For richer, for poorer

SIR – Regarding your special report on capitalism and inequality (October 13th), notwithstanding our current panic it is clear that the West is wealthy by any objective standard. Our fault lies in that we have not determined what is best done with this excess wealth. You made a strong case that the principle of markets, which has generally brought wealth to the world and lifted millions out of poverty, should not necessarily have the last word in how profits and wealth are best distributed. The three pillars of a liberal society are Adam Smith’s: prudence, looking after oneself as best as one is able; justice, keeping the law of the land; and beneficence, caring for others and society where there is need. What you term “Progressivism” would seem to be an attempt to redress the shortfall in the latter. As such it is certainly a breath of fresh air; recognising a problem is the first step towards its solution. Kevin Albertson

Principal lecturer in economics

Manchester Metropolitan University

SIR – Rather than being “debunked”, the conclusions of our book “The Spirit Level” have been substantially confirmed by numerous independent analyses. We showed that social problems related to social status (poor physical and mental health, violence, teenage births, drug abuse, as well as low levels of children’s well-being, social cohesion and social mobility) are much more common in societies with larger income differences.

Paul Krugman has said that our view of the effects of inequality “is going seriously mainstream”. Our work has been independently confirmed in peer-reviewed journals, by meta-analyses and time-series analyses showing the lagged effects of changes in inequality. Our hundreds of invited lectures and seminars, including those at the Royal Statistical Society, Harvard’s Kennedy School and the Harvard School of Public Health, have been well received. You do your reputation for accuracy no good by uncritically adopting the comforting views of one maverick with no expertise in this area, who raises entirely spurious points. Professor Richard Wilkinson

Professor Kate Pickett

York SIR – Many of the extremes in inequality are the direct result of global policies promoted by the IMF and the World Bank, and The Economist, over the past three decades. Cuts in public spending, lower taxes, action to attract investment from abroad, and even warnings against measures to curb inequalities, have all let inequality soar in many developing countries.

By contrast, the United Nations for many years has been outspoken about the dangers of growing inequality. If countries are to adopt the domestic policies you recommend they will need more encouragement and support from the international system.

Professor Sir Richard Jolly

Institute of Development Studies

Brighton

SIR – Your contention that it is teachers’ unions, and not Wall Street, who should be held most responsible for declining social mobility in America is not credible (“True Progressivism”, October 13th). Wall Street’s unconscionable irresponsibility caused the worst recession since the Depression and Americans are still feeling its effects: Americans have lost 40% of their wealth since 2007, 44% of children live in low-income families and nearly every state has cut education funding. Curiously, you specifically mentioned school choice as a way of improving education, noting Sweden’s universal school-voucher system and Britain’s school reforms. Yet neither Sweden nor Britain are among the top ten countries in education. Those countries that perform best have heavily unionised teachers and respect for the teacher’s voice. The underlying point you made, that education and the economy are tied together, is an important one. Let’s give the demonisation of teachers’ unions a rest and concentrate on what actually helps to improve education, opportunity and social mobility. Randi Weingarten

President

American Federation of Teachers

Washington, DC

SIR – What about a steeply progressive consumption-tax? In America such a tax could be administered in a similar way to the existing system. Income would be reported by employers and all other sources; “net contributions to savings” would be reported by all recognised savings vehicles (which might include mortgage payments or college tuition). The difference between the two sums would be the amount consumed and therefore taxed. A steeply progressive tax on consumption could be avoided by anyone who chose to live modestly. The “creators of wealth” should be ecstatic, because they could create all they might wish without being taxed on the creation of income or wealth. James Markham

Wilmington, Delaware SIR – You used the nation-state as a unit of analysis. But the dynamics of the wider capitalist system limits what the nation-state can do. For example, owing to their access to post-liberalisation global capital, the industrial elite in India (think of the Ambanis), who were previously subservient to the state, have become more important in shaping economic policy.

Arjun Sharma

Delhi

SIR – Looking at the timeline of one of your graphs, I would argue that the demise of the Soviet Union as an alternative economic model that capitalists feared and abhorred is a factor that has led to increased inequality. The Soviet model kept capitalistic titans on their best behaviour. Now that it has gone, capitalism, with no incentive to contribute towards social purpose, is running wild. I had to teach my children the value of sharing and that lesson should not be lost on those who reap disproportionate gains that to me look like nothing more than psychopathic hoarding.

Sandra Turnbull

Oakland, California

* SIR – Once again The Economist wrongly assumes that targeting the poor supports progressivism. On the contrary, experience tells us that means testing perpetuates the politics of regressive welfare systems. The truth is that means testing is often both a cause and a symptom of inequality.

You highlighted the challenge of population ageing for welfare systems, including in emerging economies where governments are already subsidising pensions for the better off. But it is no coincidence that the countries with unsustainable contributory systems for the better off are usually those where the poor are left with meagre means-tested hand-outs. The inadequacy of a basic “floor” in the pension system strengthens middle-class demand for generous pensions for themselves, and simply looking to more targeting will only fuel this further. What is needed is a middle ground in the form of a fair, affordable and sustainable minimum that provides security for all, while incentivising saving for a more generous pension. This stance is not radical, but reflects a growing consensus in leading thinkers in the World Bank and Inter-American Development Bank, and the pragmatic paths currently been taken by countries as diverse as Chile, Thailand and Britain. Richard Blewitt

Chief Executive

HelpAge International

London SIR – I am surprised that you support means-testing of benefits, given your revulsion towards red tape and bureaucracy. For years I helped six elderly relatives apply for council-tax rebates. After filling in the 14-page forms, which involved providing details on bank accounts, pensions and goodness knows what else, I would take them down to the local town hall to be processed by an army of clerks. Often they or I made mistakes that prolonged the pain and increased the costs.

Alfred Want

Maldon, Essex

SIR – In “Pride and Prejudice” Elizabeth Bennet’s mother was unaware of Mr Darcy’s first offer to marry her daughter, so she could hardly have reacted, as you put it, with “horror” at Elizabeth’s rebuff. It was resolved to the satisfaction of all (save Lady Catherine de Bourgh) when Elizabeth ultimately accepted his proposal.

But although there was a great disparity between Mr Darcy’s wealth and Elizabeth’s rather modest income, both belonged in principle to the same social class. Elizabeth defended herself from the suggestion that in marrying Mr Darcy she would be quitting the sphere in which she had been brought up: “He is a gentleman; I am a gentleman’s daughter; so far we are equal.”

Michael Osborne

Oakville, Canada

In search of philosopher kings