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GRAY MATTERS: The Consequences of Unequal Wealth Distribution

SaulFriedman75x75 Pulitzer Prize-winning journalist Saul Friedman (bio) writes the weekly Gray Matters column which appears here each Saturday. Links to past Gray Matters columns can be found here. Saul's Reflections column, in which he comments on news, politics and social issues from his perspective as one of the younger members of the greatest generation, also appears at Time Goes By twice each month.


Shirley Sherrod had it about right when she said,

“Y’all, it’s about poor versus those who have. It’s really about those who have versus those who don’t. And they could be black, they could be white, they could be Hispanic...”

That wasn’t exactly the whole truth, for she and her husband. Charles, were ardent, longtime civil rights activists who understood that years of racism, played a large role in perpetuating the ignorance and poverty in the south among blacks as well as whites.

(Racism is here defined as the belief among many whites, supported by the law, that Negroes were inferior. Only in America did the Supreme Court, in Dred Scott, hold that black slaves were chattel, less than human.)

Overcoming that sad heritage, Ms. Sherrod, who has spent a lifetime helping in the struggles of the poor of all shades put her finger on a fundamental human problem in much of the world, especially the United States - the unequal distribution of wealth among too many of us.

That is the subject of a new book that has become the rage among social scientists and activists in Europe, especially Britain. It’s called The Spirit Level: Why Greater Equality Makes Societies Stronger, written by British public health researchers Richard Wilkinson and Kate Pickett who have produced an unprecedented rediscovery of the causes of so much of today’s anger towards the institutions of government and finance.

The book was called to my attention by a Canadian reader, Dr. Rob Dumont, a PhD, from a prominent and wealthy family. In a reply to one of my pieces on poverty, he quoted from the book to tell me that according to its central thesis, the growing gap in many countries between the haves and the have-nots is responsible for more than the misery of poverty.

According to the book, such health and social problems as “Obesity, Mental illness, drug and alcohol abuse, homicides, imprisonment rates, lowered life expectancy, overconsumption of resources, teen pregnancy and the lack of social mobility,” all have in common strong links to inequality of wealth.

Interestingly, the authors, who have exhaustively documented their work, do not denounce the wealthy. Rather they point out that the most affluent citizens as well as the most wealthy countries also suffer from these ills. Their analysis mocks the American Declaration of Independence which proclaimed, “all men are created equal.” The original sin of slavery gave lie to that promise and the lack of equality has taken a toll in this nation even today.

As one knowledgeable Amazon reviewer, Dr. Nicholas P. G. Davies, a Briton, wrote,

“Inequality issues are often presented as being about the poor, but this book shows we are all poorer for living in more unequal societies. Inequality is as bad for the rich as it is for the poor. Society is poorer as inequality becomes greater.”

As Wilkinson and Pickett make clear with dozens of graphs, which rate the nations based on the problems that come with inequality,

“The impacts of inequality show up in poorer health, lower educational attainment, higher crime rates, lower spending of social capital, lower cooperation with and trust of government.”

One graph that shows the “health and social problems are worse in more unequal countries,” makes these points:

“The U.S, Portugal and the United Kingdom rate high in the amount of income inequality. For the U.S., low taxes (by international standards), a weak trade union movement, low minimum wage and a tradition of individualism have resulted in a high level of income inequality.”

Indeed, the U.S., with its obsession with the market economy, has modest social programs, Social Security and Medicare, while most of the other 20 nations listed are social democracies with a broad array of social insurance benefits, including universal health care. Canada is roughly in the middle of the pack, along with France, Spain and Switzerland. Japan and the Scandinavian nations have the lowest income inequality, offering cradle-to-grave social programs.

Some critics suggest that the book cherry picks its statistics and the alleged problems to prove their point. But who could argue with the graph that puts the U.S., the richest country, almost off the charts showing the relationship between a huge income gap – perhaps the highest among civilized countries – and such health and social problems as infant mortality, higher than most European nations, homicide and imprisonment rates (the highest in the world), obesity, child well-being (poverty among children has reached new heights) and drug and alcohol addiction?

Any thinking American can verify the sad truth in another graph that shows these health and social problems are worse in more income-unequal states. With the rise of unfettered rapacious, anti-labor capitalism, which touted sweatshops and child labor, income inequality rose to criminal levels.

And today, as you might expect, the southern states, namely Mississippi, Louisiana, Alabama, Texas, Tennessee, Kentucky, West Virginia and Florida “have high levels of income inequality and much poorer outcomes in the health and social areas.”

These states also have the highest levels of poverty and the lowest levels of education attainment, and in the last couple of years, income inequality has become worse throughout the United States, especially in the industrial north, as a result of the 2008-9 recession which has increased home foreclosures, personal bankruptcies and the numbers of Americans – nearly 50 million – struggling against poverty or near poverty.

Yet at the same time, the rich are becoming obscenely richer. Michelle Singletary, reported in the Washington Post last month that while the average income for the top one percent of earners rose 281 percent, or $973,000 per household, in the last decade, the bottom fifth saw their incomes increase 16 percent, or $2,400 per household.

Former Labor Secretary Robert Reich, who wrote the forward for the American edition of the book, noted that today’s CEOs are paid more than 350 times that of the average worker. Surely we’ll see the results of such inequality in health and social problems in the next few years.

In his inaugural speech, President Obama said, “The nation cannot prosper long when it favors only the prosperous.” But that’s exactly what has happened as bankers have made huge profits and gotten scandalous bonuses while real unemployment reaches towards 15 percent.

Franklin Roosevelt fought the economic royalists of his day to help Shirley Sherrod’s Georgia get electricity and survive the Great Depression with the Tennessee Valley Authority and the Works Progress Administration. What has Obama done?

One can blame the Republicans or the U.S. Senate, but where is the leadership of the President? It won’t do to give Ms. Sherrod a job. Platitudes like, “I feel your pain,” are not true. It might help to use the powers of his federal government to put Americans to work. But as she said,

“Folks with money want to stay in power and they’ll do what they need to do to stay in power...It’s always about money, y’all.”

Find out more about Spirit Level, at the excellent British web site, The Equality Trust, which supports the messages in the book.

Write to saulfriedman@comcast.net

Comments

Saul, very interesting post. But it omits a consideration of the fact that so many Americans who would benefit from increased social-welfare, government-run programs oppose them.

Example: the acquaintance of mine who promoted a fundraiser to cover her brother's medical expenses, but opposes "Obamacare." Or the blue-collar union members who deserted the Democrat parties in droves to become Reagan Democrats, and who didn't seem to mind that his first act was to bust the air traffic controllers.

States-some of them the poor state you mention--are suing the health care plan: "A total of 20 states which are opposing the massive reform law, all but one of which are Republican in their leaning: Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, South Dakota, Pennsylvania, Texas, Utah and Washington." (Legal Match law blog.)

In a time like this, Obama's successes --national health care, financial regulation, and approach toward international policy--are extraordinary.

Well said, Saul. I am afraid that the inequality between the rich and poor will be the death of this country some day. The middle class is shrinking and working longer hours for less.

There was a time when the company owner felt an obligation to share with his employees. That no longer happens and big conglomerates found out they could get more work out of fewer people and are not hiring now, even though they are once more making big profits.'

How long can the poor be ignnored before we have an uprising? Perhaps it will lead to stronger unions as it did in the past or perhaps it will lead to a revolution.

Demonizing those with acquired wealth, those who worked 17 hour days, getting up in the dark and coming home in the dark, all to provide a safe and secure present and future for their families just doesn't further the conversation. There are selfish, greedy, unhelpful individuals throughout the economic strata.

Granted, the business owner has the opportunity to create jobs, but I'm not sure "company owner(s) felt an obligation to share with his employees" is any more or less true today than it was 100 years ago, Darlene. People are people, and I don't think the general characteristics change that much over the decades.

Most people in power want to stay in power, rich or poor, black or white. The wealthy want to hold on to their "stuff" with as much enthusiasm as do those in the middle class and those who are so lacking that they really aren't in any economic class at all.

America keeps looking for someone to blame, instead of turning our eyes inward, and taking personal responsibility to the greatest extent possible -- from recycling to voting with much more in between.

Or, as I read somewhere: Do unto others as you would have others do unto you.
a/b

I think the tactic of focusing on the benefits of equality to help us all imagine the prospects and generate support for this part of the conversation is exciting. I have been poor all of my life and would be lost, frankly with the kinds of wealth people in this country toss around daily, so I'm certainly no authority but I do know the power of finding the exact right way to speak a truth when it is spoken at the exact right time. Lets hope people read, "The Spirit Level: Why Greater Equality Makes Societies Stronger" it sounds like a valuable conversation waiting to happen. It is now on my reading list. Thank you, Saul.

I have a problem with redistribution of wealth and feeling we must take from one group, and through government, hand to another. What I see as the complication with that as it doesn't give incentive nor pride; and it makes government the 'god' which is why so many oppose anything that approaches socialism or communism regardless of whether it appears to benefit them or not.

What I see as government's role is to help people help themselves which means education, health care, environmental protections, and have a tax program that encourages industry to create jobs.

We are facing a big problem with so many countries willing to do jobs for salaries that would not support a family in our country. The government can help by tariffs possibly, by tax policies that help small businesses or other businesses to afford to hire.

Right now the criteria for success in business is how the stock market reacts to anything. It means policies by people like Mark Hurd, which encourage firing the bottom 5% even if they are doing a good job because they can be replaced by someone at a lesser salary, those policies are cheered by Wall Street but don't do much for the worker and lead to competitiveness that makes every person out for themselves. It was a long way from what HP started out believing in but right now the businesses that make the most money are those that push around paper or buy someone else's technology rather than develop it themselves. And I am not saying that financial planners aren't beneficial, we have one, but they are no substitute for real manufacturing. Do we reach a point where all manufacturing is done overseas? What will that leave here? Low paying service jobs? A government that continually pays out to the people but from what resource as corporations can also move overseas?

The other thing is we often are not aware of the special deals that some get to make their companies more profitable while someone else gets nothing and then fails. It's not an even playing field but how can it be made so? Anyone who thinks we have pure capitalism is kidding themselves.

Right now we are rewarding investing more than making and that could be leveled by tax policies like a simple one on each trade which there used to be and it discourages those who trade instantly and impact the market purely to make it go up and down.

I see the problem of poverty and the need for social programs especially for the handicapped and those who cannot work, but they are no substitute for policies that help most people find real jobs and a feeling of pride in what they do.

If we don't enforce the borders and don't allow this country time to absorb all the poor immigrants, you'll get your revolution eventually.

What a strange coincidence, Saul. I was reading about The Spirit Level in the Observer this morning and immediately ordered the book.

There are some interesting comments in the book about the price to pay for more equality, e.g.

"One question that comes to mind is whether the world's most equal developed nations, Japan and Sweden, make sufficient allowance for individuals to express themselves without being regarded as a threat to the health of the collective. Critics of the two societies would argue that both make it intensely difficult for individual citizens to protest against the conformity both produced by, and required to sustain, equality. The inclination to dismiss or neuter individuals' complaints may, Wilkinson and Pickett suggest, go some way towards explaining the higher suicide rates in both countries compared with their more unequal counterparts. Those who feel wrong, or whose lives go wrong, may feel as though they really do have no one to blame but themselves"

I lifted this from a review in the Guardian of March 2009. Here is a link http://www.guardian.co.uk/books/2009/mar/13/the-spirit-level for those interested in reading more.

Rain, you are so right - WHAT does America do best/make/provide anymore? I'm picking my way thru Gibbons' Decline and Fall of the Roman Empire.... the parallels are frightening. We have gone from a nation of doers to a nation of whiners. Perhaps it's the fact that we have no more frontier to explore and try to change our luck if things don't work out the first time. Our spirit is changing, and I am sad.
a/b

Cited this article here: http://frustratedhypocrite.wordpress.com/2012/07/21/take-krugman-as-you-like-but/

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