tag:theconversation.com,2011:/au/topics/piketty-10778/articlesPiketty – The Conversation2016-11-10T11:37:36Ztag:theconversation.com,2011:article/685952016-11-10T11:37:36Z2016-11-10T11:37:36ZTrump’s victory is bad – for Africa and for global stability<figure><img src="https://images.theconversation.com/files/145397/original/image-20161110-25228-1doif9g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Donald Trump brings aggression into the US Presidency that threatens world stability.</span> <span class="attribution"><span class="source">REUTERS/Stephen Lam</span></span></figcaption></figure><p>The most forceful message being sent by a Donald Trump victory is that the American electorate has repudiated the policies and political practices of the past – at least – eight years. </p>
<p>The second message is that his supporters are tired of the elite ignoring their needs and are now fighting back. There is evidence to support their claims, like the studies showing growing inequality in the US by people such as <a href="http://www.hup.harvard.edu/catalog.php?isbn=9780674737136">Branko Milanovic</a> and <a href="http://piketty.blog.lemonde.fr/2016/03/06/inequality-in-america/">Thomas Piketty</a> and the reports of declining life expectancy for white working class Americans. </p>
<p>The third, and more ominous message, is that Trump and his supporters are <a href="https://www.washingtonpost.com/opinions/donald-trump-has-made-political-correctness-credible-again/2016/11/01/0f397c0c-9fb1-11e6-a44d-cc2898cfab06_story.html">rejecting</a> the so-called “political correctness” of the past 30 years, which is really a pejorative term for tolerance and cosmopolitanism. They are embracing the racism, sexism, and xenophobia and crude nationalism of a past and darker era. </p>
<p>The implications of Trump’s victory are therefore likely to be very bad. Trump has made <a href="http://www.aljazeera.com/indepth/opinion/2016/11/donald-trump-islamophobia-president-161109065355945.html">bigoted statements</a> about Mexicans, Muslims and foreigners in general. He has also made statements about the Chinese, the Russians, the Middle East and the international arrangements in which the US participates. These statements suggest that he has little understanding of geopolitics and even less of the practices and nuances of international relations. This increases the risk that he will blunder into a foreign crisis. </p>
<p>Given Trump’s generally aggressive approach to those he does not like, there are reasons to fear the worst.</p>
<h2>Implications for the world</h2>
<p>Trump has indicated that he has little concern for the most important issue of our time – <a href="http://www.nytimes.com/2016/11/10/us/politics/donald-trump-taxes-climate-immigration-health-care.html?_r=0">climate change</a>. He denies it is a problem and advocates returning to the use of the most dirty sources of energy – coal and oil – as part of his effort to make “America great again”. </p>
<p>This will make it much harder for the world to keep climate change within the 2 degree target established by the Paris agreement and to avoid the resulting devastating effects on continents like Africa. </p>
<p>Trump’s “America first” policies are likely to cause him to ignore many festering problems in the world, like <a href="http://www.msnbc.com/specials/migrant-crisis">migration</a>, and to respond to any that he cannot ignore in an aggressive manner designed merely to keep the problem away from the US.</p>
<p>And Trump has made it clear that he is sceptical about free trade. Thus, there is likely to be a resurgence of protectionism in the US, and, as a response, in other countries as well. </p>
<p>It is also important to keep in mind that the vote in the US is also a rejection of the policies that Wall Street and big business, and their allies in organisations like the IMF, have been advocating. We can expect the concerned reaction of <a href="https://theconversation.com/what-we-can-learn-from-markets-reaction-to-a-president-trump-68116">financial markets</a> to continue in the short run and there to be a general loss of investor confidence. This in turn will exacerbate economic and social tensions around the world. </p>
<p>If these effects continue for any length of time they could precipitate another global recession or worse. However, it is also possible that the difficult situation caused by the resurgent US will encourage some states to try and work together to build institutions for managing the global economy that are <a href="http://www.igd.org.za/206-brics-partnership-a-case-of-south-south-cooperation-exploring-the-roles-of-south-africa-and-africa">less dependent</a> on the US and its key allies. </p>
<p>The Trump victory, combined with the Brexit vote, is also likely to embolden right wing voters in France, the Netherlands, and Germany to support their own right wing populist leaders in their 2017 elections. </p>
<h2>Implications for Africa</h2>
<p>At one level, it is hard to know what a Trump presidency will mean for Africa. Trump seems to have no knowledge about the continent and to not have paid it any attention. </p>
<p>But his victory is likely to be bad for Africa for three reasons. </p>
<p>First, his protectionist bias means that he is unlikely to be a supporter of allowing Africa favourable access to US markets through such programmes as the <a href="http://trade.gov/agoa/">African Growth Opportunity Act</a>. While he may not repeal this Act, he will be aggressive in responding to any countries that he thinks are taking unfair advantage of it. This is a potential problem for South Africa. </p>
<p>Second, given his general embrace of racists in the campaign, there is little reason to think that he will view Africa favourably. It is more likely that he views the continent in a generally negative light, as a source of poverty and problems rather than as a dynamic place with opportunities and a burgeoning and energetic young population. </p>
<p>Consequently, he is unlikely to react favourably to African initiatives to make international organisations like the UN and the IMF more accountable to Africa and more responsive to its needs and concerns. </p>
<p>Finally, Trump’s “America first” approach suggests that he is unlikely to see development cooperation and support for Africa in a positive light. The result is that Africa, particularly middle income countries, are likely to find their access to US and multilateral aid and cooperation initiatives reduced. While there are some benefits that could follow from this, it will entail a painful adjustment in these countries.</p><img src="https://counter.theconversation.com/content/68595/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Danny Bradlow's research chair is supported by the National Research Foundation</span></em></p>One of the messages coming out of Donald Trump’s victory is that his supporters are rejecting the tolerance and cosmopolitanism of the past 30 years.Danny Bradlow, SARCHI Professor of International Development Law and African Economic Relations, University of PretoriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/663552016-10-06T20:14:01Z2016-10-06T20:14:01ZSouth Africa needs to fix its dangerously wide wealth gap<figure><img src="https://images.theconversation.com/files/140466/original/image-20161005-14246-49ben7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Wealth inequality is a bigger challenge than income inequality in South Africa</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>South Africa is known for its extreme <a href="http://www.unmultimedia.org/radio/english/2016/07/south-africa-income-inequality-and-unemployment-highest-in-world/#.V_Mc-PD5jIU">income inequality</a>, which is one of the highest in the world. Ten percent of the population earn around 55%–60% of all income, compared to only 20-35% in the advanced economies. </p>
<p>But while the top income share is high in its own right, it pales in comparison to those for wealth; such as real estate, pension funds and shares of listed companies. New tax and survey <a href="http://www.redi3x3.org/sites/default/files/Orthofer%202016%20REDI3x3%20Working%20Paper%2015%20-%20Wealth%20inequality.pdf">data</a> suggest that 10% of the South African population owns at least 90–95% of all assets. This share is much higher than in the advanced economies, where the richest 10% own “only” around 50-75% of all assets. </p>
<p>Why does wealth matter? First, the level and distribution of wealth in a country are important indicators of its citizens’ long-term welfare. Whereas income and consumption tell us something about a household’s current living standards, information on wealth is important in assessing whether the household can sustain these living standards during spells of unemployment or throughout retirement.</p>
<p>But wealth is also of particular concern for long-term inequality. This is because wealth can generate its own income (such as interest, dividends, rents, and capital gains), and can be passed on between generations. Over time, small differences in assets can therefore grow larger and larger. As Thomas Piketty argues in his influential book on wealth and inequality (<a href="http://www.economist.com/blogs/economist-explains/2014/05/economist-explains">Capital in the 21st Century</a>), this tendency has been one of the biggest drivers of growing inequality in both advanced and developing countries. </p>
<p>A growing number of studies have suggested that high inequality can have unfavourable political and economic <a href="https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf">consequences</a>, which is why South African policymakers are increasingly concerned about it. Currently, most initiatives focus on inequality of income and consumption, since these variables are closely linked to poverty and exclusion. </p>
<p>But based on my own research I argue that narrowing the wealth gap also deserves close attention.</p>
<h2>Why wealth is difficult to measure</h2>
<p>We know that South Africa’s wealth distribution is highly unequal. It is, however, very hard to measure precisely how unequal it is. This is because our usual tools are well suited to measuring income and consumption, but not very good at measuring wealth.</p>
<p>The most widely used data on living standards come from household surveys. Their main limitation when it comes to measuring wealth is that participation is voluntary and that richer households tend to be less likely than others to participate. In addition, many people are not aware of the current value of their assets or feel uncomfortable talking about wealth. </p>
<p>Because of these limitations, researchers have started to use data from tax records. Since tax filings are mandatory, tax data do not run the risk of under-representing individuals at the top of the distribution.</p>
<p>Nevertheless, tax data have their own limitations. First, they tell us nothing about the population whose income is too low to require income tax filing. In South Africa this group comprises more than 80% of the population. Secondly, they do not allow us to measure wealth directly since only investment incomes are taxed in South Africa. </p>
<p>While this approximation introduces an element of uncertainty, it is currently the only way to get data on the top of the wealth distribution.</p>
<h2>Extreme wealth inequality</h2>
<p>In my <a href="http://www.redi3x3.org/sites/default/files/Orthofer%202016%20REDI3x3%20Working%20Paper%2015%20-%20Wealth%20inequality.pdf">research</a> I combine tax and survey data. Three main findings stand out: </p>
<ul>
<li><p>The wealthiest 10% of the population own at least 90–95% of all wealth, whereas the highest-earning 10% receive “only” 55–60% of income.</p></li>
<li><p>The next 40% of the population – the group that is often considered to be the middle class – earn about 30-35% of all income, but only own 5-10% of all wealth.</p></li>
<li><p>The poorest 50% of the population, who still earn about 10% of all income, own no measurable wealth at all.</p></li>
</ul>
<p>The fact that the bottom half has very little wealth is not unique to South Africa. What is striking, however, is the small wealth share of the middle of the distribution. Income- or consumption-based studies find that around 20% to 30% of South Africans belong to the <a href="http://www.tandfonline.com/doi/abs/10.1080/0376835X.2013.797224">middle class</a>. </p>
<p>But my analysis suggests that a “propertied middle class” is largely nonexistent. This differentiates South Africa from the advanced economies, where a much larger share of the population owns significant financial and non-financial wealth.</p>
<p>The data also show that race plays a role in inequality, as average wealth still differs strongly between groups. Nevertheless, they suggest that wealth inequality within the majority black population far exceeds overall inequality. This is consistent with the findings of a study on <a href="https://www.researchgate.net/publication/46457107_Trends_in_South_African_Income_Distribution_and_Poverty_Since_the_Fall_of_Apartheid">income inequality</a>, which shows that the income distribution is increasingly shaped by growing inequality within race groups rather than inequality between race groups.</p>
<h2>Implications for policymakers</h2>
<p>In theory, the extreme concentration of wealth in the hands of a few can be addressed from two sides: redistributing wealth held at the top or building wealth at the bottom. </p>
<p>In reality, however, these two approaches should be balanced by combining taxation of top wealth holders with policies to encourage middle-class wealth formation. This is because South Africa has a relatively low level of <a href="http://www.econrsa.org/publications/research-briefs/pikettys-capital-and-private-wealth-south-africa">private wealth</a> and should not risk reducing overall private saving and investment. </p>
<p>The most common tools for redistributing wealth are taxes on investment incomes and inheritances. Currently these taxes constitute only a tiny share of total <a href="http://www.sars.gov.za/About/SATaxSystem/Pages/Tax-Statistics.aspx">tax revenue</a>. Taxes on investment income makes up about 1% of total tax revenue while inheritance tax makes up 0.1%. The current proposals of the <a href="http://www.taxcom.org.za/">Davis Tax Committee</a> aim to increase these shares by closing loopholes in the estate duty. </p>
<p>More effective inheritance taxes can be very effective to counter the tendency of growing wealth concentration. But there are practical challenges when it comes to taxing the wealthy effectively. Wealth can easily be shifted between asset classes, ownership structures and tax jurisdictions to avoid being subject to taxation. </p>
<p>The <a href="http://www.iol.co.za/business/companies/1-700-south-africans-named-in-panama-papers-2026164">Panama Papers</a> showed the extent to which the efficacy of wealth taxes is limited by the fact that large fortunes are moved out of the reach of national tax authorities.</p>
<p>Helping lower- and middle-class households build wealth may therefore be a more effective way to promote a more equitable wealth structure. Since pension assets are the single most important form of wealth in South Africa, a more comprehensive pension system would be particularly effective in reducing wealth inequality. The current <a href="http://actuarialsocietyconvention.org.za/convention2014/assets/pdf/papers/2014%20ASSA%20Chamburuka.pdf">proposals</a> by the National Treasury, which aim to increase the coverage of occupational pension systems and reduce pre-retirement withdrawals, are promising.</p>
<p>The new figures on the extreme extent of wealth inequality should provide some tailwind to these proposals, which could jointly lead to a more equitable wealth structure in South Africa.</p><img src="https://counter.theconversation.com/content/66355/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anna Orthofer received funding from REDI3x3 for this research. </span></em></p>When South African inequality is discussed, the focus tends to be on income brackets. But the main problem is wealth inequalityAnna Orthofer, Economics PhD Candidate, Stellenbosch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/485312015-10-06T04:06:30Z2015-10-06T04:06:30ZHow South Africa can disrupt its deeply rooted educational inequality<figure><img src="https://images.theconversation.com/files/97073/original/image-20151002-23090-vvp779.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Girls walk to school in South Africa's poor Eastern Cape province.</span> <span class="attribution"><span class="source">Siphiwe Sibeko/Reuters</span></span></figcaption></figure><p>If one were to measure an education system’s strength purely on access, South Africa would be a schooling success story. Since the end of apartheid in 1994 there has been a dramatic <a href="http://www.ci.org.za/depts/ci/pubs/pdf/general/gauge2014/ChildGauge2014_childrencount_education.pdf">increase</a> in the number of children attending primary and secondary school. University enrolments <a href="http://www.sanews.gov.za/south-africa/more-south-africans-higher-education">are also up</a>.</p>
<p>Government has used policy to forcefully change patterns of school access that were <a href="http://newlearningonline.com/new-learning/chapter-5/apartheid-education">highly racialised</a> during apartheid. It has prioritised teacher development and is trying to <a href="http://www.equaleducation.org.za/content/2013/09/26/New-draft-norms-and-standards_12-September-2013.pdf">create</a> norms and standards for school infrastructure. It should be commended for this work.</p>
<p>But for all of this progress, educational inequality remains deeply entrenched. Education is a crucial mechanism for helping children to climb out of poverty - but poor children <a href="http://jae.oxfordjournals.org/content/16/5/849.short">bear the brunt</a> of bad teaching, disorganised or malicious administration and a lack of everything from desks and chairs to toilets, libraries and science labs. </p>
<p>French economist <a href="http://piketty.pse.ens.fr/en/cv-en">Thomas Pikkety</a>, who on October 3 delivered the 13th Nelson Mandela Annual Lecture in Johannesburg, has written extensively about inequality <a href="http://www.economist.com/blogs/economist-explains/2014/05/economist-explains">in education</a>. What is entrenching inequality in a system that appears committed to equalising access to education and reversing inequalities from the past? Can we disrupt entrenched educational inequality?</p>
<h2>Enough short term thinking</h2>
<p>Historically, spending on schooling was racially skewed and <a href="https://nicspaull.files.wordpress.com/2011/04/svdb-2007-apartheids-enduring-legacy-inequaliti.pdf">heavily favoured</a> white children. This has been changed since 1994 and
<a href="http://data.worldbank.org/indicator/SE.XPD.PRIM.PC.ZS">spending</a> has become infinitely more equitable.</p>
<p>Some may suggest that this change in spending should lead to an equalisation of outcomes in terms of retention and success rates. But a look at the country’s annual matric results - the final performance of Grade 12 students as they complete their secondary schooling - shows this is simply not so. Inequality can’t be bought out of existence.</p>
<p>If schools don’t have <a href="http://repository.up.ac.za/bitstream/handle/2263/41581/Skelton_Leveraging_2014.pdf?sequence=1">appropriate infrastructure </a> or learning materials, pupils are being poorly taught and are living in economically depressed communities, a single, simple spend won’t make much difference. They will perform badly in their matric year.</p>
<p>It is time we took a long term view of education and schooling: one that looks at these things across their lifespan rather than just at matric as an exit point from schooling. It is about reframing the value of education to include its social, political and cultural purpose. </p>
<p>We know about returns on investment in schooling, and what is not emphasised is the value that education can play in teaching young people to participate actively in a young democracy. Such education goes beyond the teaching of maths and science. It is about educating a citizenry for engaging in a diverse society and about building solidarity across race, class and gender in the service of social cohesion. </p>
<p>There is no shared conceptualisation of educational problems because there are such varied ideas about what is causing them and how they can be solved.</p>
<h2>Building blocks</h2>
<p>So where do we start? Firstly, good quality early childhood education may be a way to break the cycle of inequality. Research tells us that children with <a href="http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTCY/EXTECD/0,,contentMDK:20259127%7EmenuPK:527099%7EpagePK:148956%7EpiPK:216618%7EtheSitePK:344939,00.html">strong school foundations</a> have a much greater chance of later academic success and, ultimately, will earn a better income than their peers.</p>
<p>These young children’s teachers must be particularly well equipped to teach numeracy and literacy. Our research shows that a foundation in these crucial subjects will improve academic performance in all areas across their school careers.</p>
<p>This early education must be coupled with access to health care and attentive, involved parenting.</p>
<h2>Lifelong learning</h2>
<p>The work cannot stop at primary or secondary school. Changing the post school sector is a crucial way to disrupt inequality. A diversified post school sector will offer programmes that can be matched to students’ interests, skills and the needs of the labour market.</p>
<p>Young people need more choices. University is <a href="https://theconversation.com/history-explains-why-black-south-africans-still-mistrust-vocational-training-46998">viewed by too many</a> South Africans as the only option to equip them for a successful, financially secure future. There are other options, such as Technical Vocational Education and Training colleges, but these have a <a href="http://mg.co.za/article/2013-10-04-turning-around-the-fet-colleges">reputation</a> for bad quality.</p>
<p>This view is enforced by a lack of properly qualified staff for these colleges; a lack of both infrastructure and teaching resources; weak student financial aid and support and poor institutional governance. These issues must be tackled, because these colleges are a valuable resource for both students and the economy.</p>
<p>More attention must also be paid to <a href="http://www.abet.co.za/">adult</a> learning and education. Many South Africans have already missed out on the building blocks in childhood, adolescence or as young tertiary students. </p>
<h2>There’s more to it than education</h2>
<p>All of these measures are important - but ultimately, undermining inequality involves recognising that education is just one part of the larger tapestry. All of the ills that society faces land on the doorstep of education and schooling, setting schools up for failure. </p>
<p>The role of big business in driving inequality cannot be ignored. Nor can that of government when it allocates funds inadequately to schools, universities and colleges. These funding regimes impact students from poor households most because they depend on government funding to access education at all levels.</p>
<p>Academic and author John Marsh puts it best in his <a href="http://monthlyreview.org/product/class_dismissed/">book</a> Class Dismissed: </p>
<blockquote>
<p>So yes, by all means fix schools, reward good teachers … end the soft bigotry of low expectations. The problem, however, is when our notion of social and economic justice starts and stops with education (…) This is dangerous talk – dangerous because by wrong assignment of causes, it persuades that the cure is possible .</p>
</blockquote><img src="https://counter.theconversation.com/content/48531/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ruksana Osman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A lot has changed for the better in South Africa’s education system - but inequality remains a thorn in the country’s side. How can we disrupt educational inequality?Ruksana Osman, Professor and Dean of Humanities, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/476582015-09-21T03:54:58Z2015-09-21T03:54:58ZWhat South Africa can learn from Piketty about addressing inequality<figure><img src="https://images.theconversation.com/files/95041/original/image-20150916-6284-ds9lpp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">French economist and author Thomas Piketty. His book on inequality has lessons for developing economies such as South Africa.</span> <span class="attribution"><span class="source">EPA/Bart Maat</span></span></figcaption></figure><p>Thomas Piketty’s visit to South Africa provides an opportunity to think creatively about what is driving inequality in the country and what appropriate measures might be to address the problem. South Africa has unacceptably <a href="http://www.mistra.org.za/Library/ConferencePaper/Documents/Why%20Inequality%20Matters-South%20African%20Trends%20and%20Interventions.pdf">high levels of inequality</a>, and is routinely described as among the <a href="https://www.oxfam.org/sites/www.oxfam.org/files/cost-of-inequality-oxfam-mb180113.pdf">most unequal</a> in the world.</p>
<p>Piketty will be delivering the 13th Nelson Mandela Annual lecture in early October. His magisterial and masterful study of inequality is published in his book <a href="http://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491534656">Capital in the Twenty-first Century</a>. The book, built on many years of careful research, quickly became a bestseller and he has achieved the status of something of a ‘rock star’ in the economics profession. Some have gone as far as to hail him <a href="http://www.economist.com/news/leaders/21601512-thomas-pikettys-blockbuster-book-great-piece-scholarship-poor-guide-policy">a modern Karl Marx</a>. </p>
<p>Piketty had been thinking about the extreme high levels of inequality in South Africa. He begins his first chapter using the example of the tragic events at <a href="http://www.marikanacomm.org.za/">Marikana</a> in 2012. The point he illustrates is that what share of output should go to wages and what share to the owners of capital has been at the heart of distributional conflicts in capitalist systems. </p>
<p>Besides providing an impetus to read his book, I have heard it being compared to the bible: everyone has it but very few people have actually read it. </p>
<figure class="align-right ">
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<figcaption>
<span class="caption">Piketty at the French School for Advanced Studies in the Social Sciences in Paris.</span>
<span class="attribution"><span class="source">Reuters//Charles Platiau</span></span>
</figcaption>
</figure>
<h2>Beware of economic determinism</h2>
<p>Piketty’s book has two central messages. First, that we should be cautious of economic determinism in debates about inequalities in the distribution of income and wealth. He argues that, rather than just economic factors, it is political factors that have driven patterns of inequality. </p>
<p>The reduction in inequality in much of the developed countries in the interwar and immediately post Second World War period was the result of deeply political forces and choices. Similarly, the rising levels of inequality after the 1980s is driven by political shifts, especially with regard to taxation and finance. </p>
<p>Second, and more important for South Africa’s purposes, Piketty cautions that left to its own devices, the economy is likely to generate forces driving toward inegalitarian and highly destabilising outcomes. His research shows that there are no natural conditions pushing the economy away from the normal pattern where the returns to invested capital tend to be higher than the rate of economic growth. This increases levels of inequality. </p>
<p>Only two factors – a rapid burst in economic growth and government intervention – can be relied on to shift the economy away from this ‘normal’ pattern of development.</p>
<figure>
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</figure>
<h2>Government, the labour market and politics</h2>
<p>So, what does this all mean for South Africa? There is a lot that one can say about the relevance of Piketty’s work for the country. Let me venture three thoughts. </p>
<p>First, the importance of government as a counterforce to the normal pattern of economic development in inequality. In the South African debate, at least outside the academic world, there has not been sufficient acknowledgement of the importance of government’s role. For all its weaknesses, it has played a pivotal part in redistributing income and stabilising South African society. </p>
<p><a href="http://beta2.statssa.gov.za/publications/Report-03-10-06/Report-03-10-06March2014.pdf">One estimate</a> shows that South Africa’s Gini coefficient, which measures levels of inequality for income before social transfers, is 0.69. For income after social transfers it is 0.52 and for income after taxation it is 0.47. A figure of 0 is considered perfect levels of equality and 1 perfect inequality. The democractic government introduced a massive <a href="http://www.treasury.gov.za/documents/national%20budget/2015/guides/2015%20People's%20Guide%20-%20English.pdf">social grant</a> system which now distributes R155 billion to 16 million South Africans. Can you imagine what South African society would have looked like without government intervention?</p>
<p>Second, the largest contributor to inequality in South Africa is incomes in the labour market. <a href="https://ideas.repec.org/p/oec/elsaab/101-en.html">One estimate</a> shows that labour market incomes contribute 88% of the overall gini coefficient in South Africa. </p>
<p>There are of course two dimensions to this - the high levels of <a href="http://www.statssa.gov.za/presentation/Stats%20SA%20presentation%20on%20skills%20and%20unemployment_16%20September.pdf">unemployment </a> in South Africa and the high levels of <a href="http://www.ekon.sun.ac.za/wpapers/2010/wp222010">wage inequality</a> among the employed. Clearly, the labour market should be the focus of any strategy to address inequality in South Africa. </p>
<p>Third, and related, the debate on inequality in South Africa has focused almost exclusively on economic considerations - what Piketty calls economic determinism. We need to think a lot more about the political forces shaping the current patterns of inequality in South Africa and what political configurations are needed to ensure that the economy shifts along a path that generates more employment and income opportunities for a wider spectrum of our society. </p>
<p>In other words, the question the country needs to answer is: what political forces are needed to generate more equality in the opportunities available to South Africans?</p><img src="https://counter.theconversation.com/content/47658/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Imraan Valodia does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Inequality remains one of South Africa’s major problems. Thomas Piketty’s visit to the country provides an opportunity to explore ways to deal with this problem.Imraan Valodia, Dean of Commerce, Law and Management, University of the WitwatersrandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/273652014-06-03T12:41:41Z2014-06-03T12:41:41ZGrammar school earning gap shows Tories were right to abandon selective education<figure><img src="https://images.theconversation.com/files/50106/original/4w69mygp-1401786978.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Where are they now?</span> <span class="attribution"><span class="source">The Poss</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span></figcaption></figure><p>Inequality and its rise across many developed societies poses threats of alienation and marginalisation and has been a feature of numbers of recent publications. Now <a href="http://repec.ioe.ac.uk/REPEc/pdf/qsswp1409.pdf">research</a> led by Simon Burgess at the University of Bristol has set out to address the longer term economic effects of selection in English education. </p>
<p>The title of their paper, Selective Schooling Systems Increase Inequality, poses an immediate challenge to <a href="http://www.dailymail.co.uk/news/article-2334215/Grammar-schools-reach-20-pupils-number-rise-highest-levels-1978.html">those within the Conservative party who still contend</a> that increasing the number of grammar schools would increase social mobility and hence reduce inequality. The current Tory policy is not to open any new grammar schools. </p>
<p>The evidence reported shows precisely the opposite: using data taken from the New Earnings Survey between 1974 to 1996, it shows that the earnings of those educated in areas where “selective” education was the norm were substantially more polarised than for those educated in similar but “non-selective” areas. </p>
<p>Contrasting the absolute value of earnings between the top and bottom 10% of earners in these matched areas, it found that the gap was substantially wider for those areas which were organised on selective lines than for those that were not. </p>
<p>In further analyses, matching individual earners’ characteristics, the paper shows that there is an even wider and more significant difference between the two education systems in the “earnings gap” between the top 10% of earners and the bottom 10% of earners. </p>
<p>An important aspect of this work is its emphasis on the nature of “selection” as a “double-edged” instrument. It applies to grammar schools which are the destination of the minority who are “selected”. But critically, it applies also to secondary-modern schools which are where the majority, those “not selected”, are educated.</p>
<h2>End to selection no left-wing plot</h2>
<p>The paper also provides a useful counter to the glib assertion that the rise of non-selective education was predominantly a left-wing political plot. The evidence relates to the period of history – much of it under the Thatcher administration – when many areas moved from “selective” to “non-selective” forms of educational organisation. </p>
<p>Debate in the 1970s and 1980s over grammar schools was incredibly polarised – not least because of Margaret Thatcher’s personal stance in favour of selective education, even though when she had been minister of education in the Heath government of the early 1970s she had approved the closure of more grammar schools than any other minister before or since. The closure or merging of grammar schools was often as a result of parental pressure over perceived inaccuracies in the selection process itself and of the consequent longer-term distortion of pupils’ career trajectories. </p>
<p>Surrey, West and East Sussex, Hampshire, Somerset, Leicestershire and Cheshire all closed grammar schools during this period – hardly bastions of left-wing ideology. It is in this context that the evidence provided by this study is so relevant to today’s debates.</p>
<p>Warnings about the divisive nature of the selective system have been voiced many times, but the recent dramatic description of grammar schools by Ofsted’s chief inspector of schools, Michael Wilshaw, as being “<a href="https://theconversation.com/english-grammar-schools-try-to-shake-off-middle-class-bias-23806">stuffed full of middle-class kids</a>” was certainly eye-catching. </p>
<p>It recalls a <a href="http://www.theguardian.com/education/2007/may/16/schools.grammarschools">2007 comment on this issue by David Willetts</a>, then Conservative shadow minister of education. He said, “We must break free from the belief that academic selection is any longer the way to transform the life chances of bright poor kids … there is overwhelming evidence that such academic selection entrenches advantage, it does not spread it”.</p>
<h2>Not the main driver of today’s inequality</h2>
<p>The new findings are in tune with these observations. But given the relatively small size of selective education today (there are 164 state grammar schools left out of over 3,000 secondary schools in England), it must be questioned whether this is one of the major engines driving the rise in inequality in Britain today. </p>
<p>That we are in such a period is clearly indicated in this chart from a <a href="http://www.policypress.co.uk/display.asp?K=9781847427205">2010 book by Danny Dorling</a>, now at the University of Oxford.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/50018/original/zdx3t9j9-1401727085.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/50018/original/zdx3t9j9-1401727085.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/50018/original/zdx3t9j9-1401727085.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/50018/original/zdx3t9j9-1401727085.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/50018/original/zdx3t9j9-1401727085.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/50018/original/zdx3t9j9-1401727085.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/50018/original/zdx3t9j9-1401727085.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/50018/original/zdx3t9j9-1401727085.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The top 1%</span>
<span class="attribution"><span class="source">Danny Dorling</span></span>
</figcaption>
</figure>
<p>This graph shows the proportion of total national income accruing to the top 1% of earners in Britain over the period 1918 to 2005. Levels of inequality rose from a low of 6% in the late 1970s to levels closer to those of the 1920’s by the end of the period.</p>
<p>In a series of reports published between 2005 and <a href="http://www.suttontrust.com/news/publications/poor-grammar-entry-into-grammar-schools-disadvantaged-pupils-in/">2013</a>, the Sutton Trust (the mission of which is to improve social mobility through education) identified some of the barriers currently inhibiting this in Britain. The first deals with <a href="http://www.suttontrust.com/news/news/top-legal-jobs-still-dominated-by-private-schools/">access to grammar schools</a>, while the others explore the <a href="http://www.suttontrust.com/news/news/the-educational-backgrounds-of-500-leading-figures/">over-representation</a> of the 7% of “public school” alumni in many senior professions. The reports show considerable “resistance to change” on this issue over the last decade years – implying substantial impediment to improved social mobility. </p>
<p>This is not unique to Britain, as shown by <a href="http://books.wwnorton.com/books/The-Price-of-Inequality/">a new study by Joseph Stiglitz</a>. It deals with the comparative situation in US where there is even greater evidence of the wealthiest reinforcing and protecting their access to disproportionate shares of the nation’s wealth. </p>
<p>Concern about these dangers is increasing. One of the most cogent contributors here is <a href="https://theconversation.com/thomas-piketty-the-next-marx-or-a-malthus-of-our-time-26039">Thomas Piketty</a> whose latest book paints a depressing picture of the self-reinforcing processes inimical to social mobility currently at work in many western societies. <a href="http://www.theguardian.com/books/2014/apr/28/thomas-piketty-capital-surprise-bestseller">Piketty argues</a> that inherited wealth instills inequality in the system from the very beginning. Is this the kind of society we wish to see as our future?</p><img src="https://counter.theconversation.com/content/27365/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Jesson has received funding from DCSF and ESRC. He is associate director of the Specialist Schools & Academies Trust UK, a not-for-profit organisation that works with individual grammar schools and with the Grammar School Heads Association on issues related to improving pupil and school improvement. He has also received funding from The Sutton Trust for work on grammar schools. </span></em></p>Inequality and its rise across many developed societies poses threats of alienation and marginalisation and has been a feature of numbers of recent publications. Now research led by Simon Burgess at the…David Jesson, Associate Director of the Centre for Performance Evaluation and Resource Management and Honorary Visiting Professor, University of YorkLicensed as Creative Commons – attribution, no derivatives.