Rising Wealth Inequality and NCDs

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In a recent publication titled "An economy for the 99%", Oxfam reports that eight richest men own the same amount of wealth as the poorest half of the world today. In the wake of the need to continue this discussion, we are re-posting a blog from 2015 by global equity researcher Maja Pleic on "Rising Wealth Inequality and NCDs".

To understand how disparities in health and disparities in income are related, it is necessary to debunk the myth of individual human decisions as the main determinant of both economic prosperity and ill health. Instead, individual capabilities must be understood within a system that is defined by the distribution of wealth and division of labour, which in turn determines who has access to the mechanisms of human development...

On January 19 (2015), Oxfam released a report which shows that global wealth inequality, already alarmingly high, is set to continue its rise and by next year, the richest 1% of the global population will hold as much wealth as the remaining 99% of the population. This trend is not only worrisome from the perspective of social equity, but represents a real danger for almost all aspects of human and social development and poses a serious threat to the health of our economies, democracies, education systems, health systems and the very health of all individuals on this planet.

The same day, the WHO launched the Global Status Report on Noncommunicable Diseases 2014, urging governments to take immediate action to address the epidemic of noncommunicable diseases (NCDs). According to the WHO, of the 38 million deaths due to NCDs in 2012, a staggering 42% were premature and could have been avoided with appropriate policies and responsive health systems. These two seemingly unrelated reports reflect different aspects of the same global challenge: systemic inequities in the global distribution of power and wealth and as such – access to the mechanisms for human development: education, employment, healthcare, and the very right to life itself.

To understand how disparities in health and disparities in income are related, it is necessary to debunk the myth of individual human decisions as the main determinant of both economic prosperity and ill health. Instead, individual capabilities must be understood within a system that is defined by the distribution of wealth and division of labour, which in turn determines who has access to the mechanisms of human development, including nutritious food, safe drinking water, quality health care and medicine, and education.

In the case of wealth distribution, the neoliberal viewpoint, with its roots in the Protestant work ethic, has long held that skills and hard work are justly rewarded through the economic system. Thus, anyone who wants to improve their lot in life can climb the socio-economic ladder by making the right decisions: investing in their health and education, working long hours and developing unique skills that are richly rewarded in the market place. This is the American Dream of social mobility aspired to by billions around the world. The implicit conclusion is that those with wealth and power are reaping the rewards of their hard work or the hard work of their ancestors, and those stuck in poverty have simply made the wrong decision or have not worked hard enough.

While it is alluring, especially for those in power, to view the distribution of wealth as the socio-economic equivalent of Darwin’s survival of the fittest, the reality is that humans are less like lions and gazelles, competing for survival relying only on their individual strength and wits, and more like bees and ants working collectively in a system of inter-dependant survival. In fact, our success as a species and the rise of civilization itself is based on systems of division of labour. The systems we have created throughout history have divided the labour and the spoils of labour to varying degrees of equity. Importantly, access to information, education, health care and medicine, food and water go hand in hand, with the division of labour and distribution of wealth.

On one end of the spectrum, slavery and conquest were systems based on an exploitative division of labour and resources, such that one group, the slaves, did all of the work; and another group, the slave-owners, reaped all of the wealth created by that work through violent oppression. Similarly, the conquests of colonial Europe appropriated wealth for the elite few in the capitals of Europe from the labour and resources of the colonized masses, again through violent oppression. In these rigid systems of exploitation, one’s socio-economic position and share of the wealth were determined at birth, with no room for individual agency over one’s life, health or prosperity. There is little doubt that the most exploitative systems in history created the greatest concentrations of wealth. What is also clear is that by necessity, these systems could only be developed and maintained through the violent oppression of the human capabilities of the masses, which required denying access to education, health care, and skills development to the majority of the population.

On the other end of the spectrum are the socio-economic systems embodied by the ‘welfare state’ that emerged in post-WWII Europe and North America. From the ravages of war sprang forth unprecedented social solidarity and the idealization on a global scale of the rights of man –to life, liberty, security of the person, justly remunerated work, and social security, among others.

National health systems, social security, universal education, unemployment insurance, heavy state investment in infrastructure, and strict banking regulations imposed during the Great Recession all worked together to create an economic system that fostered social mobility and gave large segments of the population access to the mechanisms of human development: education, health care, skills development, and financially rewarding employment.

As a result, global and national wealth inequality declined and the middle classes in North America and Europe swelled as taxes were levied on the rich, and opportunities made available for the masses through the welfare state. The period 1950 to 1970 was accompanied by the greatest growth rates in per capita income seen since as far back as we can estimate. Unsurprisingly, this economic boom went hand in hand with a rise in living standards, life expectancy and health status. It is not that individuals all of a sudden were making better choices about their health, it is that for the first time, large segments of the population had access to nutritious food, decent health care and medicines, health education, and to justly remunerated employment. This era is now fondly remembered as the ‘golden age’ of capitalism.

The 1970s can be seen as marking the beginnings of a new global system of neoliberal globalization defined by financial deregulation, declines in effective tax rates on capital gains and the richest 1% in North America and Europe, the decline of the welfare state and the globalization of the production process. As the effective tax rates on the wealthy declined so too did the welfare state with consequences for accessibility to health, education, and rewarding employment. The new division of labour was represented by a ‘race to the bottom’ as Western companies took advantage of lower wages and lax labour and environmental standards in low and middle-income countries (LMICs), forcing LMICs to compete against one another to attract much-needed capital, and resulting in the steep decline of unions and labour shares in high-income countries. As the bulk of production shifted to the global periphery where wages are lowest and exploitation is permissible, labourers in Western countries have seen their wages stagnate or decline, labour unions disbanded, and the middle class shrink. At the same time, we have seen the rise of ‘fast food’ – high-calorie, low nutrition, highly-processed cheap food aimed at low-income populations.

The decline of the welfare state and the rise of exploitative global production practices have resulted in a higher concentration of wealth in the hands of the few, and the decline of the middle class and opportunities for social mobility for the masses. In Western Europe and Canada, the commitment to universal health insurance and universally accessible education remains strong, although threatened. Meanwhile, in the US, the costs of a post-secondary education have soared and despite the passing of the Affordable Care Act, access to quality healthcare remains a function of income.

Hence, when the WHO reports that 16 million people die prematurely each year from NCDs, this figure must be understood within the global economic system which is defined by the concentration of wealth and the division of labour, and in turn determines who has access to nutritious foods, safe drinking water, health information and education, quality healthcare and medicines, and a safe working environment. Furthermore, in order to address this global epidemic, we have to decide as nations and as a global community what kind of system we would like to live in.

Unless policies are implemented globally to reverse the rising concentration of wealth, the welfare states in Western countries cannot be sustained, never mind exported to LMICs where they are badly needed. Universal health insurance is not possible without a middle class and the taxes to pay for it, and addressing chronic non-communicable disease in the long-run is not feasible without universal health insurance.

Hence, we are faced with the decision of continuing down the road we are currently on and returning to a time where only the very rich can afford the most nutritious food, quality healthcare and education and where social mobility is restricted; or else, implementing policies to reverse the concentration of wealth, re-investing in the welfare state and reinvigorate the middle class. If the global community collectively increased taxes on the top 1% of earners and capital gains, closed tax loopholes and tax havens, and invested in infrastructure, education, universal health insurance and social programs, we could expand access to the mechanisms of human development globally and usher in a new golden era of human progress. President Obama’s recent proposal to raise taxes for the wealthiest Americans is a sign of hope and welcome first step in this direction of equal opportunity and shared prosperity.

 

Sources:

  • Diamond J. Collapsehow societies choose to fail or succeed. New York: Penguin Books, 2005. United Nations.

  • The Universal Declaration of Human Rights. 1948. http://www.un.org/en/documents/udhr

  • Piketty T. Capital in the Twenty-First Century. Cambridge: Belknap Press of Harvard University, 2014.

  • Image: O'Brien T. Gap between rich and poor is widening. The Irish Times, 2013. http://www.irishtimes.com/news/social-affairs/gap-between-rich-and-poor-is-widening-1.1613830

About Maja Pleic

Chief Economist and Public Policy Expert

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Rising Wealth Inequality and NCDs
Rising Wealth Inequality and NCDs
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