Somberly, they placed the bodies of three members of their tribe into their final resting place. Filled with over 13,000 hand-carved ivory beads and a myriad of other paleolithic treasures— this was the most elaborate of burials; reserved only for the most important members of the tribe. Inequality it seems, has been with us since the dawn of man.
Flash forward 30 millennia to modern times and wealth reports find that as few as 26 people have as much wealth as the bottom 3.5 billion people combined. Not much has changed it seems.
Now, some level of inequality is okay and dare I say — necessary. Allowing people to go forward and improve one’s own lot leads to innovation and economic growth which benefits everyone. Even in that bastion of Communism itself — China; the statesman Den Xiaoping acquiesced that in order to develop, they needed to “Let some people get rich first”. The problem, however, arises when you have too much of it — as it hurts everyone in society; not just the poor.
There are four reasons why too much inequality is bad:
#1: It impedes economic productivity
If people are able to “maximise” their contribution to the economy (either by doing the most value-adding work that they can or through successfully innovating); then the overall “productivity pie” is increased.
This, in turn, leads to more taxes being collected by the government and less money needing to be spent on propping up the bottom of society. Ergo — there are more resources available to be shared by a fewer number of people. Because not all people across social classes, genders and ethnicities have equal opportunities for education, healthcare, and well-paying jobs — their ability to contribute (and thus grow the pie) is impeded.
Regarding health in particular — it is well documented that wealthier people tend to live longer than poorer ones — with the differences being starkest (14 whole years) between the top and bottom 10%. Increasing the life expectancy for everyone allows them to contribute more to the economy for longer whilst reducing their reliance on health and welfare mechanisms.
#2: It skews democracy
Like it or not — the CEO of ExxonMobil or your garden variety billionaire (think Koch brothers) are going to wield significantly more political influence than you. This is because — beyond just raw financial power; they also have a better ability to organise and lobby politicians to support their specific interests; as well as sponsor advertising (read: propaganda) to persuade public opinion toward their favour.
Multiply this phenomenon across all the elites in the country and you will see “policy capture” whereby the will of the majority of people does not make it into law where it conflicts with the interests of the establishment.