Being
rich in America: Would the rich live longer if they lived
in
a more equitable society? Research suggests they would.
Financial Times Deutschland, Germany
America Should Rethink Self-Destructive Income Inequality
Is it better to be rich in America, or in Germany,
Japan and the Nordic countries? According to this article by Financial Times Deutschlandcolumnist Thomas Fricke, recent evidence
indicates that compared to countries with less income inequality, being rich in
America can be dangerous to your health.
For
nearly 30 years, it was the recurring theme of good economic policy: When
incomes drift apart it isn't pretty, but economically it's good - because this
creates economic incentives. Nowhere has this formula been implemented as rigorously
as in the U.S. and Great Britain. And nowhere, thirty years after Margaret
Thatcher and Ronald Reagan, is there much doubt about whether that was good.
Even conservative David Cameron promised his country more equality during the
recent election campaign.
Meanwhile
there is some evidence that in the long run, large disparities in wealth bring
with them unacceptable collateral damage to health and living standards. And
that in socially-unequal countries, even the rich don’t live as well as their
counterparts in more egalitarian societies. It’s possible that textbooks - and
political platforms - will have to be completely rewritten - and not just in
Anglo-America.
There
is nothing revolutionary about the notion that large income gaps bring higher
levels of criminal activity. Rather, it is the scope of the combined
consequences that's new, as was discovered and described in a book by Richard
Wilkinson and Kate Pickett, which recently received acclaim in Great Britain
and that just appeared in German, and which provides a breathtaking comparison
of every possible quality-of-life indicator.
Chart
by Dr. Timothy Smeeding of the La Follette
School of
Public
Affairs, Wisconsin.
In
the U.S., where the richest fifth of the population earns eight times as much
as the poorest fifth, the number of teen pregnancies is almost ten times as
high as in Japan or Sweden, where the richest earn just three or
four times as much as the poorest. On average, Americans and British have
shorter life spans, along with the Portuguese, Australians or New Zealanders,
who also have high income differentials.
Within
unequal societies, there is an increased tendency to obesity and mental
illness. In these societies, more infants die at birth, there are more school
dropouts, and, according to polls, trust in other people is weak. In the U.S.,
only 35 percent of people generally believe that you can trust another person;
meanwhile in Norway and Sweden two thirds of people say that you can.
The
rule may not apply in every country for every indicator, but: When every
indicator is combined into one index, as Pickett and Wilkinson have done, there
is a striking correlation. Among the industrial nations that are evaluated, the
U.S. has the highest income differential of all - and on balance the worst
social and health problems. Conversely, more consensual democracies provide the best
living conditions.
Part 2: The wealthy in
socially unequal countries have shorter life spans and are often poorer than
the rich elsewhere
The
phenomenon cannot be explained away by the fact that poverty just happens to
bring many problems along with it. According to the analysis of Pickett and
Wilkinson (1), even the rich in
socially unequal countries have shorter life spans and are often sicker than
rich people elsewhere and their children more frequently die at birth.
According to Pickett and Wilkinson, this must have something to do with
national inequality. One reason, so say the authors, is the recognition people
need in order to maintain their mental equilibrium is much harder to achieve in
unequal societies - a fact that economists mistakenly idealize as economic
incentive.
Of
political relevance is the fact that the negative consequences outweigh even
the advantages of higher-per-capita income. After all, Americans are on average
richer than others, but still have more problems. That’s expensive. No other
country must mobilize so much capital to cure its ills. Furthermore, people in
egalitarian countries are apparently more innovative. In Nordic countries, the number of patents registered per capita is many times the number per capita in the U.S., where due to a lack of confidence in society, there is less of a willingness to do something to protect the common good in areas like the environment, is lower. For example, in Scandanavia, the rate of recycling is also higher.
Posted
by WORLDMEETS.US
All
this is a grotesquely high price to pay for supposedly better economic
incentives. Some U.S. States now spend more on prisons than on education. And the
phenomenon opens up an entirely new economic policy perspective. In the U.S.
and Great Britain, economists are once again supporting higher taxes for the
rich and progressive taxation - to reduce income inequality. That’s
not a must. After
all, there was a time when Americans got better health and social ratings than
even the Japanese. It wasn’t until Americans drifted apart during the Reagan
years that this was dramatically reversed.
When
cheap jobs cost years off your lifespan
In
Germany, the richest fifth of the population earns five times as much as the
poorest fifth. That’s less than in the U.S., but still more than in healthier
nations that serve as model countries. That’s reason enough to investigate
whether future economic policies increase income gaps and whether they don’t do
more harm than good. Then it also seems doubtful that the creation of more
low-income jobs is - in the true sense of the word - healthy. Especially if, in
spite of creating one or two low-wage jobs, life expectancy declines, more
babies die, and the country is overrun with mental problems. In that case, it
might on balance be worth it to put the money into creating better jobs.
According
to ancient dogma: It’s important to begin with equal opportunity for all -
regardless of what incomes may ultimately turn out to be. There is, therefore,
according to Pickett, no single social recipe for this. From a health and
social network perspective, Northern Europe’s redistributors are just as well
placed as in Japan, where income equality is the goal from the start.
Apparently, there is still room for national preferences.
1)The
Spirit Level: Why More Equal Societies Almost Always Do Better,
Wilkinson/Pickett, 2009
*Thomas
Fricke is Chief Economics Editor at the Financial Times Deutschland
