Monday, September 18, 2017

Reducing inequality: does it still make sense in a world of more than seven billion people? Kate Pickett's talk at the Summer Academy of the Club of Rome in Florence



Kate Pickett spoke at the Summer Academy of the Club of Rome, in Florence, on Sep 9, 2017. (the picture above is from another meeting)


Inequality is a subject rarely touched in the mainstream debate. Is probably safe to assume that the general public doesn't know that inequality not only exists, but it is rapidly growing. When the subject appears, such as when you read about Bill Gates and his ilk, the issue is normally dismissed by noting that "today, the poor have cell phones and flat-screen TVs" or maybe that "life expectancy keeps increasing."

Yet, things are not so simple and inequality is not just a question of which toys people have access to. It is also well known that the rich live longer than the poor. Inequality is a relative phenomenon and it is correlated to the perception of one's status in society. Perceiving oneself as being part of a lower stratum of society has negative effects on people's health, self esteem, social skills, and more. Kate Pickett correctly noted these issues in her talk in Florence and she built up an impressive series of data showing how inequality is bad for society as a whole. It was a point that deeply resonated with her audience. 

Of course, it is unlikely that we'll ever be able to eliminate social inequality and surely Kate Pickett doesn't propose to turn our society into some kind of Marxist paradise. But, by all means, she is right when she says that it makes sense to reduce inequality or, at least, to stop its growing trends. The problem is how. Here, Pickett's talk was weak. 

Mainly, Pickett seems to propose a return to the progressive taxes of some decades ago, but a reform in this direction seems to go against the grain of everything that's happening in our world. If the rich are in control of society (and they are) how can we convince them to tax themselves more? That underlies a bigger and unsolved problem: what are the origins of the "Great U-Turn" in the early 1980s that changed the trend from diminishing to growing inuquality? We are dealing with a poorly understood phenomenon and we don't know how to act on it. 

But there is an even bigger problem with the idea of reducing inequality: it is the size of the human population. In the 1960s, the Club of Rome had started its existence on the basis of concerns for social inequality rather than those for which it would become better known later on, the limits to growth. At that time, there were less than four billion people on the Earth. But, today, the number of people has doubled to 7.5 billion and it keeps growing. The stress on the remaining natural resources has increased, just as the problem of pollution in the form of global warming and the associated climate catastrophe. 

In these conditions, how to reduce inequality? Increasing the consumption levels of the poor implies further increasing the burden on the natural system. Maybe that could be compensated by forcing the rich to reduce their consumption levels. Unlikely, to say the least, but, even if that were possible, it wouldn't change the trend of increasing exploitation of the already overexploited natural resources. Redistribute consumption is not enough, we need to drastically reduce it if we want to avoid the Seneca Cliff awaiting our civilization. 

We should have done that 50 years ago, when it was still possible and when Aurelio Peccei and other founders of the Club of Rome were proposing it. Now, it may be too late. This apparently unsolvable dilemma was examined by Jacopo Simonetta in a post that appeared on "Cassandra's Legacy" last year, reproduced below. (see also a comment by Diego Mantilla)


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Social Equality and the Destruction of the Planet

Cassandra's Legacy, Thursday, June 16, 2016

by Jacopo Simonetta

Exaggerated inequality is surely a major problem in today's societies, and it keeps increasing. I, too, certainly believe that this scandal must end, but the topic of the article is another one: is it true that redistribution of wealth would have a good effect on the Earth health? Many very influential people believe this, but I am not so sure.

Evidently, affluent people consume much more than poor people do, but how much? As far as I know, there are no studies correlating the environmental impact and social classes but, as starting point, we could compare how CO2 emissions change with income. (data Word Bank and Wikipedia respectively).  

  



Social equity and consumption: Comparison between per capita income (in blue) and CO2 emissions (in red). 


It is clear that CO2 emissions increase with income, but less than proportionally in the central part of the curve. In fact, in very low incomes, the increase in emissions is very fast against modest increases. Then they go up rather slowly, to return to peak with the very, very rich people. Important local fluctuations are also correlated to climate, geography, local traditions, social organisation and so on. 

Now, as a mental exercise, we can take for good the statement that 1% of the global population appropriates 50% of world income. This means that about 75 million people earn an average income of 500,000 $ per capita per year. So, let us imagine that we can distribute all this wealth among the remaining 99% of the world population (let's call it "Operation Robin Hood"). This means more or less 5,000$ per capita. Even for a large part of the western middle class, this would be a big help. For the majority of people this would drastically change one's life. Billions of people would finally eat to satiety, dress decently, live inside houses, send their children to school, heal the sick and much more. People a little higher in the income ladder could get a new car, go on holidays, and so on. 

Very good, but what would be consequences for the planet? 

Let's try to analyze the question. As a rough approximation, we can start classifying humanity in four meta-categories: the very rich (let us presume they are 1%, so about 75 millions); the affluent (let us presume 1 billion people); the Middle class (according to "The Economist", about 3 billion people); the poor (may be 2 billion), and the very poor (according to FAO, about 1 billion). 

Comparing per-capita income and emissions in different countries, and assuming that there are all the social classes in each country, we can argue that the very rich produce about 20 tons of CO2 each per year. The affluent 10 tons each; the middle 6 tons each, the poor 2 tons each, and the very poor 0,1 tons each. For a total amount of about 36 billion tons of CO2. “Operation Robin Hood" would lead to disappearance of the lower class and a perceptible improvement in the life style of the poor and the middle class. At the same time, also the super-rich would disappear, while nothing would change for the affluent people. 

And what would that mean in terms of total CO2 emissions? Well, we just multiply the per capita emissions by the total number of people per category. The result is a grand total of about 55 billions tons, that is a 50% increment with respect to the present emissions. Social equality doesn't seem to be so good for the planet.

But there is more: Operation Robin Hood would produce a sensible reduction in mortality, and probably an increment in natality too, among low wage people. So a sharp population increase, at least for one or two generations.

Evidently, that's just an example, not a realistic simulation. But the core conclusion, that a better life for the majority of people would be disastrous for the planet, is consistent with more sophisticated models available. In the 2004 edition (Limits to Growth: The 30-Year Update), the Meadows group published a scenario where they supposed that since 2002 the birth rate is 2 children per woman and industrial production is equally distributed to everybody at a level 10% more than the global mean in the year 2000. It means much less for rich people and much more for the poor.



Word3 scenario with birth control and equal distribution of goods.(From Meadows et al. 2004)


Skipping the details, we can see that in this scenario there is a period of abundance that lasts some 20 years more than it does in the basic scenario (Business as Usual). But later the system collapses in a very similar way. And note that none of the people asking today for a more equal wealth distribution don't want any sort of birth rate control. We have no published scenario of what the outcome of these hypotheses wold be, but is not hard to argue that with a growing population andntemporary wealth distribution the system would collapse very quickly. 

Another model that's relevant to our topic is "HANDY, From a scientific perspective this model, derived from an ultra-famous one by Lotka and Volterra, is too simplified to represent a system as complex as an advanced society. In particular, it neglects feedbacks existing between hierarchy, social complexity, specialization and the capability of the societal system to absorb low entropy from the outside. Unfortunately, this is one of the core feedbacks which shape the evolution of human societies. This largely reduces the viability of the model and explains the absurdity of some of the scenarios proposed. Anyway, "HANDY" has the merit of being the first model to try to introduce the social element inside a dynamic model. Here are some of the results of the model.




The above result is rather absurd since it implies that the elites keep growing even after the commoners have collapse. However, on the whole, the results of this model can be seen at least as the indication that a low level of inequality tends to shape more stable and resilient societies. In my opinion, a cursory glance at history seems to confirm this hypothesis. It is consistent also with what we have said before and with Word 3. A low level of inequality produces a more cohesive society and a highly legitimate leadership which tends to lower and to extend the peak phase of a society.

But, and this is the point, social equality is not sufficient to avoid systemic collapse if society is based on non-renewable resources.

After all, we have already seen all of this in the real world. Please observe the curves of USA and China CO2 emissions from 1990 and 2010.




The US economy trudged along with a low GDP increase completely concentrated in the top class, with a deterioration of the life level in the middle and low classes. The result has been a modest reduction in emissions.

In the same time, in China the life of the large majority of people improved and emissions skyrocketed. Because of that, the population too increased, in spite of a low birthrate. Just imagine to duplicate the China experiment: do you really believe that the Planet will survive?

Conclusions 

It is true that billionaires are rich and I am not; this makes it possible that they are greater experts than me about money and power. But, nevertheless, it seems to me that, historically, smart leadership have always managed to redistribute a part of their revenue in ways useful to consolidate their legitimacy and hence their political power. It means that a partial redistribution of incomes would be to the advantage, first of all, of the top class people. But this is a lesson that the present day élite, largely consisting of pirates and sociopaths, has apparently forgotten.

Secondly, such action surely would improve the life of the poor, but just for a short time because, if done worldwide, the experiment would end in an unimaginable global catastrophe. Does this mean we have to be thankful to our kleptocrats? I don't believe so. It means that the reduction of inequalities must be done by reducing the income of the very rich and not by improving the commoners' wages. But this perspective is refused by everyone: right and left, south and north, up and down.

7 comments:

  1. Interestingly, Ugo's question "what are the origins of the "Great U-Turn" in the early 1980s that changed the trend from diminishing to growing inuquality?" caused me to immediately think about the HANDY model and the publication of "Limits to Growth" in 1972. A common myth is that the "elite" rejected limits to growth as nonsense.

    Suppose this myth is false. If the elite as Simonetta says are "largely consisting of pirates and sociopaths" and if these pirates and sociopaths believed the message in "Limits to Growth," then I expect we should have seen a transition to a much greater portion of the wealth going to the elite and a corresponding impoverishment of the commoners.

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  2. Thank you for yet another interesting taste of the CoR Summer Academy. I agree with the conclusion that a society with low income inequality is more sustainable, but that increasing the material wealth of lower income billions would send the planet into a tailspin.

    A similar dilemma that I have pondered is that of how to invest and consume to bring about a more sustailable world. I was a student of life cycle assessments at the universitet a few years back and got a deep understanding of the difficulties in calculating the LC-emissions of a certain product or service. As a cut-of must be set at some level, say 1 %, there is invariably a infinite list of processes that are tied the product or service calculated, but that must be left out of the LCA. The problem, as I see it, is that the sum of the contributions that are ignored (though all less than 1% each) can likely be much larger than the main processes. I.e. there can be a very long tail on the diagram of contributions.

    This is valid for solar PV and wind power of course, but also for organic food and the like. As We live in a world of constant trade and the global energy mix is very fossil indeed, I am, sadly, pretty sure that a 10 euro organic meal is worse for the climate than a 5 euro conventional one. As long as the majority of economic activity has a negative impact on life support systems the only way "out" is to reduce GDP. But that is of course as popular as a bull in china shop...

    Why is it so hard for us to consider that we, as a civilisation, behave very much like rats or bacteria would? Why do We believe that We are so much more sofisticated that the old romans och Inkas were?

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    1. I find this very interesting, but not very intuitive. I can kind of understand it when it comes to things like Solar power. It seems to reduce carbon emissions because when it is functioning it produces no carbon. But, of course, this does not factor in the enormous amount of carbon that was produced in its manufacturing or its inevitable replacement. And its "renewable" status does not account for rare minerals and metals that are needed in the it manufacture.
      But I am having a harder time seeing it in growing organic food. Can someone break that down for me? As an example?

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  3. When I read 'Doughnut Economics' when it was first published I had a very similar feeling as Ugo - in an ideal world this is a nice idea but in the real world it just isn't going to happen. The questions I would like to put are these;
    Is consumption a 'zero sum game'? In terms of resource and energy consumption it appears that over-consumption by the very rich leaves less for people elsewhere and also for future generations.

    We live in a world where the objective and celebration of wealth is to proclaim it in ways which automatically increase resource consumption; travel for example, by ever-more energy-intensive means, such as shifting from a small car to large SUV or from economy to first class/private plane travel. Then there is ever-larger and multiple house ownership. The problem is that everyone then tries to copy these values.
    My question is whether the expression of wealth and status can be changed to some other, less resource-intensive means of expression?

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  4. I believe a mistake is to view consumption as a individual pursuit only based on what consumptional pattern looks like today. What about collective consumption such as ritual gatherings, festivities? What if the fridge was run by an association of 10-15 households instead of each household having one each themselves? (that happened in the 1950's in multiple places by the way before prices fell and production could cope with supplying everyone with their own one).


    I guess this is one reason why so much of popular culture today is so military themed - Military being the most prime example of collective goods and consumption there are (you can't fight a war alone, you need at least two groups for that and have to organize the consumption of supplies for that).


    This is my main critical point here. Yes, 7.5 billion cars, one for each man on earth and perhaps a spare one in a few cases, is likely unattainable for a sustainable planet. Ditto with fridges and electrical household appliances. But there are multiple forms of organization and distribution when it comes to consumption as well. These examples are just the 'bad', the inverse side of the classical-economical supply-demand scheme with 'rational individual agents' maximizing their utility. From that view and assumptions we'll be doomed as supply extinguish due to exhaustion of resources (a moral view says it's based on our sinful greed as we're maximizing our individual utility here). But the model says nothing about the audience you're consumpting with/for (again, referring to consumption of ritual gatherings and military as the prime collective goods here).

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  5. There are many things that the consumer can not influence no matter how well-intended. I shall use my own example. I am 54 and I am not rich. Based on 70-year life expectancy I calculated that I shall leave at least 1000 PET bottles from just edible oil (which here in Serbia is mostly sunflower). Hardly any of these bottles will be recycled. And that is just me and that is just edible oil. In Serbia there is no option to buy edible oil in glass bottles, everything is packed in PET. Only imported olive oil is mostly packed in glass bottles. If I could only see in one place all the garbage that I shall leave during my lifetime! That would be a mountain of garbage. And there is 7 billion of us on this planet and everybody wants "good life". Aren't we a colossal pest that destroys this planet?

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Who

Ugo Bardi is a member of the Club of Rome and the author of "Extracted: how the quest for mineral resources is plundering the Planet" (Chelsea Green 2014). His most recent book is "The Seneca Effect" to be published by Springer in mid 2017