According to the 1870 federal census, one percent of the people owned 72 percent of all the wealth in the great industrial city of Pittsburgh.  What’s more, just half of these wealthiest one percent (0.5% of the population) owned 59 percent, well more than half of all the wealth in historic Pittsburgh.  In fact, all of the net wealth in the city was held by just ten percent of the city’s population.  Simply put, the top ten wealthiest people in Pittsburgh owned nearly fifteen percent of the city that was at the time the heart of the nation’s growing industrial might.

There are those who have more than others.  True then and true now.  According to the World Institute for Development Economics Research, the wealthiest two percent of people globally own more than half of all the household wealth on the planet.  Half of those (just 1%) own more than 40% of global assets, while fully 85% of those global assets are held by the wealthiest top ten percent of us.  Within the United States, a similarly unequal distribution of wealth continues to exist.  The wealthiest 400 Americans (.001% or one thousandth of the population) own about 2.5% of U.S. wealth.  The wealthiest ten percent of Americans own 70% of the wealth in this country, and the top tenth of those (1% of U.S. population) hold 35% of the nation’s wealth.  In the dry language of the Census Bureau, this wealth inequality is described like this:

The distribution of wealth in the United States has a large positive skew, with relatively few households holding a large proportion of the wealth.

While it’s true that there is more economic equality within the United States today than there was in late nineteenth century Pittsburgh, and inequality within the United States is less than the inequality between the world’s wealthiest and the planet’s poorest, it remains staggeringly unequal.  Among developed nations, only Switzerland bests the United States in the percent of a nation’s wealth owned by the wealthiest ten percent of the population with its top ten percent owning 71% of Swiss wealth.  In the UK, the top ten percent own 56%, and in neighboring Canada, the top ten percent own 53% of the country’s wealth.

We read about the staggering fortunes of the most wealthy among us every year about this time when Forbes magazine releases its annual Forbes list of the wealthiest people in the world.  The global news media trumpets the jostling transitions of those at the top.  Headlines blare:

Gates Edged Out as World’s Richest Man

and

Mexico’s Slim a Born Wheeler and Dealer

and

Meet the World’s New Richest Man

As interesting and insightful as these facts about the wealthiest among us, what about those at the lower end of the ladder?  What about the 85% of the 1870 population in Pittsburgh that had no net worth, or the 80% of contemporary Americans who own only 15% of the wealth in the country, or indeed about the 50% of the global population who own less than 1% of its wealth?

The Insight Center for Community Economic Development recently released a report that examines the net worth of those 85% of Americans with less wealth combined than the top quintile of Americans.   By examining the 2007 Survey of Consumer Finances, they found that African-American women in the United States during their prime working years between 36 and 49 have a median net worth of only $5.  Yes, that’s right.  The 36-49 year old African-American woman at the very middle of the distribution from the poorest to the wealthiest of 36-49 year old African-American women has a net worth of less than the cost of a Venti Frappuccino at Starbucks.  While half have more wealth than that, half have even less.

Reports like these almost never make the news, although my hometown Pittsburgh Post-Gazette newspaper’s Tim Grant did write about it :

In a groundbreaking report released Monday by a leading economic research group, social scientists turned a spotlight on the grave financial challenges facing an often overlooked group of women, many of whom could not take an unpaid sick day or repair a major appliance without going into debt.

“The popular image is they spend too much, which is the reason they are running up credit card and consumer debt, but the cost of living has risen faster than income, and they need to go into debt for basic daily necessities,” Ms. Lui said. “It’s compounded because unemployment is twice as high in the black community than it is in the white community.”

For all working-age black women 18 to 64, the financial picture is bleak. Their median household wealth is only $100. Hispanic women in that age group have a median wealth of $120.

There aren’t more mainstream media stories written about reports like these that call out the staggering inequality in America, because they make everyone feel badly.  Who wants that?

In fact, recent research suggests that, whether we read about it in the news or not, we do badly, all of us, because of it.  Epidemiologists Richard Wilkinson and Kate Pickett show in a well-reviewed work that all sorts of woes from social ills like drugs and violence to health problems like obesity and mental illness affect everyone in highly unequal societies more than those in less unequal societies.

Figure 1: Income inequality is the ratio of the wealth of the top 20% compared to the lowest 20% in each country. Health and social problems is an index of mental illness, trust, life expectancy, infant mortality, obesity, educational performance, teenage birth, homicide, imprisonment, and social mobility.

The chart in Figure 1 shows that there is a very clear relationship between social and health problems in a country and the extent of economic inequality within that country.  In Canada, for instance, where the top ten percent own 53% of the country’s wealth, health and social problems are significantly lower than in the United States where the top ten percent own 70% of the country’s wealth.  In Norway, where the top 10 percent hold a still substantial but lower 50% of the country’s wealth, social and health problems are lower still.  Even more importantly, however, is that the distribution of wealth in countries like the UK, Canada, and Norway is not only less concentrated at the top of the scale, it is also less diluted at the bottom end of the scale through strong social safety nets.

Figure 2: There is no relationship between a nation's wealth and social and health problems.

Further, what isn’t  indicative of fewer social and health problems is more wealth.  Figure 2 shows this same index of social and health problems plotted against national income per person.  As you can see, there is no relationship between the wealth of a nation and the social and health problems of its people, while there is a strong relationship between the extent of economic inequality within a nation and the social and health problems there.  As you can see from Figure 2, the United States clearly has the most wealth and the most health and social problems.  Portugal, on the other hand, is not far behind in the index of health and social problems in second place, but has the lowest national income per person.  What Portugal does share with the United States, as seen back in Figure 1, is a very high degree of economic inequality.  Norway, however, has the second highest amount of national income per person and yet ranks third lowest on the index of social and health problems.  Unsurprisingly, Norway also has the third lowest extent of income inequality as seen in Figure 1.  Clearly, there is no relationship between the wealth of a nation and the social and health problems of its people.  Just as clearly, there is a strong relationship between economic inequality in a country and the amount of health and social problems occurring there.

Figure 3: National mental illness rates and income inequality are related

This relationship is also apparent for the individual components like mental health of the social and health index.  Once again, Figure 3 shows the United States leading the pack in both income inequality and this time in the percent of its population with mental illness.  Countries like Belgium with significantly lower income inequality or Japan with the lowest extent of inequality both rank near or at the bottom of the scale for the percent of their population with mental health problems.

Is there some sort of confounding variable present in seemingly disparate countries like Belgium and Japan that isn’t present in the United States and Portugal that could possibly explain these disparities better than economic inequality could?  Is there, as they say, something in the water?  If so, there is no evidence to support that or anything else.  There is, however, this strong evidence that economic inequality does significantly impact the extent of social and health problems in a society.

Why is this? Why does economic inequality make everyone in a society do worse than they would otherwise?  What are the mechanisms by which inequality drives social and health problems?  Wilkinson and Pickett suggest three of them based on documented scientific insights.

First, humans are by nature cooperative.  Of course, we aren’t always cooperative, and some of us are more cooperative than others.  Nevertheless, we are as a species far more cooperative than others and a comparison with our closest relatives highlights just how cooperative we naturally are.

Consider the gestural point.  Sticking your index finger out and perhaps extending your arm towards a distant object is universally understood by humans from a very early age to signify that the person pointing is pointing at something that he or she wants the other person to notice.  Everyone knows this “Hey, look at that delicous cake” meaning of pointing, including, interestingly, your dog.  I can point to the piece of toast that my daughter has dropped on the kitchen floor, and my dog will easily understand that this means that I’m pointing to food that she can eat.  But no other species besides our dogs and ourselves know that that is what we are communicating when we point like that.  If you were to point like that to a chimpanzee, maybe by pointing towards a bunch of bananas in your grocery store bag, the chimpanzee would not understand what you meant.

This has nothing to do with prior training, but instead has to do with the fact that chimpanzees and other non-human primates are not cooperative.  The chimpanzee would not realize that there were those bananas in that bag until you began to grab them yourself.  In order to understand the declarative pointing gesture, you must first be able to assume that the pointer is trying to cooperate rather than compete with you.  Your dog gets this.  An infant human already knows this, but a non-human primate will never understand this.

Figure 4: Trusting others and income inequality are inversely related.

Humans (and our best friends) are uniquely cooperative.  As Naomi Eisenberger and Matthew Lieberman’s recent research at UCLA has shown, when we experience social exclusion, the same neural network is activated in our brains that is activated by physical pain.  Broken hearts and hurt feelings are real social forms of pain to humans.  Unequal societies have more of this social pain, less social support, and, as Figure 4 shows, less of that cooperative trust than more equal societies.

Secondly, even though we are considerably cooperative, we are also quite social.  Like other primates, we strive for status and part of us would relish being top dog.  We measure our own standing against that of others.  Consider that all of the graphs and discussion of the distribution of wealth in societies just in this article alone are essentially all ways of measuring people against one another socially.

Our self-esteem is linked to the ways in which other people rank and measure us.  We’d all like to be so self-assured that winning and losing didn’t matter, but the reality is that these things matter a great deal to all of us.  It’s part of life as a human.  Over two hundred scientific experiments have been conducted on the amounts that levels of cortisol, one of the primary stress hormones, rise in response to specific stressors, and it has been found by Sally Dickerson and Margaret Kearney at UCLA that performance judgements that threaten our social status or self-esteem and over which performance we have little or no control, such as running late to an important sales meeting but being stuck in traffic, “provoked larger and more reliable cortisol” than any other kind of stress.  We’ve all been in situations in which our performance was important, but no matter how hard we tried, we could never measure up.  These are stressful situations while we’re experiencing them, and afterwards often become depressing memories we’d rather not remember.

As Robert Sapolsky’s and many others’ research has shown, these high cortisol levels from psychological stress take an enormous toll on our bodies.  Elevated cortisol levels raise blood sugar and blood pressure.  While under the psychological stress of avoiding being eaten by a big stalking lion on the African savanna, these physiological changes are highly adaptive, enabling us to run faster and jump higher.  While sitting at a desk in an office worrying about taxes or retirement, these elevated cortisol levels lead to obesity and heart disease.

Quite simply, we want to be as good as those around us, and when we can’t, it stresses us out, which leads to a whole host of social and health problems from early onset puberty to drug use to violence to mental illness, several of which, because cortisol passes through the placental barrier, are passed on from mothers to children in utero.

Of course, we employ strategies like working hard to reach the top of the social ladder or at least avoid the bottom rungs.  Consequently, as several studies have shown, people work longer hours in more unequal societies.  We also know that, whether through birth, skin color, or simple luck, sheer hard work does not always correspond well to economic success or social status.  Does the Wall Street banker or Hilton heiress work harder than the Midwestern roofer?  People in more unequal societies also tend to borrow more on credit than those in more equal societies as an alternative strategy to keep up with the Joneses.  That keeping up is a whole lot easier when the Joneses of society are more rather than less like us.

Figure 5: There is a strong relationship between teen pregnancy and economic inequality.

Thirdly, Jay Belsky of Penn State, Laurence Steinberg of Temple, and Patricia Draper of Penn State found that when people learn as children that others are “opportunistic and self-serving and [that] resources are scarce and/or unpredictable,” they reach puberty earlier, become sexually active earlier, form more short-term relationships, and make less of an investment in their own parenting.  By contrast, those who learn as children that “others are trustworthy, relationships are enduring and mutually rewarding and resources [are] more or less constantly available” reach puberty later, defer sexual activity longer, form more long-term relationships, and make a greater investment in their own parenting.  As seen in Figure 5, a comparison of teen pregnancy rates across countries with more or less economic inequality bears this out.

All of the social and health problems that comprise Wilkinson and Pickett’s social and health index are certainly well-known and much-discussed topics in the United States.  It certainly isn’t an issue of a lack of awareness of these problems.  Rather, as Wilkinson and Pickett state:

Every problem is seen as needing its own solution — unrelated to others.  People are encouraged to take exercise, not to have unprotected sex, to say no to drugs, to try to relax, to sort-out their work-life balance, and to give their children ‘quality’ time.  The only thing that many of these policies do have in common is that they often seem to be based on the belief that the poor need to be taught to be more sensible.  The glaringly obvious fact that these problems have common roots in inequality and relative depravation disappears from view.

Throughout the late nineteenth and early twentieth centuries, Pittsburgh was filled with advice on how the grinding poverty, high crime, and excessive mortality experienced by the majority of the city’s residents could be cured by stopping the idleness of its working classes and teaching them self-improvement.  They had filthy habits, played too much baseball, and drank too much beer.  Instead, they should, reformers insisted, strive for refinement and betterment through walks across green fields, literature reading, and art appreciation.  So, Andrew Carnegie and others in the top one-half of one percent of Pittsburgh’s wealthiest built libraries, museums, and garden parks for those toiling for pennies in their mills and foundries twelve hours a day seven days a week.

Pittsburgh’s wonderful public libraries, stunning museums, and beautiful city parks are indeed valuable additions to civic life in the city.  Yet, we also know that the root of many of these social and health problems lies not in a lack of refinement and beauty, but in a lack of equality.  There are those who have more than others.  True then, true now, and likely to be true throughout our future.  However, it is not the existence of a gap between the richest and the poorest that appears to matter most, it is the extent to which that gap gapes that affects us all.  Certainly, much more could and should be done to make life more secure and less stressful for those on the bottom, because doing so would benefit us all.

Hillary Clinton Marches in the 2008 St. Patrick's Day Parade in Pittsburgh on March 15th, 2008. Photo by Matthew David Carter.

On March 15, 2008 Hillary Clinton walked in Pittsburgh’s St. Patrick’s Day Parade.  Throughout the latter half of March and most all of April she was waging an intense campaign throughout Pennsylvania to win the commwealth’s Democratic delegates in her bid for the Democratic Party’s Presidential nominee.  She marched the parade route surrounded by local polititians like Mayor Luke Ravenstahl and Allegheny County Executive Dan Onorato and a phalanx of Secret Service officers, but she was preceded by a small army of local supporters, one of whom is pictured below.  This particular supporter was gesturing angrily at an Obama-supporting couple standing next to me.

Hillary Clinton Marches in the 2008 St. Patrick's Day Parade in Pittsburgh on March 15, 2008. From left to right: Allegheny County Executive Dan Onorato, Senator Hillary Clinton, and Mayor Luke Ravenstahl. Photo by Matthew David Carter.

The St. Patrick’s Day Parade in Pittsburgh is one of the largest in America.

Hillary Clinton for Democratic Presidential Nominee supporter marching in the 2008 St. Patrick's Day Parade in Pittsburgh, PA 15 March 2008. Photo by Matthew David Carter.

Trampled Obama Campaign Sign Following St. Patrick's Day Parade March 15, 2008 in Pittsburgh, PA. Photo by Matthew David Carter.

On March 15, 2008 I photographed the St. Patrick’s Day parade in Pittsburgh.  This large annual parade in Pittsburgh is one of the largest in the country, and this year it fell in the midst of a Democratic primary for President in Pennsylvania that was surprisingly unsettled by this point.  Both the Clnton and Obama campaigns were out in force among the crowd during the parade.  In fact, Senator Hillary Clinton walked in the parade.  These green O’bama campaign signs were being handed out and waved about by very sincere young campaign volunteers.  This one was left on the sidewalk where it was walked on by revelers leaving the morning parade.

Outsourced to James Kwak of the excellent Baseline Scenario blog who writes that Yves Smith in ECONned :

describes how trading in CDOs built out of mortgage-backed securities drove mortgage lending, and not the other way around. In the conventional account, unscrupulous lenders and investment banks were the creators of those toxic assets; in Smith’s account, at the peak in 2006, it was traders who were shorting the housing market who provided the equity that funded all those subprime mortgages.

But there’s another point that Smith makes that I found particularly memorable. She tells the fictional story of XCrop, a new, bioengineered food that is nutritionally complete and cheap to produce — a solution to malnutrition and obesity all in one. But twenty years after becoming popular, and after having become the mainstay of the food system (replacing today’s current staples), XCrop is found to have serious harmful effects on human health. Shifting back to today’s foods would be healthier, but it would be difficult and expensive.

Recent financial technology, Smith says, is like XCrop. The point she is making is that our policy objective should not be to get us back to the good old days of cheap mortgages and widespread securitization as quickly as possible so we can return to the outsized consumption of the past decade. We need to have a healthier financial system, and to get there we have to give up the wonder food that turned out to be so harmful to the economy. Instead, however, Smith argues that much of the government has been captured by the financial services industry — the inventors and manufacturers of XCrop. And so, at the end of the day, and despite the central role that free market economic orthodoxy played in producing the crisis, the problem we face is ultimately one of politics. (emphasis mine)

Well, some jokesters did and created a fake New York Times website complete with articles.

Headlines include such gems as:

“National Health Insurance Act Passes”

“Nation Sets Its Sites on Building a Sane Economy”

and

“Troops to Return Immediately”

After living through sixteen years of two Presidents’ terms, the Baby Boomer generation appears to have run its Presidential course. When Obama, on his way over to Grant Park for his election night event, emailed his millions of plugged-in supporters, he wrote “We just made history.”

As Damien Cave noted:

With that simple “we” in millions of in-boxes, the post-baby-boomer era seems to have begun. The endless “us versus them” battles of the ’60s, over Vietnam, abortion, race and gender, at least for a moment last week, seemed as out-of-touch as a rotary phone. Of course, that was Mr. Obama’s goal. In his book, “The Audacity of Hope,” he was explicit in his desire to move beyond “the psychodrama of the Baby Boom generation — a tale rooted in old grudges and revenge plots hatched on a handful of college campuses long ago.”

With an emphasis on consensus, communication, and cooperation, Generation O believes in teams and plans. It openly embraces diversity, meritocracy, and goal-driven achievement.

They saw in Mr. Obama, 47, who was born at the tail end of the baby boom era, the values that sociologists and cultural critics ascribe to them.

Government under Mr. Obama, they believe, would value personal disclosure and transparency in the mode of social-networking sites. Teamwork would be in fashion, along with a strict meritocracy.

Will this mobilization through meetups and social networks endure the slogging messiness of federal politics? Only time will tell, but, as the GOP learned during this election, they count Generation O out at their peril.

Will the rise of this well-informed and politically active generation of young people, and their candidate, be able to overcome the divisions inherent in the cultural fabric of the Baby Boomer? Are Boomers comfortable with the tech-heavy consensus-based ideals of Generation O?

Many baby boomers are unlikely to be comfortable with this generation’s technological boosterism and ease with blurred identities and mixed ethnicities. Peter Wolson, a psychoanalyst and former dean of the Los Angeles of Institute and Society for Psychoanalytic Studies, said the crucible of the 1960s helped give baby boomers a deep suspicion of “the other.” Their world was bifurcated: pro-war versus antiwar; communist versus capitalist.

Perhaps, with the sun now setting on Presidential fortunes of the Baby Boomer Generation, a more appropriate question to ask is whether Generation O will be comfortable with its youthful ideals as they age. Given the emphasis on transparency and social networking with Generation O, I am certain that whatever the answer, we will in time have it.

From TAPPED:

There’s been lots of discussion during the past week about the future of conservatism. David Brooks and First Read consider the topic today. In short, the GOP can’t continue to appeal primarily to less educated, Southern, rural, and racist voters in an age of increasing education levels, diversity, tolerance, and migration back into cities and close-in suburbs. What’s the solution?

When looking at the history of whiteness and the creation of ethnicity in this country, the short answer to this question of whether the GOP will consider Latinos white is a resoundingly blunt “No.” For a good reference to this history, I’d recommend the book Working Towards Whiteness by the historian David Roediger.

Again, Dana Goldstein:

In our round table discussion on identity politics and the election, Brentin Mock, Adam Serwer, and I agree that one possibility is conservatives cutting loose the nativist right and embracing Latinos as “white.” Many Latino immigrants already consider themselves white, in part because of different racial attitudes in their home countries. And an appeal to these voters’ religiosity and social conservatism could, as Karl Rove and George W. Bush intended, eventually woo them back into a GOP that stops demagoguing on immigration, but continues to evince enough discomfort with African Americans and secular culture to hold onto the white Southern base. Here’s how Adam puts it:

Serwer: I think the studies showing changing demographics obscure the fact that most Latinos identify as white. So one of two things will happen: The GOP will continue to marginalize itself with hostility to Latinos, or it will redefine whiteness to include many of them. I’m betting on the latter.

Yes, Latinos tend to think of themselves as white, but the self-perception of Latinos is not what will determine their ultimate adoption within whiteness in America. After all, Irish and Italian immigrants during the early 20th century also thought of themselves as white and European.

And yet, they were not adopted into the white mainstream until much later, only after they dropped their cultural distinctiveness from their public lives, deciding to remain Italian, for instance, only at home. It was only then that they had a chance at whiteness, but even then a new term — ethnic — had to be appropriated to describe their peripheral whiteness.

Latinos on the whole do not now appear to be interested in dropping their cultural distinctiveness, and what writers like David Brooks and Adam Serwer seem to forget is that it took from the early twentieth century until the 70s for white ethnics/the “new immigrants” to become Reagan Democrats. It took decades of housing choices and intergenerational mobility for that transformation to full-fledged participation in the GOP’s white base to occur.

Will the GOP suddenly embrace these Catholic brown-skinned Spanish speakers in a rational realization that our country’s demographics are working against them? If history is a guide, Obama and the Democratic Party shouldn’t worry too much about that happening anytime soon.

The biggest political news story of the day:

President-elect Obama’s advisers are quietly crafting a proposal to ship dozens, if not hundreds, of imprisoned terrorism suspects to the United States to face criminal trials, a plan that would make good on his promise to close the Guantanamo Bay prison but could require creation of a controversial new system of justice.

Liberal economist (and Nobel winner) Paul Krugman states his case that the “center-right nation” meme is a canard:

Did progressives get a mandate from last week’s election? Lots of people would like to claim that they didn’t — that we’re still a “center-right nation.” And one of the assertions you hear to back that claim is that Obama’s victory wasn’t matched by down-ticket Democratic success.

Except it’s not true: down-ticket Democrats actually did even better than Obama. The Dem share of the House vote, in particular, was higher than Obama’s share of the Prez vote.

…

Maybe the reason people don’t see this is that the Democratic House gains were spread over two elections. But combining 2006 and 2008, what we’ve seen is a “Democratic revolution” substantially bigger than the “Republican revolution” of 1994.

An email to Obama supporters:

Matthew –

I’m about to head to Grant Park to talk to everyone gathered there, but I wanted to write to you first.

We just made history.

And I don’t want you to forget how we did it.

You made history every single day during this campaign — every day you knocked on doors, made a donation, or talked to your family, friends, and neighbors about why you believe it’s time for change.

I want to thank all of you who gave your time, talent, and passion to this campaign.

We have a lot of work to do to get our country back on track, and I’ll be in touch soon about what comes next.

But I want to be very clear about one thing…

All of this happened because of you.

Thank you,

Barack