Income Inequality and Its Consequences: Meteor Blades on Daily Kos
Surprise! Income Inequality Bad for Your Health. And the Nation’s
by Meteor Blades
Daily Kos, Jan 29, 2010
We all know what inequality in wealth and income means when it comes to political clout. And for weathering economic adversity. And for the kind of lifelong head start or hold back that can be given to offspring. The effects are gigantic and extend everywhere. In more economically equal societies, as British epidemiologists Richard Wilkinson and Kate Pickett point out in their new book, The Spirit Level: Why Greater Equality Makes Societies Stronger, people do better on every metric, much better, whether it’s drug addiction, teen pregnancies, homicide or life-span.
What possible good can come from epidemiologists poking around in economics, and in the United States, well outside their usual scholarly arenas? Quite a lot, writes Sam Pizzigati, a senior fellow at the Institute for Policy Studies and proprietor of the on-line web-site Too Much:
“If you want to know why one country does better or worse than another,” as Wilkinson and Pickett note simply, “the first thing to look at is the extent of inequality.”
The United States, the developed world’s most unequal major nation, ranks at or near the bottom on every quality-of-life indicator that Wilkinson and Pickett examine. Portugal and the UK, nations with levels of inequality that rival the United States, rank near that same bottom.
Japan and the Scandinavian nations, the world’s most equal major developed nations, show the exact opposite trend line. They all rank, on yardstick after yardstick, at or near the top.
And we see the same pattern within the United States. America’s most equal states — New Hampshire, Minnesota, North Dakota, and Vermont — all consistently outperform the least equal, states like Mississippi and Alabama.
People in more equal societies simply live longer, healthier, and happier lives than people in more unequal societies. And not just poor people in these societies, Wilkinson and Pickett emphasize continually, but all people.
If you have a middle class income in an unequal society, you’re going to be more stressed and less healthy — mentally and physically — than someone with the same income in a more equal society.
Earlier this month the congressional Joint Committee on Taxation calculated that about one million taxpayers will have an income of more than $500,000 this year. They will collect $200 billion more in income than the 80 million American taxpayers who make $40,000 or less. Not surprisingly, executives at the top corporations figure prominently in that elite group of a million.
[graph here of "Share of Income Earned by the Top 10 percent"]
According to economist Emmanuel Saez, who has made a career of studying the impact of income inequality, in 2007, the most recent year for which we have full data, the ratio of CEO pay to the average paycheck was 344 to one. Because of the recession, it’s estimated that the ratio will decrease to 317 to one in 2010. In the 1960s, ‘70s and ‘80s, the average ratio fluctuated between 30 and 40 to one.
The slight decrease in inequality we’ve seen during the Great Recession will be only temporary unless significant changes in regulations and progressive taxation are imposed. And that won’t be easy given the brainwashing visited on America by right-wing think-tanks that have propagandized us for three decades with soothing talk about the benefits of deregulation, privatization and what Pizzigati so aptly calls “wealth worship.”
Just how bad the trend has been over the past 30 years can be seen by comparing with an earlier era:
• In 1955, tax records showed that the 400 richest people in the U.S. were worth an average $12.6 million (adjusted for inflation). In 2006, the 400 richest were worth $263 million.
• In 1955, the richest Americans paid an average of 51.2% of their income in taxes under a system with a top rate of 90%, but with lots of loopholes. By 2006, the top tier paid 17.2% of their incomes.
• At the same time, wages for most Americans stagnated from 1979 to 1998, and by 2000 the median male wage was below the 1979 level, despite productivity increases of 44.5 percent. Between 2002-2004, two years of the “jobless recovery,” the inflation-adjusted median household income declined $1669 a year.
• To cover this loss, households in the aggregate boosted their credit-card debt 315% between 1989 and 2006.
“Over the past 30 years, the income of the top 1%, adjusted for inflation, doubled: the top one-tenth of 1% tripled, and the one-one-hundredth quadrupled,” says Pizzigati. “Meanwhile, the average income of the bottom 90% has gone down slightly. This is a stunning transformation.”
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February 5th, 2010 at 11:21 am
The answer, or part if it, surely must be, for the U S, is to raise the income level for social security taxing, and apply social security taxation to investment income as well, such as Andy is involved in
and use that money toward a significant monthly check to the homeless, the unemployable and the wastrels.
In the name of income equality and better health for all and the nation as well . . I ask
Why Not ?!
February 5th, 2010 at 1:02 pm
Been out to the Post Office and the Bank and while riding . . more ideas come to mind. Why not make the University President’s pay and benefits more equal to the untenured professor and surtax the tenured prof’s pay to subsidize the maintenance workers. Gosh . . there must be so many ways to make things more equal. Just think of all the dis-incentives possible.
What about equalizing the hemorroids experts’ remuneration with, say, the manicurist . . and the bell boys’ and the car parkers with the hotel administrator. Man ! Just think of the miriad opportunities to absolutely wreck the system of incentives . . just equalize the rewards.
I have come to realize that the modern liberals must be some of the most ingenious ‘thinkers’ on the planet.
February 5th, 2010 at 1:20 pm
It is interesting to watch how you process these things, David R.
Your assumption seems to be that the inequalities are all about incentives to people to make more valuable contributions to society.
How about this: when you were a young man (in Eisenhower’s America), the ratio of corporate CEO’s pay to that of the average worker in his company was about 20:1 American businesses were among the best run in the world.
Fifty years later, that ratio had grown to more than 400:1. American companies had, by and large, lost a good deal of their dominance to those in other advanced industrial countries (in Europe and Asia). And in those other countries, the ratio was a whole lot closer to what ours had been decades ago.
I suppose, though, that this much increased inequality should be regarded as a socially-beneficial arrangement, with which no tampering is warranted, lest we lose the wonderful performances of the munificently paid. Wouldn’t want to kill the goose that lays the golden eggs, would we?
February 5th, 2010 at 3:19 pm
I hate to say it – but – David R makes me want to vomit. (Does he think he’s a Christian? Wow!)
I could go on and on – but – look to Denmark. Civility is one of the points. Will we be civil to each other? Or, not? Reagan’s point was – if we reduce taxes on higher incomes, they will spend more money and it will “trickle down”, right? Well, guess what – it didn’t work, it has never worked and it will never work because of offshore accounts, greed, starting/maintaining wars…etc.
“…unto the least of these…” David R. The manicurist is no less in the eyes of God. She/He deserves as much care as the King, hmmm? (BTW, myriad.)
February 5th, 2010 at 5:05 pm
That CEO pay is what is called a Take and I join with those who call it obscene.
The stock holders should have the vote on it; why not ? they ‘own’ the company.
That would not be necessarily equalizing pay but the stockholders estimate of worth.
But not many would go to the manicurist for surgery nor to a surgeon who advertized his fee as that of the manicurist. What ?!
February 6th, 2010 at 1:28 am
This carefully orchestrated campaign to elevate corporate power has been going on for ages. Roberts court manipulated decision by 5-4 is part of the campaign to increase corporate power across the hole globe. Working Americans have seen their earning drop dramatically over 30 years. I and most I worked with have seen their purchasing power fall compared to inflation over a long time. This disparity has deepened in “undeveloped” nations. NAFTA and the whole political process since seems set up to create Mussolini’s ” Corporatism” in the US. The signs and the pain are everywhere. Sure, it is easy to setup disingenuous arguments to deny this reality. Intellectual integrity requires a wider view – making it easy to deny it. “On the ground” it is harder and harder for “the people” to survive. Religious based assumptions make it easy to adopt an absolutist pose & put your spirit in the sand and look away from what the Buddha called “The Law of Dharma.” Look it up if perhaps this is an unknown term.
February 6th, 2010 at 12:14 pm
Joan K, thanks for the spell check. (Sorry about your tummy problems-will try do do better, but probably too late to change very much ,
February 6th, 2010 at 12:33 pm
Thank you, Lee!!! “As you sow…..”
“They” use the argument that if “they” aren’t paid obscene amounts of money, “they’ll” go elsewhere and companies will fail. Perhaps it would’ve been better if we hadn’t paid “them”? Who said: “No one is indispensable.”?
If the corporate entities that ruled would have used their intelligence, knowledge and integrity to show the average American how to balance a checkbook, invest, manage finances properly, etc. as part of the education system maybe we wouldn’t be in the shape we’re in. It was the millions of credit cards offered, the advertising blitzes on getting more for less, the constant urging to eat crappy food and buy a house you can’t afford that has this world in a tailspin. People are buried in debt and file bankruptcy so they can start over again. Generations are working for nothing and corporations are reaping billions of dollars that “they” invest in offshore accounts.
There’s a simple concept of all of us being One and working for the greater good that can stop this…? But as long as we’re in competition – it won’t work.
February 6th, 2010 at 12:56 pm
And – yes, David R, the manicurist has as much right to good education, affordable health insurance and fair wages as the highest paid surgeon in the world.
Everyone thinks MDs are Gods. Ex-cu-use me? They’re people – just like the rest of us. Subject to all the foibles of the rest of us.