Posts Tagged ‘inequality’

15-Year-Old Thinking for Post-2015 Solutions on Inequality?

June 6th, 2013 | by

The much-anticipated recommendations for a post-2015 agenda report is bold and full of optimism, as my Oxfam colleagues acknowledge (a welcome treat in an otherwise uncertain era). I especially like the authors’ certainty that we can eradicate extreme poverty from the earth by 2030.

150px-Cat_post2015The new goals also specifically address a number of challenges left out of the Millennium Development Goals (MDGs) 13 years ago, which signals to me that world leaders are really listening (a welcome, and unfortunately too uncommon, occurrence). Toward that end, the report acknowledges the interplay of conflict, violence, sustainability, governance, urbanization, and inclusive growth as not silos; but rather as a constellation of interdependent issues that must be addressed to create a more prosperous and healthy world for everyone.

Now that I’ve gushed, let me raise a serious critique about how the report addresses inequality.

Despite a growing global consensus that income inequality must be halted, the High-Level Panel did not generate targets for inequality reduction. Instead, reducing inequality is claimed to be imbued across all the goals. The Panel claims, rightly, that inequality is a national issue. For sure, solutions to inequality must happen within the cultural, political, economic contexts of countries. However, though solutions need to be tailored nationally, that doesn’t mean we can’t insist on global targets. There’s still plenty of time to develop what targets could look like. Others will agree and disagree, but I think excluding the idea this early on is premature and lacks creativity.

Further, there’s very little in the report to help countries think about ways to reduce inequality. Unfortunately, the report falls back on a tired narrative of economic growth as a be-all solution.

Infographic-Post2015-article-cut_article_full

Who defines the post-2015 agenda? Infographic ‘Defining the post-2015 agenda’ by The Broker. View it interactively: http://post2015.thebrokeronline.eu/

This answer reflects 15-year-old thinking that’s inappropriate for post 2015 world. For instance, in the report there’s a lot of talk about inclusive growth, which inherently reduces inequality, but there’s no suggestion for how to make growth inclusive, only talk about the need to increase productivity.

Worse, the parts on inequality and growth lack any mention of the role of government. As we know, it’s committed governmental intervention and political will making reductions in inequality possible among the few countries where it’s decreasing. Along these lines, there’s no mention of policies aimed toward inequality reduction, including stronger social insurance, more efficient taxation, and cash transfers to the poor. Last, there’s a few lines on the need for deregulation, which makes perfect sense in terms of curbing corruption. However, there should equally be language about how the deregulation of labor standards over the past 30 years has contributed to growing inequality.

With regard to measuring inequality, the report encourages countries to use income quintiles. I’m happy to see an endorsement for looking at how income is distributed. Yet, as we know, in many countries the severity of inequality is between the very, very top 1-5 percent and the rest. Therefore, the Panel should encourage countries to take data collection more seriously to gain a more fine-grained understanding of the differences between the very top and the very bottom. One way to start down this path is encouraging countries to utilize the Palma measure of inequality, which is the ratio of income between the top 10% and the bottom 40%.

I’ve said it once. After reading the report, I’ll say it again. It’s time to move the discussion from absolute to relative gains.

No accident: Resilience and the inequality of climate change and disaster risk

May 21st, 2013 | by

Gina Castillo is the Agriculture Program Manager at Oxfam America.

Most of us think that accidents are unforeseeable and not preventable. But that is not the case when it comes to why people who are poor are hit again and again by events that make it difficult for them to escape poverty.

Today Oxfam released a new report, No Accident: Resilience and the Inequality of Risk. The report shows that disaster risk is being dumped on to millions of people living in poverty because of climate change and because of unfair practices.

Take weather-related events as an example. Due to urbanization and climate change, there are increasingly more people living in places that are susceptible to disasters. Since 1970 the number of people exposed to floods and cyclones has doubled. Those are the “big shocks”—the ones that get media attention and galvanize donors and governments into action, as was certainly the case when Haiti suffered its devastating earthquake in January 2010. Yet, there are also “small shocks” such as illness, death, or a harvest failure, that can push a family that is just hanging on to destitution.

Consider this figure below, which shows how one family in Port-au-Prince, Haiti coped in the year after the 2010 earthquake, which sadly killed two of their youngest boys. The father lost his job and the family was heavily reliant friends and neighbors who provided them with most of their meals until mid-May, as well as emergency-related grants and services. After this, they were forced to sell their livestock. An Oxfam grant allowed them to pay off their debts and to start a small business, but their household income still dropped by 88 per cent. Unfortunately, the shocks continued. The family invested in a market garden, which was later destroyed by Hurricane Tomas in October 2010. They also bought food to sell, but some of this was looted during election violence in November 2010.

Haiti resilience illustration

Figure 1: One family’s experience after the 2010 Haiti earthquake

We highlight this family’s story because it is not atypical.  People work hard to get out of poverty, as studies have shown.

So why is it so difficult for people to get ahead? In the aid world, we talk often of vulnerability. But we cannot talk about vulnerability as a random twist of fate. It’s about politics, power, and inequality. As a result, risk is dumped on poor countries and their inhabitants, asis certainly the case for climate change. 50% of carbon emissions are generated by 11% of people, the consequences of which are left to poor countries and the most vulnerable are the hardest hit. Women often face higher risks because of gender discrimination and cultural norms, yet shoulder the burden of managing families. They have fewer opportunities economically, resulting in lower income and fewer options when it comes to managing risk.

Why does this happen? Our research showed that while measuring vulnerability is difficult, countries with more vulnerable populations also tend to be those with greater income inequality. Governments need to tackle inequality and ensure that risk is better shared across society. Thankfully there is increasing awareness that excessive inequality is corrosive to growth.

Aid cannot fix inequality and disproportionate risk. Governments can. Targeted action to support society’s most vulnerable (basic services such as education health, and access to decision-making) is needed to even out inequalities, reduce risk, and build resilience.

Because some accidents are preventable.

Zambian Copper and a new “AIDs crisis”?

May 15th, 2013 | by

Africa is suffering from a new AIDs crisis: ‘Air-conditioned Induced Decisions.’  Our leaders live in air-conditioned homes, travel in air-conditioned cars, work in air-conditioned offices.  And it affects the decisions they make.” ~Maiko Zulu, Zambian reggae music star and activist

I had a chance to meet Maiko Zulu last week.  He wears frustration and disappointment with his country on his sleeve (and in his music).  Zambia is a country that should be improving economically.  Driven by mining large copper and cobalt reserves, economic growth has been high for the last decade, not less than 5% per year and more than 7% as recently as 2010.  The Economist in 2011 listed Zambia as one of the world’s 10 fastest-growing economies. Since, 2000, average income per capita has grown by more than 40%, lifting Zambia from “low-income country” to a “lower middle-income country.”

But high economic growth and increased average income have not translated into reduced poverty or better conditions for most Zambians.  If Zambia’s national income was a dollar, the poorest 10% of Zambians receive less than $0.02 and the richest 10% control $0.43, making Zambia one of the most unequal countries on earth. Despite good news on growth and income, Zambia is becoming more unequal and poverty is actually rising.

This analysis comes from a very important report released last week, Equity in Extractives, launched by the Africa Progress Panel.  It looks closely at the 20 African resource-rich countries that depend on extractive industries and finds they are performing quite badly in converting their mineral and energy wealth into benefits for the public. A few factoids:

  • Twelve of the 25 countries in the world with the highest child mortality rates are resource-rich African countries.
  • Equatorial Guinea, rich with oil, is actually now classified as a high-income country with an average income of more than $27,000 a year, higher than Poland.  But Equatorial Guinea’s child-death rate is 20 times higher than Poland’s.

In general, the resource-rich African countries are badly under-performing on basic human development and poverty reduction, despite how much money they’re making.  This chart tells the story: on the left are the countries’ ranking on wealth (actually income), and on the right is their ranking on human development indicators.  That rightward slope means people aren’t getting the health, education, and opportunity that they deserve.  Most resource-rich countries under-perform in every indicator. (Tanzania and Ghana are notable.)

Wealth_Wellbeing_Gap

One of the most interesting bits of the report is a forensic analysis that shows that inequality is growing in resource-rich countries, or at least in those the report analyzed.  The data is hard to come by, but seems to show that not only is the economic growth and revenue from oil and mining boom not being shared, but the elite are capturing (stealing?) ever more of the money over time. This means less poverty reduction than there should be, and in some cases more poverty than there was.

More than that, revenues that rightfully belong to the people of these countries are diverted through poor governance, thereby robbing the majority of citizens from the chance to improve their lives via social services and government investment intended to diversify economies. By not widening opportunities away from dependence on extractives and creating more jobs, inequality is not addressed.

Gawain and Maiko Zulu May 13

Gawain Kripke and Maiko Zulu in Cape Town last week.

The paper is important, and not only if you’re interested in extractive industries.  The analysis provides useful insights and ways to look at the issues that will interest anyone who cares about development and poverty.  The paper is studiously optimistic about the role extractive resources can play in benefiting development and poverty reduction.

Meanwhile, the truth of the inequality of growth is becoming more evident to the public in these countries.  As Maiko Zulu observes above, there is a disconnect between the public interest and those of the plutocrats and oligarchs who are running the countries.

“We can’t speak of economic growth when people are dying of poverty.”

Will disconnect eventually lead to discontent?  That’s a risky proposition that could lead anywhere…

***

To read the Equity in Extractives report, click here.

Why are two generals talking about poverty?

April 25th, 2013 | by

Andrew L. Yarrow is a senior research advisor at Oxfam America who studies inequality and low-wage work in the US.

Americans are struggling. The middle class is disappearing. Younger generations may not do as well as their parents.

None of this is news. Yet, behind the widespread recognition that our economy remains sour well into the “recovery” is the troubling reality that 1 in 3 Americans—more than 100 million people—struggle to make ends meet, living in poverty or “near poverty,” based on income thresholds set by the Census Bureau.

While there is much talk about the dangers of our nearly $17 trillion federal debt, there is little public discussion of the even greater economic crisis that consigns 50 million people to poverty and tens of millions more to low-wage jobs that barely lift them out of poverty. That is why Oxfam America has launched Voices on US Poverty, an initiative intended to stimulate discussion about US poverty. Essays from more than two dozen writers, which are being published in news media throughout the country, consider the specific challenges facing poor families and children, immigrants, minorities, and the working poor, as well as the broader nature of economic injustice. They bring such perspectives as economics, theology, journalism and social activism, and offer ideas on how to truly fix our economy in ways that benefit all Americans.

Gen-Roger-Blunt

Maj. Gen. Roger R. Blunt

Gen-Paul-Monroe

Maj. Gen. Paul D. Monroe Jr.

 

“There are clearly moral and economic problems when millions of Americans are desperate for work and unable to meet their families’ basic needs,” Maj. Gen. Roger R. Blunt and Maj. Gen. Paul D. Monroe Jr., two military leaders participating in Oxfam’s initiative, write.

“A free-market system that does not provide opportunities for all of us to succeed undermines one of our most convincing arguments against totalitarian regimes and state-run economies that often oppose our interests abroad,” they say.

 

What does it mean to be poor? Wealth and poverty are relative terms that vary greatly over time and by country. The World Bank defines poverty as “pronounced deprivation in well-being.” This can mean that people are unable to meet basic human needs (housing, food, clothing, health care), but in the US it can also mean that they struggle to stay afloat with jobs that pay just a few dollars above the US$7.25-per-hour minimum wage, with no benefits or job security. These are not the desperately poor in developing countries who live on less than $2 a day, but they are American men and women and families who can barely afford a cheap apartment and groceries, who patronize pawn shops and payday lenders, who can’t afford to get sick, and who are likely to have more debt than savings. Government benefits and charity help them—somewhat, but not enough to enable them to lead decent lives.

The numbers are chilling:

  • One in six Americans lives below the federal poverty line, with incomes less than $11,722 a year for an individual and $23,497 for a family of four.
  • The number of people in poverty is the highest in the 53 years that statistics have been collected, and the poverty rate has risen every year since 2006.
  • Another one-sixth of Americans lives in near poverty, with incomes between the poverty level and twice the poverty level.
  • About 6.6 percent of Americans, or 20.4 million people, live in severe poverty, with incomes less than half of the poverty threshold, or about $5,800 for an individual and $11,700 for a family of four.
  • Forty-four percent of children live in poverty or near poverty.
  • More than half of African Americans and Hispanics have incomes below 200 percent of the poverty level.

The picture looks even worse using an alternative measure of poverty developed by the National Academy of Sciences and the Census Bureau. Under this new Supplemental Poverty Measure, which takes into account regional differences, health care, housing, payroll tax and other costs, as well as government benefits. (See comparison of the measures below.) The number of Americans with incomes below twice the poverty level shoots up to about 150 million, or half the entire population.

Poverty Rates Comparison

“Poverty is about power, not scarcity,” Ray Offenheiser, Oxfam America’s president writes. “As Americans, we believe that our nation must lead. Poverty and inequality, and the social exclusion they breed, are wrongs to be righted, whether they occur in sub-Saharan Africa, South Asia, or the United States.”

Inequality in the post-MDG framework

March 19th, 2013 | by

There is big debate going about what should happen when the Millennium Development Goals (MDGs) expire in 2015.

I spent a day in New York recently talking about how the successors to MDGs could incorporate goals around inequality.  Other people are following the post-2015 debate closer than I am.  And others know more about inequality.  But I’m interested in how reducing inequality can be included in the next round of “post-2015” goals, and thereby be established as one of the goals of humanity.

When the current MDGs expire, most people assume that the world – via the UN – will embrace a new set of goals, and that they will look something like the existing MDGs.  For inequality, there are a few options, including:

(1) a stand-alone goal on inequality;
(2) integrating inequality indicators in other goals; or
(3) finding a more symbolic or aspirational way to support reducing inequality, without making it a measurable commitment.

It’s worth noting that some goals, like ending extreme poverty or ensuring 100% of children are enrolled in quality schools, are universal and inherently support greater equality.  To some extent, the more ambitious the goals, the more likely they are to help reduce inequality.

But there’s an argument for including a goal (or goals) on inequality in their own right, not as a secondary or incidental benefit of other goals.  For one thing, a stand-alone goal makes clear what the value-statement is and would be a powerful driver for action.

There are serious technical questions about how you could do this.  The standard GINI indicator is widely used, but has flaws that can obscure important aspects of inequality.  Other methods have also been proposed.

While I’m focused on inequality of income, or perhaps wealth, other dimensions of inequality are also important and could make alternative or complementary goals, e.g. inequality of geography, gender, or ethnicity are important and salient in different contexts.

Technical questions have technical answers.  The bigger challenges lie in the politics.  There’s a presumption that a stand-alone inequality goal is a non-starter and would be blocked by the powers that be.  Indeed, the gossip mill reports that when inequality has been proposed in the High Level Panel discussions, the UK Prime Minister has flatly refused to consider it.  But he isn’t the decider.  Or is he?

It’s depressing that the High Level Panel may neglect inequality, but there are plenty of other stakeholders and intervention points.  For example, you can have a say in the U.N. global survey for citizens. (Consider writing in “inequality” as a priority.)

The resistance of some key leaders doesn’t square with the reality that inequality rates very high as a public concern, in countries north and south, rich and poor.

It’s easy to understand why the one percent might not like all this attention to inequality,  and also why they might oppose setting an objective to reduce it.  But why would everyone else?  And why would political leaders like Cameron oppose it?

Unless they cared more about the super-rich than everyone else?

The sequester’s attack on the poor

February 25th, 2013 | by

Andrew L. Yarrow is a senior research advisor at Oxfam America who studies inequality and low-wage work in the US.

If Washington lawmakers are unable to step back from the brink of Friday’s scheduled budget “sequester,” low-income children and families will be among the many Americans hurt by this supremely foolish and cowardly exercise in policy making.

Photo: Getty Images/Rubberball

It all seemed so far away and unreal back in the summer of 2011, when President Obama and House Speaker John Boehner came up with the hare-brained idea of automatic cuts to defense and domestic discretionary spending at the beginning of 2013 if no longer-term budget deal could be reached. The January 1st “fiscal cliff” arrived, only for our bumbling budgeteers on New Year’s Eve to kick the can down the road another two months.

Well, here we are. The March 1 sequester is upon us, and $44 billion in cuts over the next six months will begin to take effect, with roughly half coming from the Pentagon and the rest coming from all manner of domestic programs. Mandatory programs such as Social Security, Medicare, and Medicaid, as well as Food Stamps, are exempt.

What does this mean? While Kentucky Republican Senator Rand Paul called the sequester a “yawn,” it will be anything but that to the 600,000 poor children and mothers who will lose WIC nutrition aid or the 70,000 children who will no longer be able to attend Head Start programs, according to the Coalition on Human Needs. Other initiatives that help the neediest Americans will also be slashed: 125,000 low-income families will lose rental vouchers; four million fewer Meals on Wheels will be served to the elderly; more than 370,000 adults and children will lose treatment for mental illness; and aid to the 23 million low-income Americans who get help with their heating bills will be reduced.

Of course, it’s not just the poor who will suffer, as the finger-pointers in both parties are quick to mention. The FBI and air-traffic controllers will see cuts. So will defense contractors. Federal employees may be furloughed. The long-term unemployed will lose benefits. And those who crunch the macroeconomic numbers say that the sequester’s ripple effects could throw as many as 700,000 Americans out of work.

These cuts come on top of a 7.6% reduction in federal funds to states since 2010. They also exclude even more draconian cuts proposed in the House Republican budget of $810 billion to Medicaid and $134 billion for Food Stamps over the next 10 years.

Few would disagree that the federal government needs to reduce its massive deficits. There are hundreds of billions of dollars in potential revenues that could be collected if we went after overseas tax havens and closed corporate tax loopholes. A 5.6% surtax on those earning more than $1 million a year could raise $450 billion over 10 years—as much as all of the domestic discretionary cuts slated under the sequester. Spending could also be cut—not only for defense but, most effectively, by reducing the astronomical healthcare costs that have driven Medicare, Medicaid, and other federal health programs to devour $800 billion a year. This is more than all domestic discretionary spending and more than even the Pentagon.

Pretending to achieve fiscal responsibility by cutting relatively small programs that benefit the poor and the middle class is dishonest and doesn’t work. And budget-cutting by sequester is not only a way for legislators to shirk responsibility, but an inhumane attack on poor and working Americans.

Climate Conversations: From Darkening to Enlightenment

February 20th, 2013 | by

Paul O’Brien is the Vice President for Policy and Campaigns at Oxfam America.

On a Friday afternoon in 2004, I was sitting on a Hill looking out over downtown Kabul.  The city was blanketed in smog with mountains rising in the backdrop.

Smog over Kabul. Photo courtesy of the Geo-Images Project http://bit.ly/VKijKQ

“Beautiful,” my Afghan friend said.

“Except for the smog,” I said.  “Our daughters are down there breathing that air.”

“The smog is beautiful too,” he said, “and they will survive. Three years ago, there were no cars in Kabul.  Today, we have your problem—too many cars.  It’s a better problem to have.”

Climate change activism has a challenge.  How do we tell a new story that works globally in our multi-polar, hungry world?

I just spent a few days thinking about this very question at a Climate Gathering in Ireland.  While the discussion critically lacked southern voices, it was a still a useful gathering of North American and European thinkers, activists, and artists trying to find new ways to mobilize a new conversation on climate.

I was unnerved when the meeting started by showing us the “darkening” room, or the place we were to go to voice frustrations.  It was well populated in the beginning sessions.  Early on I sensed that our perpetual brinkmanship may be politically bankrupt in the North.  The drumbeats of “failed consciousness” and “impending catastrophe” have become white noise for too many people.  We convince ourselves that words like “warming” and “change” will terrify millions, when we know in our hearts that our Southern allies want change more than anything.  We need a new story that comes not from failure, but the possibility of victory, not stasis but movement.

We played around with this notion; we are in a new age of enlightenment.  Once again in human history, our thinkers, activists, artists and benefactors—those guiding our private conversations—are outpacing our politicians and public conversations.  Art, technology, economics, and science are transforming not just what we can have, but what we want, or what “the good life” means.  For the first time ever, “global consciousness”—a key to solving uniquely global problems—is possible.

It’s a matter of time before politicians seek to line up incentives so that our planet wins from our innovation and endeavor.  Regulation will become our friend, and time is not our enemy.  What was unthinkable in the United States 10 years ago—a President mocking climate deniers, a global social media discussion on this issue, and locally-grown organic food in most communities, the simple life commercialized—is already happening.  Changing weather patterns don’t just insist on our attention, they are getting it and we are acting.

Of course, none of this is happening quickly enough or deeply enough for millions of people facing true crises today of hunger, forced migration, and loss of livelihoods.  Their stories can and must be told everywhere.  But if modern movement building requires more agency from Southern and Northern activists, we need more ways to mobilize people than the hope of individual outrage at our collective failure.

If climate change activism needs to become more ecumenical to be popular, it may need a more promiscuous sensibility.  It cannot always be so needy and judgmental.  Of course we must harness human “compassion,” but let’s not forget “force” and “laughter.”  Why not embrace “competition” as well as “collaboration”? How about “playfulness” as well as “responsibility”?  More people want to engage, but they don’t all want to weave every strand of their life together to do something good.  Many would engage in mindless random acts of political power if they knew something useful would happen as a consequence.  They may be responsible for the problem and may need to take responsibility, but they don’t want to be reminded of it all the time.

As we searched for an enlightenment story that cut across all our disciplines, the most resilient one was “home.”  I liked it. It works locally (the hearth), nationally (homeland) and globally (planet).  It evokes responsibility and protection.  It brings forth a different kind of voice and tone in the conversation.

Smog over Kabul. Photo courtesy Building Markets blog http://bit.ly/omDieg

When we talked of home, those who liked the big stage (most often men) shut up, while quieter voices (often women) spoke up and out.

I worry though that a story of home won’t bring in different voices, so much as convince the converted to stay the course. And that’s not enough.  Climate change needs stories of adventure and victory too—all sorts of heroes.

I was able to bring my daughter home from Kabul.  My friend and his daughter still live in a kerosene-heated home, darkening with dirty diesel every day.  They want life to keep changing more, not less.  Our enlightenment, our story of home, has to work for us both.

Poverty, Inequality, and the Post 2015 Agenda

February 4th, 2013 | by

Is it better to gain absolutely or relatively?

For example, free trade agreements promise all members economic benefits (absolute gains); although some members will benefit more than others (relative gains).

In terms of poverty, the Millennium Development Goals (MDGs) are a lesson in absolute gains. In sheer numbers, we’ve halved the world’s population living below the $1.25/day poverty line, and millions more joined the ranks of an emerging global middle class.

Yet, the victory of absolute poverty gains masks the pernicious relative inequalities that have grown alongside poverty reductions.

In many countries, poverty reduction and economic growth were unequal. In China, for example, the urban poor along the industrial coast made much greater gains than those in the vast, rural interior. In other places, prejudices and discrimination excluded groups from the benefits of growth and social services because of gender, race, ethnicity, and religion. Globalization and growth accelerated the creation of new, exclusive classes of upper middle and high income earners. Yet, the impact escalated prices on food and essentials, leaving the near poor vulnerable to slipping back below the poverty threshold.

To the right of the tennis courts and swimming pools, is Paraisópolis, a favela or shanty town, outside of São Paulo, Brazil. Translated, its name is Paradise City. Source: Google Maps http://bit.ly/11tbM3X. You can see another view of the area by photographer Tuca Vieira here: http://bit.ly/W7TODA

As we gear up for a post 2015 agenda, our generation is in a unique historical position. Eradicating global poverty is no longer a fantasy. It’s within our reach. However, the next challenge is reducing chronic inequalities between those subsisting just above the poverty line, and those securely apart of the middle class, or higher.

As the UN’s High Level Panel meets in Monrovia this week to discuss the post 2015 agenda, let’s laud the MDGs for helping to deliver the absolute gains made eradicating poverty.

But, let’s not allow world leaders to shy from the difficult challenge of creating relative gains for those heretofore excluded from economic and social opportunities.

Is inequality killing us?

January 23rd, 2013 | by

Andrew L. Yarrow is a senior research advisor at Oxfam America who studies inequality and low-wage work in the US.

What do high Gini coefficients and diabetes, regressive taxation and cardiovascular disease, and low minimum wages and respiratory ailments have to do with each other? More than most people—even physicians and economists—may think.

It’s not news that economic inequality in the United States has sharply increased during the last 30 years. It’s also not news that super-sized soft drinks, the easy availability of assault weapons, and the lack of health insurance for 49 million people are tragically cutting many American lives short.

What could be big news is that inequality in the United States may be a factor contributing to Americans’ poorer health, especially compared to Western Europeans, Japanese, Canadians, and Australians.  According to a massive new report by the National Research Council and the Institute of Medicine, “U.S. Health in International Perspective: Shorter Lives, Poorer Health,” the United States ranks dead last among 17 rich countries in life expectancy and at or near the bottom in nine key health indicators, ranging from infant mortality, obesity, and heart disease to homicides, chronic lung diseases, and sexually transmitted diseases (STDs).

Table courtesy the paper's authors.

These international health rankings look remarkably similar to inequality rankings by the Organization for Economic Cooperation and Development (OECD). Denmark, Norway, and Sweden hover near the top with the best health outcomes and the least social inequality; France, Germany, the Netherlands, and Canada are in the middle of both rankings. The US and Portugal are at the bottom.

Among the 17 countries studied, the United States now has the greatest disparity in wealth between the richest 1 percent of households, whose $16.4 million average net worth is 288 times that of the median household. The US also has the lowest male life expectancy and the lowest probability of its citizens surviving to age 50. Likewise, average incomes of the top 1 percent are more than 70 times higher than those of the poorest fifth of Americans—much greater than in Western Europe or Japan. And finally, the US has the dubious distinction of having the highest rates of infant mortality, STDs, and deaths from car crashes and gun violence.

Table courtesy the paper's authors.

Even fatal illnesses that our state-of-the-art medicine might be controlling, such as heart and lung diseases, are more likely to kill Americans than they are to kill citizens of all but one other country in the study. And the gaps have been widening, as America has been slipping farther behind other developed countries in health outcomes during the last 30 years.

Some might chalk this up to the fact that, prior to Obamacare, the US has had the highest proportion of people without health insurance. Others, pointing to the fact that the poor tend to be less healthy, would be right to note that the US has the highest poverty rate of the countries studied.

Yet, neither lack of health insurance nor poverty fully accounts for America’s miserable health ratings. Even well-to-do, white, college-educated Americans with health insurance fare less well than their counterparts in almost every other rich country.

While the report devotes only a paragraph to the role of high economic inequality, other researchers—notably Richard Wilkinson and Kate Pickett, authors of The Spirit Level: Why More Equal Societies Almost Always Do Better—argue that highly unequal income distribution harms all members of society. They posit that social stress, status anxiety, social competition, and lack of trust born of inequality lead to poorer health.

“Shorter lives and poorer health will ultimately harm the nation’s economy as health care costs rise and the workforce remains less healthy than that of other high-income countries,” concludes the authors of the National Research Council and the Institute of Medicine report.

Moral arguments against excessive inequality have recently been supplemented by macroeconomic evidence that inequality hinders economic growth and contributes to greater economic volatility. Now, we may add that inequality is medically harmful. This, in turn, brings the argument full circle.

Education as the great equalizer? Or class enforcer?

December 18th, 2012 | by

Policy-makers put a lot of faith in education as a pathway toward prosperity—for individuals, for families, and even for entire countries. And for many, education offers the possibility of economic mobility and, perhaps equality of opportunity.

For Oxfam building human capital through education is not just good for society and families, but should be considered as something closer to a human right.

'Numbers and letters' class (pre-primary) at N. V. Massaquoi School, West Point, Monrovia, Liberia. Aubrey Wade/Oxfam GB

This case is easier to make—and more salient—for primary and secondary education. For more advanced education, a careful analysis is worthwhile to make sure the value to individuals, families, and societies is worth it. In general, the presumed answer is yes. But, as the costs of getting a college education rise, the question increasingly gets asked and doubts creep in about whether it’s worth it.

I came across a report released earlier this year on “the economic case for higher education” in the USA produced by the US Departments of Treasury and the US Department of Education.  Those are formidable authors, so I thought it would be an impressive document. And it is.

The paper finds that college tuition has increased rapidly since 1991. This is offset a bit by increased financial aid (from various sources) and government tax breaks. But even taking these into account, college tuition has increased by 58 percent since 1991 for public schools and 25 percent for private schools. Public schools educate the large majority of students, so rising public school costs affect more people. Rising costs in public schools reflect the relentless budget cutting happening in the states, as well as increasing costs and administration of those schools.

Despite increasing cost, college education has a high return-on-investment. Incomes for people who have college education are 64 percent higher than for those who do not. And people with college education often receive other benefits, like pensions, health insurance, paid time off. And they are employed more, or rather, experience less unemployment.

In general, the wage premium for going to college has accelerated since the early 1980s. This might imply a shortage of college-educated people for the labor force, but it also reflects the stagnation of wages for non-college educated people.

For individuals and families, it’s clear that college is a good bet. Individuals that start life in a poor family (in the lowest income quartile), but who get a college education, reduce the chance that they will also be poor by more than half.

But the positive story of college education and prosperity begins to fray with this graph:

Here we see that college is still a distant dream for the overwhelming majority of poor Americans (bottom or first quartile on the left).  Less than one-third starts college, and less than one-tenth graduate. Compared to people in families with more money, poorer kids enroll at much lower rates, and once they enroll have a much harder time graduating. While the trend has been upward for poor people over three decades of college enrollment and graduation, the improvement has been for every income level, not just poor families (the orange v. blue bars). In fact, the improvements have been faster for higher income levels—with the rate of  improvement in college entry and graduation highest for kids in families in the third quartile.

Despite increasing cost, college education has a high return-on-investment. But it is still a distant dream for the majority of poor Americans. Photo: Nikki Eads/Oxfam America.

So richer kids have an easier time getting to college, more success sticking with it, and get higher incomes as a result. Things have been getting better for them over the years.

A college education is a great opportunity and is an engine for class mobility. It could be an engine for increased equality. But is an engine that is unavailable to kids from the lowest class really an engine of opportunity at all? If college delivers higher income to graduates, but is denied to poorer families, then does it actually help transmit increased inequality?

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