A History of Inequality
“In recent decades, income and wealth have become more unevenly distributed in Europe and North America, in the former Soviet bloc, and in China, India, and elsewhere.” This introduction to a new book by Walter Scheidel, titled The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century, recalls the current anxiety over the growing share of wealth and income concentrated in the hands of the “1 percent.”
While the author recognizes the existence of a large volume of literature devoted to the question of why income has become more concentrated, alternatively he addresses the forces that have caused inequality to fall, in the twentieth century and in the distant past. Disturbingly, the four historical events to which Scheidel attributes reversals of inequality are not what one would wish for. He calls them the Four Horsemen of Leveling.
The first of the Four Horsemen of Leveling is war, at the scale of mass mobilization. The two world wars of the twentieth century rose to a level of destruction that wiped out wealth and redistributed resources. Earlier wars lacked such destruction and thus did not effect a reduction in inequality. The world wars demanded universal sacrifice. Huge increases in income and property taxes were levied, and physical damage to capital assets disproportionately impacted the wealthy. All told, the world enjoyed an extended period of rising equality following World War II.
A second Horseman is transformative revolution. In the extreme example of the communist takeover of Russia, extraordinary violence restructured society and reconfigured access to material resources. Rights of ownership to land were abolished, and rights to use the land were given to all citizens.
Complete state failure is a third Horseman. Historically, rulers lost control to non-state actors due to corruption or inability to maintain security, public services and infrastructure, and loss of legitimacy. System collapse is most detrimental to the rich and powerful as concentration of resources is upended. The recent history of Somalia was a great leveling.
The fourth Horseman is epidemics and pandemics. Plague, smallpox and measles have been more destructive of human life than human-caused violence. The loss of population made labor scarce, changing the balance of power between workers and employers.
Scheidel believes that total revolutions and long wars involving millions of fighters are unlikely going forward. Pandemics are a risk, but not plagues like the Black Death. State failure of a leveling scale is rare; recent examples have been confined to Africa and the Middle East. Scheidel examines the possibility of peaceful means for reducing inequality, such as land reform in more agrarian societies, economic development, democratization, education, and others; one by one he dismisses them as unlikely. He does not find in history any benign means of reducing inequality that has achieved results comparable to the Four Horsemen.
Even so, proposals for reversing inequality abound, focusing on policies of government. Progressive taxation is most prominent, envisioning maximum income tax rates over 50%. (The highest U.S. rate in 1944 was 94 %.) Other policy proposals address higher minimum wage rates, free universal education and health care and guaranteed basic income, among others. The political viability of such proposals is questioned even by those who propose them.
Inequality varies significantly from country to country. Level of income inequality is measured by a statistic called the GINI Index of Income Distribution. The World Bank uses the scale with values from 0 to 100, with 0 representing perfect equality and 100 representing perfect inequality. The table below lists the 50 countries with the lowest GINI index as of each country’s latest year measured. Country names are color-coded by continent or portion of continent; note that 20 of the top 22 countries are in Eastern or Western Europe. The United States is 84th on the list. The entire list of 140 countries for which data is available can be viewed here. Values range from 24.09 to 63.38
A recent article in The Economist with a headline analyzing Warfare and Welfare is consistent with findings in Walter Scheidel’s new book.
“European welfare states began in Prussia at the end of the 19th century, when war with France required the mobilisation of a large number of civilians…. In America this relationship between warfare and health care has evolved differently…. the federal government broke the putative link between war and universal health care by treating ex-servicemen differently from everyone else. In 1930 the Veterans Administration was set up to care for those who had served in the first world war…. America did come close to introducing something like universal health care during the Vietnam war, when once again large numbers of men were being drafted. Richard Nixon proposed a comprehensive health-insurance plan to Congress in 1974. But for Watergate, he might have succeeded.”
Coincidentally (?), some of the same Western European countries that led the list as most equal also topped the latest list of the world’s happiest countries in the World Happiness Report 2017, released at the United Nations on March 20, 2017. Interviews with citizens of Norway, which led the list as most happy, cited broad social welfare support, including free education and health care, as contributing to a sense that society works for everybody.