It's amusing what people don't grasp about inequality

As we're continually being told inequality is the very terror of our times. Despite books like the Spirit Level entirely failing to prove the point all do seem to pay at least lip service to the idea that it is, in and of itself this inequality, destructive to all that is good and holy about society. 

Our own view is that given the manner in which free markets laced with capitalism have abolished absolute poverty here at home, are well on the way to doing so globally, those who desire something to whine about just have to go looking for something else - relative poverty and inequality. For how can a revolution be demanded if the current system is working rather well at our basic economic task, making us oiks out here in the street better off over time?

Despite all of that it is worth at least following the logic of those complaining. For example, this from Max Lawson at Oxfam:  

The poverty and inequality of data on inequality

The first thing to say is that the data is not good, but that we do know that the problem is strongly biased in one direction- inequality is systematically underestimated.


The Gini is calculated using household surveys or census data.  This data has been shown to systematically underestimate the incomes of the richest part of society. For example, a study of several Latin American countries found that the richest survey respondent had a salary lower than that of a manager in a typical medium to large scale firm.  The super-rich do not fill out surveys, and when they do they rarely reveal the true scale of their income.

The only possible logical conclusion from this is that inequality is less damaging than is claimed. Not what they're saying of course but it is the only logical possible conclusion.

For all of the estimations of how damaging inequality is come from observing the bad things which happen in a society and then comparing it with our measurement of that inequality. Now we say that inequality is higher than we thought. But we've still the same amount of bad things going on. Thus, obviously, any given level of actual inequality - not our measure, but the real number out there - must be producing a smaller bolus of bad things.

Think it through, some dreadful lurgy, some plague, is passing through the population. Of those we identify as getting it then 10% die. Then we find out that we're missing 90% of those who do get it but show, say, no symptoms. We now regard that disease as having a 1% death rate, something a great deal less worrying.

So it is with inequality. If the level is x and we note y bad effects, now we reconsider and state that inequality is 2x but we've still only got y effects then inequality is half as damaging as we'd previously thought.

All of which means that, if we want to insist that our earlier estimations of inequality are too low then we've also got to agree that all of our estimations of the effects of inequality are far too high. Too high by exactly the same amount as our estimates of the inequality itself were too low.

Thus, joyously, the more the protest over inequality being higher than recorded the less important inequality itself is.

Not a point we've seen being made as yet but no doubt they'll get to it given the stout commitment to intellectual consistency on the subject, yes?