Category Archives: Inequality

Inequality

Institutions and the dynamics of inequality

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In a recent article, Intergenerational Wealth Transmission and the Dynamics of Inequality in Small-Scale Societies, by Monique Borgerhoff Mulder and colleagues (Science 326, 682 (2009) show the role of wealth sharing institutions, such as common property, in shaping the dynamics of inequality in society .  In their article they write:

Investigations of the dynamics of economic inequality across distinct economic systems have been limited by the paucity of data on all but contemporary market-based industrial societies. … Here we present empirical estimates of the extent of inheritance of wealth across generations and of the degree of wealth inequality, along with a descriptive model of the relation between the two. …

The key thesis to be explored is that for some kinds of wealth and some economic systems (but not others) the parents’ wealth strongly predicts the wealth of the offspring. In particular, the cattle, land and other types of material wealth of pastoral and agricultural economies are directly transmitted by simple transfers, often buttressed by social conventions of inheritance. By contrast the somatic wealth and skills and the social network ties central to foraging and horticultural livelihoods are more subject to the vagaries of learning, genetic recombination, and childhood development. Moreover, in foraging and horticultural economies, such material wealth as exists tends to circulate through broad social networks rather than being vertically transmitted to offspring. A corollary of the thesis is that, if our model is correct, economies in which material wealth is important will show substantial levels of wealth inequality.

Both the thesis and the corollary find strong support in our data. …

Our principal conclusion is that there exist substantial differences among economic systems in the intergenerational transmission of wealth and that these arise because material wealth is more important in agricultural and pastoral societies and because, in these systems, material wealth is substantially more heritable than embodied and relational wealth. By way of comparison, the degree of intergenerational transmission of wealth in hunter-gatherer and horticultural populations is comparable to the intergenerational transmission of earnings in the Nordic social democratic countries (5)—the average β for earnings in Denmark, Sweden, and Norway is 0.18—whereas the agricultural and pastoral societies in our data set are comparable to economies in which inequalities are inherited most strongly across generations, the United States and Italy, where the average β for earnings is 0.43. Concerning wealth inequality, the Gini measure in the hunter-gatherer and horticultural populations is almost exactly the average of the Gini measure of disposable income for Denmark, Norway, and Finland (0.24); the pastoral and agricultural populations are substantially more unequal than the most unequal of the high-income nations, the United States, whose Gini coefficient is 0.37 (21). Our model explains some seeming anomalies, such as substantial wealth differences in those hunter-gatherer populations whose rich fishing sites can be defended by families or other corporate groups and transmitted across generations and which constitute an atypically important form of material wealth for those societies (22). Our findings also provide evidence for the view—widely held among historians, archaeologists, and other social scientists—that some influences on inequality are not captured simply by differences in technology, as measured by our {alpha} values. For example, the marked hierarchies among some Australian foragers may be due to polygyny (23), elite possession of ritual knowledge (24) that may be transmitted intergenerationally, or even to the dynamics of food sharing (25). Similarly, the fact that some agricultural and pastoral societies do not exhibit substantial levels of economic inequality despite their characteristic forms of wealth being in principle heritable (26, 27) suggests the importance of deliberate egalitarianism, as well as other cultural influences and political choices (28). Examples include the lavish funeral feasting that redistributes the wealth of the elite among the Tandroy and other cattle pastoralists in Madagascar (29) and elsewhere (26). Other examples are the Nordic social democratic polities mentioned above.

Inequality

World distribution of income

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In a new paper, Parametric Estimations of the World Distribution of Income, Maxim Pinkovskiy and Xavier Sala-i-Martin revisit previous work by Sala-i-Martin, and estimate that globally income has substantially increased, reducing the number of people living in extreme poverty, and become more equally distributed (among individuals globally) over the past decades.

World distirbution of income 1970-2006 (Pinkovskiy & Sala-i-Martin 2009)

World distribution of income 1970-2006 (Pinkovskiy & Sala-i-Martin 2009). Red lines show 2006 and 1980 $1 day/income level.

In the paper they explain changes in income distribution:

In 1970, the WDI was trimodal (Fig. 19). There was a mode between the two $1/day lines, corresponding to the mode of the East Asian distribution (which, in turn, corresponds to the mode of the Chinese distribution which, in turn, corresponds to the mode of the Chinese rural distribution). The second mode is at about $1,000 and corresponds to the mode of South Asia which, in turn is slightly to the right of the mode of India. Finally, there is a third mode at around $5,000, which is somewhere between the mode of the USSR and that of the OECD. Note that a substantial fraction of the distribution lies to the left of the poverty lines, and that substantial fractions of the East Asia, South Asian, and African distributions lie to the left of the poverty lines. In 1970, $1/day poverty was large.

Figure 19: World Distribution of Income by Region, 1970

Figure 19: World Distribution of Income by Region, 1970

By 2006 things have changed dramatically (Fig. 20). First, note that the three modes disappeared. Instead, we have one mega-mode at an annual income of around $3,300, which roughly corresponds to the mode of East Asia and South Asia. To the right of the mode there is quite a substantial “shoulder” marked by the roughly 1 billion rich citizens of the OECD. At the other extreme, there is a thick tail at the bottom of the distribution marked by Sub-Saharan Africa. The fraction of the overall distribution to the left of the poverty lines has been reduced dramatically relative to 1970. Interestingly, most of the distribution to the left of the poverty line in 2006 is from Africa.

Figure 20: World Distribution of Income by Region, 2006

Figure 20: World Distribution of Income by Region, 2006

Inequality

Inequality and Societal Problems: a review of the Spirit Level

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the-spirit-levelThe Spirit Level: Why More Equal Societies Almost Always Do Better by well known public health researchers Robert Wilkinson and Kate Pickett is reviewed by political scientist David Runciman in the London Review of Books article How messy it all is:

The argument of this fascinating and deeply provoking book is easy to summarise: among rich countries, the more unequal ones do worse according to almost every quality of life indicator you can imagine. They do worse even if they are richer overall, so that per capita GDP turns out to be much less significant for general wellbeing than the size of the gap between the richest and poorest 20 per cent of the population (the basic measure of inequality the authors use). The evidence that Wilkinson and Pickett supply to make their case is overwhelming. Whether the test is life expectancy, infant mortality, obesity levels, crime rates, literacy scores, even the amount of rubbish that gets recycled, the more equal the society the better the performance invariably is. In graph after graph measuring various welfare functions, the authors show that the best predictor of how countries will rank is not the differences in wealth between them (which would result in the US coming top, with the Scandinavian countries and the UK not too far behind, and poorer European nations like Greece and Portugal bringing up the rear) but the differences in wealth within them (so the US, as the most unequal society, comes last on many measures, followed by Portugal and the UK, both places where the gap between rich and poor is relatively large, with Spain and Greece somewhere in the middle, and the Scandinavian countries invariably out in front, along with Japan). Just as significantly, this pattern holds inside the US as well, where states with high levels of income inequality also tend to have the greatest social problems. It is true that some of the most unequal American states are also among the poorest (Mississippi, Louisiana, West Virginia), so you might expect things to go worse there. But some unequal states are also rich (California), whereas some fairly equal ones are also quite poor (Utah). Only a few (New Hampshire, Wyoming) score well on both counts. What the graphs show are the unequal states tending to cluster together regardless of income, so that California usually finds itself alongside Mississippi scoring badly, while New Hampshire and Utah both do consistently well. Income inequality, not income per se, appears to be the key. As a result, the authors are able to draw a clear conclusion: ‘The evidence shows that even small decreases in inequality, already a reality in some rich market democracies, make a very important difference to the quality of life.’ Achieving these decreases should be the central goal of our politics, precisely because we can be confident that it works. This is absolutely not, they insist, a ‘utopian dream’.

Why then, given all this – the concise argument, the weight of the evidence, the unmistakable practical purpose of the authors – does the book still feel oddly utopian? Part of the problem, I think, is that the argument is not as straightforward as its authors would like. Despite their obvious sense of conviction, and maybe even because of it, they fudge the central issue at crucial moments, whereas at others, perhaps in order to compensate, they overstate their case, which only makes things worse. To start with the fudge. Is the basic claim here that in more equal societies almost everyone does better, or is it simply that everyone does better on average? …

Robert Wilkinson and Kate Pickett also have a review article Income Inequality and Social Dysfunction in the Annual Review of Sociology (2009 35:493-511) that examines the support for various hypotheses of the relationship between inequality and social dysfunction.

Ecological Economics, Inequality

Machine Fetishism, Money and Resilience Theory

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Here comes the “resilience backlash”. After some considerable praising of resilience theory the last years – for example by Fast Company, Foreign Policy, and the Volvo Environment Award – human ecologist Alf Hornborg from Lund (Sweden), elaborates some harsh criticism in a forthcoming issue of the International Journal of Comparative Sociology. Although the article is almost impossible to summarize in a brief way – as it includes topics ranging from unequal exchange in the world system, “machine fetishism”, to the limitations of organizational learning – this quote captures the main criticism:

“In order to remain within acceptable discursive territory, politicians and researchers alike are expected to assume a profoundly critical stance vis-à-vis current patterns of consumption, transports, and energy use, yet continue to offer pathways to sustainability that do not seem too uncomfortable or provocative. This explains why the rallying-cry of the early 21st century is not ‘revolution’ (as in the early 20th century), but ‘resilience’.”

The key argument running throughout the paper is related to one of the weak spots of resilience theory: asymmetrical distribution of resources and power in social systems.

As a social scientist, I share Hornborg’s concern that resilience theory has been poor in elaborating the power dynamics of social-ecological change. On the other hand, Hornborg misses a range of issues that provide a much more balanced picture of what resilience is intended – and not intended – to do. Here are four quick points:

1. We know it

Yes Alf, “power” – however we choose to define it – has been problematic to integrate within the framework of social-ecological systems. On the other hand, resilience scholars are well aware of the problem, and some attempts have been made already. Elinor Ostrom – one of the most influential social science thinkers in the resilience community, but not at all mentioned in Hornborg’s article – has written extensively on the role of local collective action, institutions, and good governance. Her work does not explicitly deal with “power” as I assume that Hornborg would define it, but it does unpack the features of collective decision-making, how centralized policies often fail to deliver sustainable results, as well as the need for multilevel, nested institutions to deal with rapid market change and stresses. The wording might be different, but the main message is the same: communities and ecosystems are under severe pressure from globalized markets, and the impacts tend to affect the poorest the most. So, no disagreement there I assume.

2. We are getting there

There is a wide spread notion that resilience theory is advanced by ecologists trying to apply ecological theory on social systems (e.g. Hornborg pp. 253). This is not the case. In fact, there are a range of interesting attempts to integrate insights from complex systems theory, with social theory and ecology. Stephan Barthel’s work on social-ecological memory, as well as Henrik Ernstson’s work on the dynamics of power in social networks in urban ecology, are two great examples of how social theory is being integrated with resilience insights. Personally, I’m coordinating the collaboration with the Earth System Governance Project – an international research network that explores the role of agency, accountability, access, allocation, and adaptiveness in global environmental governance. Topics here include the possible creation of a “World Environment Organization”; the severe “trust-gap” between developed and developing countries in climate negotiations: and the international systems inability to create a legal framework to strengthen the security of environmentally induced migrants (e.g. “climate refugees”). It doesn’t get more political than this.

3. Resilience is not a theory about everything…

But sure, resilience scholars could maybe do more. On the other hand, there is a trade-off here. “Resilience” is – just like any other scientific theory – not a theory about everything. In my view, it is a theory of change in complex social-ecological systems, and a way to understand a range of novel institutional and political challenges.

4. … but it provides a range of interesting insights

And to wrap up: I’m not sure whether the suggestion that “the only way of achieving ‘sustainability’ would be by transforming the very idea and institution of money itself” (Hornborg pp. 257), is the way to go. It might be a matter of problem framings and political taste really, but I prefer the combination of practical, but disruptive social-ecological innovations that enhance human security in an ecological literate way. Might sound like an impossibility, but Chris Reij’s work in Niger and Burkina Faso, Elin Enfors’ and Line Gordon’s work on small-scale water innovations in sub-Saharan Africa, as well as the World Resources Institute  report “Roots of Resilience”, comes to mind.

The social sciences doubtlessly have a critical role to play for resilience thinking. But I’m not sure whether Hornborg really elaborates this role in an interesting, constructive and creative way.

Cities, Inequality, Networks

West Africa and international drug trade

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The connection of local economies with global markets often results in the local development of new skills, wealth, and infrastructure.  However, in the absence of effective governance black globalization can develop.  The integration of some parts of West Africa, such as Guinea-Bissau, into global trade networks has lead to the accumulation of skills in smuggling and smuggling institutions that have enriched few while impoverishing many.  For example see the UNDOC report Cocaine Trafficking in West Africa: The threat to stability and development (pdf).

Stephen Ellis, the Desmond Tutu professor in the Faculty of Social Sciences at the Free University  of Amsterdam, writes earlier this year in African Affairs (doi:10.1093/afraf/adp017) about the development of West Africa’s International Drug Trade

A major change in the global cocaine trade is taking place. South American cocaine traders are reacting against the saturation of the North American market, the growing importance of Mexican drug gangs, and effective interdiction along the Caribbean smuggling routes. These factors have induced them to make a strategic shift towards the European market, making use of West Africa’s conducive political environment and the existence of well-developed West African smuggling networks. Some leading Latin American cocaine traders are even physically relocating to West Africa and moving a considerable part of their business operations to a more congenial location, just as any multinational company might do in the world of legal business. Most recently, since a coup in Guinea in December 2008, there have been reports of Latin American cocaine traders moving in significant numbers to Conakry, where some relatives of the late President Lansana Conte have an established interest in the cocaine trade. Some observers believe that the next step for Latin American cocaine traders might be to commence large-scale production in West Africa. Some African law-enforcement officers are deeply concerned by the likely effects of the drug trade and drug money on their own societies, and indeed there is evidence that drug money is funding political campaigns and affecting political relations in several West African countries. Diplomats and other international officials worry that some West African countries could develop along similar lines to Mexico, where drug gangs have a symbiotic relationship with political parties and with the state and drug-related violence results in thousands of deaths every year.

Research by the present author shows that Lebanese smugglers were using West Africa as a transit point to transport heroin to the USA as early as 1952. A decade later, Nigerian and Ghanaian smugglers in particular began exporting African-grown marijuana to Europe on a scale large enough to attract sustained official attention. By the early 1980s, some had graduated to the global cocaine and heroin business. Since then, successful Nigerian and Ghanaian drug traders have established themselves in most parts of the world, including other West African countries, where they work with local partners in Benin, Côte d’Ivoire and elsewhere. Very large shipments of cocaine from South America to West Africa have been recorded for the last ten years. In short, West Africa’s role in the international drug trade has historical roots going back for over half a century and has been a matter of significant concern to law-enforcement officers worldwide for decades rather than years. Latin American traders who see some benefit in moving part of their operations to West Africa can find local partners with well-established networks who provide them with safe houses, banking, storage space, and a host of other facilities in return for a suitable financial arrangement or for payment in kind.

Not only is West Africa conveniently situated for trade between South America and Europe, but above all it has a political and social environment that is generally suitable for the drug trade. Smuggling is widely tolerated, law enforcement is fitful and inefficient, and politicians are easily bribed or are even involved in the drug trade themselves. Many officials throughout the region are deeply concerned by the effects of the drug trade, but are often confronted by people and networks more powerful than they, with other priorities. The recent emergence of a sophisticated financial infrastructure in Ghana and Nigeria is a further reason for the enhanced importance of West Africa in global drug trafficking. All of the above draws attention to a point made by Jean-François Bayart and others more than ten years ago, namely that expertise in smuggling, the weakness of law-enforcement agencies, and the official tolerance of, or even participation in, certain types of crime, constitute a form of social and political capital that accumulates over time.

…

The UNODC has pointed out that the relocation of a substantial part of the Latin American cocaine business to West Africa, including even some senior management functions, is not best understood as a consequence simply of comparative advantage in pricing. A more important reason for this development, which has been taking place for over a decade, is the exceptionally favourable political context offered by ineffective policing, governments that have a reputation for venality, and the relative lack of international attention given to West Africa. A pliable sovereign state is the ideal cover for a drug trafficker. The Colombian economist Francisco Thoumi states that ‘[p]rofitable illegal economic activity requires not only profitability, but also weak social and state controls on individual behavior, that is, a society where government laws are easily evaded and social norms tolerate such evasion’. In short, ‘[i]llegality generates competitive advantages in the countries or regions that have the weakest rule of law’. Drug production is not primarily to be explained by prices, but by reference to ‘institutions, governability and social values’. This is consistent with the ‘new’ international trade theory, which emphasizes the role of technical knowledge, public infrastructure, and the qualities of institutions in encouraging trade, supporting the view that ‘institutional and structural weaknesses and cultural aspects determine the competitive advantage in illegal goods and services’.

…

It is not hard to see why powerful people may nonetheless tolerate the drug trade in West Africa. For countries as poor as Guinea-Bissau or Guinea-Conakry, it makes a huge, though unofficial, contribution to national income. The UNODC, however, warns that crime hinders development, which it defines as ‘the process of building societies that work’. Crime is said to destroy social capital, and therefore to be anti-development. In purely technical terms, the emergence of the drug trade in West Africa over a period of fifty years or more is an astonishing feat. West African traders, with Nigerians in the forefront, have created for themselves an important role in a business characterized by competition that is cut-throat – literally – and by high profits. They have penetrated drug markets in every continent. Their success, and their growing ability to cooperate with organized crime groups elsewhere in the world, is inextricably linked not only to globalization and new patterns of international migration, but also to specific experiences of rapid economic liberalization in the late twentieth century. Nigerians especially were playing a significant role in the illegal drug trade in the 1970s, before the era of structural adjustment. Subsequently, the manner in which new financial and economic policies were implemented in West Africa in the 1980s contributed greatly to the formation of what has been called ‘a shadow state’, in which rulers draw authority ‘from their abilities to control markets and their material rewards’. Dismantling large parts of the bureaucratic apparatus inherited from colonial times, and the formal economic activity that went with it, rulers became intent on identifying new shadow state networks, sometimes drawing in foreign investors. West Africa’s ‘shadow states’ are thus relatively new, but they draw heavily on older traditions. These include not only the existence since pre-colonial times of initiation societies that are sites of power, but also the colonial practice of indirect rule, which sometimes resulted in local authorities operating unofficial networks of governance rooted in local social realities, hidden from the view of European officials whose attention was focused on the official apparatus of government.

General, Inequality

Oil Pirates of Nigeria

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From the BBC Fighting for Nigeria’s oil wealth:

The Niger Delta, a region the size of England, is littered with violence and gas flares – the offshoot of oil extraction – whose roar and heat you can feel for hundreds of metres around.

The flares have become symbols of the region and the paradox that exists in an area where you find one of the world’s richest oil regions alongside some of the poorest people.

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With unemployment at 90%, many people of the Delta are tempted to join the criminal gangs who terrorise the area, kidnapping foreign oil workers and launching raids on oil platforms.
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Maintenance of the gangs, their boats and weapons is expensive and is funded by the theft of oil on a huge scale – up to 200,000 barrels a day.
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The gangs are well-armed and the Joint Task Force is ill-equipped for the challenge.

They’ve managed to seize only a few of the barges used to ferry the stolen oil to huge tankers waiting offshore to take it on to the world’s refineries. It’s a huge and sophisticated operation on an international scale.

For more information on oil piracy see the Christian Science Monitor, PBS Newshour, and the BBC who write “Nigeria’s oil production has been cut by around a fifth since 2006, partly as a result of the violence by criminal gangs and militants. “

Inequality

Kindness

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Adam Philips & Barbara Taylor, authors of the recent book On Kindness that uses history and psychoanalysis to examines the idea of kindness in western society, write in the Guardian Love thy neighbour: Why have we become so suspicious of kindness?

Kindness was mankind’s “greatest delight”, the Roman philosopher-emperor Marcus Aurelius declared, and thinkers and writers have echoed him down the centuries. But today many people find these pleasures literally incredible, or at least highly suspect. An image of the self has been created that is utterly lacking in natural generosity. Most people appear to believe that deep down they (and other people) are mad, bad and dangerous to know; that as a species – apparently unlike other species of animal – we are deeply and fundamentally antagonistic to each other, that our motives are utterly self-seeking and that our sympathies are forms of self-protectiveness.

Kindness – not sexuality, not violence, not money – has become our forbidden pleasure. In one sense kindness is always hazardous because it is based on a susceptibility to others, a capacity to identify with their pleasures and sufferings. Putting oneself in someone else’s shoes, as the saying goes, can be very uncomfortable. But if the pleasures of kindness – like all the greatest human pleasures – are inherently perilous, they are none the less some of the most satisfying we possess.

Ideas, Inequality

Martti Ahtisaari’s Nobel Peace Prize Lecture

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From Martti Ahtisaari‘s Nobel Lecture:

All conflicts can be resolved
Wars and conflicts are not inevitable. They are caused by human beings. There are always interests that are furthered by war. Therefore those who have power and influence can also stop them.

Peace is a question of will. All conflicts can be settled, and there are no excuses for allowing them to become eternal. It is simply intolerable that violent conflicts defy resolution for decades causing immeasurable human suffering, and preventing economic and social development. The passivity and impotence of the international community make it more difficult for us to place our faith in jointly built security structures. Despite the many challenges, even the most intractable conflicts can be resolved if the parties involved and the international community join forces and work together for a common aim. The United Nations provides the right framework for international peace efforts and solutions to global problems. However, we are all aware of the constraints of the United Nations and of the tendency of the member states to give it demanding assignments without providing adequate resources and political support. It is important that the UN member states work resolutely to strengthen the world organization. We cannot afford to lose the UN.

In a conflict, one party can always claim victory, but building peace must involve everybody: the weak and the powerful, the victors and the vanquished, men and women, young and old. However, peace negotiations are often conducted by a small elite. In the future we must be better able to achieve a broader participation in peace processes. Particularly, there is a need to ensure the engagement of women in all stages of a peace process.

Peace processes and the agreements resulting from them end the violence. But the real work only starts after a peace agreement has been concluded. The agreements reached have to be implemented. Social and political change does not happen overnight, and the reconstruction and establishment of democracy demand patience. That requires a comprehensive approach to peacebuilding, and support for civil society.

Inequality breeds conflict

Growing inequality within countries and between regions deepens the existing cleavages. It is our task to create a future and hope for regions and countries in crisis where young people suffer from unemployment and have little prospects of improving their lives. Unless we can meet this challenge, new conflicts will flare up and we will lose another generation to war.

Inequality, Visualization

A climate change and development slide show

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The 2007/2008 UN Human Development Report Fighting climate change: Human solidarity in a divided world focuses on the inequalities of climate change, as well as providing its usual indicators of human development.

According to the report, in 2007 the most developed countries are Iceland, Norway, Australia, Canada, and Ireland while the least developed (of the countries ranked) are Mali, Niger, Guinea-Bissau, Burkina Faso, and Sierra Leone).

The high developed countries are responsible most of the accumulation of greenhouse gases driving climate change, while the low development countries are most vulnerable to the impacts of climate change (see also previous post on climate inequalities).

Now the report has inspired an exhibit at the UN – One planet, one chance. Magnum photos produced a video for the exhibit, which uses gripping photos to describes the basic inequalities of climate change. The video is below the break.

Continue reading →

Greenlash, Inequality

Fish Piracy Feeds the Global Rich

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A New York Times article Europe’s Appetite for Seafood Propels Illegal Trade describes how fisheries collapse is leading roving bandits to scoop up the world’s valuable fish leaving little behind for local fishers:

Fish is now the most traded animal commodity on the planet, with about 100 million tons of wild and farmed fish sold each year. Europe has suddenly become the world’s largest market for fish, worth more than 14 billion euros, or about $22 billion a year. Europe’s appetite has grown as its native fish stocks have shrunk so that Europe now needs to import 60 percent of fish sold in the region, according to the European Union.

In Europe, the imbalance between supply and demand has led to a thriving illegal trade. Some 50 percent of the fish sold in the European Union originates in developing nations, and much of it is laundered like contraband, caught and shipped illegally beyond the limits of government quotas or treaties. The smuggling operation is well financed and sophisticated, carried out by large-scale mechanized fishing fleets able to sweep up more fish than ever, chasing threatened stocks from ocean to ocean.