Tuesday 07 July 2020

Peeling bulbs – and Piketty

Jan Maarten Slagter learnt something from his first holiday job peeling bulbs.

My first holiday job was peeling bulbs – not unusual for a boy from Oegstgeest. It taught me some valuable lessons. One was that I had better finish school because peeling bulbs was clearly not where my talents lay.

 

I also found that if you are not particularly good at your job it is infinitely preferable to be paid by the hour than per unit produced. The nimble-fingered housewives seated at a long table peeling basket after basket of bulbs earned many times the measly 8 guilders and 25 cents (I remember it to the cent) I got to take home every day. And yet we spent the same number of hours in the hot and dusty bulb shed. Was that fair?

 

10 guilders

 

Of course it was. These women were being paid (not very well it has to be said) for their effort and experience. And I learnt something. Had I persevered I might have taken home 10 guilders before long. We were treated exactly the same, paid as we were per bulb peeled. Income inequality is a result of equal treatment in most cases – not of unequal treatment.

 

There has been much debate of late about (in)equality and (un)fairness. The bestseller Capital in the Twenty-First Century by the until recently largely unknown French economist Thomas Piketty coincided with the preliminary discussions about a revision of the Dutch tax system. How unequal is the division of wealth and should we do something about it by levying more taxes?

 

Different

 

As far as income inequality goes this has been happening for years. The 10% of top-earning households are paying more in taxes than the rest of the population put together. To be clear: this comprises income from capital (albeit a fictitious income based on the capital gains tax but that doesn’t concern us here).

 

The discussion, then, is about wealth inequality. That is even more complicated than income inequality. In the latter case, it could be said that a person who earns a big salary has been ‘lucky’: social environment and talent are not merits and a fairer division would be justified up to a point.

 

But wealth inequality comes about in many different ways. There’s the lottery winner versus the poor struggling family who don’t have the money to go on holiday. There’s the young successful lawyer who over and above his mortgage borrows a hefty sum to be able to buy himself a partnership versus the widow who takes out a loan against a prohibitive interest rate in order to provide a university education for her three children.

 

To correct wealth inequality without unfairly prejudicing large groups of people would be impossible.

 

Jan Maarten Slagter is a financial journalist.

 

 

 

 

 

 

 

 

 

 

 

 

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