Grasping at equality

Last week Kristian Niemietz posted a blog on The Institute of Economic Affairs website describing a country in Europe, and revealing which later in his posting.

In this country
- twenty per cent have to live on less than half of average income
- among those working the bottom thirty percent receive just seven per cent of total earned income
- the top twenty per cent receive forty-five percent of total earned income
- women earn twenty per cent less then men on average, and have an unemployment rate fifty per cent higher than that for men
- there is no minimum wage.

Where is this hell on earth? The answer is Liechtenstein, which has been one of the outstanding economic success stories.


The inequality cannot be denied. There is, however, another aspect. This is the absolute levels of the various groups:
- average (- median) annual gross wages are £42,000
- at the 25th percentile, - the top end of the bottom quarter of wage income, the person earns £32,400.
- unemployment is 2% for men and 3% for women.

What do we make of it, and what should a good socialist say?

First of all, the figures are perhaps the best available in any country, but they are subject to definition, collection and analytical problems.

Secondly, in making comparisons between countries with different currencies, there is a problem of what is the appropriate rate of currency exchange to permit the comparison?

Thirdly, there is the question of whether the pattern is repeated with post-tax earnings levels, and what is the effect of "unearned" income? In Norway, for instance, incomes are high but so are taxes.

Given these problems, what do we say to the figures?

In economic terms would you prefer to live in a country with greater inequality, but with everyone at a higher level of income, or would you prefer to live in a country with less inequality but also lower incomes? What should socialists say, given their dogma of equality?

If there were a prospect of moving from one kind of society to the other would short term adjustment costs change peoples' view?