4 June 2018

Economic development is a prerequisite for gender equality


According to the World Bank, the true and proper economic emancipation of women would make the world $160 trillion richer. However, this eye-catching figure gets things the wrong way round, confusing cause and effect. In fact, the correct formulation is that if the world were $160 trillion richer then we would have had the economic emancipation of women.

The calculation itself is reasonable enough. Our income is made up of our labour itself and the value added to it by our human capital.  The more capital we have the more productive we are. Women are, generally speaking across the world, denied both opportunity and education. Their human capital is therefore lower. And so is their income. If we were to have equality of that income then we might assume that we have equality of human capital, something that would be true in a free market. So, equality would lead to much more human capital out there, and that’s where the extra $160 trillion comes from.

There’s also a small problem here, one which the World Bank ignores. We don’t actually know that this vaunted gender equality would make us richer at all. They have calculated the additional wealth from more female economic participation on gender equal terms. But they agree there’s some amount of living to be done which isn’t monetised in the economy at all. And if women stop doing this, or some of it, then men are presumably going to have to plug the gap. That loss as the men do more of the unpaid labour isn’t included in the World Bank’s number.

It is, of course, unlikely that the loss would be greater than the gain, but it would limit the economic gains of gender equality.

The bigger problem, however, is the World Bank’s underlying assumption that this economic empowerment of women, this greater gender equity, will be something which grows the economy. Everything they claim flows from that assumption, and it’s not entirely obvious that it’s a correct one. We’ve rather a lot of evidence that it’s economic development and advance which leads to gender economic equality.

Consider the sort of poverty that is thankfully a thing of the past for the lucky ones but still a reality for 10 per cent of reality. A quarter of children die by their fifth birthday, plagues, droughts, famines sweep through populations uncertainly. Average lifespan even if childhood is survived is 50 years or so. The entire economy is either human or animal muscle powered. Such a society is one that doesn’t have machines, automation or the productivity they bring.

That reality makes a division of labour between men and women, with women having a large number of children and men working, all but inevitable.

It is economic development which lifts us all up out of that. A society where brainpower is the valued economic attribute people are employed for, not their ability to tote or lift is one in which men lose their natural advantage. And when nearly all children survive into adulthood and the fertility rate falls, women suddenly have the time to undertake paid economic activity.

It is societies which have managed these two tricks, automation and child health, which have started to educate women and offer those economic freedoms. For it makes sense to do so and one of the things we do know about us human beings is that we do those things which make economic sense.

It’s not a straight line — there will always be conservatives standing athwart the path of progress shouting “Stop!” But the fact is that it’s economic development which comes first, and which enables empowerment and equality.

It’s precisely because we’d like to have that equality that it’s important we get our causality the right way around. Telling everyone to educate women in a society where there is no economic surplus nor reason to do so won’t work. Any and every society with such a surplus will do the educating.

That is, economic growth first and always, all the things we know to be good will follow. This is as true of the still currently poor countries as it was of our own when our forebears were that poor. The only difference is that we can do it all faster today given that we now know what to do.

Tim Worstall works at the Adam Smith Institute and the Continental Telegraph.