Wealth Inequality - subtly missing the point
It could be me
“Changing the narrative on wealth inequality” from the Joseph Rowntree Foundation. A 2024 report about approaches to framing wealth inequality as a social problem to build political pressure for change.
Shortly after starting, an uneasy feeling is building. It’s tricky to pin down, but the more I read the more I get the sense that the evidence they’re presenting doesn’t much support the point they’re trying to make.
It’s the same ballpark but it’s all just a bit off target. It’s like darts have been thrown, but they’re stuck in wall; near the board yes, but not in the board. Something was hit, but I think that still counts as a miss.
A sample below. They are trying to make the point that wealth inequality drives poverty. So, I’m expecting to learn how wealthy people create poor people, make them poorer, or keep them poorer than they would otherwise be had the wealthy people not existed. This requires more than saying look, there are wealthy people here, and there are poor people there, and poor people have a worse time of it. That isn’t making any argument about cause and effect. And is hinting at a zero-sum fallacy.
The article reads…
“Wealth inequality drives poverty and precarity for people at the bottom and exacerbates disparity.
Wealth inequality is high and rising and more marked than income inequality. In the UK, the bottom 50% of the population owned less than 5% of wealth in 2021, and the top 10% a staggering 57% (up from 52.5% in 1995). The top 1% alone held 23% (World Inequality Lab, 2022). The ratio of wealth to income has risen in the UK from 2.3 to 1 in 1948, to 5.7 to 1 in 2020 (in Savage et al., forthcoming).
It has a significant impact on life chances and outcomes (Callaghan et al., 2021) and it generates high levels of poverty amongst those with no wealth assets to fall back on. There are no nations which have high levels of economic inequality and low levels of poverty.”
So paraphrasing… some have a lot, others have little. Having little affects life chances and outcomes. So far so obvious. The “And it generates high levels of poverty” is suitably vague. What does, having little? That would be a circular argument. Having little limits your chances and outcomes and generates having little. Quite true but an absolute wealth argument not an inequality argument. Do they mean the fact that some have lots generates high levels of poverty? If so, how so? No explanation given, just a statement.
Don’t worry, the next section sounds promising…
“Wealth inequality drives and patterns precarity.
Although we are a very rich nation, we are a very unequal one. Most people have very little wealth, and around a quarter of the population have none, or are indeed juggling debt. Even modest amounts of wealth can act as a safety net to stop people being pulled into poverty. Not having access to wealth makes lives more insecure and makes it more likely that people might be pulled into poverty.”
More on how having less is more precarious. No doubt. But no mention of how that relates to wealth inequalities.
Is anyone else spotting the recurring issue?
Here’s a breakdown with a Chat GPT assist on summarising the logical flaw.
Core Argument vs. Evidence
Core Argument:
The article's central claim is that wealth inequality drives poverty and precarity. This implies a causal relationship between wealth inequality (the gap between the wealthiest and the rest) and poverty/precarity (insecurity or risk of poverty).Evidence Provided:
Wealth Distribution Statistics: The article cites disparities in wealth ownership (e.g., the bottom 50% owning less than 5%, the top 10% owning 57%). These figures illustrate the existence of wealth inequality but do not directly show how it causes poverty.
Absolute Wealth and Safety Nets: The article mentions that having little or no wealth contributes to poverty and insecurity, and that modest wealth acts as a safety net. However, this speaks to the effects of absolute wealth levels (e.g., whether someone has assets to fall back on), not directly to inequality.
Logical Flaw
The evidence about absolute poverty (lack of wealth or debt) does not inherently support the claim that inequality is the cause of poverty. For example:
If a society were equally poor (everyone has little wealth), there would be no inequality, but poverty would still exist.
Conversely, it is possible to have a highly unequal society where even the poorest have their basic needs met (as might be argued for most high-GDP nations).
Steel man that argument.
To strengthen the claim that inequality causes poverty, the article would need to explain how inequality itself contributes to poverty, such as:
Economic Mechanisms: Showing how wealth concentration reduces economic mobility or access to resources for the less wealthy. The best example I can think of is getting on the property ladder, when the first run is getting higher and higher due to asset price inflation if the wealthy were buying up all the houses as second or third homes. But that line of argument is not without its flaws. Is the millionaire really in competition to buy the same home as the first time buyer?
Policy Impacts: Arguing that inequality affects political decision-making, leading to policies that harm the poor. You’d also need to believe that the poor can’t see that and vote for policies in their interests, and if there are large inequalities there would be more voting power in poorer, larger, group. And how current safeguards against this aren’t working.
Social and Psychological Effects: Exploring how inequality might reduce social cohesion or create environments where poverty becomes more entrenched. For example, ghettoization, less mixing across wealth class, inhibiting social mobility etc. A property owning class and renting class maybe. Accurate.
It misses the chance to make this case. Instead it largely implies causation without evidence.
Conclusion
The article to me made the case for the problems of low absolute wealth, not relative wealth. Their central inequality claim might well be true, but the case was not made here, which seems a lost opportunity. Are the darts in the wall or the board for you? Am I subtly missing the point, or did they?
Related concepts
The zero-sum fallacy