Lies, Damned Lies, Statistics

11/04/2011

A translated version of this article has been published by Aamulehti

The Spirit Level by Richard Wilkinson and Kate Pickett was published in 2009. The book is a rambling, partisan argument for old-style left-wing ideology, cloaked in highly questionable statistics. It was thoroughly trashed by expert opinion when it appeared. The only reason to revisit the issue is the Finnish translation (Hyvinvointi ja tasa-arvo), which appears in the teeth of our parliamentary elections. The obvious aim is to rekindle the age-old resentment against the rich and thus inject some oomph in the attacks against capitalism and the market economy.

The “big idea” of the book is that “The more equally wealth is distributed the better the health of the society.” The authors underpin their idea with a barrage of statistical correlations between the Gini measure of inequality in income, and various health and welfare indexes. But every undergraduate student knows that correlation is not causation.

The authors make some desperate efforts to find a plausible causative mechanism, ignoring many counterexamples of their own statistics. For example Japan is the most egalitarian country and Singapore has the biggest income disparity. Yet Singapore fares as well as Japan in the health indexes. In the end the statistics do not matter. They act as a red herring, an insidious lie which diverts our attention to hide the non sequitur of the argument.

To the unbiased eye the problem is poverty, pure and simple; widespread poverty obviously correlates with inequality of income. But Williamson and Pickett have not one word to say about relieving poverty. Instead they attack the other end of the income scale. On the few pages reserved for recommended interventions, they introduce outdated syndicalist ideas to curb high incomes. This is pathetic. They seem in earnest to believe, that if we could get rid of, say, the one percent with the highest income, health and welfare would miraculously improve along the line. How self-deluded or cynical can one be?

The book has sold like wildfire, though like wildfire it has left no lasting impression. Yet the authors are on to something. They hanker for the primitive tribal state, when solidarity reigns supreme and any differences in status are frowned upon. All humans share this genetically anchored nostalgia; at heart we are all socialists. But real socialism is antithetical to liberty. It condemns us to stagnation and poverty, if not worse.

The left has politically exploited our inborn egalitarian instinct to the hilt. The envy and spite of the less well-off is the driving force of left-wing political parties. In democracies advancement by merit causes disparity of income and status. Wilkinson and Pickett make much of the stress of the left-behinds. They maintain that this blemish on democracy can be fixed and that equality and liberty can be easily reconciled.

This is the gist of the matter, statistics and logical argumentation be damned. Thanks to their egalitarianism, small primitive communities suffer little social stress. In hierarchical societies, too, stress is checked as everyone has to accept his or her station as fixed and God-given. In contrast, modern democracies try hard to offer all citizens equal opportunities, and there is the rub. When discrimination is eventually fading away, you can only blame yourself for your lack of success. This inevitably produces inequality and some tension, which cannot be explained or conjured away. It is the price of progress and prosperity, freedom and democracy.

Open and fair competition is the basic driving force of progress in democratic societies. The winners do not cause much of a problem. In Finland we would have nothing against a few specimens like Bill Gates or Warren Buffett. The losers are the real problem as health and social afflictions accumulate. They are kept on welfare but this is just a palliative. They create little or no value and are losing their self-respect and employability. The poor should become productive and self-reliant. Meeting that challenge would go a long way in increasing equality and curing the ills of democratic societies.