The Effects of Great Income and Wealth Inequality

By Donald Klosterman

We live in an era of increasing income and wealth inequality. Many of us have come to accept this as normal. Some see it as an outcome of our technology, others of our culture. Be it nature or nurture, we are no longer in balance with our environment or our society. We see the “other” as someone to be feared rather than helped. We routinely denigrate our environment for short-term economic gain even when we are well aware of the costs of such actions. We allow ourselves to be convinced that our neighbors are inferior in order to justify our waging war against them.

It is ironic that human offspring require more time to mature than almost any other species. From birth through the next decade, without watchful elders, without a protective and nurturing society, few children would ever make it to adulthood. Yet, we create myths that rather than being social creatures, we are independent and born with a right to freedom that justifies us harming our neighbors. Our institutions rarely accept the notion that it takes a village to raise a child.

As inequality grows, the role of government becomes more difficult. If the rich and powerful write the policies, then the rich and powerful are rewarded. If the poor were ever able to create policy, might they focus on our responsibility to society and the earth rather than to the rich?

As noted by Father Tim Bushy, who is responsible for mission compliance for Providence Health System, “One of the key functions of Government is to assist citizens in fulfilling our responsibility to others in our society, since, in a large and complex society these responsibilities cannot be adequately carried out on a one-to-one basis.” This viewpoint transforms taxes from being a burden to an obligation, a way to carry out one’s responsibility to others by sharing resources. For example, under this viewpoint, single-payer Medicare for All is simply sharing resources and sharing risk.

Having a president claim that tax avoidance is evidence of his intelligence reflects the view that the individual has no obligation and could somehow live separately from society. Such thinking fuels policies that promote economic inequality and undermine the social and culture pillars supporting democracy.

In his 1963 Encyclical entitled “Peace on Earth,” Pope John XXIII advocated for unions, a family living wage that is higher than a just above-the-poverty-level wage, and other mechanisms to help people flourish. In his message, he stated that there cannot be peace without justice. Government action is required to promote justice. For government action to be effective or even possible requires its institutions and agents to be trusted. There is a clear relationship between inequality and trust. These thoughts are referenced by the current Pope as well as Muslim clerics, Jewish Rabbi’s and a host of Hindu and Zen scholars. It is universal.

Inequality erodes the very foundation of our humanity. This happens many ways. A landmark study by Richard Wilkinson and Kate Pickett, The Spirit Level: Why Greater Equality Makes Societies Stronger, published in 2011 and based on 30 years’ research, analyzes the correlation between income inequality and an Index of Health and Social Problems (HSP) for 21 industrialized countries.

The HSP measure consists of nine variables: Level of Trust, Mental Health and Addiction, Life Expectancy and Infant Mortality, Obesity, Children’s Educational Performance, Teenage Births, Homicides, Imprisonment Rates, and Social Mobility. The graphic below shows the United States having the greatest income inequality and the highest (worst) score on the HSP measure and Japan having the lowest income inequality and the lowest (best) score on the HSP measure.

For brevity’s sake, only three variables — Trust, Effects of Mental Illness and Addiction, and
Imprisonment Rates– will be discussed.

First: the authors found Trust levels were much lower among people in countries with greater inequality such as Singapore and Portugal and much higher in more egalitarian countries such as Finland, Sweden, Norway, and Japan. The U.S. had the second lowest score on the trust variable. Analysis of the 50 states found the same correlation. The U.S.’s below average trust level seems obvious, as we have low trust in elected officials, government agencies, large companies, and each other.

Second: The same result was found for the Effects on Mental Illness and Addiction measures.
There was a very strong correlation between these measures and income inequality. The
United States had the worst scores, whereas Japan, Belgium, and Germany had far better scores. (A caveat: The U.S was estimated to have a 10 percent rate of mental illness in the 1960s. A mental health professional told me recently that it is around 20 percent now.)

Third: The authors found the correlation between income inequality and Imprisonment Rates to be particularly strong. Again, the U.S., followed by Singapore, had the highest imprisonment rates whereas Japan, Finland, and Norway had the lowest imprisonment rates. The authors noted the U.S. approach seemed to be to impose long sentences and imprisonment for crimes — a lock-them-up-and-throw-away-the-key approach, whereas other countries work to restore prisoners back into society.

The obvious question is: Does great inequality cause poor HSP scores or vice versa? Based upon many social science studies sprinkled throughout the book, the authors believe great inequality is the cause of poor HSP scores.

Since the end of the New Deal, U.S. policy has shifted from the social to the individual. Poverty is no longer seen as a social failure but rather as a personal one. Thus, inequality is no longer viewed as a problem despite the persuasive evidence to the contrary.

As inequality increases and trust erodes, the political consensus required to solve social problems becomes more elusive. The end result is bankruptcy of the country, the community, and the soul.

“When people become self-centred and self-enclosed, their greed increases. The emptier a person’s heart is, the more he or she needs things to buy, own and consume. It becomes almost impossible to accept the limits imposed by reality. In this horizon, a genuine sense of the common good also disappears. As these attitudes become more widespread, social norms are respected only to the extent that they do not clash with personal needs. So our concern cannot be limited merely to the threat of extreme weather events, but must also extend to the catastrophic consequences of social unrest. Obsession with a consumerist lifestyle, above all when few people are capable of maintaining it, can only lead to violence and mutual destruction.” (Pope Francis, from the Encyclical, Laudato Si)

If we are to restore effective governance, governance that can promote justice, we must address the drivers of distrust and division. The central root cause appears to be inequality.

We cannot solve our existential crisis, be it nuclear holocaust or climate change, without simultaneously building trust, which means reducing inequality.

“Today, however, we have to realize that a true ecological approach always becomes a social approach; it must integrate questions of justice in debates on the environment, so as to hear both the cry of the earth and the cry of the poor.” (Pope Francis, from the Encyclical, Laudato Si)

The axiom that there can be no peace without justice is true.

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