A recent book entitled, The Inner Level - How More Equal Societies Reduce Stress, Restore Sanity and Improve Everyone's Wellbeing, advances just this argument.
I was drawn to the book by reading the following article in The Guardian, Is rising inequality responsible for greater stress, anxiety and mental illness?
Here are a few extracts:
In 2009, when the world was still absorbing the shock of the previous year’s financial crisis, a book called The Spirit Level was published. Written by a couple of social epidemiologists, it argued that a whole raft of data conclusively showed that societies with greater inequality also had a range of more pronounced social problems, including higher rates of violence, murder, drug abuse, imprisonment, obesity and teenage pregnancies.
Given that naked profit motive had just taken the world to the brink of economic collapse, it was a good moment to take stock and reflect on where rising inequality was leading us. For the previous 30 years a broad consensus had operated in politics, particularly in the US and Britain, that as long as those at the bottom were being lifted by the rising tide of wealth, then it didn’t much matter that those at the top were rising much faster...
But then the crash came, it turned out that the boom and bust years were not over, and we found ourselves as ordinary taxpayers in the unjust position of bailing out the banks that had been guilty of the greatest excesses of greed and social irresponsibility. As a result austerity followed and those who suffered most from its effects were the poorest members of society...
The new book, as the subtitle suggests, focuses on the psychological or mental costs of inequality, which, they argue, are many and varied. The basic premise is that inequality creates greater social competition and divisions, which in turn foster increased social anxiety and higher stress, and thus greater incidence of mental illness, dissatisfaction and resentment. And that leads to coping strategies – drugs, alcohol, and addictive behaviours like shopping and gambling – which themselves generate further stress and anxiety.
As noted in the previous post, economic prosperity confers tremendous benefits on the 9.9 percent. The Inner Level re-enforces this observation and cites numerous studies that show comparative outcomes of people living at varying socio-economic strata.
Most alarming from my perspective as an investor, is that observation that children from poor families perform more poorly in school ... by a wide margin. This loss of potential has several implications:
- the inability to lift one's self out of poverty places a continuing and self-perpetuating burden on support programs - this is accentuated by the demands imposed by poorer physical and mental health, increased crime etc.
- the "foregone" opportunity for achievement means that children from poorer families as less able to make a contribution and add to the wealth of the nation - also to adjust to the fast-moving nature of the workplace
In the longer term, one has to question the sustainability of models which lead to these outcomes and the relative ability of nations to compete in the global marketplace.
Matters of this nature have many and complex dimensions. To date, much of the treatment in the mainstream media has characterized those who question the status quo as "left wing hand wringers". However, as the consequences of failures in the present system spread to include a wider cross-section of society, this questioning will become mainstream, viz.
In recent years, the populist cause aka "the need for change" has been hijacked by right wing ideologues but a strong countercurrent is swirling. Marxist ideology and it's political incarnation has been a disastrous failure. Perhaps it's time to give serious consideration to other approaches which provide a better quality of life to people.
In the meantime, I will continue my search for investments in societies which have a positive socio-economic trajectory. A hint on how to find them? Google terms such as "social wellbeing", "economic indices" etc.
While you and I may disagree with much of the commentary, it always pays (financially and mentally) to challenge one's preconceptions.
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