{"id":465,"date":"2015-07-24T15:06:47","date_gmt":"2015-07-24T14:06:47","guid":{"rendered":"https:\/\/blogs.ncl.ac.uk\/nisr\/?p=465"},"modified":"2015-07-24T15:06:47","modified_gmt":"2015-07-24T14:06:47","slug":"reducing-inequalityin-national-wealth","status":"publish","type":"post","link":"https:\/\/blogs.ncl.ac.uk\/nisr\/reducing-inequalityin-national-wealth\/","title":{"rendered":"Reducing inequality\u2026in national wealth"},"content":{"rendered":"

The next in the\u00a0blog series from\u00a0Newcastle University\u00a0Societal Challenge Theme Institutes<\/u><\/a>\u00a0giving recommendations for targets and indicators of the\u00a0UN Sustainable Development Goals<\/u><\/a>, is from Dr Andrew Walton<\/a>, Lecturer in Political Philosophy in School of Geography, Politics and Sociology.<\/span><\/p>\n

In the current proposal for the <\/strong>Sustainable Development Goals<\/strong><\/u><\/a>, Goal 10 states the aim to \u2018reduce inequality within and among countries\u2019.\u00a0 For many (good) reasons, much articulation of this goal has focused on its first component \u2013 reducing inequality between co-citizens within countries.\u00a0 But it is important also to consider what should be the appropriate target for the second component.\u00a0 What should be our aim and measure in reducing inequality amongst countries? My suggestion is to lessen the gap in per capita national wealth \u2013 the value of each country\u2019s financial and physical assets.<\/strong><\/p>\n

Measures of (in)equality<\/strong><\/p>\n

The basic idea of measuring (in)equality involves comparing the circumstances of certain actors.\u00a0 Thus, any conceptualisation of equality must specify an answer to two questions:<\/p>\n

    \n
  1. Which actor should be compared?<\/li>\n
  2. What aspect(s) of their circumstances should be compared?<\/li>\n<\/ol>\n

    There are different ways to conceptualise and measure (in)equality historically [1]:<\/p>\n\n\n\n\n\n\n\n
    Model<\/strong><\/td>\nActor<\/strong><\/td>\nAspect(s)<\/strong><\/td>\n<\/tr>\n
    Gross Domestic Product (GDP)<\/td>\nCountries<\/td>\nFinal value of goods & services produced within nations\u2019 borders<\/td>\n<\/tr>\n
    GDP\/capita<\/td>\n\u2018Average\u2019 citizen (country \u00f7 population)<\/td>\nFinal value of goods & services produced within nations\u2019 borders<\/td>\n<\/tr>\n
    Income<\/td>\nPersons or households<\/td>\nDisposable income \/ expenditure<\/td>\n<\/tr>\n
    Wealth<\/td>\nPersons or households<\/td>\nAssets, including financial holdings and physical goods, such as real estate<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    Perhaps obviously, these models ask us to think about (in)equality in rather different ways.\u00a0 For example, on current figures using GDP suggests that China is better-off than Switzerland, whereas GDP\/capita suggests the opposite [2].\u00a0 Similarly, both GDP and GDP\/capita suggest that Brazil is a relatively well-off country, but measuring income and wealth highlight that it is home to individuals who are worse-off than almost the entire populations of similarly well-off countries [3].<\/p>\n

    What these differences highlight is that asking which model we should use to measure (in)equality pushes us to explore deeper philosophical questions about our underlying reasons for being concerned with (in)equality, and to find a measure that is tailored to these concerns.\u00a0 My suggestion here is that some of our underlying concerns point in the direction of exploring how countries compare in per capita wealth [4].<\/p>\n

    Why compare countries and why compare them per capita?<\/strong><\/p>\n

    For many people it will seem obvious that there is something important about whether their country is well-off.\u00a0 It is sometimes thought important for ensuring that their country is respected by others and very commonly because it has a significant impact on whether its citizens have comfortable lives.<\/p>\n

    Some argue that comparing national circumstances is a mistake. They suggest that, ultimately, it is only the welfare of people that matters and, as noted above, cross-country comparisons can hide that some individuals within countries are badly-off.\u00a0 Advocates of this view might argue that Goal 10 should be collapsed into one goal: measuring (in)equality amongst individuals worldwide.<\/p>\n

    We should reject the conclusions of this argument.\u00a0 Because the SDGs also consider (in)equality within countries and have other goals targeting aspects of individual welfare, they will not overlook the worry mentioned above.\u00a0 Meanwhile, because one thing that benefits people\u2019s welfare is to participate in the collective decisions and development of their nation, even this individual-centred view can acknowledge the importance of a world involving country groupings and, thus, the additional relevance of cross-country comparisons.<\/p>\n

    However, we should accept the point that countries are, in essence, valuable only insofar as they benefit their populations and our comparisons between them should reflect this concern.\u00a0 It is for this reason that our cross-country comparison should focus on a per capita measure, which looks at how some aspect of a country\u2019s circumstance relates to its people.<\/p>\n

    Why compare wealth?<\/strong><\/p>\n

    Some possible ways we could make per capita inter-country comparisons would be the following:<\/p>\n\n\n\n\n\n\n
    Model<\/strong><\/td>\nActor<\/strong><\/td>\nAspect(s)<\/strong><\/td>\n<\/tr>\n
    GDP\/capita<\/td>\n\u2018Average\u2019 citizen<\/td>\nFinal value of goods & services produced within nation\u2019s borders<\/td>\n<\/tr>\n
    Wealth\/capita<\/td>\n\u2018Average\u2019 citizen<\/td>\nAssets, including currency, stock, bond holdings and physical goods, such as land, natural resources, and rights to global commons<\/td>\n<\/tr>\n
    Capabilities<\/td>\n\u2018Average\u2019 citizen<\/td>\nHuman development indicators, such as life expectancy, education, income<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    A reasonable case could be made that reducing inequality between countries in any of these respects would be a worthwhile target.\u00a0 Nevertheless, I proposed at the beginning of this post that the goal should be to focus on wealth\/capita.\u00a0 Two related points support this view.<\/p>\n

    First, neither GDP\/capita nor capabilities takes full account of the aspects of a country\u2019s circumstance that affects the welfare of its population.\u00a0 To take two clear examples, currency reserves and natural resources, which are considered in wealth\/capita, but not these other measures, both allow a country to provide its population with economic security and future consumption [5].<\/p>\n

    Second, many of the assets that countries hold are a matter of luck.\u00a0 For example, no country did anything to entitle it to the oil or gold that lies within its borders and, indeed, much of their economic wealth arises from the fortunes of the market.<\/p>\n

    In cases where there is a good that many actors desire and which no actor is entitled automatically to own, it seems sensible to distribute that good equally.\u00a0 If Isaac and I are sat beneath a tree feeling hungry when an apple falls on his head, it seems reasonable for us to share it.\u00a0 Similarly, insofar as it is valuable for countries to hold financial and physical assets and their current holdings have arisen from good fortune, there is a reason to aim for equalising their shares.<\/p>\n

    Moving towards international equality<\/strong><\/p>\n

    A more fully fledged case for measuring inter-country (in)equality in terms of per capita national wealth is that achieving parity in this regard can, under certain conditions, represent a truly idealistic aim.\u00a0 There is a moral argument that a distribution of assets is fair if it mirrors what each relevant actor would have bought with equal purchasing power in the context of all goods being priced at a market-clearing equilibrium [6]. Such a distribution, in the international context, would entail equality in per capita national wealth and it is fair because it reflects the equality of all parties in their access to these goods and allows them to shape their holdings according to what they believe is worth having.<\/p>\n

    Realising this aim is perhaps a more long-term project than for the framework of the SDGs.\u00a0 Nevertheless, it helps show the value of building our understanding of (in)equality in national wealth and beginning to reduce it, whilst casting light on some important steps for moving towards this goal:<\/p>\n

    Pursue (the second component of) Goal 10 by:<\/p>\n