The population of the Roman Empire grew rapidly during the first two centuries up to AD. Then came a series of deadly epidemics, known as the Antonine Plague. In Roman Egypt, for which we have contemporary data thanks to preserved papyri, real wages first fell when the population increased and then regained ground when the population collapsed. We also know that many grain fields were converted to orchards and vineyards following the plagues.
The implication is that the standard of life for common people improved — they ate less bread, more fruit, and drank wine. The gap between common people and the elites shrank. Naturally, the conditions affecting the labour supply were different in the second half of the 20th century in the US. But none of this alters the fact that an oversupply of labour tends to depress wages for the poorer section of the population.
What’s Causing Income Inequality In America? Government Policies That
And just as in Roman Egypt, the poor in the US today eat more energy-dense foods — bread, pasta, and potatoes — while the wealthy eat more fruit and drink wine. As the slice of the economic pie going to employees diminishes, the share going to employers goes up. Periods of rapid growth for top fortunes are commonly associated with stagnating incomes for the majority. Equally, when worker incomes grew in the Great Compression, top fortunes actually declined in real terms.
And so in 13th-century England, as the overall population doubles, we find landowners charging peasants higher rents and paying less in wages: the immiseration of the general populace translates into a Golden Age for the aristocrats. As the historian Christopher Dyer wrote, life was good for the upper-crust English around They drank more wine and spent their spare cash building or refurbishing castles, cathedrals, and monasteries. For example, the number of knights and esquires tripled between and But disaster struck in , when the Black Death removed the population surplus and then some.
By the 15th century, while the common people were enjoying their own Golden Age, the aristocracy had fallen on hard times. We can infer the severity of their financial straits from the amount of claret imported from France. Only the gentry drank wine, and around , England imported 20, tuns or casks of it from France per year.
By , this declined to only 5, In the midth century, there were simply fewer aristocrats and they were much poorer. In the US between around and , there was another Golden Age for the elites, appropriately called the Gilded Age. While living standards for the majority declined seen vividly in dwindling average heights and life expectancies , the moneyed classes were enjoying ever more luxurious lifestyles. And just like in 13th-century England, the total number of the wealthy was shooting up. Between and , the number of millionaires in constant dollars went from 2.
In our current cycle, the proportion of decamillionaires those whose net worth exceeds 10 million in dollars grew tenfold between and — from 0. This seems like a peculiar development. The reason for it — cheeringly enough, you might say — is that cheap labour allows many enterprising, hard-working or simply lucky members of the poorer classes to climb into the ranks of the wealthy.
In America today, enterprising and hard-working individuals start dotcom companies or claw their way into jobs as the CEOs of large corporations. On the face of it, this is a wonderful testament to merit-based upward mobility. But there are side effects. Upward mobility for a few hollows out the middle class and causes the social pyramid to become top-heavy. And then you get trouble. I n the US, there is famously a close connection between wealth and power.
Many well-off individuals — typically not the founders of great fortunes but their children and grandchildren — choose to enter politics Mitt Romney is a convenient example, though the Kennedy clan also comes to mind. Yet the number of political offices is fixed: there are only so many senators and representatives at the federal and state levels, and only one US president. As the ranks of the wealthy swell, so too do the numbers of wealthy aspirants for the finite supply of political positions.
The population of Italy roughly doubled during the second century BC, while the number of aristocrats increased even more. Again, the supply of political offices was fixed — there were places in the senate and membership was for life. By the end of the century, competition for influence had turned ugly.
When politicians consistently favor employers over workers, things get unequal very fast.
During the Gracchan period —BC , political feuding led to the slaughter of the tribunes Tiberius and Gaius on the streets of Rome. During the next century, intra-elite conflict spilt out of Rome into Italy and then into the broader Mediterranean.
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The civil wars of the first century BC, fuelled by a surplus of politically ambitious aristocrats, ultimately caused the fall of the Republic and the establishment of the Empire. Beside sheer numbers, there is a further, subtler factor that aggravates internal class rivalry.
Inequality in America’s Political Class
So far I have been talking about the elites as if they are all the same. The millionaires want to reach the level of decamillionaires, who strive to match the centimillionaires, who are trying to keep up with billionaires. The result is very intense status rivalry, expressed through conspicuous consumption. Towards the end of the Republic, Roman aristocrats competed by exhibiting works of art and massive silver decorations in their homes.
They threw extravagant banquets with peacocks from Samos, oysters from Lake Lucrino and snails from Africa, all imported at great expense. Archaeology confirms a genuine and dramatic shift towards luxury. The US political system is much more attuned to the wishes of the rich than to the aspirations of the poor.
Intra-elite competition also seems to affect the social mood. Norms of competition and extreme individualism become prevalent and norms of co-operation and collective action recede.
Social Darwinism took off during the original Gilded Age, and Ayn Rand who argued that altruism is evil has grown astonishingly popular during what we might call our Second Gilded Age. The glorification of competition and individual success in itself becomes a driver of economic inequality. By the same reasoning, those at the bottom are not deserving. As such social norms spread, it becomes increasingly easy for CEOs to justify giving themselves huge bonuses while cutting the wages of workers. Such cultural attitudes work with economic forces to widen inequality.
Labour markets are especially sensitive to cultural norms about what is fair compensation, so prevailing theories about inequality have practical consequences.
And labour markets are also strongly affected by government regulation, as the economist and Nobel laureate Joseph Stiglitz has argued. The US, as we saw, breeds strong links between wealth and politics.
Some wealthy individuals run for office themselves. Others use their money to support their favoured politicians and policies. As a result, the US political system is much more attuned to the wishes of the rich than to the aspirations of the poor. Kevin Phillips has been one of the most influential voices raised in alarm at the dangers for democracy of growing wealth disparity.
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Yet the US political system has been under the influence of wealthy elites ever since the American Revolution. In some historical periods it worked primarily for the benefit of the wealthy. In others, it pursued policies that benefited the society as a whole. Take the minimum wage, which grew during the Great Compression era and declined in real terms after The proportion of American workers who were unionised changed in a similarly cyclical fashion, as the legislative field tilted first one way then the other.
The top marginal tax rate was 68 per cent or higher before ; by it declined to 28 per cent. In one era, government policy systematically favoured the majority, while in another it favoured the narrow interests of the wealthy elites. In countries that have a universal health care system, health inequalities have been reduced. In Canada, for example, equity in the availability of health services has been improved dramatically through Medicare. People don't have to worry about how they will pay health care, or rely on emergency rooms for care, since health care is provided for the entire population.
However, inequality issues still remain. For example, not everyone has the same level of access to services. Even if everyone had the same level of access, inequalities may still remain. This is because health status is a product of more than just how much medical care people have available to them. While Medicare has equalized access to health care by removing the need for direct payments at the time of services, which improved the health of low status people, inequities in health are still prevalent in Canada.
A lack of health equity is also evident in the developing world, where the importance of equitable access to healthcare has been cited as crucial to achieving many of the Millennium Development Goals. Health inequalities can vary greatly depending on the country one is looking at. Health equity is needed in order to live a healthier and more sufficient life within society.
Inequalities in health lead to substantial effects, that is burdensome or the entire society. Inequalities in health are often associated with socioeconomic status and access to health care. Health inequities can occur when the distribution of public health services is unequal. A study by Makinen et al. Wealthier groups are also more likely to be seen by doctors and to receive medicine. There has been considerable research in recent years regarding a phenomenon known as food deserts , in which low access to fresh, healthy food in a neighborhood leads to poor consumer choices and options regarding diet.
The economies of the world have developed unevenly, historically, such that entire geographical regions were left mired in poverty and disease while others began to reduce poverty and disease on a wholesale basis. This was represented by a type of North—South divide that existed after World War II between First world , more developed , industrialized , wealthy countries and Third world countries, primarily as measured by GDP.
From around , however, through at least , the GDP gap, while still wide, appeared to be closing and, in some more rapidly developing countries , life expectancies began to rise. If we look at the Gini coefficient for world income, over time, after World War II the global Gini coefficient sat at just under.
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From around to , the global Gini increased sharply, to a peak of around. After falling and leveling off a couple of times during a period from around to , the Gini began to climb again in the mid-eighties until reaching a high or around.