INEQUALITY - THE MOST SIGNIFICANT BLIGHT ON SOCIETY - WORLDWIDE.

Gross inequality is the major cause of social and economic degradation in developing and rich societies alike.

Before starting to analyse the incidence and effects of inequality in the world, it is worth getting some salient facts straight:

Inequality is a natural phenomenon. Humans are not all born equal, there are considerable differences in intellect, ability, energy and social skills in any population. So, life outcomes will vary considerably for different people, as will life opportunities. Some inequality in any society will be inevitable and desirable. Equally, some nations and geographical areas are disadvantaged relative to others by lack of natural resources and climate.

But gross inequality is not natural…

Compelling evidence shows that inequality beyond certain levels is due to human action. As an example, here's a map, which clearly shows that the United States, one of the world's richest countries, is more unequal than just a few other countries, some of them the poorest and most troubled on the planet.

Like climate change, there are many deniers about the malign effects of inequality. It seems to suit many in developed and developing economies alike to either ignore what is happening to the poorer majority - or deny that inequality has a corrosive effect on the whole of society.

Inequality is a global phenomenon The map is based on the CIA data, and shows countries by whether they are more or less equal than the U.S. The red countries have greater income inequality, the blue countries less; the U.S. is purple.

Income inequality is more severe in the U.S. than it is in nearly all of West Africa, North Africa, Europe, and Asia.

In the United States, 20% of the population own 90% of the wealth, leaving 10% for the rest. The pay of Chief Executives of S&P 500 companies is over 300 times the average pay (not the lowest) of other employees.

Globally, 25 people own more wealth than the poorest one and a half billion of the world's inhabitants. In Britain 5 families own more than 20 million poorer people. There is enough food produced in the world to feed every human being on the planet. World agriculture produces 17 percent more calories per person today than it did 30 years ago, despite a 70 percent population increase. This is enough to provide everyone in the world with at least 2,720 kilocalories (kcal) per person per day according to the most recent estimate. The principal problem is that many people in the world do not have sufficient land to grow, or income to purchase, enough food.
Hence there is a high incidence of undernourishment and even starvation in many parts of the world. Remarkably, there is also considerable hunger in some developed countries.

Poverty is the principal cause of hunger. The causes of poverty include poor people's lack of resources, an extremely unequal income distribution in the world and within specific countries, conflict, and hunger itself. As of 2008 the World Bank has estimated that there were an estimated 1,345 million poor people in developing countries who live on $1.25 a day or less. This compares to the later FAO estimate of 1.02 billion undernourished people. Extreme poverty remains an alarming problem in the world's developing regions.

Despite rapid economic growth, inequality is increasing in many developing countries……

China

Inequality in apparently booming China has reached extreme levels

The government will "target" reducing the number of people living on less than $1 a day by around 80 million by 2015.

In 2011 Xinhua said 150 million Chinese live on less than that, a stark contrast to the country's image as the world's manufacturing heartland, the holder of its biggest foreign exchange reserves and a motor of global recovery.

China refused to publish GINI statistics between 2005 and 2013, when it released figures that put it towards the top of the international inequality tables at a GINI number of more than 0.47.

On the other side of the coin, China has 2.7 million U.S. dollar millionaires and 251 billionaires, according to the Hurun Report, but 13 percent of its people live on less than $1.25 per day according to United Nations data. The average annual urban disposable income is just 21,810 yuan ($3,500).

India

Inequality in earnings has doubled in India over the past two decades, a new report says, making it one of the worst performers among emerging economies.

The Organisation for Economic Cooperation and Development (OECD) says the top 10% of wage-earners make 12 times more than the bottom 10%, compared to six times 20 years ago.

The OECD says India has the highest number of poor in the world.

Some 42% of its 1.21 billion people live on less than $1.25 a day.

India has also not fared well in poverty reduction, the report says.

It says 42% of Indians live below the poverty line, as against the official Indian figure of 37%.

And is particularly bad in Africa

WASHINGTON, October 7, 2013- Economic growth in Sub-Saharan Africa (SSA) remains strong with growth forecasted to be 4.9% in 2013. Almost a third of countries in the region are growing at 6% and more, and African countries are now routinely among the fastest-growing countries in the world, according to the World Bank's new Africa's Pulse, a twice-yearly analysis of the issues shaping Africa's economic prospects.

As Africa's growth rates continue to surge with the region increasingly a magnet for investment and tourism, Africa's Pulse notes that poverty and inequality remain “unacceptably high and the pace of reduction unacceptably slow.” Almost one out of every two Africans lives in extreme poverty today. Optimistically, that rate will fall to between 16% and 30% by 2030. The report suggests that most of the world's poor people by 2030 will live in Africa.

Effects of inequality in poor and developing countries

Poverty

Living on Less Than $1.25 a Day

The $1.25 per person per day threshold for extreme poverty is a standard adopted by the World Bank and other international organizations to reflect the minimum consumption and income level needed to meet a person's basic needs. That means that people who fall under that poverty line—that's 1/6 of the world's population, or 1.4 billion people—lack the ability to fulfil basic needs, whether it means eating only one bowl of rice a day or forgoing health care when it's needed most.

• On average —and taking into account population size— income inequality increased by 11 percent in developing countries between 1990 and 2010.
• A significant majority of households in developing countries—more than 75 percent of the population—are living today in societies where income is more unequally distributed than it was in the 1990s.

Hunger and malnutrition

The following data are from the World Hunger Information Service. Most of the information derives from the United Nations Food and Agricultural Organisation

It estimates that nearly 870 million people of the 7.1 billion people in the world, or one in eight, were suffering from chronic undernourishment in 2010-2012. Almost all the hungry people, 852 million, live in developing countries, representing 15 percent of the population of developing counties. There are 16 million people undernourished in developed countries

The number of undernourished people decreased nearly 30 percent in Asia and the Pacific, from 739 million to 563 million, largely due to socio-economic progress in many countries in the region. The prevalence of undernourishment in the region decreased from 23.7 percent to 13.9 percent.

Latin America and the Caribbean also made progress, falling from 65 million hungry in 1990-1992 to 49 million in 2010-2012, while the prevalence of undernourishment dipped from 14.6 percent to 8.3 percent. But the rate of progress has slowed recently.

The number of hungry grew in Africa over the period, from 175 million to 239 million, with nearly 20 million added in the last few years. Nearly one in four are hungry. And in sub-Saharan Africa, the modest progress achieved in recent years up to 2007 was reversed, with hunger rising 2 percent per year since then.

Developed regions also saw the number of hungry rise, from 13 million in 2004-2006 to 16 million in 2010-2012, reversing a steady decrease in previous years from 20 million in 1990-1992 The above is based on the new estimates of world hunger by the FAO using revised procedures.

Hunger is also a cause of poverty, and thus of hunger. By causing poor health, low levels of energy, and even mental impairment, hunger can lead to even greater poverty by reducing people's ability to work and learn, thus leading to even greater hunger.

Millions cut off from participation in civil society. A vast number of poorer people in the world live in ghettos of extreme deprivation, without recourse to adequate medical services, water and power - or education and the ability to participate in democratic processes. They lack the energy or influence to do anything about their plight and are trapped in this state by entrenched power elites. Also, they are the first to suffer from starvation and civil strife.

Autocratic elites - corruption, oppression and violence

Gross inequality normally means that a small elite has captured very high proportions of the wealth in a country, and is using the power thus generated to cement their economic and political positions. The agencies of the state are controlled by the elites, which tend to become permanent. The degradation of the mass of the populace causes misery and hunger, and sometimes sparks violent revolution and guerrilla movements. Otherwise, large swathes of communities are sunk in hopelessness and torpor, and frequently become victims of violence.

Thus countries with extreme inequality can become violent and unstable, creating a descending cycle of misery for the majority.

Migration, refugees and statelessness

Millions of people worldwide live in refugee camps in conditions of considerable poverty and deprivation, as a result of wars, power battles and simple starvation.

Many rich countries are experiencing a backlash against immigrants, as a result of increasing pressures from economic migrants, fuelled by increasing internal inequality.

INEQUALITY IN THE DEVELOPED WORLD

Inequality is increasing in most countries.

The normal international measure of inequality is the Gini score. GINI is a measure of equality of wealth and income. A GINI score of 100 would indicate that one person owned all the wealth, a score of 0 would indicate perfect equality of wealth distribution.

The US records a GINI score of 0.477, nearly the highest of developed nations. Sweden records a GINI score of 0.26, which indicates much more equal distribution.
The US GINI score has gone from 0.39 in 1967 to 0.477 in 2011, indicating that the US has progressively become a less equal society - and inequality is still growing.

Whilst the US score is 0.47, and that of South Africa, one of the world's most unequal countries, is 0.63; the average score for the “Social Market” countries of Scandinavia and Northern Europe is 0.27 - indicating much more equal societies.

Gini coefficients of inequality mid 1980s to late 2000s (OECD)

NB. The GInI coefficient for the US is 0.47, not 0.39 as shown. This lower figure was produced by the CIA and later amended upwards after an outcry. It is still moving upwards.
French Economist Thomas Piketty, who has specialised in studying long term inequality, has found that one of the reasons that inequality will continue to rise inexorably in developed countries is that possessors of great wealth can earn between 4 and 5 percent on their investments, and shelter their wealth from tax. This rate of return is far greater than long term GDP growth - and wage increases for the vast majority of the population, so in the absence of substantial intervention to reverse long term trends, inequality will continue to rise and rise.

Wealth Distribution in the US

In the United States, wealth is highly concentrated in a relatively few hands. As of 2010, the top 1% of households (the upper class) owned 35.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 53.5%, which means that just 20% of the people owned 89%, leaving 11% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.1%. Inequality appears to have grown greater since 2010

FUNDAMENTAL CAUSES OF INEQUALITY

Concentration and abuse of Power

The cause of gross inequality in some societies, as opposed to others, is clearly not natural distribution of ability. Basic abilities are generally equally spread across the population of most societies, but diet, early experiences, privileged education and superior opportunities and contacts will give some a large advantage. So when it comes to the creation of a permanent wealthy class and low social and economic mobility, it is privilege that causes some to be highly “successful” and a majority to falter. And privilege comes from an unequal distribution of Power. The rich and powerful can purchase better education, better contacts, enjoy higher expectations; even better diets, than the poor. But this is too simplistic: it is the use of power and privilege without constraint - and a lack of counterbalancing support the less fortunate that causes inequality to become embedded in a society.

Of course, history tells that it is not only the wealthy that have possessed excessive power. In Britain, the Trades Unions exercised enormous economic and political power in the 1950' and 1960's. The effects were disastrous. Whilst inequality reduced, union “Barons” dictated the economic and social agendas, gross inefficiency reigned in both the public and private sectors, and punitive tax rates tended to discourage enterprise. Unfortunately, after the first Thatcher government destroyed the power of the unions, it was almost instantly handed to the banks and financial markets, resulting in a massive growth in inequality. So Britain moved from one dysfunctional state to another.

Power is embedded in unequal societies

A great difficulty for reformers in unequal societies is the close relationships between economic power possessors - banks, corporations, wealthy individuals - and some political parties. Economic power brings many benefits to politicians who cosy up to it - political contributions and potential wealth after politics are two well-known examples.

But this is not the end of it. Politicians who try to take a stand and reform the current “system” will stir up massive campaigns against their objects - and themselves. Publicity campaigns, a hostile media and an immense amount of political propaganda will be mobilised, which is why most politicians are terrified of concerted media hostility. Unfortunately, a large part of the population are ill-equipped to use critical appraisal, and a significant number have been brainwashed to believe that only their own interests matter. So they tend to “buy” the prevailing media line, which is hostile to fundamental change.

Obsessions with Growth and Scale

Growth

Many economists and politicians are obsessed with economic growth. Growth in GDP is used to measure the success of a society (or its economy at least). They have managed to brainwash many members of the population to believe in a vision of continuous improvements in income and consumption. Some might say that growth has become the opium of the masses. A political party that fails to promise growth will have little chance of getting elected, as they will receive rough treatment by big business, finance and the media. Given the short term nature of political and communal horizons, even short term improvements in “growth” after a downturn will suffice to turn many towards voting for the party that promises the most, even if the medium term result is a collapse.

Maybe the most poisonous fact about an obsession with economic expansion is that growth is the best way to disguise increases in inequality. If it can be claimed that the majority of a population is “better off” due to growth, it tends to stop them from questioning the fact that the top 10% are becoming Better Off at an obscene rate.

Last but by no means least, the long term effects of obsessing about growth on the natural environment and the world's resources are quite disastrous. Rich countries consume at rates that destroy the environment in poorer ones, and shortages of water are beginning to point the way to new forms of conflict. The overuse of oil, gas and coal are polluting the atmosphere and helping to cause climate change.

Scale

Closely connected with a growth obsession is a belief in Scale. Of course, size is important in a few cases, like the ability to support major capital projects and some facets of infrastructure development. But in most cases, large scale enterprise is not necessary - in fact it can become a positively destructive force, leading to concentration and abuse of power. There are several main disadvantages of very large scale:

• Very large organisations are extremely difficult to manage and control from the top, so corporate managers lose control of what is going on - and live in a bubble. It is a tendency in very large organisations for top managers to get out of touch with the bulk of staff and customers, leading to them regard both as cannon fodder to the greater corporate cause of profit and growth.
• An obsession with scale can cause corporate hubris. Success is often judged by the size of a business, the size of executive rewards, the amount of political clout enjoyed by an enterprise and its leaders.
• The desire to pursue size leads to a wide range of unhealthy practices, a major one being the pursuit of growth and scale through mergers and acquisitions, despite the well-known fact that a majority fail. They continue to be pursued because egos need to be fed and investment bankers need a rich flow of fees.

The obsession with scale can extend to charities and social enterprise .A good initiative can be ruined by pressures to “scale up”, whereas it could be more healthy to encourage a plethora of small enterprises that are close to customers and communities.

A noticeable feature of more equal and consistently successful societies, such as Germany, is the existence of a very large number of smaller and medium sized enterprises, the devolution of power to local and regional institutions, and tendencies towards collaboration between key stakeholders - in other words, dispersal of power.

Deeper down…
Cultures. Two extremes stand out in the modern world.

Free Markets

The essence of free market thinking.

The Austrian School

Classical liberalism — which we shall call here simply liberalism — is based on the conception of civil society as, by and large, self-regulating when its members are free to act within very wide bounds of their individual rights. Among these the right to private property, including freedom of contract and free disposition of one's own labor, is given a very high priority. Historically, liberalism has manifested a hostility to state action, which, it insists, should be reduced to a minimum (Raico 1992, 1994).

Adam Smith.

Current belief in the sanctity of the market can be traced back to statements by Adam Smith, the father of conventional economic theory, in his book, The Wealth of Nations. "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self love, and never talk to them of our necessities but of their advantages" (p. 7).
Later, in reference to trade, Smith states, "he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention." "By pursuing his own interest he frequently promotes that of the society more effectually (sic) than when he intends to promote it" (p. 199).
These statements provided the foundation of the contemporary economic wisdom -- that pursuit of short run self-interests is transformed into the public good, as if by an invisible hand. In other words, the greatest societal good results from the greatest individual greed.

Social Market philosophies

Those societies which demonstrate greater sustained equality are driven by different belief systems than more unequal ones. The essence of these beliefs is a concern for the general well-being, of collaboration between different stakeholders to pursue the common good - and that it is worthwhile sacrificing some part of selfish interest for the good of the whole society. These beliefs are strongly demonstrated by some Scandinavian countries, and maybe Japan and some countries like Germany. These values have been characterised as being typical of the Nordic countries, and dubbed the ”Nordic Model”.

The 'Nordic Model'
Values behind the Nordic Model

Quite simply, the Nordic Model is based on a small number of strong values:

• The interests of society are more important than the selfish interests of powerful individuals or private institutions
• Collaboration trumps competition when it comes to enhancing the common interest
• All citizens have the right to support from the state to enable them to be full participants in the economy and civil society - and a duty to make a contribution for the good of all.

This sense is evident in the following examples. The first comes from research by . Einhorn and Logue, University of Massachusetts. March 2006.

The Nordic Model applies to Sweden, Finland, Denmark and Norway, although other countries share some of their characteristics. It should be emphasized that the characteristics of each Nordic country are somewhat different to each other, so there is a degree of flexibility within the model. But each of them accords closely to Skidelsky's and Kay's definitions of a social market society.

Eindhorn and Logue* characterise the so-called 'Nordic' model as that in which:

• An active and interventionist state,
• Provides universal transfer payments to support the elderly, disabled, unemployed and families with numerous children and low market incomes,
• Provides universal social services for health, education, childcare, services for the elderly and the like,
• Uses national policy to achieve high rates of labour force participation and full employment on the national level, via both macro-economic and sectoral policies,
• Integrates major interest groups in making and implementing national policies (rather than the capture of the state structure by a single group of interests, or state capture of the interest organisations),
• Possesses a strong civil society with encompassing and democratic organisation of interests, but particularly the strong organisation of those otherwise weakest in capitalist society - family farmers and urban workers,
• Is underpinned by a set of values around empiricism and social trust; in particular solidarity and reciprocal responsibility are crucial concepts in the development of public policy

Effects of Inequality

There is a rapidly growing body of evidence on causes, and particularly effects, from research conducted in the US and UK. Two of the more impressive analyses of recent times come from Nobel Prize economist Joseph Stiglitz and Professors Kate Pickett and Richard Wilkinson, but their analyses are supported by a growing body of supporting data.

The Effects

Concentration of economic and political power.

In US and UK, a growth in the size and influence of huge corporations and a concentration of wealth in the hands of a few super-rich people has resulted in them having the power to shape the political agenda in their favour. And power begets more power, so inequality is a cancer that feeds itself, as can be seen by the trends of the last decades. Huge power possessors will resist any serious attempts to regulate their actions and constrain their ability to act in their own narrow interests. Massive lobbying by financial, energy, food, drink and military-industrial interests, and the associated public relations campaigns seek to bend political and public opinion in their favour.

As corporations and financial institutions become larger, so do they become more and more remote from their customers and the bulk of their staff - and also the societies that harbour them, which become objects for exploitation, rather than close partners. A major strength and stabilising influence on the German economy is the “Mittelstand”, the large number of smaller and medium sized companies, often family- owned companies in a variety of industries, but especially technology and manufacturing. Germany and the Scandinavian countries also have dispersed power to bodies representative of major stakeholders and the regions - so power resides closer to those affected by it.

Massive corporations also extend their reach beyond their countries of origin, seeking to extend their power through such institutions as the IMF and World Bank. The so-called “Washington Consensus”, in reality agreement to extend neo-Liberal charter free market practises into underdeveloped countries, was in reality a cover for exploitation.

As power begets more power, the process of domination by a few becomes self-sustaining.

Education as an instrument of domination and promoter of inequality.

Education systems that are highly centralised and determine what will be learned through detailed and rigid curricula, can become oppressive. If the driving belief is that learners are “empty vessels” and the role of the teacher is to fill them with pre-determined and pre-digested material, then education can stifle independent thought, critical analysis and the ability to make independent judgments.

Obviously there are certain aspects of literacy and numeracy that are essential basics and can be learned by rote, but if this practice is carried through the entire education system, the result can be the production of cannon fodder for consumerism - or passive members of autocratic states.

The antidote is to inspire creativity and independent thought in a population that can think for itself and exercise self-determination in making life- affecting decisions. This can only be done through stimulating thought and challenging conventional wisdom inside an education system.

Also, education systems that allow a rich elite to attend separate schools, and gain lifetime privilege can only perpetuate inequality. Britain is a prime example of this phenomenon.

Failure of Markets.

It is a well-known fact that the majority of those who seek and possess power will also act to preserve and increase it.

So contrary to some arguments, markets cannot work effectively unless they are rigorously controlled to prevent build-up of power in a few hands and exploitation of the majority. The push for deregulation and the reduction of the power of the state as the mediator on behalf of society has caused marked effects:

• Concentrations of wealth, relative impoverishment of the majority. The earnings of at least one third of employees have declined in real terms over decades. The portion of the “cake” going to labour as opposed to capital has declined.
• Speculation and socially useless activities realising huge rewards for the few - and causing great damage to the many. The behaviour of the investment banks leading up to the crash of 2007/8 led to a huge speculative bubble trading in often worthless assets. Risks were passed to those who could not understand or afford them, but they were the ones to suffer when the whole rotten edifice collapsed.

After such a catastrophe, it might be imagined that action would be taken to curb the power of financial institutions and big corporations, but in reality little has been done - a result of ferocious political lobbying and powerful propaganda.

Instability and economic inefficiency

As power over markets has become more and more concentrated, so has the behaviour of those who possess it become more irresponsible (In relation to their effects on society). Spurred by wealth seeking and lacking constraint, their behaviour has become more and more extreme. The whole investment banking industry has become infected by the drive for riches and short-term payoffs. In tune with this, the markets that affect all in society become more and more speculative, short-termist and thus volatile.

Corruption

The assumption of a “Too big to fail” position by global banks has accentuated an already marked tendency towards market manipulation and defrauding customers. It can also be claimed that the position of oil companies towards global warming, and food, drink and tobacco companies towards public health - and many big companies towards pricing and customer service can be described as corrupt. Pursuit of profit, dividends and top executive pay has obviously far outweighed any notions of customer interest. Of course there are many companies whose behaviour is highly ethical, but they tend to be outside the circle of those whose shares are quoted on financial markets.

Selfishness and consumerism

Rich free market countries agendas are dominated by the needs of big business, which requires ever-increasing consumption to feed growth and profits. Politicians need growth, consumption and a feel-good factor to attract voters. The elision of politicians' agendas and those of big business have generated an obsession with growth and consumption. A large part of the populace, despite stagnation of real incomes, are encouraged to consume by many politicians and a massive advertising industry. So people are bombarded with propaganda about the desirability of owning more and more objects, linked with messages about fashion and “lifestyle”. Many have become possessed by a compulsion to conform with the prevailing messages and think primarily of themselves as consumers, divorced from any awareness of a wider community. The drive for consumption and growth without real earnings growth has fuelled massive increases in consumer debt, encouraged by messages from lenders encouraging people to “have it all… now”. In turn unsustainable debt has increased volatility and unbalanced economies away from investment in productive industry and towards consumption.

Undermining democracy

Increasing inequality and realisation that political and economic agendas are driven by “Them” - distant and privileged political figures and corporate power, has fostered cynicism and a lack of belief that voters can influence the course of events by their votes. This is accompanied by a rapid decline in trust in most public figures and agencies. Thus voting turnout in national elections in unequal countries has shown a sharp decline by comparison with more equal ones.

Reducing trust and social capital

Gross inequality has been proven to cause separation and schisms in a society. The poor tend to be driven into ghettos, where repeating cycles of poverty, poor education and social inclusion tend to feed ill-health, crime and economic deprivation. On the other hand, more wealthy citizens tend to become physically separated from the poor, and to develop theories about the causes of poverty (“their own fault”), spurred by the popular media. Meanwhile the very rich are able to exclude themselves from civil society, exercise power to secure their positions and avoid paying their dues to the societies that actually support them. The congregation of the super-rich in certain parts of London, with very negative effects on the city around them is a very good example of this.

Good evidence by many researchers shows that extreme inequality has an effect, not only on the poor, but increases stress and intolerance in society as a whole. Politics becomes more conflictual - and the capacity of a society to escape from a descending spiral of inequality and social decay becomes less and less. Thus the very fabric of society begins to degrade.

In a nutshell, Inequality decreases Social Capital…

The World Bank believes that: 'Social capital refers to the institutions, relationships, and norms that shape the quality and quantity of a society's social interactions... Social capital is not just the sum of the institutions which underpin a society - it is the glue that holds them together' (The World Bank 1999).

The central thesis of social capital theory is that 'relationships matter'. The salient idea is that 'social networks are a valuable asset'. Interaction enables people to build communities, to commit themselves to each other, and to knit the social fabric. A sense of belonging and the concrete experience of social networks (and the relationships of trust and tolerance that can be involved) can, it is argued, bring great benefits to people.

Trust between individuals thus becomes trust between strangers and trust of a broad fabric of social institutions; ultimately, it becomes a shared set of values, virtues, and expectations within society as a whole. Without this interaction, on the other hand, trust decays; at a certain point, this decay begins to manifest itself in serious social problems... The concept of social capital contends that building or rebuilding community and trust requires face-to-face encounters. (Beem 1999: 20)

There is very strong evidence that communities with a good 'stock' of such social capital are more likely to benefit from lower crime figures, better health, higher educational achievement, and good economic performance.

The alienation of the 'middle'

This example is drawn from British experience, but seems to be consistent also with that of the US.*

“People with middle income and wealth levels located somewhere between the 30th and 70th percentiles are trapped between the two extremes of rich and poor. Despite having fared better than the relatively poor, they are beginning to react to emerging facts about the growing divide between them and the rich and their mood is becoming increasingly sour. They are assailed by stories of the wealth of those in the financial markets and top management and for those living in London and the South East. They are beginning to understand that the soaring price of housing is caused by the burgeoning wealth and consumption patterns of people in the financial markets.

It is this group that suffers most from the plethora of scandals and scams caused by the behaviour of the banking, mortgage, insurance and financial services industries. Several million people have been adversely affected by pensions mis-selling, dodgy endowments, sub-prime mortgages and a host of other well-publicised swindles and mistakes. So as a group, the income and wealth they have now appears to be far more stretched - housing, energy costs, provisions for old age, costs of university education and longer financial dependence of their children all eat away at what should be a comfortable life style.

At the same time, experience in the workplace is often of increasing stress and pressure, declining security of employment and apparently, work satisfaction. And in the world around them, they are likely to be most aware of and affected by those aspects of society that appear to be in decline.
To cap it all, they are constantly bombarded by the media with stories of crime, failings in the healthcare system, runaway immigration and a continual negative narrative about the state of society. When there is good news, it tends to be drowned out by a chorus of gloomy stories.

Is it any wonder that they are so easily influenced by the doomsayers and the culture of blame which is the one part of the traditional middle class newspapers that they tend to believe?

This same mood towards those above them - ('Fat cats') - and below - (‘yobs, immigrants, scroungers and criminals') generates little sympathy for taking action to rectify the problems caused by inequality. "I've got enough problems taking care of myself and family in an increasingly insecure, unfair and dangerous world", might be the motto of the middle.

So the glue that holds society together becomes degraded, and society more and more resistant to being governed. This in turn fosters the growth of political extremism and political movements based on nostalgia and protest”.

Sources, YouGov and other surveys

Degrading public goods and public service

As the market and its powerful players become more dominant, so the power of the state to play an active and positive part in society has decreased.

With this decrease has come a degradation in the quality and quantity of public “goods”.

Comparisons on all criteria of social health between the United States, a very unequal society and Sweden, a more equal one show better Swedish outcomes in:

• Public health: life expectancy, obesity, diabetes, infant mortality, heart disease and death from cancer. Furthermore, the Swedish health system costs half as much per head as the US.
• Crime: homicide, prison incarceration
• Social Trust: trust in government and trust in others generally

A surprising truth

Studies by many researchers in the United States and in Europe demonstrate that, regardless of social class, performance in all the health and social factors above is markedly worse in unequal societies as compared with more equal ones. Thus, health outcomes for both the richest to the poorest in America are worse than those for the richest and poorest in more equal societies.

Further comparisons between England, more equal than the US, but relatively more unequal than Sweden, show exactly the same results. *

The same effects are manifest in such factors as Trust and belief in democracy and communal action.

Thus it is the case that gross inequality affects the whole of society, and not just the poor.