Economic Inequality # 2

A few days ago I wrote about the couple who did not know how they could manage to live on a combined income of $450,000 per year. Interestingly, the Globe had a follow up piece yesterday (I seem to have lost it) talking about the response the story got from readers. It appeared as if my comments were somewhat mild compared to others. The Globe went on to say that the problem really wasn't the fact that this family made so much - they had worked hard and deserved it, but rather that other people didn't have the same opportunities as them to get to that level of income. The Globe is partially right. It would be wonderful if everyone had access to every opportunity and the support required to get there. The fact is that many don't have access to either the supports or the opportunities. Wishing for it - just does not make it so. One wonders if the writers for the Globe and Mail others truly understand the national consequences for the ever increasing inequity.

Richard Wilkinson in a wonderful Ted Talk discusses the issues of income equality in industrialized nations. Through graphs and an impassioned voice he presents data that overwhelmingly must lead one to become convinced that income inequality is bad for our country. Wilkinson makes two critical points. One is that when comparing life expectancy and gross national incomes across a range of industrialized countries, there is no correlation between how rich a county is and how long people live. The people living in countries with the largest average income in the world (such as the USA and Norway) live about the same number of years as do people living in poorer countries.

Secondly however, if one looks within our national societies, there is a highly significant relationship between income and every type of social measurement. For example, for people who are financially better off than others in their country, their children are less likely to die in infancy and they themselves will live two-three years longer than will their poorer counterparts (Wilkins,  Berthelot and Ng. The consequences of income inequality affects virtually every part of life. According to Wilkinson, using data from the UN, in every industrialized and democratic country that has a large difference between the richest and the poorest such as the USA, that country struggles with mental illness, addictions, obesity, homicides, imprisonment, teenage pregnancies  and math and literacy. In countries that have a smaller degree of separation between the richest and the poorest citizen, such problems occur at a less frequency and with less severity.

Wilkinson by using data from UNICEF clearly demonstrates that by any measurement of child well being, children are doing worse in the countries where the difference between the richest and poorest citizens is the greatest. So if the symptoms of the problem (addictions, obesity, homicides and imprisonment are not the problem - they are symptoms of the problem) are so obvious - what is the solution?

Within the solution there lies what appears to be a paradox. If people who have large incomes pay more taxes, income equality would diminish proportionally. But that in itself does not solve the problem. The issue is not just money but rather equality of access to opportunities. No one (I hope) would suggest that the way to get to income equality is to reduce the income of all the people to the lowest common denominator. We need to increase opportunities and supports. The real question is what do we do with the money that is raised through taxes. The money from taxes must be used for the creation of  better schools, more playgrounds and after school recreation programs etc.  Children who have access to these types of supports will have more chance of success. Children who have an increase chance of success will be more likely to succeed. Young adults who succeed will need fewer supports and therefore the state will spend less money on social support programs. Taxes will go down for everyone.

It seems obvious to me - pay higher taxes now, make sure that money goes towards programs that are useful and needed, and later everyone pays fewer taxes. Lets do it!