Does relative inequality matter globally, or not?

Curious post from Chris Bertram over at Crooked Timber. Responding to twin critiques, one of Europe and one of obsession with relative inequality by Tyler Cowen and Will Wilkinson, respectively, he says that Tyler and Will have it backwards, and that domestically, relative inequality matters quite a bit, but globally, i.e., beyond the sovereign state with no controlling overauthority, relative inequality doesn't matter at all once you're past an absolute level. Given that I also occupy the same/similar ideological space as Tyler and Will, I agree with them and disagree with Chris. But in the course of Chris' reasoning it seems to me that he underlines their points rather than refuting them.

Going straight to his point that international inequities don't matter, Chris says:

By contrast, I see no good reason to think that analogues of these arguments hold for international relativities. If Germans end up poorer in wealth and income than Americans, this will not thereby undermine political inequality among Germans. Position in local rather than global hierarchies is what matters for health outcomes and self-esteem. Just so long as all Germans, say, continue to enjoy those capabilities that are important for full participation as citizens in their communities, something that can certainly be assured on the basis of a level of wealth and income such as Germans enjoy today, I see no special reason for moral concern about the relative decline of Germany compared to the United States. Of course, there may be a problem if there is mass emigration by talented and productive people in Europe to the United States (in the way that there is currently a movement from Eastern to Western Europe). That would be bad if it impacted directly on the access of Europeans to, say, health care, and it would be bad if the talented were able to use their opportunities elsewhere in a way that made European countries domestically more unequal. But just so long as European countries can give people adequate opportunities to live absolutely decent lives in Hamburg, Paris or Bristol, there will a limit on those who will leave just for increased wealth and income, especially if that wealth and income[1] can’t be guaranteed to translate into a higher level of well-being.

(emphasis added.)

I don't see the theoretical justification for stopping at the nation-state level when it comes to comparing inequality. If the problems of relative inequality are problems qua relative inequality (as Chris' list implies) and not simply in their secondary effects on political outcomes, then in theory you must object to international relative inequity as well. First, I don't think that the claim that local v. global positioning mattering really holds, especially given that there is at least prima facie evidence that ideological Islamic terror draws greatly on resentment of global positioning in the heirarchy (Arab chauvinists feel their position is unjustly low and, therefore, a root cause for radicalization), and certainly health outcomes absolutely track GDP comparing 1st world to 2nd and 3rd world outcomes at least (e.g. Japan has better health than China, Germany has better health than Russia, etc). And assuming arguendo that all of the problems with relative inequality are more or less true, the problems would seem to also apply internationally relative to the US and Europe (two areas that have, by far, met the 'adequate opportunities to live *absolutely* decent lives' test):

[...] it seems to me that relativities in wealth and income matter because of the way that they can impact upon people’s absolute levels of well-being. There are a number of components to this, and I needn’t rehearse the arguments in grim detail. Amartya Sen goes through some of them in his well-know essay “Poor Relatively Speaking”: if wealthier people come to have access to new technologies, and if access to important goods get mediated through access to those technologies, then the poor who lack such access will find it harder and more expensive to supply their needs. You can run this one from everything from cars and out-of-town shopping centres to the internet. Second there are arguments about how inequalities in wealth and income undermine political equality. Third there are the Frank-style arguments about how relativities impact directly upon happiness. Fourth there are the Marmot and Wilkinson (the other one) arguments about how inequality impacts on health. Fifth, there arguments such as those put forward by Adam Swift concerning how people can translate their advantage in wealth and income into better educational opportunities for their children and place them better in the queue for jobs that those of poorer individuals. Some of these arguments may have flaws (I’m inclined to be more skeptical about the Frank ones than the others) but together they make a compelling case for the idea that inequality is bad for people, domestically.

If wealthier nations come to have access to new technologies (as is the case in the US v. Europe in general), and if access to resulting important goods gets mediated through this access to new technology, then the poor countries who lack such access will find it harder and more expensive to supply their needs. You can run that one from everything from cars to information technology to medical equipment to industrial processes. Second, there is demonstrable political inequality between the EU and the United States [see: German/French political resistance to Iraq war, futility thereof] which can be credibly traced to the raw fact of economic power[2] that supports military and other power. Global relative inequality seems to get under Euro skin, given the amount of kvetching they do about US consumption habits, popular trends, etc. French angst about "Anglo" culture possibly undermining and dominating La France is directly related to the relative inequality in terms of popular cultural output between the US and France.[3] So certainly even in Euroland relative global inequality (can) directly impact happiness. And as Trent has pointed out, when you look at actual outcomes for individual diseases, the US trumps the EU, too.[4] And certainly the ever-increasing divide between the US and Europe in terms of absolute output and per capita output lends credence to the idea that if the US can translate its advantage in wealth and income into better educational and employment opportunities for its children/immigrants, that would further exacerbate the relative inequality and drive the other aspects, too.

Conversely, if all that matters is "giv[ing] people adequate opportunities to live absolutely decent lives", then its not clear at all why this doesn't apply all the way down to some minimum monkeysphere level (something like 150 to 22,350 people[4]) where sociobiological hardware kicks in. That is to say, so long as some BFEast German town (say, Suxbruck) gives adequate opportunities to live absolutely decent lives, what would it then matter that, say, Bonn's citizens have a 5-10x wealth advantage? Certainly all of the arguments that Chris employs to pooh-pooh the significance of international relative inequality would apply to Suxbruck v. Bonn or Bavaria v. Mecklenburg-Western Pomerania for that matter. (or, to go even smaller, West Suxbruck v. East Suxbruck.)

It seems that either relative inequality does matter all the way (and thus Tyler's critique is poignant) or else it doesn't (and Will's point is affirmed). I can see how Tyler and Will's points can coexist, but not how Chris' inversion coheres.

(footnotes below)

fn1. Readers of the Fly Bottle will note that Will has pointed out the studies showing that the only variable that positively tracks with subjective well-being (SWB) is income/wealth, and even that only weakly. So if income/wealth won't make your SWB greater, no particular intervention will.

fn2. Whether Europe has chosen to free ride on US military expenditures or is sincerely pacifist and thus wouldn't've maintained a credible , the hard fact on the ground is that Europe cannot, either sustainably or in the short run, match routine US military spending without wrecking the fiscal basis of the Euro Social model. Thus there is neither a credible European military threat to raise vs. the US, nor a credible military alternative to the US when intervention is called for, thus the US is relatively unconstrained vis-a-vis European angst vs. the way the US *is* relatively constrained by Chinese, Russian, or Iranian angst.

fn3. When I was visiting Austria last year, almost every station was playing the Best (American) Hits of the 80s, 90s, and the 80s. The only time I heard anything european was when some generic House music would be played, or when a Czech station would come into view. Given the clannish xenophobia of the avg. Austrian I met, I'm shocked at how dominant US popular music is over there. Given also how beautiful Austrian carol singers sounded during the holiday season, I can't imagine its because Austrians can't make music at all.

fn4. A la Will Wilkinson's "United Nations Fallacy", if you take actually comparable units (US states vs. Euro states, or US vs. all of Europe), the US aggregate health outcomes also beat European ones. If the US has to include its poorest parts, Europe should also, and if not, then why not compare, say, Massachusetts v. Sweden? Or Minnesota v. Sweden? Florida v. Spain? New York v. Britain? etc and so forth.

fn5. Math oriented readers, help a brother out. Assuming Dunbar's Number is the hardware limit for human social cooperation, is it appropriate to say that in theory you could scale that by having a Amway-like pyramid where one person knows 149 other people, all of whom know just him and 149 other people who know 150 other people, etc, and the maximum would be something like 149^2 or 150*149 or 150^, or whatnot? I seem to vaguely recall something about how to find out the number of possible connections within a given matrix as being solved like that. Corrections, theoretical objections, etc, are highly welcomed in comments as I'm genuinely curious.

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