Oxfam published on Monday a pilot inequality index that ranks governments on the basis of what they do to reduce inequality.
The ten best-performing governments among 152 states in the world are European: Sweden, Belgium, Denmark, Norway, Germany, Finland, Austria, France, Netherlands, and Luxembourg.
What is measured
The criteria were set by the governments themselves. In 2015, the leaders of 193 governments promised to reduce inequality as part of the Sustainable Development Goals (SDGs). The index is based on a new database of indicators, covering 152 countries, which measures government action three areas, namely social spending, taxation, and labour rights.
The majority of the data collected for the index is recent and based on budgets, with countries moving up or down the ranking depending on how policy changes. If a country increases the minimum wage or boosts investment in education then it will be rewarded by an increased CRI Index score which, over time, will reveal a policy trajectory.
The pilot Index has been statistically audited by the European Commission’s Joint Research Centre (CRI), which claims it is statistically robust and will be helpful in ‘paving the way towards a monitoring framework of governments’ efforts to reduce the gap between rich and poor’.
Why Europe does not look so good
Inequality is rising, even in countries like Sweden. For example, although the index regards Sweden the best in the world, according to the OECD, inequality has been rising faster in the Scandinavian champion that in any other rich country. Still, Oxfam regards Sweden as the best performer.
The authors of the Oxfam report warn that in Europe many government policies that reduce inequality have been put in place many years ago. Current government policies may be working towards the opposite trajectory to increase inequality, as is the case in the UK, France, Denmark, and Germany.
For example, the report projects that the newly elected President, Emmanuel Macron, is likely to increase inequality in France. The reason is that he is determined to reduce corporate taxation from 33% to 25%.
The appalling state of inequality in the United States
Although the US is one of the wealthiest countries in history, its level of inequality is the highest among major industrial countries, mostly to the detriment of women and people of colour.
This is a result of taxation and employment policies. Corporations often pay no effective federal income tax, due to various loopholes that allow them to circumvent nominal rates. There is also an intention to decrease taxes for wealthy individuals and large corporations while slashing health care and education spending. And the federal minimum wage of $7.25 is well below the $10.60 per hour needed for a family of four to stay above the federal poverty line.
However, it is telling that Greece, Spain, Cyprus, Croatia, Poland, Estonia, and the Slovak Republic perform worse than the United States across the index.