Do the Rich Need the Rest?

The top 10% of Americans now make about as much as the bottom 90%. But within that group, an even smaller fraction dominates. Nobel Prize winning economist Joe Stiglitz has observed that the US is ruled by the top 1%, for the top 1%. And within that top 1%, the top tenth has been triumphant. Earning on average $5.6 million in 2008 (and at least $1.7 million), the group has seen its income rise 385% from 1970 to 2008, while earnings of the bottom 90% declined.

Worldwide, the rich are pulling away from the rest as well. Given this political reality, what kind of future is likely for the bottom 99%? Will the sort of precarious existence now common for the poor and lower-middle classes climb higher up the income ladder?

Michael Lind suggests this is likely, because so many jobs can be done by “less expensive and more deferential foreign nationals,” or prisoners. WSJ reporter Robert Frank has also observed a decoupling of destinies: “the economic fate of Richistan seems increasingly separate from the fate of the U.S.” (or any particular country).

Meanwhile, progressive thinkers like Bruce Judson, Robert Reich, and David Callahan have hoped for the rise of a conscientious superclass. In their view, any nation’s wealthy should see middle class prosperity as part of its own self-interest properly understood. Most of these thinkers hold up Germany or Sweden as models of egalitarianism that helps even those at the top. A book called “The Spirit Level” has made a complementary case, arguing that, as a statistical matter, even the richest in an unequal society tend to be less healthy and secure than those at the top of a more equal social order. (Consider, for instance, that even if you were in the oil-drilling elite of Equatorial Guinea, making $250,000 per year, you might well want to move to Sweden for a similar position paying $100,000 a year.)

I have been skeptical of the progressive “we’re all in it together” line. From a a purely economic perspective, the most efficient business structure would work labor extremely hard, not protect it too much from pollution or other occupational hazards, and deny it expensive health care when expected future productivity declined below the cost of care. The Wall Street Journal editorial page does not advance this cruel calculus as the motivation for its constant praise of developing world “efficiencies.” But any serious analysis of well-being has to begin with an effort to disaggregate competitive advantage that arises out of cheap life and overworked labor, as opposed to improved technology and better educated workers. This is rarely done among those who deign to promote globalization to its cultured despisers.

Drug Shortages and the Medical Commons

Nevertheless, I think that recent market breakdowns may help the top 1% understand the degree to which their fate—at least when they are sick—is intertwined with that of the rest of us. Kate Greenwood describes the complexity of the current drug shortage crisis, and some potential solutions:

Participants in a Drug Shortages Summit convened late last year by the American Society of Clinical Oncology and others recommended that additional legislative and regulatory reforms be explored, ranging from providing incentives to manufacturers in exchange for a guarantee that they continue producing critical drugs, to charging manufacturers fees to fund expedited FDA review of applications for permission to manufacture generic drugs, to requiring manufacturing redundancies (e.g. that more than one source for a drug’s active ingredient be identified) as a condition of approval.

The very wealthy can route around most infrastructural, educational, or health problems. In Sao Paulo, helicopters buzz past traffic jams; in the U.S., massive SUVs insulate their owners from some of the bumpiness of our crumbling roads. Prep schools provide a pricy alternative to dilapidated classrooms and demoralized teachers. Concierge primary care and specialty hospitals can be medical gated communities, oases of pampering that the wealthy can seek out when they want to flee the indignities, inefficiencies, and delay that are common in ordinary health care settings.

But it’s hard to imagine individuals, or even wealthy groups, stockpiling all drugs they might need, particularly the sterile injectables or biotech solutions that are critical to advanced medicine. Even the very wealthy must rely on a steady, more general demand for these products. They can’t just order them up for just-in-time delivery, like a Tiffany watch. Public subvention—ranging from research grants to Medicare and Medicaid funding for the products research generates—provides that demand. Cutting it by providing ever more tax breaks for the wealthy is an astonishingly short-sighted strategy, even for the richest.

Visionary elites also realize that human capital results in cures, and almost all other technological advance. So early childhood education is essential, as Nancy Folbre has argued. Hard-headed economists may be ready to categorize today’s unemployed as “zero marginal product workers,” whose demands on society’s resources need to be minimized via an apparatus of debtors’ prisons, unforgiving reputation intermediaries, and pervasive surveillance. But they should at least see children as potential contributors to our economy, and accordingly protect their health and education.

Sadly, neither of these realizations seems to have dawned upon the political elites most fiercely devoted to the top 1%’s interests. They have an elegantly short-termist vision, where holding the line on taxes trumps everything: childhood hunger, R&D, education. It is a tragic consequence of a worldview where people are more profitably controlled (or cheaply monitored) in the short run than nurtured to contribute to society as a whole in the long run.

At least when it comes to medicine, the rich do need the rest. Cuts to education will reduce our capacity to cure, though that might not be clear for a while. But cuts to basic health care finance could exacerbate drug shortages now that even the richest can’t buy their way out of, given the drugs’ long manufacturing lead time. The Croesuses pushing for austerity might end up with a Midas touch.

Image Credit: Mother Jones special on inequality.

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