By Wiemer Salverda. Former Project Co-ordinator of Growing Inequalities’ Impacts (2010-2014)
More than twenty years ago now, just one step into the 21st century and on the threshold of the dotcom crash, Thomas Piketty published his first major inventory of inequality and redistribution in France over the preceding century, soon to be followed by his joint work with Emmanuel Saez on the evolution of American income inequality since 1913. It kickstarted the worldwide search for the top tails of the income and wealth distributions which gave us the ill-famed top-1% and top-0.1%: the incomes and wealth of the abusively rich. The efforts led to the establishment of the World Inequality Database which now covers most countries in the world and produces the annual World Inequality Report.
It has inspired more than one generation of researchers to unearth the necessary data and analyse the evolution and effects of inequality in ever broadening perspectives. The current Growing Inequality project addressing technological progress, globalisation and migration is an excellent example. It was preceded by another example, the international research project: GINI – Growing Inequalities’ Impacts. The project’s focus were the social, cultural and political impacts of inequalities in incomes and wealth as well as education in a long-term international comparison (see here [Growing Inequalities’ Impacts | GINI Project | Fact Sheet | FP7 | CORDIS | European Commission (europa.eu]). The project and the European Commission, who financed it, were inspired by two new publications: the OECD’s first extensive report on the distribution of income and poverty: Growing Unequal of 2008, and The Spirit Level (2009), the book by Kate Pickett and Richard Wilkinson which greatly stimulated the public debate about the pernicious effects of inequality on society as a whole.
The Growing Inequalities’ Impacts project brought together some 200 highly motivated researchers:
25 research teams produced extensive, comparative Country Reports on inequalities in 30 different countries worldwide,
individual experts contributed almost 100 Discussion Papers that analyse a wide range of relevant aspects of inequality, varying from, for example, housing or crime to education or minimum income protection, from electoral voting to status anxiety,
some important implications were spelled out in Policy Papers at the end of the project.
Oxford University Press published the results in two volumes: one presenting and discussing the many analytical contributions, and the other concisely reporting the thirty country results.
The present website generously offers access to these results here. [REPOSITORY-FP7 – Gini-Research]
The twenty years since 2001 have been filled with a dialectics of ever extending scientific reporting and analysis on the one hand and increasingly severe economic crises on the other hand. In the year of the OECD’s Growing Unequal, a fundamental crisis in the Financial system overwhelmed the world economy – followed in its wake by the Eurozone crisis that grew in force until in July 2012 Mario Draghi promised that the European Central Bank would do “whatever it takes” to put an end to the crisis. In 2011, when it appeared that those responsible for the Financial crisis in the US had been bailed out and returned to their musical dance, the Occupy Wall-Street movement took to the streets with the slogan ‘we are the 99%’, the dark picture that those view who look in the mirror of the top-1%. The OECD published its second major report Divided We Stand: Why Inequality Keeps Rising. In 2014 Thomas Piketty’s Capital in the 21st Century underlined the underlying mechanism of increasing inequalities. The OECD dedicated its third major report In It Together: Why Less Inequality Benefits All in 2015. In 2020, Covid-19 laid bare for all the world to see that people at the bottom of the income distribution not only are hit most but also provide the essential physical logistics that keep things going during the pandemic’s lock downs. It seems an understatement to say that the reverberations of the Russian raid on neighbouring Ukraine likely reinforce the negative trends.
Analyses and crises have greatly enhanced awareness of the problem of inequality. No mean feat and satisfying to the analysts, but, unfortunately, awareness is necessary but not sufficient to markedly reduce the problems of inequality. Inequality has become deeply embedded in society and is solidly anchored in many institutions, creating important interlinkages in many directions that mutually bolster the effects. Inequality regards not just income or wealth, but also health, the distribution of employment and wages, the linkages of educational attainment and merit, the poverty of housing for some and its riches for others, the importance of power of enterprise and of the super-rich in politics, to name a few.
Very encouragingly, more and more analytical steps are taken every day, but there are still so many left to be put. Policy making is a hard and difficult process that has to address conflicting interests and especially their institutional expressions. Each of the two, analysis and policy, can only do so much at the same time. Analytical results may help to change the direction of public debate and the nature of what can be called the political climate, but they need to be picked up in actual policy making, which confronts its own set of choices and also cannot wait until the last analytical detail has been settled. And, because of inequality’s broad embeddedness, policy making cannot content itself with adding new measures but also has to address and change entrenched societal parameters.
The road from analysis to policy may be long and winding and can seem more indirect than direct. A direct combination of analysis and policy making as exemplified by the OECD may give greater weight to analytical findings and support their transformation into national policies. The organisation initiated and (so far) successfully advocated the new international agreement of a 15% minimum tax on multinational enterprise. If we attribute that measure, at least partly, to the OECD’s strong base of inequality analyses it still remains an apt illustration of how winding the road can be and how long. Another, different example is the forthcoming Minimum Wage Directive of the European Union, aimed at ensuring a decent living for those earning the lowest possible wages. Also here, the road to the Directive has been long and winding, in spite of the fact that it started explicitly from general principles that were underwritten by all EU policy makers in 2017: the Pillar of Social Rights. It makes the Directive part and parcel of the European answer to the broad public unease about both rising inequality and policy making at a great distance from the general population.
Both examples illustrate the long haul from inequality research to equality policies. Policy making will be able to build on them as stepping stones towards greater equality if, akin to existing environmental assessments, the adoption all new policy measures will be subject to ‘inequality assessments’ of the proposed measure that includes also the related hindrances detected in existing measures and institutions. To support this, the European Commission and national governments shall report annually on the ‘state of (in)equality’ to show the discernible progress that can be attributed to the measures already implemented and propose a time planning for taking away remaining impediments.