Why I Am Not in Favour of Equality

There is a word that has done more damage to clear thinking than almost any other in the political lexicon, and that word is ‘equality.’ It sounds so unimpeachably decent that to question it feels like questioning kindness itself.

But the word is a chameleon. It changes colour to suit whichever argument needs to be won, and most of the mischief in modern politics comes from people sliding between its meanings without ever pausing to notice they have done so.

My stance is quite straightforward. I am wholly in favour of equality before the law. What I am not in favour of is equality of outcome, which is the version that keeps creeping back into fashion wearing the borrowed clothes of the other meanings.

Differences in income and wealth are not an unfortunate by-product of a free economy that we must apologise for and tax away. They are the very mechanism by which the economy learns. A businessman who spots an unmet want and satisfies it better than his rivals does not merely deserve his profit; that profit is the signal that tells the rest of the economy where resources should flow next. Flatten the rewards and you flatten the signals. You end up with an economy that cannot tell a good idea from a bad one, because both are paid the same.

Socialists have always treated inequality as the problem to be solved. I treat it as the information that the problem-solving requires.

Consider two people. One works sixty hours a week building a business that employs forty people. The other works twenty hours a week and spends the rest of the time fishing. To insist that they end up with equal wealth is not to treat them equally at all. It is to treat their radically different choices as though they were identical, which is a lie dressed up as virtue. Genuine fairness lies in judging people by the same rules, not in engineering their results to produce a match.

This is the distinction the equality lobby never wants to make, because the moment you make it, their entire programme collapses into a demand that some people's effort be confiscated to flatter other people's outcomes.

Much of the appeal of equality as a policy goal rests not on compassion for the poor but on resentment of the successful, though it rarely admits as much. Ask why a footballer should earn more than a nurse and you will usually be asked back why that is unfair, rather than told what harm it actually does. Nobody is worse off because someone else built a fortune by pleasing millions of customers. The nurse's wages were not stolen by Wayne Rooney's. But envy needs no victim to function; it only needs a difference to resent.

I have spent a great deal of time arguing that markets are not zero-sum. Wealth created by one person is not subtracted from another's. The instinct behind enforced equality, however, is precisely the zero-sum instinct, the conviction that if someone has more, someone else must have correspondingly less, and that justice requires evening the score. It is bad economics built on a worse psychology.

Strip away the moralising and look at what equality-of-outcome policies do in practice. They punish the productive to subsidise the unproductive, which over time produces less of the first and more of the second. They replace a thousand independent judgements about value, made daily by consumers choosing where to spend their money, with a single official judgement about who deserves what. And they remove the very incentive structure that called forth the prosperity now being redistributed, rather like sawing off the branch to make better use of the apples.

Britain's twentieth century gave us a fine controlled experiment in this. The years of high marginal taxation and levelling ambition produced not a more dynamic economy but a more stagnant one, with talent fleeing abroad and enterprise discouraged at home. We did not redistribute our way to prosperity; we taxed our way to relative decline, and only began recovering when incentive was allowed back into the system.

None of this means indifference to poverty. Quite the reverse. I want the poor to become rich, not the rich to become poor. and those are different ambitions, frequently mistaken for one another. The route to the first is growth, opportunity, and an economy left free enough to keep generating both. The route to the second is confiscation, which has never yet made anyone better off except briefly.

So, not to favour equality does not mean indifference to the condition of the poor. The obsession with narrowing the gap between rich and poor has consistently distracted us from the much better question of how to raise the floor. A society that chases equality ends up poorer and less free. A society that chases growth ends up with both more inequality and more prosperity for everyone, including those at the bottom. Given that choice, I know which one I would rather live in. It is the one that history suggests actually works.

Madsen Pirie