A WORLD WITHOUT THE RICH: why are the poor unwilling to pay for a «better world»
Photo by Jon Tyson on Unsplash
Capitalism is far from an ideal model of socio-economic organization. Although mankind has not yet come up with anything better, there is talk of the end of capitalism everywhere today, from home parties to the forum in Davos.
There are so many dissonances and threats in today’s world that it is time to ask the question: can our world even afford the rich?
Two professors from the University of York’s Faculty of Medicine, Richard Wilkinson and Kate Pickett, attempted to answer it in a paper published in the journal Nature.
INEQUALITY CREATES CRISIS
Scientists conclude that environmental, social, and humanitarian crises are growing. And without social equality and a high level of public trust, it is impossible to stop the degradation of the environment, which is the fault of the consumer society.
Humanity simply can no longer afford two things. The first is the cost of economic inequality. The second — rich people. According to Wilkinson and Pickett, just 1% of people have managed to capture the global wealth created between 2020 and 2022. And it is twice the size of all that «earned» by the other 99% combined.
And over the previous decade, the world’s billionaires have more than doubled their fortunes to nearly $12 trillion.
THE RICH WILL NOT ESCAPE
Researchers have gathered evidence that this income gap is a source of enormous societal stress, leading to societal dysfunction: higher rates of homicide, imprisonment, child mortality, obesity, drug use, social mobility, and social mistrust.
The United States, for example, although considered the standard of a democratic state, is the most «unequal» of all Western democracies. Inequality is the reason why Americans are 11 times more likely than Norwegians, for example, to kill their fellow citizens and 10 times more likely to go to prison. Also, compared to Norway, the US has twice the rate of infant mortality and obesity.
Ironically, inequality has a negative impact not only on the quality of life of the poor. It does not help the rich maintain their mental health, increasing the likelihood of violence and aggression against them.
Furthermore, wealth is not an automatic guarantee of good school achievement, and the risk of taking dangerous drugs is no lower for rich children than for poor children.
UNPROFITABLE INEQUALITY
Wilkinson and Pickett used the UK as an example to show that inequality causes considerable losses to the state, which, unfortunately, are not sufficiently recognized by national governments.
The Equality Trust, a London-based charity co-founded by these academics, calculated and compared the UK’s figures with the average of the 5 countries in the Organization for Economic Cooperation and Development (OECD) where inequality is lowest.
These countries are Denmark, Finland, Belgium, Norway, and the Netherlands, which have the lowest income inequality. In comparison to them, the United Kingdom loses $126 billion annually due to inequality.
Unsurprisingly, mental and physical health indicators, murder rates, and incarceration rates were also not to favor the British. But if this sort of thing is going on in good old England, what to say about countries far removed from Western «civilized» standards?!
STATUS ANXIETY
Excess of inequality makes nations extremely vulnerable to emergencies and global risks. Not only economic and social but also climatic. For the simple reason that «unequal» societies have severe problems with adaptability.
The stress caused by inequality provokes profound and widespread psychosocial consequences. Sharp differences in social status and class, marked by the quality of housing, clothing, food, means of transportation, etc., reinforce feelings of superiority for some and inferiority for others.
When each person’s self-value is non-absolute and non-obvious, loss of confidence, diminished dignity, and feelings of inferiority generate a sense of continuous «status anxiety». The fact that people are «worth» differently is a major stressor for society as a whole. And these are not abstract psychological theories — studies of cortisol changes point to this fact.
The correlation of «status anxiety» with levels of violence and unhealthy, destructive lifestyles is also well documented. In countries with high levels of inequality, school bullying is about 6 times more likely to occur. In US states where inequality is high, people are killed 5 times more often than in states where inequality is acceptable.
STATUS CONSUMPTION
The paradox of inequality is that it does not reduce but rather stimulates consumption. The higher the level of inequality, the more money is spent on various kinds of status things.
The psychological reason for this phenomenon is quite clear: the link between wealth and self-esteem encourages people to buy goods in an attempt to improve formal indicators of social status.
This effect was first described at the very end of the century by the American economist Thorstein Veblen in his book «The Theory of the Leisure Class» (1899). Unequal societies easily become victims of advertising manipulations that stimulate consumption.
Wilkinson and Pickett calculated that the share of advertising expenditures in gross domestic product is much higher in countries with high inequality. A widely publicized «prestige» product promotes the standards and lifestyles of the rich as a coveted object to emulate.
As a result, we are seeing explosive growth in spending on vacation homes, swimming pools, travel, clothing, and expensive cars.
POOR PEOPLE DO NOT WANT TO PAY FOR A «BETTER WORLD»
Inequality also makes it challenging to implement global environmental policies. According to Oxfam, each average member of the 1% of the elite produces 100 times more emissions than the average member of the global poverty. Now go and prove to the poor, who compare themselves to the consumption standards of the rich, that they should limit themselves to something to save the planet!
In 2018, mass «yellow vest» protests in France were a reaction to President Emmanuel Macron’s attempt to introduce an «eco-tax» on fuel — the French perceived it as an injustice. In the same year, protests by truck drivers in Brazil erupted for a similar reason, severely disrupting the transportation system and supply chain.
Thus, another unfortunate correlation is revealed — inequality and the environment. People in more equitable countries tend to prioritize environmental protection over economic growth.
According to the Global Peace Index, such countries are more peaceful and more inclined to cooperate for the «common good». Sweden and Norway give about 1% of their GNI to foreign aid, while the UK gives 0.5% and the US only 0.2%. The UN, however, insists on a 0.7% rate.
HOW TO BUILD A FAIR WORLD
It’s a pity Karl Marx didn’t live to see this day; otherwise, he would have given the British professors a standing ovation. Wilkinson and Pickett believe that for the purpose of global survival, the world’s politicians must figure out how to effectively limit high incomes by shifting the burden of spending to the wealthiest.
Otherwise, social harmony, healthy societies, sustainability, carbon neutrality, and good ecology can be forgotten. They recommend concluding international agreements to block all tax avoidance loopholes — a simple and easy thing to do with the current level of digitalization.
This would primarily benefit poor countries, where corporate tax evasion costs 100 billion dollars a year. This money could be used to educate an additional 124 million children and prevent 8 million maternal and infant deaths each year!
After all, according to the British human rights organization Tax Justice Network, the OECD countries are responsible for more than 2/3 of the world’s tax losses.
«THE GHOST OF COMMUNISM» RETURNS?
In addition to taxes on overconsumption, scientists suggest banning the advertising of tobacco, alcohol, gambling, and over-the-counter drugs. Also, in order to reduce inequality, tighter control must be taken over the management of large companies that dominate the global economy.
In any case, the fact that the problem of inequality in all its aspects is being discussed thoroughly and seriously by the modern scientific community makes us think about a possible and not so distant future «without capitalism».
Scientists speak so convincingly about the beneficial effect of equality on all aspects of social life that it is time to ask the following question: was humankind too hasty in dismissing the «ghost of communism» and the teachings of Marx? Of course, we can rightly point out the obvious errors in Marxist theory. But it seems that there is no way to rid mankind of the idea of a just reorganization of the world.
Original research: Why the world cannot afford the rich
