Can income differences really be changed? Aren’t they just a reflection of human nature?

No. The scale of income inequality is very different in different countries – and even in different states of the USA. The more unequal of the rich developed countries (Singapore, USA, Portugal and the UK) are about twice as unequal as countries like Japan, Norway, Sweden and Finland.  There are also big differences in the levels of inequality in poorer countries. Not only does the extent of inequality vary from country to country, it also varies over time. Income inequality grew rapidly in Britain, particularly from the mid 1980s to the early 1990s. The USA had an almost continuous increase in inequality from the mid 1970s to the early 1990s. Graphs showing the trends can be found in the last chapter of  The Spirit Level. Although income differences widened in many countries, they did not do so in all countries. In the 20 years from the mid 1980s onwards, countries such as France, Belgium, Spain and Greece were among those which managed to avoid increasing inequality.

Governments in all rich countries control close to 40 percent of economic activity: they cannot avoid affecting income differences. The increase in inequality in both Britain and the USA almost certainly reflects the neo-liberal economic policies of the governments in power. Differences in “market incomes” – that is income before taxes and benefits – can be reduced by strong trade unions, by minimum pay policies, by employee representatives on the board, by a public ethic intolerant of the “bonus culture” and so on. They can also be reduced by taxes and benefits, particularly if more stringent action is taken to prevent tax avoidance. Other less direct influence on income differences include education policies and the management of the national economy.