Remarks on inequality                              

                                     Pingfan Hong

            

 

I would like to make three points.

First, we should discuss inequality issues in the broad context of social justice.

Second, we should anchor the discussion of inequality in the universally agreed fundamental values and principles as those promoted by the UN, but not based on any ideologies.

Third, we need an integrated policy approach to addressing cross-cutting and multi-dimensional inequalities in the context of the Sustainable Development Goals (SDGs) and the 2030 Agenda for Sustainable Development, which the UN has launched in September 2015.  

Let me elaborate on each of these three points.

 

1.    Inequality and social justice

 

Most discussions on inequality issues have been based on findings from positive studies, such as the trends of inequality in distribution of income and wealth as measured by Gini coefficient, Palma index, or other indicators.

Quite a few studies have also been focused on analyzing the relationship between these inequality indicators and other economic and social variables, for example, GDP growth, international trade, employment, education, etc.

All these positive studies are important, but not sufficient.

Gini coefficient and Palma index, no matter how sophisticatedly constructed, can provide neither sufficient nor necessary basis of social justice for the discussion of inequality issues. These indictors can hardly be used as the just guidance for policy making.

For example, when Gini coefficient of a country increased from 0.3 to 0.4 in the past three decades, we cannot claim this country has necessarily become less just, or more unjust.

Similarly, among countries, if a country has higher Gini coefficient than another, we cannot sufficiently claim the former is a more unjust society than the latter.

We need to place the discussion of inequality in the context of social justice.

For that, we would need to revisit some theories of social justice.

For example, one of the most influential theories of social justice in the past few decades has been the one developed by John Rawls, an American political philosopher.  

Rawls believes justice is the first virtue of social institutions. In his view, any laws and institutions, no matter how efficient and well-arranged, must be reformed or abolished if they are unjust.

He proposed two principles for defining social justice.

First principle: each person is to have an equal right to the most extensive basic liberties, including political liberty (the right to vote and to be eligible for public office); freedom of speech and assembly; liberty of conscience and freedom of thought; the right to hold personal property; and freedom from arbitrary arrest and seizure as defined by the rule of law.

Second principle: social and economic inequalities (such as inequalities in distribution of income and wealth, and inequalities in social authority and responsibility) are permissible only if they are reasonably expected to be to everyone’s advantage, particularly to the benefit of the least advantaged members of society.

Rawls also emphasized that these two principles are to be arranged in a serial order, with the first principle prior to the second.

This ordering means that a departure from the institutions of equal liberty by the first principle cannot be justified by, or compensated for, by greater social and economic advantages.

Each person possesses the equal right to basic liberties that even the welfare of society as whole cannot override. The sacrifices imposed on a few cannot be outweighed by the larger gains enjoyed by many. In a just society, the equal liberties of each member are taken as settled, not subject to political bargaining or to the calculus of social interests.

If we follow these two principles and the ordering of them, then in the discussion of inequality, we should probably first examine how the equal liberties are secured for everyone in the society before we look into inequalities in distribution of income and wealth.

In many cases, large inequalities in distribution of income and wealth are usually rooted in the institutional inequality in basic rights.

If we follow these principles, we should not be satisfied with the analysis of the trends in Gini coefficient or Palma index; instead, the analysis should go deeper to investigate if the existence of economic and social inequalities is to the benefit of the least advantaged members of society.

For example, the high income of medical doctors, compared with that of other professionals, may be justified if it means that the least advantaged members of society (including those who are sick, elderly and poor) can have better access to medical services.

On the other hand, the high income of some financial gamblers can hardly be justified if their high income is a result of usury and financial chicanery, at the expense of increased financial risks for all.     

When we compare inequality among countries, we cannot simply compare Gini coefficients; instead, we should investigate if the degrees of the equal liberties are comparable across these countries.        

If we follow Rawls theory of social justice, we may find that the conventional analysis of the relationship between income inequality and GDP growth is almost irrelevant: it matters little whether there is a trade-off between inequality and economic efficiency (growth) from the perspective of social justice.     

There are other alternative theories of social justice.

For example, Utilitarianism assumes a social welfare function can be constructed for the society as a whole by aggregating the utility of individuals, where the utility is a single index which can measure all kinds of “pleasures” and “pains” an individual is facing. While individuals can make trade-off among “pleasures” and “pains” to achieve maximum utility, the society can also improve its social welfare through trade-offs in the utility among individuals. According to Utilitarianism, the more equal distribution of income, the higher the social welfare for the society.  

On the opposite, libertarianism claims that each individual has a fundamental right to liberty, the right to do whatever one wants with one’s own property, provided one respects other people’s right to do the same. The libertarian theory of rights rules out the needs for redistribution of income and wealth, as it believes inequality in income produced by a “free market” is natural, as everyone is facing formal equality in opportunity. As a leading figure of libertarianism, Milton Friedman was once quoted as saying: a society that puts equality—in the sense of equality of outcome—ahead of freedom will end up with neither equality nor freedom. On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality.

Meritocratic theory pointed out in practice, opportunities in a market economy are far from equal: those who have supportive families and a good education have advantages over those who do not. Meritocratic theory therefore tries to modify libertarianism by suggesting removal of obstacles to achievement through providing equal educational opportunity and health programmes for the children from the poor families. According to the meritocratic conception, the distribution of income and wealth resulting from a free market is just, but only if everyone has the same opportunity to develop his or her own talents.   

In comparison, Rawls’ theory of social justice, which to some extent was developed on the basis of other theories in the history, seems to be more balanced and comprehensive.

For example, Rawls criticized libertarianism by arguing that the distribution of income and wealth resulting from a “free market” with formal equality in opportunity cannot be considered just, as the distributive shares are influenced by the factors arbitrary from a moral point of view, such as the family background. Rawls has also remarked that although meritocratic theory corrected certain morally arbitrary advantages in libertarianism, it still falls short of justice, as the distribution of income remains to be determined by the natural distribution of abilities and talents, which are morally arbitrary too (though in a lesser degree to libertarianism). Rawls’ theory also clearly differs from utilitarianism by arguing that there is no trade-off between members of a society in their basic equal liberty rights: justice denies that the loss of freedom for some is made right by a greater good shared by others.   

In general, we should place the discussion of inequality in the context of social justice, because the purpose of addressing inequality is not to lower Gini coefficient, but to improve social justice at large.  

 

2.    Inequality and the fundamental values and principles of the United Nations

 

We need to anchor the discussion of inequality in the context of the fundamental values and principles of the UN.

Equality is among the fundamental values and principles based on which the UN was created and to which the UN is committed.      

Let’s first review how equality is defined in a few universally agreed UN documents.

In the Universal Declaration of Human Rights, equality is defined as “equal in dignity and rights”.

In the Declaration on the Right to Development, equality is elaborated as “equality of opportunity for all in their access to basic resources, education, health services, food, housing, employment and the fair distribution of income” (Article 8).

In the Millennium Declaration, equality is defined as one of the six fundamental values, namely, “freedom, equality, solidarity, tolerance, respect for nature and shared responsibility”. Equality referred to “No individual and no nation must be denied the opportunity to benefit from development. The equal rights and opportunities of women and men must be assured.”

In the most recent Sustainable Development Goals (SDGs), SDG10 is set to “reduce inequality within and among countries”, and calls for ensuring “equal opportunity” and reducing “inequalities of outcome”.

It is clear that the concept of “equality” as one of the fundamental values and principles of the UN is broad, multi-dimensional, including, but not limited to, the dimension of “income and wealth”.

Therefore, when we discuss income inequality, we should not single it out from the multidimensional concept of equality.

We should also avoid isolating the issue of inequality from other fundamental values and principles of the UN.

When we discuss inequality issues at the UN, we should not be guided by any ideologies, which are not consistent with the fundamental values and principles of the UN.

 

3.    Integrated approach to addressing inequality for achieving SDGs     

 

Inequality is a cross-cutting issue in the SDGs.

While SDG-10 has been explicitly defined to reduce inequality within and among countries, many other SDGs have also included certain targets for reducing inequality in different dimensions.

In general, several key words are frequently used to reflect the cross-cutting and multi-dimensional nature of equality as embedded in all the SDGs. These key words are “equal”,   “inclusive”, “equitable”, “universal”,  and “for all”.     

For example, in SDG-1 to end poverty, it has a target to ensure the equal rights to economic resources, to access to basic services, ownership and control over land and other forms of property, natural resources.

In SDG-2 to end hunger, it also has a similar target to ensure equal access to land and other productive resources, financial services.

SDG-3, to ensure healthy lives and promote well-being “for all” at all ages, reflects the equal rights to health. Its targets also include “universal access to sexual and reproductive health-care services” and “universal health coverage”.

SDG-4, to ensure inclusive and equitable quality education and promote lifelong learning opportunity for all, clearly defined the equal rights to education.

SDG-5, to achieve gender equality and empower all women and girls, itself defined the equality in gender dimension.        

SDG-6, to endure availability and sustainable management of water and sanitation for all, included “universal and equitable access” to safe and affordable water, and “equitable sanitation”.

Although a few SDGs, such as SDGs 12-15, did not explicitly mention “equality”, each of them is highly relevant to equality. All these environment related goals are important for reducing inequality among countries, as well as inequality within countries.

Those environment-related goals also have impact on “inter-generational” equality. For example, taking urgent action to combat climate change and its impact (SDG-13) has significant implications for inequality between today’s generation and the future generations. 

Given the cross-cutting and multi-dimensional nature of inequality as defined in the SDGs, it is important to develop an integrated approach to reducing inequality in its all dimensions for a balanced achievement of all the SDGs.

In this regard, SDG-16 has to some extent already provided us with some guidance: we need to build effective, accountable and inclusive institutions at all levels. In the longer run, social institutions play a crucial role in shaping equality in a society through defining rights and duties, and appropriate distribution of benefits and burdens among members of society. So do international institutions for shaping equality across countries.    

In this sense, institutional building and reforms at both international and national levels are more important than individual policies in reducing inequality and improving social justice.