Buried in the G20 leaders’ summit declaration’s fuzzy language of “shared prosperity” and “leaving no-one behind” is insight into one of the most beguiling ideological battles of our time — inequality. Thankfully, the declaration stopped short of a global endorsement of the Joseph Stiglitz school of inequality economics.
If you read the accompanying Stiglitz-chaired “Report on Global Inequality”, a sweeping, moralising, empirically shaky document warning of a worldwide “inequality emergency”, and then read the declaration, you can feel the sherpas taking a large red pen to the bolder bits.
The G20’s newly minted Extraordinary Committee of Independent Experts on Global Inequality, led by Stiglitz and an ensemble of fellow moral economists, has declared that “83% of countries, representing 90% of humanity, suffer high inequality”. Powerful framing. Seductive even. Only problem is it’s not true.
Like so many grand pronouncements issued under the banner of global concern, this report is not really about inequality. It’s about power and who defines fairness, who polices wealth, and who gets to claim moral authority over economic life. And in this case the numbers have been massaged to fit the ideology.
The report’s central claim hinges on the World Bank’s Gini index: any country with a Gini above 0.4 is said to suffer “high inequality”. Using that metric, the report asserts that 83% of nations, covering 90% of the global population, cross that threshold. But the World Bank’s own data shows that only about a quarter of countries and 22% of the world’s population exceed it.
In other words, the G20’s figures are inflated fourfold. How? By quietly switching datasets (income to wealth), stretching definitions and aggregating incomparable time periods, the statistical equivalent of mixing Celsius, Fahrenheit and Kelvin to prove the world is overheating.
It’s a dangerous narrative being embraced in Pretoria and written in Stiglitz’s new magnum opus, “The Origins of Inequality and Policies to Contain It”.
The LSE Review of Books notes that Stiglitz paints inequality as a policy accident, a consequence of “market failures” amplified by ideology and captured institutions. For Stiglitz inequality is always a design flaw, never a natural property of dynamic systems. The state is cast as the wise engineer and markets as the capricious villains.
But this worldview, however morally satisfying and intellectually sweeping it is to those who crave a more powerful state, becomes brittle the moment you leave the conference room and step into the world as it is. The central fallacy and Stiglitz’s most persistent error is confusing inequality with injustice.
Aristotle warned against precisely this confusion when he distinguished between distributive justice (rewards proportional to merit) and corrective justice (remedying harm). To punish inequality born of effort, innovation or risk-taking is not justice, it’s envy born out of a worldview that sees the wealthy as Scrooge McDuck swimming in a money pit. Not as the risk-taking entrepreneur creating jobs and societal good.
Friedrich Hayek, Stiglitz’s arch-neoliberal enemy, cautioned that the pursuit of “social justice” is often a euphemism for centralised control. Once you grant the state the mandate to equalise outcomes, you also grant it the power to decide whose outcomes count.
Even John Rawls, the philosopher most invoked by egalitarians, did not argue for flattening the distribution. His difference principle allows inequality if it benefits the least well-off. What the G20 Stiglitz report does is strip that nuance away.
One has the sense, reading the final G20 declaration, of people who understand that inequality is not a single problem but a shadow cast by many things: ambition, accident, inheritance, talent, misfortune, corruption, the long memory of nations. It is not easily separated from the world that gives rise to it.
There are moments in which the declaration carries the faint aftertaste of the expert report. It speaks of the need to make digital transformation “inclusive”, of the risks that ungoverned technology may widen the gulf between those who gain and those who are left behind. It describes the necessity of making economies fairer and more open to those born far from privilege.
But these are simply acknowledgements. The tone is not that of people who believe the world can be remade by adjusting the distribution of outcomes. It is the tone of those who know that opportunity, not enforced equality, is the real work.
Notably absent is any commitment to the new global panel the experts urged into existence, a body meant to monitor inequality the way satellites track storms. The declaration sidesteps it entirely.
One cannot help sensing why. The world is tired of grand theories. Wary of institutions that grow faster than the problems they aim to solve. And understandably cynical of abstractions that promise much and deliver little.
What the leaders offer instead is a kind of pragmatic modesty. They speak of jobs, investment and technology used for the benefit of workers and small firms. They speak of food security, education and resilience. These are not revolutionary ideas. They are slow, human ones. They resemble the rhythm of life in any country full of hard work, slow reform and the gradual widening of opportunity.
There is wisdom in this restraint. Inequality has become the great incantation of our time, invoked to explain unrest, decline, political anger, the failings of markets, even the climate itself. It has been given a metaphysical weight it cannot bear. And because of this we have mistaken the symptom for the cause, the measure for the malady.
Yes, inequality can be cruel. It can harden into caste and resentment. It can trap the clever child in the wrong neighbourhood and elevate the dull heir to the wrong offices. But inequality can also arise from the freedom to try, to fail, to rise. From the simple fact that people are not the same, do not desire the same things, do not begin from the same places.
Reading the declaration one feels a modicum of relief because it refuses to pretend the problem can be solved by decree.
• Avery, a financial journalist and broadcaster, produces BDTV’s ‘Business Watch’. Contact him at michael@fmr.co.za.
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