CHNET-Works! - Newsletter

CHNET-newsletter banner


...... ..................  upcoming webinar button ...... ..................
 How to register button ...... ................... archived webinar button

Health as if everybody counted blog

Subscribe to feed Viewing entries tagged income inequality

People who get it, Part 2

Posted by Ted Schrecker
Ted Schrecker
Ted Schrecker is a clinical scientist at the Élisabeth Bruyère Research Institut
User is currently offline
on Friday, 14 September 2012
in CHNET-Works!

I've tried to make the case in previous postings for considering public finance as a public health issue. In a new article in Foreign Affairs,(1) Massachusetts Institute of Technology political scientist Andrea Louise Campbell makes several relevant arguments. She isn't concerned with health, and she is writing in the US context, but many of the analytical issues are relevant to our situation.

Campbell starts with the observation that the percentage of GDP that Americans pay in taxes is lower than in any high-income country: 24.1 percent. In the OECD as a whole, the figure is lower only in Chile (which has no national personal income tax) and Mexico. For Canada, the figure is 32 percent – higher than the United States, but a dramatic contrast with the Nordic countries, Italy, Belgium, Austria and France, where the figures are over 40 percent. She also points out that the drastic increase in economic inequality in the US, in particular concentration at the top of the economic scale (the one percenters, defined literally and statistically), is partly attributable to cuts in personal income tax during the Bush II presidency. (We know by way of the work of Emmanuel Saez that it is also a consequence of a steady rise in the market incomes of the one-percenters that began circa 1980; the relation between that trend and subsequent public policies must be left for another posting.)

There is more to the picture, though. Campbell points out that the much higher tax revenues available to European governments come not from higher and strongly progressive income taxes, as we might like to think, but rather from high consumption taxes, which are actually regressive: in other words, their impact is proportionally larger as you move down the income scale "because lower-income households tend to spend everything they earn." What, then, accounts for the contrast between the US and most of continental Europe in such matters as poverty and income inequality? Part of the answer lies not on the revenue side, but rather on the expenditure side: "In Europe, regressive taxes are matched with highly redistributive states. In the United States, mildly progressive taxes are matched with a not very redistributive state." Still another contributor is the much higher prevalence of low-wage jobs in the US ... and although Campbell does not make the point, that in turn probably has a lot to do with the weakness of unions, in particular outside the public sector.

tom slaterTom Slater, University of Edinburgh

Geographer Tom Slater, at the University of Edinburgh, is likewise concerned with various dimensions of economic inequality. Much of his earlier work was concerned with the process of gentrification and how it disrupts the lives of people who are displaced. In one forthcoming paper, he offers a powerful critique of the "cottage industry" of neighbourhood effects research in urban studies. Like Campbell, he is not specifically concerned with health, but much of what he says is immediately relevant to the study of neighbourhood effects on health. It has already been pointed out, in a widely cited article by Steven Cummins and colleagues, that most of the usual study designs are likely to understate such effects, because they involve a static definition of place (normally with reference to residential location) rather than a relational one that reflects the complexities of daily life on limited resources.

Slater's critique is more fundamental: such studies presume that where people live is the problem, rather than asking "why do people live where they do in cities? If where any given individual lives affects their life chances as deeply as neighbourhood effects proponents believe, it seems crucial to understand why that individual is living there in the first place" (italics in original). Failing to begin by questioning the operations of an economic system that sorts people across metropolitan space based on their purchasing power in land and housing markets means that "neighbourhoods ... become the problem rather than the expression of the problem to be addressed." This warning should be kept in mind by health researchers who generally tend to shy away from such structural explanations, preferring instead to focus on how neighbourhoods are conducive to certain kinds of 'health behaviours' like smoking and unhealthy eating.

In another forthcoming paper, Slater borrows a term from a book edited by Robert Proctor and Londa Schiebinger - Agnotology: The Making and Unmaking of Ignorance – in which the contributors address the question of "what keeps ignorance alive, or allows it to be used as a political instrument?" Canadian readers even vaguely familiar with the track record of our current national government need no explanation of this question's importance. (Proctor's interest in this topic began with research on the tobacco industry's efforts to create doubt about the health effects of smoking; David Michaels, who has done superb work on how industries manufacture uncertainty with respect to impacts on health and the environment, is one of the contributors.)

Slater argues that a right-wing think tank in Britain has played an important role in producing and sustaining ignorance about the root causes of poverty, ascribing it to failures of personal responsibility and the creation of 'dependency' by already minimal programs of social provision in much the same way as the protagonists of welfare 'reform' in the United States during the 1990s. The Conservative-led government that came to power in 2010 enthusiastically adopted this analysis, proposing workfare requirements and multi-billion-pound cuts in benefits while ignoring research evidence that such measures "do not lift people out of poverty, but rather remove them from welfare rolls, expand dramatically the contingent of the working and non-working poor, and affect their daily existence negatively in almost every way imaginable." The lack of available jobs, as a result of decades of deindustrialization, is simply ignored - a point also made eloquently by Owen Jones in his book Chavs: The Demonization of the Working Class.

These are superficial renderings of complex and important papers, but they have several key messages for everyone working in population and public health in Canada. First and foremost, we have much to learn from those working in disciplines that have no direct connection with health, and outside Canada. The retreat of the state in Canada from redistributive policies was well established before the financial crisis. Since then, in Canada as elsewhere, we have been told that expenditure cutbacks – "austerity" – were essential in order to keep government deficits from becoming unmanageable. Most current approaches to austerity are highly selective, though. They involve cuts to expenditures (or moratoria on new investments) that mainly benefit the least well-off; they demand little or no sacrifice from the wealthy; and they focus almost exclusively on the expenditure side. For example, as noted in a previous posting Ontario's Drummond Commission on the province's fiscal future was ordered not to consider the option of raising taxes from their historically low levels – a choice that has clear implications for any society's ability to provide the opportunity for a healthy life to all.

By now it should not be contentious to state that poverty and chronic economic insecurity are hazardous to health. It may not be stating the case too strongly to suggest that controversy on that point is manufactured, in the same sense that controversy about the health hazards of tobacco and the evidence for personal fecklessness as a major cause of poverty are manufactured. To be sure, there is much still to be learned about how social determinants of health affect health equity, but the apparent determination of research funding agencies not to support the relevant lines of inquiry itself merits study using the rubric of agnotology. Finally, Slater's trenchant critique of the neighbourhood effects literature addresses not only the limitations of a particular kind of inquiry, but also the imperative of methodological self-consciousness in all forms of research on health and its social determinants.

(1) Unfortunately, only a summary of the article is available for open access

0 votes
Hits: 10400 Continue reading

Social determinants of health: Glum tidings on the inequality front

Posted by Ted Schrecker
Ted Schrecker
Ted Schrecker is a clinical scientist at the Élisabeth Bruyère Research Institut
User is currently offline
on Monday, 11 June 2012
in CHNET-Works!

The Commission on Social Determinants of Health was emphatic about the role of “the inequitable distribution of power, money and resources” in sustaining socioeconomic gradients in health.  Such inequitable distributions do not just happen; they are the result of choices about how societies govern their economies and distribute the rewards they generate.  Globalization has undoubtedly narrowed the range of such choices – think about Eduardo Galeano’s “magic galleon that spirits factories away to poor countries” (1) and the shift of power in Europe from electorates to bond investors and credit rating agencies – but has not eliminated them.  Three recent publications offer important and sobering insights into how those choices have played out in Canada.

The most recent report on child poverty from UNICEF’s Innocenti Research Centre points out that: “It is now more than 20 years … since the Government of Canada announced that it would ‘seek to eliminate child poverty by the year 2000.’ Yet Canada’s child poverty rate is higher today than when that target was first announced.”  The poverty rate referred to here is not Canada’s Low Income Cut-Off, but rather a standardized relative measure referring to a household disposable income of less than 50 percent of the national median, after adjustments for family size.  Canada, as we can see, does not rank especially well on this measure.   Much of the report is devoted to comparing this measure with an alternative one constructed around 14 specific measures of child well being, for which data are available only for European countries, but among countries for which both measures are available there is a clear correlation between rankings.  

glum tidingsSource: UNICEF Innocenti Research Centre (2012), Measuring Child Poverty:
New league tables of child poverty in the world’s rich countries.
At the other end of the economic scale, a new paper by five Canadian economists explores some of the driving forces behind Canada’s steadily rising level of inequality –in particular, the growing share of income flowing to the top one percent of the income distribution.  “The top income share almost doubled” from about 8 percent in the late 1970s “to reach 14 percent in recent years.  Such an uneven distribution of income has not been seen since the dark days of the Great Depression.”   In a clearly written review of the issues, the report goes on to make a number of important points:

  • The range of occupations represented in the top one percent is far wider than stereotypes would suggest, with only 10 percent of top earners working in financial services as of 2005 (the date covered in the last compulsory Long Form Census, from which many of the report’s data are drawn)
  • Growing inequality is a function not only of changes in the distribution of market income but also, and crucially, of the retreat from redistribution that began in the 1990s
  • “Younger workers, especially those with limited education, face a world with worse earnings prospects than their fathers’ generation,” suggesting a future of further inequality in market incomes as older cohorts of workers who have maintained their wages retire
  • Revenues from increasing income taxes only on the top once percent would probably be relatively modest, even before considering the impact of strategies for tax avoidance that are available to many of the rich

The report also has, to my way of thinking, at least two shortcomings.  

First, and perhaps unavoidably given data limitations, it deals only with income and not with wealth.  Wealth distributions are often more unequal than incomes, and many forms of intergenerational wealth transfers (e.g. bequests of valuable principal residences) do not show up in income figures.  The report points out the role of assortative mating (of two high earners) in increasing household income inequality; its contribution to inequality in household wealth may be more significant.

Perhaps more seriously, the report takes the concept of ‘skill’ as entirely unproblematic, treating the education level associated with a particular occupation as a rough proxy.  However, there is often no clear connection between the intrinsic complexity of the tasks involved and the credentials of those performing them; in terms of labour market outcomes it makes more sense to ask what kinds of tasks, including some very complex ones, are amenable to ‘offshoring’ in low-wage jurisdictions.

Robert Evans, the iconoclastic health economist whose work was the topic of an earlier posting, likewise organizes a recent article around the one-percenters’ growing share of income and on that fact that “these trends,” both in Canada and the United States, “are to a considerable extent a consequence of conscious, deliberate agency by more or less organized and coherent interest groups.”  His most immediate concern is what the retreat from redistribution means for the future of Canadian public health insurance (“a casualty in the class war,” in Evans’ words) now that federal cash transfers to the provinces for health care no longer come with even minimal conditions.

Evans is, as always, playful with his literary allusions; Sherlock Holmes enthusiasts are directed to his endnote 11 and the accompanying text.

Outside the health care field, he emphasizes the health consequences of the “degrading” of environments where people live and work that is associated with rising inequality – a special concern in view of the prospects of a global economic realignment in which many ‘good jobs’ have simply disappeared from the high income world.  Reducing the effects of that realignment on health disparities will require more, not fewer redistributive economic and social policies – certainly not the austerity measures that are now worsening the current recession.  If one agrees with Evans’ analysis of the sources of successful resistance to such policies, then the precarious state of the social determinants of health agenda in Canada is hardly surprising. 

(1)  Galeano E. (2000).  Upside Down: A primer for the looking glass world.  New York: Picador.

Source: UNICEF Innocenti Research Centre (2012), Measuring Child Poverty:

New league tables of child poverty in the world’s rich countries.

0 votes

“Divided we stand”: OECD on inequality, and reasons for caring

Posted by Ted Schrecker
Ted Schrecker
Ted Schrecker is a clinical scientist at the Élisabeth Bruyère Research Institut
User is currently offline
on Friday, 06 January 2012
in CHNET-Works!

The Organisation for Economic Co-operation and Development (OECD) is a group of high-income (and some middle-income) countries that historically has paid attention mainly to conventional economic indicators such as growth, productivity and innovation. It does other things as well, including providing some of the best statistical overviews and assessments of its members' foreign aid performance. And recently, it has been addressing the consequences of increasing economic inequality within the borders of many of its members.

Divided-we-stand-pic-1Ermenegildo Zegna Boutique in Chile, one of the OECD’s most unequal countriesA December 2011 OECD report provides a description of those increases, an analyses of their causes, and country-by-country data that have some sobering implications for Canada. The report finds that income inequality increased in most OECD countries over the past three decades, although the level of inequality varies widely. The average income (adjusted for household size) of the richest 10 percent of the population is 5 or 6 times the average income of the poorest 10 percent in the Nordic countries, but 10 times that of the poorest in Canada, 14 to 1 in the United States, and 27 to 1 in Mexico and Chile. The report identifies a number of contributors to rising inequality of market incomes, including several aspects of globalization; technological change (which to the authors' credit it describes as hard to disentangle from globalization); changes in hours worked, which have favoured higher earners; and changes in household structure.

There is much room for debate here, notably about the role of globalization and the reasons for rising labour market incomes at the top of the income distribution, which have played a major role in increasing inequality, but also about the OECD's view that inequality can be reduced through raising workers' educational levels. This is worth doing, but effects on inequality are likely to be offset by growth in the kinds of work susceptible to 'offshoring'. For policy purposes, a point of particular interest is how taxes and benefit systems change the distribution of income, and how their effect varies across countries and over time. Like earlier analyses, the report points out that taxes and benefits in some countries (many in Continental Europe) are more strongly redistributive than in others (like the United States and Chile). Generically: "Until the mid-1990s, tax-benefit systems in many OECD countries offset more than half of the rise in market-income inequality. However, while market-income inequality continued to rise after the mid-1990s, much of the stabilizing effect of taxes and benefits on household income inequality declined."

The country note for Canada points out that the share of all income flowing to the richest 1% of Canadians grew from 8.1% in 1980 to 13.3% in 2007 – a trend that closely parallels an even more extreme pattern in the United States, where the income share of the top 1% is now higher than at any point since the Great Depression. (Readers interested in exploring comparative trends in top incomes may want to explore the World Top Incomes Database.) The OECD also points to the declining redistributive effect of Canadian taxes and transfers – a point made a few years ago in a Statistics Canada study, which observed: "Redistribution grew enough in the 1980s to offset 130% of the growth in family market-income inequality -- more than enough to keep after-tax income inequality stable. However, in the 1990-to-2004 period, redistribution did not grow at the same pace as market-income inequality and offset only 19% of the increase in family market-income inequality." The OECD note identifies a somewhat less dramatic retreat from redistribution, reflecting the fact that many ways of doing such calculations exist - for example, the OECD study restricted its analysis to the population aged 15-64 - but the general trend is clear.

Why should population health researchers be concerned with rising economic inequality? There are several reasons, most of which are familiar. First, rising inequality may lead to increases in poverty, however it is defined, although that is not necessarily the case. Second, socioeconomic gradients in health usually exist across the entire income spectrum. Intuitively, we would expect these gradients to be steeper when economic gradients are also steeper, other things being equal, although this is a difficult proposition to test because of the impact of policies that do not directly affect income distribution. Third, income inequality is only part of the story: wealth inequality, which the OECD study did not address, is normally greater than income inequality, and insecure and precarious jobs (which have their own health implications, including higher exposure to on-the-job hazards) are concentrated at the bottom of the income scale. Fourth, it is argued – notably by Richard Wilkinson and colleagues – that higher levels of economic inequality within a society lead to overall lower levels of health, although the mechanisms of action remain unclear.

Divided-we-stand-pic-2Photo by Paul Keller, reproduced under a Creative Commons LicenceA final reason has received less attention in the context of health policy; it involves a phenomenon that former US Cabinet secretary Robert Reich called the "secession of the successful". Past a certain high level of income and wealth, people need less from government, and different things. As one Arizonan interviewed for an article on politics in that state put it: "People who have swimming pools don't need state parks. If you buy your books at Borders you don't need libraries. If your kids are in private school, you don't need K-12. The people here, or at least those who vote, don't see the need for government." To which we could add: people who can afford to drive or fly everywhere don't need public transportation; people with secure incomes gain little from public financing of social or subsidized housing; people who could afford private insurance may resist paying taxes to keep a public health insurance system afloat for the less healthy and less wealthy; and so on.

What happens to the political prospects for reducing health inequity by way of social policy when a small but highly influential segment of the population needs government mainly for roads, police and prisons – and perhaps regards enhancing its own security through private purchases as routine? I recently returned from a workshop in Johannesburg, one of several South African cities that are more economically unequal than any other developing world cities included in United Nations Human Settlements Programme study (p. 73). The workshop was held in a guest house with an electronically activated gate, in a suburb where many properties were fenced with razor wire, and almost every one boasted a private security service's "armed response" sign. This is commonplace in South African cities. From Arizona to South Africa, does the interaction of inequality and privatization suggest a self-reinforcing process that can only be reversed through internal revolt or catastrophic external events (think the Great Depression and the second World War)? Health economist Robert Evans, quoted in a previous posting, wonders: "If we are back to a pre-war income distribution, how much of our post-war social policies can survive?" We should pay more attention to this question.

1The Gini coefficient, a standard measure of income inequality, in Johannesburg is 0.75 according to this study – more unequal than the national distribution of income in any country in the world. By comparison the Gini coefficients in Mexico and Chile, the two most unequal countries in the OECD, were 0.494 and 0.476 in the late 2000s, according to the OECD.

0 votes
Ottawa SEO and Web Design