scale(this compresses the data so it fits on the graph) – USA 14 times higher than Japan. Same relationship if “outliers” USA & Singapore are excluded (r=0.75 p<0.01).Same relationship using 50 States in USA (not shown) – (r=0.48 p<0.01).3. USA number quadrupled 1978-2005; UK number doubled 1990-2005.4. Finland # fell; Sweden stable through the 1990s.5. Violent crime rate higher in unequal societies – but this a minor contributor to these statistics.6. USA – longer sentences (California 2004, 360 with life sentences for shoplifting) and higher imprisonment rate.7. UK – increased prison sentences (40/day for shoplifting) and increased duration in prison.8. Netherlands – similar crime rate to UK but lower imprisonment rate and shorter duration of imprisonment.9. Strong social/racial gradient (lower class/blacks sent to prison) exacerbates the size of the GAP.10. Degrees of civilization within prisons: Japan (havens of tranquillity)/Netherlands vs USA (supermax prisons).11. “Prison doesn't work” especially in unequal countries: re-offending rates 60-65%(USA & UK) – 35-40% (Sweden & Japan).12. Unequal countries – PUNITIVE attitude (“get tough on crime”). Equal countries – REHABILITATIVE attitude.
r=0.57 p<0.01 (USA r=0.47 p<0.01)1. Definition of Obesity: BMI (body mass index) >302. NZ along with USA and UK have shown an increasing prevalence of obesity over time.3.Same pattern for children.4. Stronger relationship for women than men.5. Range on graph – USA >30% Japan 2.4%.6. Outcomes of obesity are bad – diabetes, hypertension, perhaps some cancers.7. The prevalence of diabetes in New Zealand is now among the highest in the world, and obesity is central to the development of type 2 diabetes -the commoner form. To quote a research paper in The Lancet (June 25th 2011): “Of high income countries..diabetes (prevalence is) highest in the USA, Greenland, Malta, New Zealand and Spain”.
WHO surveys (1998-2005) with the same questionnaire in 9 countries and similar in 3 countries =12 countries. (r=0.73 p<0.01)2. Range 8-26%.3. Especially strong relationship for anxiety disorders - as might be predicted.4. USA 50 states – same relationship for adult women and children – not for adult men (graph not shown). Overall r=0.18 NS.5. The exception to relationship between the GAP and Social Problems is SUICIDE.
Data from UN Office on Drugs & Crime 2007. (r=0.63 p<0.01)Data from USA (50 states) has a “tendency” to show a similar correlation (graph not shown).
UNICEF index used 40 indicators of child well-being (r=-0.71 p<0.01)Using totally different indicators, child wellbeing relates again closely and convincingly to the size of the income gap.
Data from UNICEF (2001). “At the top of the league (are) our usual group of rich countries…” There is a 10-fold difference between the top (USA) and bottom (Japan). r=0.73 p<0.01The data shown here are similar to that from across the 50 states in the USA (2002, graph not shown) – r=0.46 p<0.01.3. Teenage motherhood in rich countries is seen as bad for the mother, the baby and for society.4. Within rich societies, those with the lowest household income have MUCH higher rates of teenage pregnancy than those with higher household incomes.5. Religion might contribute to differences between countries but the effect appears small witness catholic countries with both high (Portugal & Ireland) and low (Spain and Italy) rates.6. Teenagers giving birth who are married is common (>50%) in Japan, Greece and Italy but is uncommon (<25%) in USA, UK and NZ.7. The reasons underpinning this relationship are complex and argued. The “stress” of being at the bottom-of-the-heap in an unequal society appears to increase the chances of teenage pregnancy. “Motherhood is a way in which young women in deprived circumstances join adult social networks”.
The graph from “The Spirit Level” is not shown but indicates that maths and literacy scores of 15 year-olds are lower in more unequal countries (r=-0.45 p=0.04). The same pattern is seen across the 50 states in USA (graph not shown – r=-0.47 p<0.01). Drop-out rates from schools in USA show the same pattern versus inequality across the 50 states.Finland: Finland has been at the top over many years. Teaching is competitive in Finland - 2,000 applicants for 120 jobs each year. It is easier to get into Medical School than teaching.Finland at the top – based on PISA (program for Int. Student Assessment for 15 year-olds around the globe). PISA data shows that New Zealand does well for its better students but relatively poorly for poorer students.Govt. in Finland looks at 8-10% sample of student’s work.Data on Finland from The Independent (UK) newspaper 26 May 2011.Prof Lavonen is HOD of Teaching Education @ U of Helsinki.University tuition free for Finnish & EU studentsExplanations for the link between equality and educational standards are discussed in the book. More equal societies promote a secure attachment between mother and child through longer paid maternity (and/or paternity) leave, free early childhood education etc and an overall more secure early childhood which is vital for later educational performance. “Early childhood education programmes can foster physical and cognitive development, as well as social and emotional development…....Cost-benefit analyses show that they are high-yield investments”!!!
1. Changes over time are parallel i.e. after fall of the Berlin wall inequality increased in the former East Germany along with documented increases in BMI. Russia experienced dramatic decreases in life expectancy and a parallel increase in income inequality since the early 1990s. Post WW11, Japan developed an egalitarian economy and unrivalled improvements in population health.
Whatever the fine details are to explain the correlations shown, “the picture makes immediate intuitive sense”.How high levels of inequality lead to adverse health and societal outcomes is difficult to determine, but “stress” seems central.Three sources of stress are said to be: low social status; lack of friends and; stress in early life.Pride, shame and status probably contribute to stress.The results of excessive stress are varied – and mostly unsurprising.The next slide looks at the relationship between equality and trust in the rich countries.
r=-0.66 p<0.01Data are from the European & World Values Survey (2005) using the question: “Most people can be trusted” - yes or no?There was a 6-folod difference in levels of trust between “top” and “bottom” scoring countries, greater trust occurring in countries with the lowest income inequality.The same association was seen across 41 states in the USA which provided data...next slide.
r=-0.70 p<0.01The findings are similar to those in the previous slide with a 4-fold difference in trust between the top and bottom-scoring states.Trust overall has fallen in USA from 60% in 1960 to <40% in 2004.As inequality increased in USA between 1960 and 1998, trust declined and the correlation between the two is robust (see Figure 4.3 in “The Spirit Level”).
The gap in income (here between the top and bottom 10%) in the UK (gap in 1975=1) has risen over a 30 yr period peaking in the early 1990s and “remains at levels almost unprecedented since records began”. Similar in USA (replace Thatcher with Reagan).New Zealand showed a similar pattern from the 1980s along with UK, USA, & Australia.. ”accompanied in each case by a free-market ideology and policies designed to create a more ” flexible” labour force”. “The English-speaking countries caught the disease quickly from each other and caught it badly”.The data suggest that “neo-liberal” policies which swept especially the English-speaking countries had the unintended consequence of changing income distribution i.e. increasing the GAP.The possibility that high levels of inequality reflect meanness/selfishness in those in power within the country is supported by the observation that income inequality correlates with the percentage of national income spent on foreign aid (see Figure 4.6 in “The Spirit Level”). The UN target of 0.7% of gross national income to be spent on foreign aid is met by only 3 Scandinavian countries and the Netherlands. Countries most distant from the UN target include USA, Portugal, Australia and New Zealand.
Are our politicians concerned about the GAP in New Zealand?A letter of concern regarding New Zealand’s wide GAP from E Begg and G Nicholls (Christchurch) to all 122 politicians in mid 2010, elicited 8 replies. This suggests that our politicians, with some exceptions, see the GAP as of little importance. This premise is backed up in the next slide…..
Joseph Stiglitz (1943- ), American economist & Professor @ Columbia University, is recipient of numerous awards and was chief economist at the World Bank – but now is highly critical of globalization, free market economists and the IMF and World Bank policies. He was an advisor to Obama but is highly critical of his rescue plan after the recent economic collapse. He has written many books. See his detailed profile on Wikipedia.If the current GAP remains or increases in New Zealand, prepare for more prisons, more police, more drug problems, more psychiatric disease….etc. So action is needed – next slide.
The correlations between the size of the GAP and indices of societal wellbeing and health point strongly to cause and effect. The data lead logically to the conclusion that reducing the GAP has an excellent chance of improving the nation’s health and welfare – to the benefit of all in our society.We do not suggest that the gap should be CLOSED – to mimic the unfortunate experiment of Soviet communism.We do suggest that the GAP should be REDUCED – perhaps to levels seen in some Scandinavian countries and Japan.How can the gap be reduced?...next slide.
Treasure Island is a book published in 2011 explaining how (and approximately how much) money is stored away in tax havens out of reach of the taxman in countries of origin which morally should own this money in the interest of its own population. It is estimated that individuals have around $11.5 trillion secreted in tax havens and corporations have very much more hidden.New Zealand with its unicameral political system and small population, can move promptly to reduce the GAP – as it did to increase the GAP in the late 1980s.In closing the GAP, “..the historical evidence points to the primacy of political will”.“Governments have usually not pursued more egalitarian policies until they thought their survival depended on it”.There are many examples of countries which have successfully reduced the GAP (Korea, Taiwan, Hong Kong, Singapore, Sweden 1932-…) and various methods were used.There are many ways to reduce the GAP and an integrated approach (reduce differences in income, alter tax structures and benefits, support early childhood education, supply “adequate” maternity/paternity leave, free health & education…etc) is to be encouraged. Closing tax havens will be difficult – but must be addressed.The last word comes from Chile’s Nobel laureate, Pablo Neruda…next slide
1.Pablo Neruda (1904-1973) the Chilean poet and politician won the Nobel Prize for literature in 1971.2. “Rise up with me against the organisation of misery” was used by Michael Marmot as a catch-cry in his report “Fair Society, Health Lives” , a Strategic Review of Health Inequalities in England post 2010.
Suggest: Join one of the groups which aim to encourage a reduction of the GAP in New Zealand.
The gap slides
New Zealand’s Problem<br />Increased wealth but ↑health/social problems<br /><ul><li>crime/violence/imprisonment
Education PerformanceBigger GAP = worse performanceFinland - at the top1. Free (illegal to charge fees), compulsory (7-16 yr), no selection of students, no national testing, no league tables, no inspections 2. Teachers: “The most sought after profession”- Master’s degree, prestige, competitive++“Teachers are academics and well trained, so we trust them”(Prof Lavonen)3. Narrow income gap (Little social mobility)[Free tertiary education]<br />
Statistical AssociationsCause & Effect?<br />Correlations between countries & States<br />Robust correlations<br />Changes with time in parallel <br /> - USSR to Russia<br /> - Japan vs USA post WWII<br /> - Post-Berlin Wall<br />
The GAP in New Zealand<br />“It is no coincidence that the biggest increases in income inequalities have occurred in economies such as those of America, Britain and New Zealand, where free-market economic policies have been pursued most zealously”<br />The Economist 1994<br />
The GAP in New Zealand<br />“Income disparities are widening and they will widen much more. That doesn’t worry me”<br />Minister of Finance 1995<br />
The GAP in New Zealand 2009-2010<br />INCOME<br />Chief Executives – 14% rise<br />All New Zealanders – 1.7% rise<br />Business Herald 2010<br />
Considerations for the Rich<br /> 1. Reducing the GAP benefits the rich<br /> (as well as the poor)<br /> 2. Can the GAP expand further?<br /> “As we watch the fervor across the Arab world – where a fraction of the population controls the lion’s share of wealth – we must ask: when will it come to America”<br /> Joseph E Stiglitz (2011)<br />
ACTION: Reduce the income GAP<br />Hypothesis: Reducing the GAP will:<br />Improve health indices<br />Reduce infant mortality<br />Reduce crime & imprisonment rates<br />Reduce obesity<br />Reduce mental illness<br />Reduce teenage pregnancies<br />Improve education performance<br />Improve wellbeing….etc etc<br />Save $$$ long-term<br />
How to Reduce the GAP<br />Tax/Welfare – Scandinavian model<br />Decrease Income GAP – Japan model<br />Oversight of ministries etc (remove blinkers)<br />Close tax havens ($$ trillions)<br /> (Treasure Islands Nick Shaxson)<br /> Public / Political will<br />
The Fight Against Organised Misery<br /> But stand up,<br />you, stand up,<br />but stand up with me<br />and let us go off together<br />to fight face to face<br />against the devil’s webs,<br />against the system that distributes hunger,<br />against organised misery<br />The Captain’s Verses<br />Pablo Neruda 1972<br />
Where to from here?<br />NEW ZEALAND<br />www.closingthegap.org.nz<br />www.closertogether.org.nz<br />UK<br />www.equalitytrust.org.uk<br />