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6 Ways Income Inequality Is Making Your Life Worse

President Obama will focus on the growing gap between rich and poor in tonight's State of the Union address. Here's why you should listen.

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3. Income inequality makes you less safe.

Statistical patterns show that crime rates increase with rising economic inequality. For instance, a 1999 Harvard analysis of the homicide rates in each state and the District of Columbia found that as the gap between the rich and the poor rose, the rate of homicide rose along with it. Income inequality alone accounted for “ 74 percent of the variance in murder rates and half of the aggravated assaults,” the research concluded. A 2002 World Bank  studyconfirmed these result, concluding that homicide and an unequal distribution of resources are  inextricably tiedthroughout the world.

The National Bureau of Economic Research has developed an even more precise number, reporting that “a twenty percent drop in wages leads to a  12 to 18 percent increase in youth crime.” Other analysis has found that a 1 percentage point increase in the Gini index (a measure of wealth inequality) produces, on average, a 3.6 percent increase in the homicide rate.

4. Income inequality makes us less democratic.

A large  body of research suggests that high inequality leads to lower levels of representative democracy and a higher probability of revolution, as poorer citizens become convinced that the government is only serving and representing the interests of the rich. And today’s political candidates and parties are relying more on deep pocketed campaign donors than  at any other time since the early 1970s, when Congress first enacted campaign finance laws.

The Huffington Post’s Paul Blumenthal recently pointed out that “the top 0.01 percent of campaign donors — one percent of the one percent — contributed more than  40 percent of all the money spent in the 2012 elections.” Compare that to 1980, when the top 0.01 percent of campaign donors accounted for just under 15 percent of all the political contributions. Today’s rich also donate millions to Political Action Committees (PACs) and so-called 501(c)4 organizations in an effort to influence the politics and public policy. The Washington Post reported this month that the 17 groups that are funded by conservative donors Charles and David Koch “raised at least $407 million during the 2012 campaign” — more than Democrats and Republicans spent  in the entire 2000 election.

Harvard economics professor Edward L. Glaeser argues that as the rich become richer and secure more political influence, they support policies that make them wealthier at the expense of everyone else. “If the rich can influence political outcomes through lobbying activities or membership in special interest groups, then more inequality could lead to  less redistribution rather than more,” he explained in a 2006 paper.

5. Income inequality undermines the American dream.

New research finds that while economic mobility in the United States has stayed flat for two decades, the distance between the richest Americans and the poorest has grown dramatically. So if social mobility is a ladder, this means “the rungs of the ladder have grown further apart (inequality has increased), but children’s chances of climbing from lower to higher rungs have not changed,” the researchers note.

This intergenerational mobility is significantly lower in the United States than in most other developed countries. The chances of a child moving out of poverty are about half as high in the U.S. as in Denmark, for instance, leading Richard Wilkinson, Professor Emeritus of Social Epidemiology at England’s University of Nottingham, to conclude, “If Americans want to live the American dream,  they should go to Denmark.”

Other research has found that economic mobility depends heavily on geography, and in particular, that areas with strong middle classes have higher rates. Places with lower and less progressive state income taxes, on the other hand, have lower rates of mobility.

 
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