I belong… to a privileged minority. Everyone reading this sentence belongs, in fact, for only a small percentage of the world’s people has the ability and leisure to read and the resources to buy a book. How do we, the ‘privileged ones,’ act as stewards of the grace we have received? We can begin… by ripping off the labels we so thoughtlessly slap on others unlike ourselves. We can begin by finding a community that nourishes compassion for the weak, an instinct that privilege tends to suppress. We can begin with humility and gratitude and reverence, and then move on to pray without ceasing for the greater gift of love. —Philip Yancey, Soul Survivor

Why Does Inequality Matter?

This is the third in our series of brief articles about inequality.  In this article we look at why inequality matters.  These words by Philip Yancey from Soul Survivor say it well  “I belong… to a privileged minority.  Everyone reading this sentence belongs, in fact, for only a small percentage of the world’s people has the ability and leisure to read and the resources to buy a book.  How do we, the ‘privileged ones,’ act as stewards of the grace we have received?  We can begin… by ripping off the labels we so thoughtlessly slap on others unlike ourselves.  We can begin by finding a community that nourishes compassion for the weak, an instinct that privilege tends to suppress.  We can begin with humility and gratitude and reverence, and then move on to pray without ceasing for the greater gift of love.”  Philip Yancey reminds us about what is important and at the heart of the world’s major faith traditions.  This is a reminder about the importance of supporting all in our society, which also means understanding why inequality matters.  Inequality is important for social, practical and emotional reasons.  Let us look at each in turn.
There is growing evidence that inequality in a society brings many social ills, which include lowered educational performance among children, reduced life expectancy, higher infant mortality, more obesity, increased crime, lower levels of trust, and less social mobility.  Measures of social distress increase directly as inequality increases, whether comparing among countries or among states in the United States.  It damages community cohesion; people are less concerned with the well-being of others.  And yet everyone benefits from reduced inequality.  It is not just the poorest who benefit—the evidence shows that most people benefit.  While the greatest improvements are experienced by those lower down the economic ladder, there are still significant benefits for those at the top.  And it doesn’t seem to matter how this reduced inequality is created, whether by more equitable compensation levels as in Japan, or redistribution of societal resources as in Scandinavian countries.
Inequality also creates practical economic problems.  Income and wealth are concentrated in the hands of a few, the economic fuel to power our economy is depleted, and the engine of our economy stalls.  Using tools of mathematical modeling we can see this by examining how discretionary spending, the fuel of our economy, changes with growing inequality.  The estimated cumulative loss of discretionary spending since 1970 in the United States, simply due to growing inequality and the growing concentration of income, totals more than four trillion dollars.  Greater concentration of wealth and income significantly hurts our economy; we need trickle up, not trickle down approaches.
On an emotional level once basic survival needs are met the pattern of happiness or life satisfaction rapidly leveling off as income increases can point us to a path that strengthens our society for the benefit of all.  It turns out that when happiness levels off with increasing income, as it does, then happiness for our society is greatest when income for everyone is roughly equal.  This is one reason why the world’s major faith traditions speak to the importance of supporting all in a community.  It is one reason why societies that are more equal are better places to live.  There are, of course, factors that support some degree of inequality and the associated incentives this provides, which in turn benefit individual happiness. However, in general, reduced inequality is associated with greater economic prosperity.  So it is not surprising that people in the United States say they would prefer much reduced wealth inequality.
The current level of inequality in the United States creates reduced life circumstances for many and threatens economic and social stability.  This is why David Shipler in The Working Poor observes, “Being poor means being unprotected…. A poor man or woman gets sacked again and again—buffeted and bruised and defeated. When an exception breaks this cycle of failure, it is called the fulfillment of the American Dream.”  It is therefore not surprising that Harold Pinter offered the following observation, “If to be a socialist is to be a person convinced that the words ‘the common good’ and ‘social justice’ actually mean something; if to be a socialist is to be outraged at the contempt in which millions and millions of people are held by those in power, by ‘market forces’, by international financial institutions; if to be a socialist is to be a person determined to do everything in his or her power to alleviate these unforgivably degrading lives, then socialism can never be dead because these aspirations never die.”