Angus Deaton, who won the Nobel Prize for Economics today, is best known for his detailed work on consumption and poverty for individuals. But in his 2013 book The Great Escape: Health, Wealth, and the Origins of Inequality, Deaton made a short, compelling, and clear case for why income inequality in society as a whole is a threat to democracy — and why worrying about it isn't just class warfare or resentment:
The political equality that is required by democracy is always under threat from economic inequality, and the more extreme the economic inequality, the greater the threat to democracy. If democracy is compromised, there is a direct loss of wellbeing because people have good reason to value their ability to participate in political life, and the loss of that ability is instrumental in threatening other harm.
The very wealthy have little need for state-provided education or health care… They have even less reason to support health insurance for everyone, or to worry about the low quality of public schools that plagues much of the country. They will oppose any regulation of banks that restricts profits, even if it helps those who cannot cover their mortgages or protects the public against predatory lending, deceptive advertising, or even a repetition of the financial crash. To worry about these consequences of extreme inequality has nothing to do with being envious of the rich and everything to do with the fear that rapidly growing top incomes are a threat to the wellbeing of everyone else.
In other words, worrying about income inequality doesn't mean being jealous of wealth. It's about the effect on the rest of society when the wealthy are rich enough that they can effectively drive political outcomes so they line up with their unusual policy preferences.
(via Paul Kelleher)