Andrew Bradstock: Equality the key to a better society

Helen Clark's team at the United Nations Development Programme has just produced its first report since she became administrator. And it has a challenging message for her native country - we're in the big league when it comes to economic inequality.

The report looks at the gap between rich and poor in developed countries, and finds Hong Kong, Singapore and the United States to be the most unequal. But New Zealand is in sixth place, just ahead of Britain and Australia.

In one sense the report isn't telling us anything the Government hasn't already disclosed. For example, the 2008 Social Report, published by the Ministry of Social Development, notes New Zealand's low ranking in terms of equality among the OECD countries.

And Statistics New Zealand observed in 2007 that just over half of the country's total net worth was owned by the top 10 per cent of wealthy individuals, with the poorest half of the population owning just over 5 per cent of the wealth.

What the UN and Government reports do not tell us, however, is whether any of this really matters. Should anyone, other than the innately jealous, bother about the gap between rich and poor?

For an answer to that we need to look at another major report on inequality produced this year. Entitled The Spirit Level, and authored by British academics Richard Wilkinson and Kate Pickett, this also looks at wealth distribution across different countries.

Like the UN report, The Spirit Level places New Zealand among the top six most unequal countries. But it then goes on to identify a link between levels of inequality and performance across a range of social factors.

The clue to Wilkinson and Pickett's argument is in the subtitle of their book: Why More Equal Societies Almost Always Do Better. After many years' research they conclude that societies with lower levels of inequality are more cohesive, more trusting, more at ease with themselves and safer to live in.

Wilkinson and Pickett put the case that countries with high levels of inequality will almost invariably imprison a larger proportion of their population. And have lower literacy scores, more obesity, more teenage pregnancies, worse mental health, and shorter average life-spans than those with much lower levels of inequality.

Inequality, in other words, may be an important factor behind "dysfunctional societies". Wilkinson and Pickett argue persuasively for a causal link between economic inequality and these social phenomena.

They are not suggesting entirely new causal processes, they say, simply providing more information about the relationships that have always been recognised.

The conclusion their data invites us to draw, that the link between inequality and social and health problems in the rich world is too strong to be dismissed as chance, and should make us pause for thought.

Only a political or religious fundamentalist would argue there is one cure for all ills. But if, as Wilkinson and Pickett suggest, even small reductions in inequality can lead to significant improvements in society, might it be worth the Government giving their work serious study?

One can hear alarm bells ringing straightaway - won't any scheme to reduce inequality inevitably mean higher taxes, lessening incentive and a return to "big government"? Not necessarily, for as The Spirit Level points out, societies with the greatest equality have followed different paths to that position.

While Sweden may use redistributive taxes and benefits, and a large welfare state, Japan has a greater equality of market incomes, of earnings before taxes and benefits. Greater equality can be achieved by both "give" and "take". By ensuring people have more income through, for example, the introduction of a living (rather than minimum) wage.

Also welfare rates and pensions which take into account research into minimum income standards and by changes to the tax system, and incentives to individuals and institutions to be more publicly linked with poverty reduction through, say, corporate social responsibility or philanthropic activity.

More creative approaches could be considered, too, such as tax concessions to encourage democratic employee-ownership. Crucially, Wilkinson and Pickett argue that reducing inequality does not just benefit those at the poorer end of the scale. Of course, in more equal societies there will be fewer poor people.

But if these societies are also less angst-ridden, less divided, and generally healthier, safer and more secure in themselves, this benefits all.

It would take a courageous government to consciously set out to reduce inequality, but in the long term, by treating causes rather than just symptoms, the results could be very worthwhile.

* Andrew Bradstock is Howard Paterson Professor and Director of the Centre for Theology and Public Issues at the University of Otago.