Public Opinion Brief No. 114: Global Perceptions of Distributional Fairness and Free Market Capitalism

Public Opinion Brief No. 114: A Joint Survey by BBC World Service, GlobeScan, and EAI in 2012 across 22 Countries

1. Survey Results on Perceptions of Distributional Fairness and Free Market Capitalism

2. Comparison with Past Survey Results

3. Characteristics Revealed in the Survey Results

1. Survey Results on Perceptions of Distributional Fairness and Free Market Capitalism

1) Survey Results on Perceptions of Distributional Fairness

- Global citizens: 35% perceived the distribution of economic development benefits as "fair"; 61% as "unfair"

- Unfair distribution: Spain > France > South Korea

■ In January of this year, the International Monetary Fund (IMF) lowered its forecast for global economic growth in 2012 from 4.0% to 3.3%. There are warnings that global economic growth could remain in the 1% range if Eurozone leaders do not take swift and decisive action to overcome the fiscal crisis. Unforeseen negative factors are also hindering the global economic recovery. Japan's earthquake and tsunami in 2011 not only slowed its economic growth but also caused a global shortage of parts. The democratization movements in the Middle East and North Africa led to soaring international oil prices due to political instability. The fiscal crisis in Eurozone countries has destabilized international financial markets.

■ The central issue at the World Economic Forum held in Davos, Switzerland, in January of this year was finding solutions to the global economic crisis. At the core of the discussions was a reflection and introspection on contemporary capitalism, with 'growth' being one pillar of the proposed solutions. The logic was that without growth, employment cannot be created, and without job creation, consumption cannot revive. The other pillar of the solution was 'distribution.' The argument was that income inequality exacerbates social polarization, perpetuates low growth, justifies government intervention in the market, and can endanger market-centered capitalism. Even the World Economic Forum, attended by heads of state and business leaders, began a serious reflection on distribution alongside growth for the sake of maintaining the global economic system.

■ The gravity of the problem concerning distribution was not limited to the economists, business leaders, and politicians participating in the World Economic Forum. In fact, the majority of citizens in most countries perceived that their country's distribution system was not functioning properly. According to a survey conducted jointly with 22 countries by the international public opinion research firm GlobeScan, only 35% of global respondents believed that the benefits of economic development were distributed fairly (very fair + somewhat fair), which was 26 percentage points (p) lower than the 61% who responded that it was not fair (not at all fair + somewhat unfair).

■ On a country-by-country basis, among the 22 countries surveyed, only Australia, Kenya, Canada, and India had a higher percentage of respondents who found the distribution fair than unfair. In Australia, the proportion of respondents who found it fair (very fair + somewhat fair) was the highest at 61%, while those who found it unfair (not at all fair + somewhat unfair) accounted for 36%. In Kenya, the proportion of respondents who found it fair was 56%, and those who found it unfair was 42%. In Canada and India, the proportions of respondents who found it fair were 55% and 51%, respectively, while those who found it unfair were 43% and 42%, respectively (analysis excludes 'don't know/no answer' and 'depends on the case' responses).

■ In the remaining 18 countries, the proportion of respondents who found the distribution unfair was higher than those who found it fair. Spain, which is experiencing a severe fiscal crisis, showed the highest percentage of negative responses. Among the Spanish population, only 6% responded that the benefits of economic development were distributed very fairly or somewhat fairly, while the combined percentage of those who responded it was not at all fair or somewhat unfair reached 92%.

■ The second highest percentage of negative responses came from France, a fellow Eurozone member experiencing a fiscal crisis and recording 0% economic growth in the first quarter of 2012. Among the French population, only 12% responded that the distribution was fair (very fair + somewhat fair), while 85% responded that it was unfair (not at all fair + somewhat unfair).

■ The third country with a high percentage of negative perceptions regarding the fairness of distribution is South Korea. Among the South Korean population, the proportion of respondents who found the distribution fair was 16%, while those who found it unfair was 81%. It is notable that the proportion of negative perceptions regarding the fairness of distribution is high, even though South Korea is not experiencing a severe fiscal crisis or 0% economic growth like Spain or France. Furthermore, the fact that the proportion of respondents who answered 'very fair' was 0% confirms the extent of negative assessment by the South Korean public regarding the fairness of distribution.

■ In addition, Russian citizens, among the BRICS nations, also had a higher proportion of respondents who found the distribution unfair than fair. This is because the proportion of respondents who found it fair was 15%, while those who found it unfair was 78%. In Brazil, an economic powerhouse in South America, the proportion of those who found it unfair (69%) was higher than those who found it fair (25%). Even in China, a socialist country and a G2 nation, the proportion of respondents who found it fair (46%) was 6 percentage points (p) lower than those who found it unfair (52%). This negative public perception of distribution fairness was also observed in the United States. In the US survey results, the proportion of respondents who found it unfair (65%) was higher than those who found it fair (32%).

[Figure 1] Survey Results on Distribution Fairness (%)

Note) The white portions indicate 'don't know/no answer' and 'depends on the case'.

2) Survey Results on Perceptions of Free Market Capitalism

- Improvement through regulation is needed: 48%

- It is functioning properly: 14%

■ Although negative perceptions of the distribution of economic benefits are widespread globally, this expansion of negative perceptions has not directly translated into an active demand for a new economic system to replace the current one. This is because the proportion of respondents who answered, 'Free market capitalism has some problems, but they can be resolved through new regulations or improvements,' was high at 48%. The percentage of global respondents who believe, 'Free market capitalism has serious problems, and therefore a different economic system is needed,' was 24%. The response rate for 'Free market capitalism is functioning properly, and efforts to strengthen regulation will only decrease efficiency' was the lowest at 14% compared to other items.

■ The most significant feature of the survey results is that, although the degree varies, a majority in all countries perceive the need for improvement. The 'need for improvement' here is based on the position that current free market capitalism has problems and therefore new government intervention is necessary. Comparing the survey results, countries with a response rate of over 50% for 'need for improvement' include Germany, South Korea, Canada, Australia, the United Kingdom, Peru, France, China, and Nigeria. Among these countries, Germany's response rate was 75%, which is 9 percentage points (p) higher than South Korea's 66%, the second highest response rate. The response rates in countries other than Germany and South Korea were all around 50%.

■ The populations with the most critical views on current free market capitalism are those in Spain and France, which also showed the most negative perceptions regarding the fairness of distribution. In Spain, only 3% of the population responded that current free market capitalism is functioning properly, while 42% responded that a new economic system is needed. Similarly, in France, only 4% responded that current free market capitalism is functioning properly, while 41% responded that a new economic system is needed. Citizens in Mexico, Egypt, Nigeria, and Indonesia also showed a higher preference for a new economic system over the current free market capitalist system by about 10% to 20% percentage points (p).

■ South Korean citizens, who ranked third in terms of negative perceptions regarding distribution fairness, had a much lower proportion of public opinion favoring a new comprehensive system compared to Spanish and French citizens. Among South Koreans, 16% responded, 'Free market capitalism has serious problems, and therefore a different economic system is needed,' while 66% responded, 'Free market capitalism has some problems, but they can be resolved through new regulations or improvements.' The response rate for 'Free market capitalism is functioning properly, and efforts to strengthen regulation will only decrease efficiency' was 15%. Consequently, an overwhelming majority of South Korean citizens perceive the need for 'improvement' rather than 'maintenance' of the current capitalist economic system or 'replacement' with a new system.

■ There are three countries where the proportion of respondents who answered that the current free market capitalist system is functioning properly is higher than the proportion who answered that a new economic system is needed. The largest difference was observed in the survey results for US citizens. Among US citizens, 27% responded that the current free market capitalism is functioning well, which is 10 percentage points (p) higher than the 17% who responded that a new economic system is needed. The second highest proportion was among Chinese citizens, who preferred the current free market capitalist system over a new economic system. The proportion who responded that a new economic system is needed was 19%, while the proportion who responded that the current free market capitalist economic system is functioning well was 22%. The remaining country is Germany, which has served as a pillar of the European economy since the Eurozone crisis. 15% of German citizens supported the current economic system, while only 9% believed a new economic system was necessary.

[Figure 2] Survey Results on Perceptions of Free Market Capitalism (%)

Note) The white portions indicate 'don't know/no answer' and 'depends on the case'.

2. Comparison with Past Survey Results

- Distribution was fair: 33% in 2008, 34% in 2009, 34% in 2012

- Improvement of free market capitalism is needed: 50% in 2009, 48% in 2012

■ Comparing the survey results on the fairness of distribution of economic benefits this year with those from 2008 and 2009, no significant differences were found. The proportion of respondents who answered 'fair' (very fair + somewhat fair) was 33% in 2008 and 34% in 2009. The results for 'unfair' (not at all fair + somewhat unfair) were 60% in 2008 and 58% in 2009.

[Figure 3] Trend of Perceptions on Distribution Fairness (%)

Note) 18 countries for comparison: Nigeria, Germany, Russia, Mexico, USA, Brazil, Spain, UK, Egypt, India,

Indonesia, China, Chile, Canada, Kenya, Turkey, Pakistan, France, Australia

■ Similarly, there was no difference between the 2009 and 2012 survey results regarding global perceptions of free market capitalism. The proportion of respondents who answered that there were problems and therefore improvements were needed was 60% in 2009 and 48% in 2012. The proportion of respondents who believed a new economic system was needed also showed no difference between 2009 and 2012 (23% and 25%, respectively). The proportion of respondents who answered that free market capitalism is functioning well was 12% in 2009 and 13% in 2012.

[Figure 4] Trend of Perceptions on Free Market Capitalism (%)

Note) 19 countries for comparison: Nigeria, Germany, Russia, Mexico, USA, Brazil, Spain, UK, Egypt, India,

Indonesia, China, Chile, Canada, Kenya, Turkey, France, Australia

- Brazil, China, India: Increased negative evaluation of distribution fairness

- Nigeria, Indonesia: Increased need for a new economic system

■ Comparing the survey results from this year with past surveys, countries showing significant increases or decreases compared to the average include, first, countries where the proportion of respondents answering 'unfair' (not at all fair + somewhat unfair) regarding distribution fairness increased above the average: Spain, Chile, Brazil, Indonesia, the United States, China, and India. Among these, Spain, which is facing difficulties due to the fiscal crisis, showed the largest increase, with a 26 percentage point (p) rise compared to 2009. Chile, Brazil, Indonesia, the United States, and India also showed an increase of over 10 percentage points (p). China, emerging as a major economic power, is also a country where negative perceptions of distribution fairness have increased. It rose from 48% in 2009 to 52% in 2012.

■ The countries where the proportion of negative perceptions regarding distribution fairness decreased compared to the 2009 survey results are Turkey, Germany, Mexico, Egypt, and Kenya, with an increase of around 10 percentage points (p).

[Figure 5] Change in Perceptions on Distribution Fairness (%)

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

■ The countries where the proportion of respondents answering that a 'new economic system is needed' for the current liberal market economy increased above the average compared to the 2009 survey results are Spain, Nigeria, Egypt, Indonesia, and Pakistan.

■ Conversely, the countries where the proportion of respondents advocating for a new economic system decreased are Brazil and India. In both countries, although the proportion of negative responses regarding distribution fairness increased, the proportion advocating for a new economic system to replace the current free market capitalism decreased by approximately 10% to 20% percentage points (p).

[Figure 6] Change in Percentage Advocating for a New Economic System (%)

f2e34dd1a320d063

f2e34dd1a320d063

f2e34dd1a320d063

3. Characteristics Revealed in the Survey Results

1) Characteristics of the Survey Results from 22 Countries

- Gini coefficient is low but distribution is unfair, France, Germany, Spain, South Korea

- Economic growth rate is good but a new economic system is needed, Nigeria, Mexico

■ Except for Spain and France, which are experiencing fiscal crises, no correlation was found between perceptions of distributive fairness and capitalist systems in the survey results from other countries. For example, when analyzing the results by comparing the Gini coefficient, which indicates the degree of income inequality, with the perception survey on distributive fairness, a high proportion of respondents perceived distributive fairness negatively in France (0.292 as of 2008), Germany (0.300 as of 2008), Spain (0.317 as of 2008), and South Korea (0.314 as of 2009), where the Gini coefficient can be considered low. In contrast, in Australia (0.328 as of 2009) and Canada (0.324 as of 2008), which have higher Gini coefficients than these countries, the proportion of respondents who answered that distributive fairness was unfair was low, at 36% and 43%, respectively.

■ Even in countries with relatively high Gini coefficients, the survey results on distributive fairness were mixed. First, in Chile (0.497 as of 2009) and Turkey (0.409), where the Gini coefficient is considered high among the surveyed countries, the proportion of people perceiving distributive fairness negatively was 80% and 64%, respectively, which is higher than the overall average of 61%. Conversely, China, despite having a high Gini coefficient of 0.500, showed a lower result than the overall average, with only 52% of respondents perceiving distributive fairness negatively.

■ Analysis comparing the survey results on free market economic systems with GDP growth rates and economic growth rate projections also revealed no correlation. In Nigeria and Mexico, which are among the countries with high GDP growth rates and economic growth rate projections, the proportion of respondents who answered that a new economic system is needed was 34% and 33%, respectively, higher than the overall average of 16%. Similarly, in Ghana and China, where GDP growth rates and economic growth rate projections are relatively high among the surveyed countries, the proportion of respondents who felt the need for a new economic system was 19% and 16%, respectively.

■ These results suggest that the discussions on 'growth' and 'distribution,' which are at the center of various reflections on the current capitalist economic system, need to be approached from more diverse angles as well, in order to devise measures to improve the global economic recession. This is because diverse positions that are difficult to explain solely by the economic conditions of individual countries may emerge.

[Table 1] Economic Indicators of Surveyed Countries

Note) The * for the Gini coefficient indicates data from 2009, and ** indicates data from 2008. The data for China is from the 2010 report by the Chinese Academy of Social Sciences.

2) Characteristics of Korean Survey Results

- Separate Perceptions of Distributional Fairness and Economic System

■ A comparison of the survey results on perceptions of distributional fairness and free-market capitalism among Korean citizens reveals the distrust and dissatisfaction held by our citizens. This is evident through a comparison of how the 84 respondents who answered that distribution was fair (very fair + generally fair) and the 404 respondents who answered that distribution was unfair (not at all fair + generally unfair) perceived free-market capitalism.

■ Among citizens who responded that the distribution of benefits from economic development was fair, only 19.0% answered that the current capitalist system is functioning well. 15.5% responded that a new economic system is needed, and 60.7% responded that there are problems but they can be improved. Among citizens who responded that it was unfair, 13.9% answered that the current capitalist system is functioning well. The proportions who responded that a new economic system is needed and that there are problems but they can be improved were 17.6% and 65.5%, respectively, showing no distinct difference from the response proportions when distribution was considered fair.

■ Consequently, this implies that even citizens who hold negative perceptions about the fairness of distribution do not reveal a difference compared to citizens who perceive the current economic system positively. In other words, the perception of fairness in distribution did not significantly influence the problems with the current economic system.

[Figure 7] Comparative Analysis of Perceptions of Distributional Fairness and Free-Market Capitalism (%)

Note) The white sections indicate "Don't know/No response" and "Varies by case," and for distributional fairness perceptions,

Don't know/No response was excluded from the analysis.

- Deeply Rooted Distrust and Dissatisfaction Regarding Distributional Fairness

■ While some differences were observed in perceptions of distributional fairness based on socioeconomic backgrounds such as age, household income, and education level among Korean citizens, it is noteworthy that these differences were not substantial. Firstly, regarding age, the proportion of respondents who found distribution fair was 27.8% among those aged 60 and above, while the response rate for all other age groups was in the 10% range. In the analysis by household income, except for the 31.8% who responded that distribution was fair in the income bracket of over 2 million KRW, all income brackets above 2.01 million KRW showed results in the low 10% range. Regarding education level, the proportion of respondents who found distribution fair was 35.7% among those with a middle school education or less, while it was 16.1% for high school graduates and 13.5% for those with an associate's degree or higher.

■ The results above reveal two characteristics. First, the relatively high proportion of positive evaluations among those aged 60 and above, with lower educational attainment and income, aligns with the current government's support base. This suggests that political stance can also be reflected in perceptions of distributive justice.

■ Second, the proportion of negative perceptions regarding distributive justice significantly outweighs the positive perceptions across all demographic groups, including those aged 60 and above, with lower educational attainment and income. This indicates that distrust and dissatisfaction are deeply and broadly disseminated among our citizens, and simultaneously implies that considerable effort and time may be required for improvement.

[Table 2] Perceptions of Distributive Justice by Age, Education, and Income (%)

Note) Excludes "Don't know/No response" and "Varies by case".