Who Gets What? Part 1

I recently finished reading Who Gets What? Analysing economic inequality in Australia by Frank Stilwell and Kirrily Jordan, a present from my mother. It took me ages, partially because I was reading other things, and also because I kept getting irritated by it. I had to keep stopping and making a note about various errors and omissions and plain silliness. That gave me the idea that I should write a review, but as the notes piled up, I realised it was turning into a full-blown rant critique. Afterwards, looking over the notes, I decided not to bother constructing a major rebuttal because a) I’m lazy, and b) no-one’s going to care very much. Instead, I’m going to make a series of posts expanding on a selection of my initial responses to anything I felt shouldn’t go uncontested. Hopefully you, my dear reader, will feel it presents some avenues for fruitful discussion.

So welcome to Part 1.

In the first chapter, ‘Inequality’ (that serves as an extended introduction to the data and arguments presented later), Stilwell briefly outlines some economic inequalities, and writes:

Should this gulf between rich and poor be a matter of public concern? Some say not. These are either the complacent or the committed … The committed have a more assertive ideological stance. These are the proponents of ‘incentivation’. They argue that, in general, people receive rewards in proportion to their productivity. So a steep gradient between low and high incomes is a necessary incentive for the efforts that create a thriving economy.

In an academic work like this, written by a highly regarded professor of political economy at a prestigious university, such a simplified and incomplete view of opposing arguments is disappointing. Stilwell presents a false dichotomy of “the complacent or the committed”, brooking no nuance or degree in his taxonomy. If that wasn’t bad enough, he goes on to claim the latter have but a single dimension in their outlook, the scare-quoted ‘incentivation’. If I wanted to be kind, I could call this cherry-picking. But in reality, this is a lie by omission. Personally, I have come across a range of arguments suggesting economic inequality isn’t a major concern, or at least isn’t a problem requiring government action. These include the moral argument that redistribution of income is a form of theft; the mathematical observation that government spending has a deadweight loss; the empirical evidence showing a correlation between the relative zeal of redistribution and poorer outcomes for society; and the logical position that inequality is impossible to eliminate, costly to reduce, and that reduction suffers from diminishing returns. Stilwell’s failure to acknowledge these non-trivial arguments did not bode well for the rest of the book. Unfortunately, it isn’t until the sixth-last page that Stilwell even admits there are various stances beyond ‘complacent’ and ‘committed’, and even then it’s merely in the context of societal “beliefs” that stand in the way of collective action to reduce inequality, not an attempt to grapple with them or repudiate them.

The bulk of Who Gets What? is statistics regarding wealth and poverty, and quite comprehensive it is too. Yet amongst this very large collection of percentages, charts and graphs, there is not a single explicit mention of how poverty persistence can complicate any analysis. It’s all very well to say x% of y population live in relative poverty, but you won’t get a good idea of what’s actually going on unless you account for people moving into and out of poverty. Is it really x% if most of them are only temporarily poor? Think of people between jobs, or young people starting their employment – they may visit the lowest quintile, but they don’t live there. Some studies have suggested that persistent poverty rates (more than two years) are on the order of 1%-3% in Australia.

The clues are set out by Stilwell himself:

..if the poverty line is set at half the average family income, about 11% are living in poverty. Those most at risk include young people in the 15-24 year age bracket, single people, sole parents, Indigenous Australians, recently arrived migrants, refugees and people with disabilities [and] the unemployed.

So three categories – the young, migrants, and refugees – who as a matter of course will not earn much to start with due to lack of experience and skills, and will tend to improve their income over time. Should that really be a worry for policy makers? Then we have single people and sole parents. It’s no secret that having a partner or spouse makes you better off – living together is much cheaper than living apart – and that truism is exacerbated by having children. That’s why divorce and “unmarried mothers” carried such grave social stigma (sometimes formalised in law) for so long, and why social conservatives advocate policies to “encourage and reinforce” family life, like the Family Tax Benefit, and oppose things they deem to weaken it, like childcare or maternity leave. I’m sure Stilwell is not suggesting a social conservative agenda in this area, undoubtedly he’d simply prefer welfare increased for these vulnerable groups.

Who Gets What? has the first paraphrasing I’ve seen of what apparently is a famous remark by JK Galbraith:

..to justify increased economic inequality on the ground of ‘incentivation’ makes an odd behavioural assumption – that the rich will work harder if their incomes are increased whereas the poor will work harder if theirs is reduced.

This struck me as a strawman argument, one almost bizarrely cartoonish in its misapplication of logic. The ‘increase’ isn’t a given – it comes from work, making work more attractive. The ‘reduction’ (assuming it refers to welfare) makes not working less attractive and working more attractive. And if we assume it refers to minimum wages, reducing them increases employment (and the likelihood of moving into higher income brackets). So Galbraith was being nonsensical.

Stilwell finished the chapter with his first use of ‘relentless’ which, tellingly, would prove to be one of the most common adjectives (along with its adverbial version), and in what became a typical formulation – “a society in which high incomes and wealth are relentlessly sought”. The most common adjective, ‘neoliberal’, didn’t take anywhere near that long – it first appeared at the top of page 2! Those two choices of vocabulary said a lot about the kind of book I was reading, and can perhaps explain why it took me so long to finish.

Stay tuned for Part 2.

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4 Responses to Who Gets What? Part 1

  1. Mark Hill says:

    Full credit to you for reading such a terrible book.

    I once forced myself to read “How to argue with an economist”. The book was full of misrepresentations and ignorance. I was once made of sterner stuff.

  2. Pingback: Who Gets What? Part 2

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  4. Pingback: The Stilwell Manifesto

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