Once upon a time, an old Nordic legend tells, there lived a princess in Burgundy who owned a huge treasure of gold. One night the treacherous Hagen von Tronje, an advisor to the king, broke into the treasury and looted it; but not for himself, nor for anyone else. Hagen stole the gold so that the princess could not have it. He feared the power gold could buy, so he plunged it into the torrents of the Rhine.
In Richard Wilkinson and Kate Pickett, Hagen von Tronje has two worthy modern-day successors. Their book, The Spirit Level, is a radical plea for egalitarianism. Greater income inequality, they argue, is correlated with just about every social problem. But unlike traditional egalitarians, the authors’ aim is not to raise the material living standards of the poor through redistribution. They believe that in the developed world, absolute income levels have become largely irrelevant: “Once we have enough of the necessities of life, it is the relativities which matter” (p. 225).
A number of concerns have been raised about the data, the correlations and the jump from correlation to causality – but I would like to focus on an entirely different aspect. It is only towards the end of the book, with climate change entering the stage, that things come full circle. We learn that in order to avoid ecological disaster, “we need to limit economic growth severely in rich countries” (p. 226). Not that this is a problem: “It is fortunate that just when the human species discovers that the environment cannot absorb further increases in emissions, we also learn that further economic growth in the developed world no longer improves health, happiness, or measures of well-being” (p. 216).
So here’s how the pieces of the jigsaw fall into place: as long as inequalities exist, people will not be willing to give up growth, because growth contains a promise - we may see lifestyles more luxurious than our own all around us, but in the near future we too may be able to afford the things that our wealthier neighbours afford today. Wilkinson and Pickett believe that the reverse relationship also holds: if our neighbours lose their luxuries, we too will lose interest in them. Remember, it is the relativities which matter. Eradicate inequality, and the scourges of consumerism and materialism will disappear, and we will live happily ever after in a climate-friendly zero-growth economy.
So everything seems to depend on the hypothesis that we do not actually want high material living standards - it is just that as long as we are exposed to luxurious lifestyles around us, we are too terrified to get left out. Yes, some studies on “Happiness Economics” suggest that absolute living standards do not matter for well-being, while relative living standards do. However, many suggest otherwise, and some even suggest the precise opposite.
Given this uncertainty, we face the risks of rejecting the above hypothesis even though it is correct (a “Type II error” in statistics), or of not rejecting the hypothesis even though it is incorrect (a “Type I error”). Which is worse?
If we commit a Type II error, people are still free to look for non-political ways of leaving the “consumerist” lifestyle behind. But if we commit a Type I error, we may find out in ten or twenty years time that we have thrown tons of gold into the Rhine for nothing. In the old legend, the Kingdom of Burgundy fell anyway in the end. The vengeful princess substituted political power for financial power. It turned out to be far more destructive.