Tag Archives: the Spirit Level

Close the Gap

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After my last post about Kate Pickett’s lecture on the Spirit Level, Liam Purcell from Church Action on Poverty told me that their current campaign to Close the Gap was inspired by this research. I’ve been following and supporting this campaign, so I thought I would write a piece all about it.

The Spirit Level investigates how the relationship between a country’s economic growth and the health and wellbeing of its citizens breaks down once a country reaches a certain level of income. The UK has reached this level – until the recession the UK was getting richer but not healthier or happier. Other things were making a difference, and the Spirit Level research demonstrates that differences in income inequality between countries can account for differences in health and wellbeing. Not only this, but reducing income inequality brings benefits not only for the poorest people in a society, but for every sector of the population.

Church Action on Poverty is campaigning to Close the Gap between rich and poor. This would not only transform the lives of those on the lowest incomes, people who Church Action on Poverty works with on a regular basis, but would also make our whole society fairer, happier, healthier and safer. The campaign focuses on four areas: fair taxes, fair pay, fair prices and fair say.

Fair Taxes

Anyone who knows me IRL knows I’ve been campaigning with Church Action on Poverty and Christian Aid on tax since the tax bus came to town! We’ve all been pretty annoyed that Starbucks, Google and Amazon, to name but a few, seem to be able to operate and make profits in this country without paying their fair contribution to the infrastructure which makes their operations possible. Christian Aid also offers a perspective from poorer countries. If we need company taxes to help our economy, how much more important are they in countries with smaller incomes and bigger needs? Tax was a key part of the recent IF campaign, calling for the closure of tax havens loopholes, disclosure of information between tax jurisdictions, and a public register of who really owns companies (beneficial ownership) so money can’t be hidden and citizens can hold businesses to account. We have really put tax on the table, and just in the last few days, the Prime Minister announced that the UK would publish a register of beneficial ownership and that this register would be public and not just for the tax office. Now Europe and the US needs to follow suit.

More needs to be done to close loopholes and tax havens, and Church Action on Poverty is asking for a re-think on tax. It is part of belonging together to contribute to the welfare of all. This is true for businesses and individuals, and we need to build a fair and transparent taxation system that reflects this attitude. If you want to see more about how the UK is still hiding money and how companies in the City of London are not paying their fair share, come and see the film The UK Gold, being screened in Liverpool on 21st November 2013.

Fair Pay

Did you know that this week is Living Wage week? Do you even know what a Living Wage is? It is calculated independently of governments in this country by the Joseph Rowntree Foundation (yes, originally the chocolate guy) and is the hourly rate someone working full-time would need to be paid in order to reach what the public considers to be an acceptable standard of living. At £7.65 an hour (£8.80 in London) it is considerably more than the minimum wage of £6.31 (no London rate).

Those who criticise the Living Wage suggest that it would be too expensive to implement and would put people out of business. The first thing response is to remind people that the Living Wage is voluntary and functions as a standard to aspire to. But in case you think that is a cop out, from the reading I’ve done, those organisations which have implemented it have found that improvements in productivity and reductions in sick pay have more than outweighed the cost. I guess it depends how low your starting point is, but the same argument was raised when the minimum wage was introduced, and there was no corresponding increase in businesses going to the wall.

In fact, introducing a Living Wage looks like it would actually save the government money. A new report from think tanks IPPR and the Resolution Foundation suggests that paying everyone at least the living wage would save the government £2.2 billion a year because of a reduction of in-work benefits and an increase in tax and NI contributions, even taking into account the fact that it would be spending more on paying public sector workers. This is something that has vexed me for a while. The Government is effectively subsidising industries which pay low wages, which includes in particular retail and care. There are plenty businesses in these sectors making handsome profits. By topping up low pay, the Government makes low pay a sustainable option and allows it to continue, while supermarkets (for example) continue to rake it in. The solution is not to cut in-work benefits but improve pay, as is beautifully described in this article by Polly Toynbee. She also says “For the long term, power needs to flow back towards the utterly powerless employee. A German-style seat on the board, as well as on the remuneration committee, helps contain top greed…Companies should be obliged to publish their pay ratios, from top to bottom.”

This is the second strand of Church Action on Poverty’s fair pay demand. We need to question whether huge salaries paid to anyone are justified or acceptable. It is not just a question of whether someone is worth it, but rather is it fair or just that in our society there is such discrepancy in pay. There needs to be a shift in attitudes so that pay ratios between the highest and lowest paid workers of 100:1 or even 200:1 are no longer acceptable.

Fair prices

Working with people on low incomes as a debt adviser has really opened my eyes to just how expensive it is to be poor. My dual fuel, pay by direct debit, paperless billing discounts are not available to someone who has to use a pre-pay gas or electricity meter because they are having difficulty meeting their bills. The weekly shop is also much more expensive if you have no transport to the big out-of-town supermarket and have to rely on local shops. Even the buy two get one free offers are out of reach on a low income, never mind carrying all that extra stuff home on the bus!

Another big issue is the cost of credit, significantly more if you are on a low income, and harder to obtain. This is why door-step lenders, payday loan companies and hire-purchase businesses are thriving, because if there’s nowhere else to borrow money and your washing machine has packed in, what else are you going to do? The cost of borrowing like this is astronomical, there is no limit on the fees and charges added on by lenders, and very little checking up on whether a borrower has the ability to repay. If you get behind with your repayments, or “roll-over” your loan for another month, the debts very quickly mount up and become unmanageable and unpayable.

Church Action on Poverty is calling on businesses to stop charging premium rates to their poorest customers and instead introduce social tariffs. United Utilities, water providers in the north west, already do this, and it is an enormous help to some of the people who have come for debt advice. Church Action on Poverty is also calling for a cap on the overall charges which can be levied by lending companies. Regulation for payday lenders is being discussed right now, so if you want to add your voice to calls for fairer lending, you can sign this petition.

Fair Say

How easy it has been for society to slowly but definitely increase the gap between rich and poor, and make life more and more difficult for those at the bottom of the heap. It is easy because those at the bottom lack power. Those with the money not only have power over business and policy decisions, but also over what you get to hear about, what gets discussed in the media, and the way we think about those who have not. Church Action on Poverty works with poor communities, not just to alleviate their needs, but also to give them a voice, to be able to advocate for themselves and bring about their own transformation.

I know I sound like an old-school leftie, battling against the hegemony of the establishment, as if we were lost in 1984 (the novel not the year) with the thought police. But I challenge you to read that report I mentioned in the last post – Poverty: Truth and Lies. And when you’ve read it, then tell me that those in power are not controlling the discourse.

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Inequality: a blight on our nation?

I went to another lecture last night! Kate Pickett talking about “Inequality: the enemy between us” at Liverpool University. I’ve been interested in her work since I did my dissertation, so I thought it would be good to share it. She is co-author, with Richard Wilkinson, of a book called “The Spirit Level”, which explores the relationship between the level of equality in society with various other measures of wellbeing, more of which on the Equality Trust website.

The lecture started by taking us through the main findings of this research. As you might expect, as a country grows richer, so life-expectancy in that country improves. This is a general pattern across all countries until a certain level of income is reached. At the point where countries would be considered rich, any further increase in income no longer leads to its citizens living longer. Comparing rich countries by income and life-expectancy shows that there is no longer a link between the two. So, for example, Portugal and the USA are respectively poorest and richest in this group of countries, but both have relatively low life-expectancy, while Norway (richer), Spain (poorer) have better life-expectancy. Japan has the best figures, while its income is in the middle.

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This doesn’t seem to make sense, as higher income correlates to better life-expectancy within a country. However, when a measure of well-being (including life-expectancy) is plotted against a measure of equality, the results are startling. There is such a strong association between the two that Prof Pickett joked that it looks more like a physics experiment than the kind of outcome normally seen in social science research! We then went on to see many more examples of how inequality is associated with poorer outcomes for other indicators of health and wellbeing, such as the UNICEF measure of child wellbeing, which shocked us in the UK when we came last a couple of years ago. What this shows is that it is not money which leads to better health and longevity, but rank – a person’s status in society.

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So far, we had seen lots of data, and an interesting association. The next part of the lecture considered why inequality might lead to worse health and social wellbeing. Apparently, if you have more friends, you are less likely to catch colds, and if you cut yourself (not badly) you will heal more quickly if you are in a good relationship with your spouse. Who knew?! This is a demonstration of the impact which social affiliation has on our physiology – our healing processes and immune systems. Psychologists have demonstrated that tasks which involve “social-evaluative threat” are the most stressful to complete. That is, maths tasks might be a bit stressful, but they are much more stressful if you know your score will be revealed and compared with everyone else’s. In situations like this, performance worsens if you are subject to “stereotype threat” – ie if you belong to a group which stereotypically is expected to perform worse then you will (on average) perform worse. Stress has an impact on our immunity and on our ageing, and social status even affects our neuro-biology. Perhaps chronic stress is the reason for the differing outcomes – does greater inequality emphasise the differences between social status, causing greater stress and thereby impairing our health, happiness and cognitive function?

But the link between inequality and poor health etc is not just of academic interest. The UK is one of the most unequal countries in this group, doing badly on a whole host of measures. That is a lot of people suffering unnecessarily, only because our society is so unequal. Clearly inequality affects the poorest at the bottom of the pile, but the research in “The Spirit Level” indicates that actually, inequality worsens outcomes right across the spectrum of society.

The impact of inequality has a broader impact too. Pro-social behaviour is lower in more unequal societies. More equal societies have more peace, give more foreign aid, do more recycling and have more biodiversity. These are all the “bigger-than-self” kind of issues which are the concern of Common Cause, research which underpinned my dissertation. In the lecture, we heard more about the effect of “priming”. High status people are more likely to behave unethically, but getting the same people to think about the benefits of equality before carrying out a task leads to more ethical behaviour. The Common Cause report also discusses how priming can lead to more pro-social behaviour. This report encourages groups concerned with “bigger-than-self” issues to consider the values and frames in their own communication, to ensure that values which lead to more pro-social behaviour are continually being primed within society. Equality is itself one of those values.

The Q&A session after the lecture showed that there were many in the audience who were keen to see more equality in our society, including many who were unhappy with the way UK society not only seems very unequal, but stigmatises and excludes the poor. So, is there a solution? Can we make our society more equal? We can all start with our individual situation, challenging prejudice and language which stigmatises, and ensuring our own behaviour is not grasping and concerned only with our own status, but rather with the needs of others too. Prof Pickett suggested that it would be good to see greed and individualism become as unacceptable in future as racism and sexism have become today. She also mentioned a book with some interesting ideas “What shall we tell our daughters” by Melissa Benn. Has anyone read it?

Beyond individuals, what changes would we need to see in society to bring more equality? The need to lift the floor was identified as essential, for those who can and those who cannot work. But there is also a need to constrain at the top. This could be done in two ways (it seems to me that both could be done together). One choice is redistribution. This would involve progressive taxation and proper social security, including a living wage, rather than just a minimum wage which is not enough to live on. She urged us to vote for whoever is promising this, but also reminded us that all of this is vulnerable to being undone by a successive government. The other choice is to make a shift in our society so that equality is embedded within it. This would involve improving economic democracy, which will mainly happen within the workplace. It would mean strong trade unions (small ripple of applause at this!), workers on company boards, especially those that set remuneration, more employee ownership, more mutuals and co-operatives, and anything that leads to more community cohesion.

This all sounds good to me. But before I congratulate myself on egalitarian credentials, I was challenged by one answer she gave. There had been some discussion about the increase in narcissism, and Prof Pickett joked about a self-questionnaire to identify it which asks if you think you’d run the world better than it is currently run. So someone asked her what she would do if she ran the world, though she modified her horizons and only answered for this country. Are you ready? She said she would abolish all private education so that absolutely everyone would go to a state school, and she would introduce inheritance tax at close to 100%. I don’t feel like such a radical socialist now!