[Vision2020] Income Inequality

[nickgier at roadrunner.com]

Good Morning Visionaries:

Some of you may remember my column on the book "The Spirit Level" in which the authors find strong correlations (and arguably causal relations) between income inequality and nine social and health problems.  I attach the full version as a PDF file and appended a shorter version.

Nick

THE HUGE SOCIAL COSTS OF ECONOMIC INEQUALITY

Among the new objects that attracted my attention during my stay in the United States, none struck me with greater force than the equality of conditions. I easily perceived the enormous influence that this primary fact exercises on the workings of the society.

Alexis de Tocqueville, Democracy in America
	
Richard Wilkinson, professor emeritus at the University of Nottingham Medical School, and Kate Pickett, an epidemiologist at the York University, have just published a book entitled "The Spirit Level: Why Greater Equality Makes Societies Stronger."  

The authors studied levels of trust, mental illness, life expectancy, infant mortality, educational achievement, teen births, homicides, and incarceration rates. They found that the US performed the worst on all nine problems, and that the most consistent predictor of these problems is economic inequality.

Drawing insights and conclusions from 396 books and articles, Wilkinson and Pickett demonstrate in graph after graph how the nine problems correlate strongly with income inequality. Aggregating the data for all nine issues, health and social maladies were worse for unequal USA, Portugal, the UK, and New Zealand, but much better in more equal Japan, Sweden, Norway, and the Netherlands.  

One of the areas in which economic inequality expresses itself is as a general lack of trust.  When people were given the statement "Most people can be trusted," over 60 percent of the Scandinavians and the Dutch agreed while only 10 percent of the Portuguese, 30 percent of the British, and 38 percent of Americans agreed.

At this point one might say that racial and ethnic tension is the main reason for the lack of trust in the UK and America’s Southern States.  In 1960, however, 60 percent of Americans thought that most people could be trusted.  This was a time of higher income equality, but there was of course much more racial tension between blacks and whites.

Wilkinson and Pickett cite a study of a Chicago ghetto over time, which showed that, even though Poles, blacks, and Hispanics had lived there in succession, the same health and social problems existed there. The common denominator was income disparity in relation to the rest of the city.

Using an index combining forty different indicators of child well being, the authors graph it against income inequality. The more equal Swedish, Dutch, Finnish, and Norwegian children do far better than the less equal British, New Zealander, Israeli, and American children.  

Critics will say that correlations, even those that are very strong and even those that change in tandem over time, do not prove causation, but Wilkinson and Pickett have answered them with good arguments.  

There are a number of controlled primate and human studies involving social status, a major way in which income disparity expresses itself, that prove causality. Space does not permit listing them all, but a test in India demonstrated that students do equally well on solving puzzles until the caste status of each student is announced.

With their famous motto French Revolutionaries introduced the three enduring values of modern political philosophy: liberty, equality, and community. I substitute "community" (which includes traditional values)  for "fraternity" as a corrective to the 1792 French mistake of thinking that they could create everything anew. 

I would argue that today's libertarians destroy this fragile political trinity by emphasizing liberty too much, while conservatives tend to threaten both liberty and equality by insisting on traditional positions that are no longer valid.  Communist totalitarians of course destroyed everything in their obsession for complete equality.

Wilkinson and Pickett's book makes it even more clear the essential role that equality plays in preserving both liberty and community. They propose that "equality [is] the precondition for getting [liberty and community] right. Not only do large inequalities produce all the problems associated with social differences, but it also weakens community life, reduces trust, and increases violence." 

The Reagan Revolution has proved to be disaster for America. From 1950-80 high progressive taxes were in place and unions had their largest membership. During that same period household incomes rose along with steady economic growth. From 1980 onwards incomes for ordinary Americans have stagnated and economic inequality has increased dramatically. The nine health and social problems also have become worse.

Wilkinson and Pickett have shown that improving economic equality can have a powerful counter effect working its "enormous influence," as DeToqueville observed 190 years ago, "on the workings of [American] society."
 
With sufficient political will based on overwhelming evidence, Americans could once again impress distinguished foreign visitors with a firm recommitment to equality.

Nick Gier taught philosophy at the University of Idaho for 31 years.


---- Ted Moffett <starbliss at gmail.com> wrote: 
> It is ironic is that the political/economic ideology of lessening regulation
> of business and/or finance, with the goal of improving the economy, of
> letting the "free market" work its magic to generate wealth, that the middle
> class in the US has supported to some extent, has resulted in wealth
> generation that has gone mostly to the upper classes, in recent decades.
> Voters under the guise of the wisdom of free markets are voting for
> politicians who allow big corporate and finance interests to control
> government legislation to favor the wealth generation of the wealthy. The
> facts are clear the middle class is being economically hoodwinked; and this
> has been supported by both Democrat and Republican party policies influenced
> by money pouring in to politics.
> 
> For over a decade I have commented repeatedly that the US was being
> transformed into more of a "third world" nation (using that exact wording),
> with an increasingly economically marginalized lower and middle class
> dominated by a small group of powerful and wealthy.  Just a few days ago I
> saw Arianna Huffington being interviewed regarding her new Sept. 2010
> book "Third
> World America: How Our Politicians Are Abandoning the Middle Class and
> Betraying the American
> Dream<http://www.amazon.com/gp/product/0307719820?ie=UTF8&tag=daikos-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0307719820>"
> (
> http://www.dailykos.com/storyonly/2010/9/18/901673/-Book-review:-Arianna-Huffingtons-Third-World-America
> ),
> and was both pleased and annoyed at her book title.  I thought, "She stole
> my idea!" though it is probable that many people have described what is
> happening to the US in terms of the US becoming more "third world."
> 
> The title or subtitle of this excellent article on Slate, "Introducing the
> Great Divergence," by Timothy Noah, regarding income inequality, is borrowed
> from Nobel winning economist Paul Krugman.  The excerpt below from this
> article contains facts that should be repeated in headlines over and over:
> 
> "The Great Compression ended in the 1970s. Wages stagnated, inflation raged,
> and by the decade's end, income inequality had started to rise. Income
> inequality grew through the 1980s, slackened briefly at the end of the
> 1990s, and then resumed with a vengeance in the aughts. In his 2007 book *The
> Conscience of a
> Liberal<http://www.amazon.com/gp/product/0393333132?ie=UTF8&tag=slatmaga-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0393333132>,
> *the Nobel laureate, Princeton economist and *New York Times *columnist Paul
> Krugman labeled the post-1979 epoch the "Great Divergence."
> 
> It's generally understood that we live in a time of growing income
> inequality, but "the ordinary person is not really aware of how big it is,"
> Krugman told me. During the late 1980s and the late 1990s, the United States
> experienced two unprecedentedly long periods of sustained economic
> growth—the "seven fat
> years<http://www.abebooks.com/abe/ParaRoute?pid=17184&url=http://www.abebooks.com/servlet/BookDetailsPL?bi=2886391131&searchurl=sts%3Dt%26tn%3DSeven%2BFat%2BYears%26x%3D0%26y%3D0>"
> and the " long boom<http://www.amazon.com/gp/product/0738203645?ie=UTF8&tag=slatmaga-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0738203645>."
> Yet from 1980 to 2005, *more than 80
> percent<http://web.mit.edu/ipc/publications/pdf/07-002.pdf>
> *of total increase in Americans' income went to the top 1 percent. Economic
> growth was more sluggish in the aughts, but the decade saw productivity
> increase by about 20 percent. Yet virtually
> none<http://www.epi.org/publications/entry/bp195>of the increase
> translated into wage growth at middle and lower incomes, an
> outcome that left many economists scratching their heads."
> -----------------------------------------
> Vision2020 Post: Ted Moffett
> 
> 
> On 9/17/10, Ron Force <rforce2003 at yahoo.com> wrote:
> >
> >  Slate magazine (a subsidiary of the Washington Post) has an interesting
> > 10-part series on the rise of income inequality in the US:
> >
> > http://www.slate.com/id/2266025/entry/2266026/
> >
> > It includes a widget so you can enter your zip code and income to find out
> > where you rank in the U.S. and compare with the averages for the zip, Idaho,
> > and the US (if you want to know).
> >
> > "A man worked for years and years on a philanthropic project - to arrange
> > the transfer of the money that the rich don't need to maintain their
> > lifestyle the poor who need it. After years and years of work he declared
> > that the work was about 50% complete - the poor have agreed to accept the
> > money."
> >
> > Ron Force
> > Moscow ID USA
> >
> >
> >
> >
> >
> >
> >
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