Samuel Cohn: Global Social Trends

Lane Kenworthy, sociologist at the University of California San Diego with a distinguished record of statistical studies of advanced capitalist nations, is about to publish a game-changing book in macrosociology and public policy. It comes out in 2025 from Oxford University Press. 

The title: IS INEQUALITY THE PROBLEM?

Lane Kenworthy is a progressive who has just blown a hole in some of the most fundamental ideas in progressive thought today. He shares the same social justice goals that are held by many left-of-center academics. But he argues that their methods are deeply misconceived.

In particular, the standard doctrine of a lot of critical social science is that rising inequality in capitalist societies is responsible for a great percentage of our social problems. Kenworthy accepts the standard wisdom that income inequality has dramatically increased, both in the United States and in most of the developed world. The empirical support for the claim of rising income inequality is overwhelming; the increase has been documented by a vast array of statistical studies.

The received wisdom about this increase in inequality is that is has been the cause of a huge number of social pathologies. These pathologies include diminished economic growth, reduced access to healthcare, rising mortality, morbidity and untreated sickness, rising unemployment, underemployment and economic precarity, increased social discontent, political frustration leading to ethnic hostility and hostility to migrants, political frustration leading to support for conservative populist programs, increased sexism among economically deprived men, elite control of the economy leading to cartelization, elite control of the economy leading to risky investments and financial crises, and elite control of the media leading to diminished democracy and rising authoritarianism.

The solution to all of these problems is “in theory” to reduce social inequality. There is particular interest in going after the incomes of the 1% and redistributing these to the poor. I write “in theory” because Lane Kenworthy has great doubts about whether social inequality really does cause all the problems that it gets blamed for.

Kenworthy is swimming against the tide. The book opens with a long list of quotes from some of the most distinguished social scientists and prominent individuals of our time. The famous names include the Nobel Prize Winner Paul Krugman, Pope Francis II, the Nobel Prize Winner Joseph Stiglitz, former Secretary of Labor and present-day Berkeley economist Robert Reich, political scientists Jacob Hacker and Paul Pierson, the Research Department of the OECD, the OXFAM research department, leading development economists Olivier Blanchard and Dani Rodrik and, of course, the prominent French economist Thomas Piketty who built his reputation on his critique of inequality. All of these authors see rising inequality as the fundamental source of problems in modern societies.

Lane Kenworthy’s counterargument is simple and straightforward.

Levels of inequality simply do not correlate with the negative effects that are blamed on inequality.

Increases of inequality also do not correlate with those negative effects.

Running fancy statistical estimations that include control variables do not make this correlation stronger.

The reason for this is simple. National differences in economic growth, access to health care, social mobility, psychological happiness, support for democracy or support for left or right-wing parties are based on other factors. Inequality affects these other factors weakly and indirectly. Thus, reducing inequality would not make all of these other problems magically disappear.

Early in the book, Kenworthy makes a point that is a real slam dunk for his position. New York and California are among the two most unequal states in the United States. Both are liberal states with generous government benefits, good economies, and ample political support for progressive social policies. The presence of some of America’s richest plutocrats in New York and California has produced neither poverty, gutting of government services or reduced support for democracy. I did my own “I can be Lane Kenworthy for five minutes” analysis where I looked at American states with perfectly matching levels of social inequality. Using a standard measure of inequality, the Gini Coefficient, and a table of 2019 data found at https://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_income_inequality, it was readily apparent that both red states and blue states can be relatively equal, relatively unequal or somewhat in the middle. Many ultra-liberal and ultra-conservative states have virtually identical Gini coefficients. Both California and Mississippi come in at 0.49. Connecticut and Louisiana have clone scores of 0.50. Idaho is one of the most egalitarian states in the country with the low Gini of 0.43. Idaho is extremely conservative, has low levels of welfare expenditure and has only average rates of economic growth. Not exactly what Thomas Piketty would expect.

In the book, Kenworthy presents simple graphs showing the bivariate relationship between inequality and a large number of indicators among the wealthy capitalist nations of the world. The contrasts are between the U.S. which is one of the more unequal advanced industrial nations and Canada, the Western European countries, Japan, Australia and New Zealand. In the overwhelming majority of cases, neither overall inequality nor changes in the level of inequality have any effect on economic growth, population health, population happiness, social mobility, or quality of democracy. Occasionally, a negative relationship between inequality and some measure of human well-being slips through. However, parallel tests on the same nations or more careful consideration of the countries involved ends up supporting the claim of no inequality effect per se.

Does this mean Lane Kenworthy believes that we should forget about taking care of the poor and we should let the rich get as rich as they would like? He doesn’t think so and neither do I. He absolutely believes in raising the standard of living of the poorest and most vulnerable populations within our country. Better health care, income supports for people in crisis, and better education are all good things. The issue is not whether the rich on top are a lot richer than the poor or a lot lot lot lot richer than the poor. The rich can be a lot lot lot lot richer than the poor without changing the desirability of preventing children from starving in the streets, making people go homeless or making people go bankrupt to pay for their medical care. As long as people with dire human needs are taken care of, it doesn’t really matter whether the wealthy are millionaires or billionaires.

It DOES matter whether the government has adequate funding to provide the services that are necessary to maintain minimum standards of human well-being. Kenworthy is insistent that all citizens should pay their fair share of taxes. This includes the top 10%, the top 1% and the top .00001%. I fully agree with Lane Kenworthy on this point.

One does not tax the rich out of some sense of personal envy or small-minded levelling. One taxes the rich because the nation has objective needs – such as a strong military, good roads, good schools and high-quality medical research. Once services are provided at a decent level, there is no further advantage to taking money away from the wealthy. In my opinion, this is true whether the billionaire in question earned that money fair and square, inherited that money fair and square, or stole that money fair and square. Public finance is meant to take care of societal needs and not micromanage the levels of bank accounts of the world.

My own take is that making inequality the issue per se merely serves to threaten the wealthy, making them defensive and less cooperative. One can espouse policies that would make some wealthy people less wealthy if those policies produce genuine public goods. Antitrust policy prevents harmful monopolies but lowers the income of monopolists. Labor and ecological standards prevent exploitation and destruction of the environment but lower the income of exploiters and polluters. Enforcing security laws leads to healthier more transparent markets but lowers the income of fraudsters and inside traders. Creating a national healthcare plan reduces medical administrative costs and insures universal access; it also lowers the income of private insurance companies. Taking away money from people merely because they have a lot of it accomplishes no particular social goal. Putting in meaningful reforms is generally a good idea, even if that means reducing the income of special interests.

Lane Kenworthy would argue that if you want to see more economic growth, look at the true causes of economic growth. If you want to see better access to health care, look at the true causes of limited access to health care. If you want to greater support for democracy or for ethnic equality, look at the true causes of democracy and ethnic equality.

Income inequality is the red cape that draws the anger and attention of progressive bulls. Charging at the cape allows the powers that be to maintain the other obstacles that really do prevent the improvement of the lot of poor people. Going after these other obstacles are what we need to be doing.

Skip the cape. Go for the matador.