The age of inequality: The 1 per cent and the rest - New Scientist

An appeal for fairness in society

ANYONE who has children - or, for that matter, anyone who's ever been a child - will testify that we appreciate the importance of fairness from an early age, or at least its usefulness when appealing to authority. "But that's not fair!" is one of the earliest indications that a child is developing a moral sense - even if their conception of fairness doesn't always accord with their parents' view.

We know that this commitment to fairness persists into adulthood. Experiments in behavioural economics demonstrate that we will punish "free riders" - those who benefit from others' efforts without contributing equally themselves - even if that means we end up worse off ourselves. To put it another way, our cognitive biases mean that we punish perceived unfairness even when that conflicts with our narrow economic interests.

And narrow is the operative word. Considered within the context of isolated transactions, such apparently self-defeating behaviour is hard to rationalise. Set within a social context, however, it makes more sense. Societies which prize fairness and egalitarianism may actually be more stable; these values appear to have been held dear by our distant ancestors (see "Inequality: Why egalitarian societies died out").

But we seem to have abandoned this emphasis on equality when it comes to the design of modern civilisation (see "Inequality: Who are the 1 per cent?"). Inequality is rife both within and between modern societies. Western societies, in particular, are profoundly skewed, by almost any measure you care to name.

And yet for much of the past 40 years, inequality has remained a topic of serious discussion for just a small cadre of academics. Only recently has the Occupy movement, among other developments (e.g. Fathers 4 Justice), brought it to the forefront of public attention.

Why? One reason, perhaps, is that over the past four decades the prevailing political and economic rhetoric, buttressed by the failure of communism, has been that inequality is inevitable. As the customary parental rejoinder to childish protestations goes: life isn't fair. There will always be a heap, and there will always be someone at the bottom of it. Against this backdrop, what now constitutes fairness is provision for the latter group to climb, and occasionally rocket, to the top.

In this way, fairness becomes a matter of equality of opportunity: "anyone can become president". Yet it is increasingly hard to accept that we are meeting even this restricted objective. Inequality has significant detrimental effects on the health of those on the lowest rungs of society (see "Inequality: Of wealth and health"), making it less likely that they will advance their station in life.

And at the other end of the social ladder? Earlier this week the UK-based Tax Justice Network reported that a staggering $21 trillion, and maybe much more, has been stockpiled in tax havens by just 92,000 people - roughly the richest 0.001 per cent - using the best financial and legal chicanery that money can buy.

No doubt a deeply entrenched elite has fostered this situation to protect its own interests. But it may have been allowed to become entrenched because of another set of cognitive biases. Many of us seem keenest to seek out free riders among those that have least - the indigent and dispossessed, the stateless and the homeless. Perhaps this is the so-called "just-world hypothesis" at work: the belief that the world is an orderly place in which people get their just desserts. To be rich is to have been rewarded for your skills and grit; to be poor is to be feckless and undeserving.

Even when we do consider the "1 per cent", we focus on individuals - overpaid bank bosses and under-talented celebrities being favourite targets - while the structures that support them remain untouched. Charities and lobbyists have long known about, and exploited, our propensity to be more easily swayed by individual narratives than by rational consideration of the needs of groups. Enduring reform, as opposed to opportunist retribution, is hard to enact.

But such biases can work both ways. The UK government's new proposal to "name and shame" those who embrace aggressive tax avoidance may seem a toothless gesture, but so greatly do we prize our reputations that we will go to considerable expense to protect them. So the courts of public opinion may prove more effective than those of the judicial system.

Such points of leverage may be useful to those who want to create a more equal society. But all of us will need to bear them in mind as we continue to discuss the degrees and kinds of inequality we wish to tolerate. If we choose to redefine fairness once again, and remake our societies accordingly, we should take pains to avoid falling foul of our biases. Because it's up to us alone: there is no authority to whom we can simply wail about unfairness in the hope of restitution. We are the responsible adults now.

Source

"The age of inequality: The 1 per cent and the rest"