The question of inequality
Donald Hay, Jesus College and Department of Economics,
Oxford
DCM Social Sciences stream, March 20th and 21st 2015
Outline of talk
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Growth of inequality (Piketty)
Explanations (Piketty, Stiglitz)
Consequences of inequality (Wilkinson and Pickett)
Theological perspectives on inequality
Biblical ethics from the OT: economic justice, and
justice for the poor
Types of inequality
 Focus on growth of inequality of income and wealth
in many of the rich economies since 1970
• Other inequalities:
- gender, e.g. at work
- race, e.g. questions about policing
- sexual orientation, e.g. campaigns for gay
‘marriage’
- religious, e.g. minorities in Middle East and India
Income inequality: international
comparisons
 Variations across OECD countries in ratio of income of
top 20% to bottom 20% [next slide]
The evolution of income inequality
 Evolution of income inequality in US and UK since the
beginning of the 20th Century (Piketty): the share of
the top 1%
The evolution of wealth inequality
Piketty, Capital in the Twenty First Century
 Wealth inequality in Europe and the US since the 19th
century
 Top wealth holders in the world economy
The evolution of wealth inequality
Top wealth holders in the world economy:
 Oxfam report: the number of top wealth holders in
the world who have as much wealth as the bottom
50% was 388 in 2010, falling to 80 in 2014
 The increasing share of top wealth holders since 1987
according to Piketty.
Explanations for growth in inequality
(1)
Piketty – the inexorable consequence of market
capitalism:
- the ratio of capital to income (see next slide)
- the share of capital in national income
- r>g
- the role of inheritance in accumulation
- critiques
Explanations for growth in inequality
(2)
Political economy arguments (Stiglitz) - in US at least
inequality is outcome of rent-seeking behaviour of
wealthy elites:
 Government action favouring corporations and the
wealthy
 Actions by wealthy to protect their wealth: lobbying
Congress, capturing regulators, media campaigns
 Electoral manipulation
Consequences of inequality
 The correlation of inequality and social indicators
across rich countries (see slide 17)
 Social indicators: level of trust, incidence of mental
illness and addiction, life expectancy, obesity, student
scores in maths and literacy at age 15, birth rates
among teenage girls, homicides and violent assaults,
prisoners per 100000 population, social mobility
Consequences of inequality
(continued)
Summary:
 Social indicators 3x to 10x worse in most unequal
countries than in most equal countries
 Prevalence of social problems affects whole income
distribution, not just the poorest groups
 Greater equality can be result of earnings equality
(Japan) or redistribution (Sweden)
Explanations?
Ethical questions posed by inequality
What is wrong with inequality?
 Is inequality is just how things are?
 Should we be concerned about the 1%?
 Is the issue poverty not inequality per se?
 Does it matter if inequality is associated with social
dysfunction?
Are there ethical concerns about the processes by which
inequality comes about?
 For example, the exercise of power by wealthy elites to
safeguard their wealth and income?
Theological approaches
 Creation: Imago Dei, relational, the neighbour
 The people of God: equality in the community of the
people of God
 Principle of solidarity
 Principle of the common good
Theological approaches
Applications:
 Inequality contravenes principle of solidarity – implies
that some members of the community are worth less
than others, and creates relationships of power
between people.
 Inequality arising from exercise of power and
influence by elites is not conducive to the common
good.
Biblical insights (1): Economic justice
Leviticus 25: the allocation of the land in Ancient Israel three key elements:
 The Land as God’s gift, v23
 The initial distribution of the Land: Numbers 26
 Loss of land, the Jubilee provisions, and stipulations
for the interim until the Jubilee
Principles underlying the arrangements for the Land:
 Equality of opportunities to work and access to
resources
 Work and the ability to provide for one’s household
available to everyone
 Systemic mechanisms to redress inequalities that
develop over time
Biblical insights (2): justice for the
poor
Poverty in the OT:
 Most frequently linked to oppression
 Main bulwark against poverty was family land, so
problem if family had lost its land, or had no
inheritance
 Family experiencing crop failure or loss of livestock to
disease
Provisions to address problems of poverty:
 Triennial tithe, Deuteronomy 14: 28,29
 Gleaning laws, Deuteronomy 24: 19
 Interest free loans, Leviticus 25, a form of mutual
insurance
Principles for poverty alleviation:
 Systems of mutual support – triennial tithe, gleaning
laws
 Loans may be appropriate if poor person is expected
to be able to recover economically, but debts should
not be allowed to accumulate
 Systems are local, to avoid problems of moral hazard
 Mutual support characterised by equality (compare 2
Corinthians 8 and 9, especially 8: 13, 14)
Conclusions
Questions that need to be addressed:
 Should we be concerned about inequality whatever form it
takes?
 Should we be concerned about inequality in wealth and
income per se?
 Should we be concerned about the apparent growth in
inequality, and the processes that are driving that growth?
 Are there specifically Christian ethical principles that help
us to address these issues?