First, numerous studies have ascertained that more money does not make people happier beyond a threshold level that is not all that high. Once people have enough to pay for a reasonable level of expenses and build up a safety buffer, more money does not produce more happiness.
But even more important is that high levels of income inequality exert a toll on all, particularly on health. Would you trade a shorter lifespan for a much higher level of wealth? Most people would say no, yet that is precisely the effect that the redesigning of economic arrangements to serve the needs at the very top is producing. Highly unequal societies are unhealthy for their members, even members of the highest strata. Not only do these societies score worse on all sorts of indicators of social well-being, but they exert a toll even on the rich. Not only do the plutocrats have less fun, but a number of studies have found that income inequality lowers the life expectancy even of the rich.
Those who would deny a link between health and inequality must first grapple with the following paradox. There is a strong relationship between income and health within countries. In any nation you will find that people on high incomes tend to live longer and have fewer chronic illnesses than people on low incomes.
Yet, if you look for differences between countries, the relationship between income and health largely disintegrates. Rich Americans, for instance, are healthier on average than poor Americans, as measured by life expectancy. But, although the US is a much richer country than, say, Greece, Americans on average have a lower life expectancy than Greeks. More income, it seems, gives you a health advantage with respect to your fellow citizens, but not with respect to people living in other countries…
Once a floor standard of living is attained, people tend to be healthier when three conditions hold: they are valued and respected by others; they feel ‘in control’ in their work and home lives; and they enjoy a dense network of social contacts. Economically unequal societies tend to do poorly in all three respects: they tend to be characterised by big status differences, by big differences in people’s sense of control and by low levels of civic participation…
Unequal societies, in other words, will remain unhealthy societies – and also unhappy societies – no matter how wealthy they become. Their advocates – those who see no reason whatever to curb ever-widening income differentials – have a lot of explaining to do.
Is the problem in this example income inequality? No, the problem is out of control government, with income inequality simply the result, not a driver, of societal ills. But I doubt this is the narrative the article is trying to advance.
It's easy to see how "big status differences" alone have an impact. The wider income differentials are, the less people mix across income lines, and the more opportunties there are for stratification within income groups. Thus a decline in income can easily put one in the position of suddenly not being able to participate fully or at all in one's former social cohort (what do you give up, the country club membership? the kids' private schools? the charities on which you give enough to be on special committees?). And lose enough of these activities that have a steep cost of entry but are part of your social life, and you lose a lot of your supposed friends. Making new friends over the age of 35 is not easy.
And the costs of living in more unequal societies extend beyond health, although that impact is particularly dramatic. If you look at broader indicators of social well being, you see the same finding: greater income inequality is associated with worse outcomes. From a presentation by Kate Pickett, Senior lecturer at the University of York and author of The Spirit Level, at the INET conference in 2010:
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You might argue: Why do these results matter to rich people, who can live in gated compounds? If you've visited some rich areas in Latin America, particularly when times generally are bad, marksmen on the roofs of houses are a norm. Living in fear of your physical safety is not a pretty existence.
Japan, which made a conscious decision to impose the costs of its post bubble hangover on all members of society to preserve stability, has gotten through its lost two decades with remarkable grace. The US seems to be implementing the polar opposite playbook, and there are good reasons to think the outcome of this experiment will be ugly indeed.