WHAT REALLY MATTERS?

It often seems to be assumed that the appropriate measure of a country's economy is its per capita gross domestic product, its productivity, or some other measure of the total value of the stuff that is produced per person.

Policies are judged by what effect someone thinks they will have on such measures. The goal of any policy must be to produce ever more stuff better and faster. That's called economic growth.

But there are people who question if this is really the most important goal, especially in the world's richest countries. A recent book called The Spirit Level by Richard Wilkinson and Kate Pickett suggests that something else is worth much more attention.

That something else is equality. Wilkinson and Pickett look at how well different rich countries perform on a wide range of measures. They relate this performance to measures of inequality between rich and poor in each country.

More equal countries tend to perform better than less equal ones in many ways. They tend to have longer life expectancies, lower infant mortality, lower homicide rates, fewer people in prison, less mental illness, and fewer teenage pregnancies, for example.

Simply showing that two things are correlated like this does not prove that one causes the other, but Wilkinson and Pickett consider several possible alternative explanations for these correlations before concluding that inequality probably is the common cause.

It is obvious that reducing inequality would help the poor. But Wilkinson and Pickett go farther than that. They claim that even relatively well-off people benefit from living in a more equal society.

For example, death rates for working-age men are lower in more equal Sweden than in less equal England and Wales. Not surprising, the difference is greatest for the lowest job classes. But even the highest classes do better in Sweden.

The idea is that living in a more equal society is less stressful and generally better for us. People behave more cooperatively and focus less on climbing the social ladder. This creates the general benefits.

Once people can afford all the food they want, decent housing, good health care, adequate clothing, and other basic needs, more money actually seems to provide little or no increased happiness.

But most people will still spend more money if they can get it because doing so is how we gain social status. The one who dies with the most toys wins.

Wilkinson and Pickett suggest that we would be better off to reduce this sort of competition by creating more equal societies.

How could we do that? The most equal rich countries now are Japan and the four Scandinavian countries, but they achieve their relative equality in quite different ways. Japan has low inequality in before-tax incomes, apparently for cultural reasons. It does not need much in the way of social programs to achieve its high level of equality.

The Scandinavians, on the other hand, use famously high tax rates to fund generous social programs. It does not seem to matter. Outcomes for physical, mental, and social health are very similar.

For a country like Canada, it seems much more doable to raise taxes and improve social programs than to change attitudes and customs enough to create equality in the Japanese way.

Canada's level of inequality is currently pretty average among rich countries, but we are headed the wrong way. After remaining virtually constant for decades, inequality began increasing in the mid 1990's.

And we are constantly bombarded with the message that we must cut taxes immediately to avoid losing the productivity race so we can continue to consume more-more-more.

I think it is debatable if tax cuts lead to economic growth, but I am sure they cause more inequality because they benefit the rich most and force cuts to social programs. We should focus on reducing inequality, not on economic growth.

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