Nobody's Talking About the Silver Bullet That Could Heal the Economy and Cure Most Social Ills

Imagine a guidebook on formulating social policy, with instructions on how to extend life expectancy, decrease infant mortality, improve child well-being, reduce obesity, lower homicide rates, decrease school dropout rates, lower teen pregnancy, increase levels of civic trust, improve voter turnout, decrease drug abuse, lower incarceration rates, decrease rates of mental illness, and improve social mobility based on merit.

There’s convincing evidence for all of this and more in The Spirit Level: Why More Equal Societies Almost Always Do Better, by Richard Wilkinson and Kate Pickett (Allen Lane). To learn more, go to their Web site, www.equalitytrust.org.uk.

The core message is that the countries that distribute their incomes the most equally have the longest life expectancy and the highest quality of life.

The same is true for states within the U.S.; the more income equality, the longer the life span. Unfortunately, the United States is now the most unequal of the wealthy countries, with the exception of Singapore.

 

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As income inequality increases, we trust one another less. For those concerned that I am confusing correlation with causality, I refer you to the thoughtful discussion of this in The Spirit Level. The authors review the extensive data on civic trust and make a convincing argument that causality is the best fit.

Increasing income inequality puts us on a pathway toward a less trusting, more individualistic and less community-minded society. As community cohesion erodes, we all suffer.

The graphic below shows just how much the U.S. is lagging behind other wealthy countries due to our highly unequal income distribution.

 

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The leading countries in life expectancy, Sweden and Japan, are also among the most equal of the wealthy nations. Interestingly, they have accomplished this relative equality in completely different ways: In Sweden, the tax system redistributes income; in Japan the income is given out relatively equally before any tax adjustments. Combinations of the two methods are also possible.

We in the U.S. are becoming more and more unequal. Our poor showing in life expectancy and quality of life is a direct result. It wasn’t always this way, and it does not need to remain so. Income distribution has varied widely.

In the Gilded Age of the robber barons, income distribution in the U.S. was very unequal (see the graphic below). This was one of the causes of the Great Depression. FDR’s New Deal can be interpreted, in large measure, as a program to reverse income inequality.

In a stunningly short time, called the Great Compression by economic historians Claudia Goldin and Robert Margo, America underwent a significant redistribution of income. While historians offer a variety of explanations for the Great Compression, what is clear is that income was much more fairly distributed.

This relative equality produced the middle class America that I grew up in. Of course, there were rich and poor people, but nothing like the extremes of wealth and poverty that we see today. This middle-class America lasted until the late 1970s, when the trend toward greater inequality began to accelerate.

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Today, we are faced with the same degree of income inequality as existed during the Great Depression. We can take our cue from FDR. It’s time for another great compression. It’s time to put folks back to work, to strengthen and help rebuild our labor unions, and to protect our most vulnerable community members.

Policies that lessen income inequality lead to an improvement in life expectancy and social well-being. Such policies would include raising the minimum wage, improving worker pensions and benefits, strengthening labor unions, passing progressive tax reform, adequately funding education, passing universal health-care coverage and guaranteeing a minimum standard of living for everyone. The vast majority of society benefit from more equality, as greater social cohesion improves life for us all.