Justice delayed is justice denied.
William E. Gladstone
Economists are rethinking the numbers on inequality claimed a headline in this week’s Economist. At first glance, the article seemed to be claiming that none of what we have been told by pioneering researchers into inequality is true. It seemed to be saying that 1) incomes of the top 1% have not soared relative to the rest of the population; 2) that the incomes of the middle class have not stagnated and wages have in fact risen significantly; 3) that the Labour share of GDP has not fallen; and 4) that wealth inequality has not also widened. It gives the impression that researchers like Thomas Piketty, Emmanuel Saez and Gabriel Zucman have got it all wrong. And if it really did claim all these things, that would indeed be a bombshell.
But a closer reading of the detail of the article reveals that its claims are far weaker. Essentially it makes two main points: first that points 1)-4) are not demonstrably true in every developed country; and second that some researchers have questioned the precise numbers calculated by the pioneers even in the US. This seems such a trivial observation that my initial reaction was to dismiss the article.
But then I realised the article was trying to do for inequality what the tobacco industry did for lung cancer and the oil industry for climate change. It was trying to create an impression that there is no real certainty that inequality is a real issue and therefore no action should be taken until extensive further research has been carried out. The article was straight out of the denialist’s playbook.
Sir Richard Doll’s pioneering research into the link between smoking and lung cancer was first published in the British medical Journal in 1950. His article concluded that:
“The risk of developing the disease increases in proportion to the amount smoked. It may be 50 times as great among those who smoke 25 or more cigarettes a day as among non-smokers.”
By 1955, after two further large-scale trials confirmed his initial results, there was no longer any scientific doubt.
For the tobacco companies, this research was dynamite. If they did nothing, they could be out of business very quickly. On the other hand, Doll’s research was incontrovertible, and a flat-out denial would not be credible – it would simply raise the public’s awareness of the very problem they wished to hide. What could they do? As Clive Bates and Andy Rowell wrote for the London-based Action on Smoking and Health (ASH) group:
“Publicly the companies’ overriding policy has been to argue that they are not qualified to comment on the health consequences of smoking, but when they do so to create confusion and “keep the controversy open”. This has been done by, on the one hand denying the existing evidence, whilst on the other demanding absolute proof of causation and calling for more research. This research, much of which has been covertly funded by the tobacco industry, is designed to look at other causes of cancer and to water down the evidence linking smoking and disease. For example, the industry statements are peppered by fudging comments such as “no clinical evidence”, “no substantial evidence”, “no laboratory proof”, “unresolved”, and “still open”. Nothing has been “statistically proven”, “scientifically proven”, “or “scientifically established”. There is no “scientific causality”, “conclusive proof”, or “scientific proof”. It is still the case in 1998 that tobacco company representatives will not give a straightforward ‘yes’ to the question ‘does smoking cause lung cancer, yes or no?’ “
Although, in the long run, the tobacco companies lost the argument, this approach was nevertheless highly effective. In the UK, for example tobacco advertising was not finally banned until 2003, and the use of attractively branded cigarette packs was not outlawed until 2017. That is half a century of additional marketing, at the cost of many additional lives.
Oil is to climate change as tobacco is to lung cancer. And the response of the oil industry to the threat of climate change legislation has been similar.
Climate science is not new. The French mathematician Joseph Fourier first identified the possibility of greenhouse gas effects in 1824. By 1896, the possibility of a link with the burning of fossil fuels had also been established. By the 1960s, the link was scientifically established and its importance was becoming clear:
“… from 1957, Roger Revelle alerted the public to risks that fossil fuel burning was “a grandiose scientific experiment” on climate. NASA and NOAA took on research, the 1979 Charney Report concluded that substantial warming was already on the way, and “A wait-and-see policy may mean waiting until it is too late.”
And from the 1970s, the climate change denial movement became active, especially in the United States. An extraordinarily well-funded and increasingly well-hidden movement, the Climate Change Counter Movement (CCCM) has been following the same strategy used by the tobacco companies. As Robert Brulle, an environmental sociologist at Drexel University has pointed out, around $7 billion has been spent on manufacturing the appearance of controversy on a topic where in reality 97% of scientists agree:
“A well organized CCCM … played a major role in confounding public understanding of climate science, but also successfully delayed meaningful government policy actions to address the issue.”
Many parts of the world – including of course the US and UK – are experiencing the adverse effects of climate change right now. The costs of delay have already been enormous and will rise much further.
Much the same can be said about poverty and inequality. As long ago as 1879, the economist Henry George published his most famous book: Progress and Poverty: An Inquiry into the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth: The Remedy. This book established rising inequality as the symptom of a failing economy and rent-seeking as the cause of that symptom.
And during the Great Depression, concern about inequality reached such a point that Roosevelt implemented his New Deal. From that time through to the end of the Golden Age of Capitalism, inequality fell as the economy boomed (see Chapter 2 in 99%) and most people became better-off.
But since then, especially in the US, the four points that The Economist seems to be disputing have been generally true. And a host of economic researchers have documented these facts. We are now at a point when the Democratic Party in the US and the Labour Party in the UK are proposing to take more radical action to reverse the trends. And this, I suspect, is what has triggered the article in The Economist.
Having attempted to create the impression that we have no reliable data on inequality and that a protracted and bitter controversy is in view, the article concludes:
“While that long and bloody academic battle takes place it would be wise for policymakers to proceed cautiously. Proposals for much heavier taxes on high earners, or a tax on net wealth, or the far more radical plans outlined in Mr Piketty’s latest book, are responses to a problem that is only partially understood.”
And this is its real point: no action should be taken to address inequality and mass impoverishment.
Fortunately, most people do not agree. Whereas the damage done by smoking is not noticeable until the cancer arrives, and the damage to the environment may not be felt by much of the population for many years, mass impoverishment is much harder to deny. Most people can feel it in their pockets and see it in their children’s lives. The inequality denial movement has a much greater challenge than the tobacco industry and the climate change counter movement. Let us make sure that it is less successful.