That paradox of inequality

Matthew Syed asks an interesting question:

And this explains perhaps the most conspicuous political paradox of our age: why has the rise of economic inequality not led to the election of left-leaning governments whose raison d’être is (or should be) to offer redress for social injustice?

If inequality has risen as it is so often claimed it has then why aren’t the redistributionist parties sweeping the board? As, well as they did last time around a century and so ago?

Possibly, because the claim of rising inequality isn’t, in fact, true. We often mention that the Gini, the usual measure of income inequality, is currently lower than it was in 2007/8. That’s what is known as “falling” inequality, not rising.

There have been two new papers looking in more detail at this. Essentially, exploring the claims of the Piketty, Saez, Zucman axis. One shows that the post-tax, post-benefits income share of the 1% (for the US, agreed) has not in fact risen as that axis insists. Actually, it’s about flat. The other looks at the next level of inequality, after government provided services (ie, public goods). This is something that we’ve insisted upon here over the years. That all gain access to the NHS on the same terms is an equalising influence upon society. We must therefore account for that equalisation when trying to calculate inequality. Inequality is less than the more usual calculations - of course it is.

There’s a third level here as well, as yet unexplored in this formal manner. But again we’ve insisted upon it around here. The only form of inequality that could conceivably matter is consumption inequality. Which means that we must also include the consumer surplus in our calculations. Lambos and Chelsea houses tend to go for what someone’s willing to pay for them. Free email, search engines and social media go to all on that same upfront cost of nothing. This is another equalising factor in the standards of living as life is lived. There is one calculation out there that the email and search engine provides a consumer surplus of $18,000 a head. Which, obviously, applies to all, equally. Me, you, Bill Gates (although he has to use Bing) and that guy down the chip shop swearing he’s Elvis.

Far from the modern claims that inequality is soaring it is contracting by that only measure that possibly matters, consumption possibilities.

Which does leave us with the reverse of Syed’s original question. If the rise in inequality is not true then why have we had so many claims that it has happened? Clearly, the claim is being made so that the left wing redistributionists can roar back into power. Despite the base claim not, in fact, being true. But then when ever was truth a factor in politics and the gaining of power?