Why the world cannot afford the rich

From Nature

As environmental, social and humanitarian crises escalate, the world can no longer afford two things: first, the costs of economic inequality; and second, the rich. Between 2020 and 2022, the world’s most affluent 1% of people captured nearly twice as much of the new global wealth created as did the other 99% of individuals put together1, and in 2019 they emitted as much carbon dioxide as the poorest two-thirds of humanity2. In the decade to 2022, the world’s billionaires more than doubled their wealth, to almost US$12 trillion.

The evidence gathered by social epidemiologists, including us, shows that large differences in income are a powerful social stressor that is increasingly rendering societies dysfunctional. For example, bigger gaps between rich and poor are accompanied by higher rates of homicide and imprisonment. They also correspond to more infant mortality, obesity, drug abuse and COVID-19 deaths, as well as higher rates of teenage pregnancy and lower levels of child well-being, social mobility and public trust3,4. The homicide rate in the United States — the most unequal Western democracy — is more than 11 times that in Norway (see go.nature.com/49fuujr). Imprisonment rates are ten times as high, and infant mortality and obesity rates twice as high.

These problems don’t just hit the poorest individuals, although the poorest are most badly affected. Even affluent people would enjoy a better quality of life if they lived in a country with a more equal distribution of wealth, similar to a Scandinavian nation. They might see improvements in their mental health and have a reduced chance of becoming victims of violence; their children might do better at school and be less likely to take dangerous drugs.

The costs of inequality are also excruciatingly high for governments. For example, the Equality Trust, a charity based in London (of which we are patrons and co-founders), estimated that the United Kingdom alone could save more than £100 billion ($126 billion) per year if it reduced its inequalities to the average of those in the five countries in the Organisation for Economic Co-operation and Development (OECD) that have the smallest income differentials — Denmark, Finland, Belgium, Norway and the Netherlands5. And that is considering just four areas: greater number of years lived in full health, better mental health, reduced homicide rates and lower imprisonment rates.

Many commentators have drawn attention to the environmental need to limit economic growth and instead prioritize sustainability and well-being6,7. Here we argue that tackling inequality is the foremost task of that transformation. Greater equality will reduce unhealthy and excess consumption, and will increase the solidarity and cohesion that are needed to make societies more adaptable in the face of climate and other emergencies.

The underlying reasons for inequality having such profound and wide-ranging impacts are psychosocial. By accentuating differences in status and social class — for example, through the type of car someone drives, their clothing or where they live — inequality increases feelings of superiority and of inferiority. The view that some people are worth more than others can undermine people’s confidence and feelings of self-worth8. And, as studies of cortisol responses show, worry about how others see us is a powerful stressor9.

Rates of ‘status anxiety’ have been found to be increased in all income groups in more-unequal societies10. Chronic stress has well-documented effects on mortality — it can double death rates11. Health-related behaviours are also affected by stress. Diet, exercise and smoking all show social gradients, but people are least likely to adopt healthy lifestyles when they feel stressed.

Violence and bullying are also linked to competition for social status. Aggression is frequently triggered by disrespect, humiliation and loss of face. Bullying among schoolchildren is around six times as common in more-unequal countries12. In the United States, homicide rates were five times as high in states with higher levels of inequality as in those with a more even distribution of wealth13.

Inequality also increases consumerism. Perceived links between wealth and self-worth drive people to buy goods associated with high social status and thus enhance how they appear to others — as US economist Thorstein Veblen set out more than a century ago in his book The Theory of the Leisure Class (1899). Studies show that people who live in more-unequal societies spend more on status goods14.

Our work has shown that the amount spent on advertising as a proportion of gross domestic product is higher in countries with greater inequality. The well-publicized lifestyles of the rich promote standards and ways of living that others seek to emulate, triggering cascades of expenditure for holiday homes, swimming pools, travel, clothes and expensive cars.

Oxfam reports that, on average, each of the richest 1% of people in the world produces 100 times the emissions of the average person in the poorest half of the world’s population15. That is the scale of the injustice. As poorer countries raise their material standards, the rich will have to lower theirs.

Inequality also makes it harder to implement environmental policies. Changes are resisted if people feel that the burden is not being shared fairly. For example, in 2018, the gilets jaunes (yellow vests) protests erupted across France in response to President Emmanuel Macron’s attempt to implement an ‘eco-tax’ on fuel by adding a few percentage points to pump prices. The proposed tax was seen widely as unfair — particularly for the rural poor, for whom diesel and petrol are necessities. By 2019, the government had dropped the idea. Similarly, Brazilian truck drivers protested against rises in fuel tax in 2018, disrupting roads and supply chains.

Do unequal societies perform worse when it comes to the environment, then? Yes. For rich, developed countries for which data were available, we found a strong correlation between levels of equality and a score on an index we created of performance in five environmental areas: air pollution; recycling of waste materials; the carbon emissions of the rich; progress towards the United Nations Sustainable Development Goals; and international cooperation (UN treaties ratified and avoidance of unilateral coercive measures).

That correlation clearly holds when social and health problems are also factored in (see ‘Unequal outcomes’). To show this, we combined our environmental performance index with another that we developed previously that considers ten health and social problems: infant mortality, life expectancy, mental illness, obesity, educational attainment, teenage births, homicides, imprisonment, social mobility and trust. There’s a clear trend, with more-unequal societies having worse scores.

Other studies have also shown that more-equal societies are more cohesive, with higher levels of trust and participation in local groups16. And, compared with less-equal rich countries, another 10–20% of the populations of more-equal countries think that environmental protection should be prioritized over economic growth17. More-equal societies also perform better on the Global Peace Index (which ranks states on their levels of peacefulness), and provide more foreign aid. The UN target is for countries to spend 0.7% of their gross national income (GNI) on foreign aid; Sweden and Norway each give around 1% of their GNI, whereas the United Kingdom gives 0.5% and the United States only 0.2%.

The scientific evidence is stark that reducing inequality is a fundamental precondition for addressing the environmental, health and social crises the world is facing. It’s essential that policymakers act quickly to reverse decades of rising inequality and curb the highest incomes.

First, governments should choose progressive forms of taxation, which shift economic burdens from people with low incomes to those with high earnings, to reduce inequality and to pay for the infrastructure that the world needs to transition to carbon neutrality and sustainability. Although governments might baulk at this suggestion, there’s plenty of headroom. For example, tax rates on the highest incomes in the United States were well above 70% for about half of the twentieth century — much higher than today’s top rate of 37%. To shore up public support, governments need to make a strong case that the whole of society should contribute to funding the clean energy transition and good health.

International agreements to close tax havens and loopholes must be made. Corporate tax avoidance is estimated to cost poor countries $100 billion per year — enough to educate an extra 124 million children and prevent perhaps 8 million maternal and infant deaths annually. OECD member countries are responsible for more than two-thirds of these tax losses, according to the Tax Justice Network, an advocacy group in Bristol, UK. The OECD estimates that low- or middle-income countries lose three times as much to tax havens as they receive in foreign aid.

Although not yet tried, the merits of a consumption tax — calculated on the basis of personal income minus savings — to restrain consumption should also be considered. Unlike value-added and sales taxes, such a tax could be made very progressive. Bans on advertising tobacco, alcohol, gambling and prescription drugs are common internationally, but taxes to restrict advertising more generally would help to reduce consumption. Energy costs might also be made progressive by charging more per unit at higher levels of consumption.

Legislation and incentives will also be needed to ensure that large companies — which dominate the global economy — are run more fairly. For example, business practices such as employee ownership, representation on company boards and share ownership, as well as mutuals and cooperatives, tend to reduce the scale of income and wealth inequality. In contrast to the 200:1 ratio reported by one analyst for the top to the bottom pay rates among the 100 largest-worth companies listed on the FTSE 100 stock-market index (see go.nature.com/3p9cdbv), the Mondragon group of Spanish cooperatives has an agreed maximum ratio of 9:1. And such companies perform well in ethical and sustainability terms. The Mondragon group came 11th in Fortune magazine’s 2020 ‘Change the World’ list, which recognizes companies for implementing innovative business strategies with a positive global impact.

Reducing economic inequality is not a panacea for health, social and environmental problems, but it is central to solving them all. Greater equality confers the same benefits on a society however it is achieved. Countries that adopt multifaceted approaches will go furthest and fastest.

Nature 627, 268-270 (2024)

doi: https://doi.org/10.1038/d41586-024-00723-3

Neo-liberalism has failed.  It has created huge inequalities in societies, it has worsened the environmental crisis, and it has made our politics more vicious and rabid.  Time for a change.

The Tory water privatisation scam

 Dunno who created this.  Kudos to them.

And the Right wonder why socialism is once again respectable, and why young people are moving Left.

Record wealth inequality in the USA

 Hey, billionaires.  Have you ever wondered why social democracy is becoming so popular?  Why taxing billionaires is back on the agenda?  This could be a small hint.

Post-communist regimes

Clever chart of how to categorise post-communist regimes.  (Source)

Belarus should be down there with Russia and Kazakhstan.
Lithuania and Latvia are up there with Estonia

We are not communists

 

My "far left" values

 I have been accused by a few of having "far left" values.  These are a few of the policies I support:

• Free health care for everybody;
• Millionaires and billionaires should pay fair tax;
• Monetary and fiscal policies should target low unemployment, not just low inflation;
• There should be excellent, free government schools, as there are in, say, Finland;
• We need to cut emissions fast, and not just rely on hopium;
• There should be a decent safety net for our poorest fellow citizens;
• Equal rights for all.

It doesn't strike me that these are even particularly left-wing.  And most people want something similar.  Which is why the Right has to make up lies about it, while using culture wars to drum up their votes.

A cartoon by Tom Toles

The Labor Day chart which says it all

 From TMI

Before around 1980, worker productivity and compensation steadily increased as union membership grew and remained relatively high. Then when union membership declined, there wasn’t a sharp uptick in productivity (the rate of gain remained roughly the same from the days of stronger unions) — the thing that changed was workers’ compensation. With less union strength, workers simply started getting paid less. With fewer unions, workers’ productivity gains which had previously been compensated instead were pocketed by owners and shareholders

1980 was about when neo-liberalism became the orthodoxy.  Since then, in real (=inflation-adjusted) terms, the incomes of ordinary people have stagnated, even though real GDP  and GDP per capita has risen steadily.  The excess has gone to the top 10% and especially to the top 1%.  

How long do conservatives think voters will allow this to continue?  Just a reminder, billionaires:  it was the excesses of the late 19th century that led to the rise of socialism.  

This chart is equally telling:

It really is quite simple: employers have far more power and better information about labour market conditions than employees.  And as long as economies are run too cool, unemployment and partial unemployment remains higher than what would allow workers to fight back.

I know doctrinaire socialism has many faults (I lived through it!) but extreme red-in-tooth-and-claw capitalism isn't delivering for ordinary people.  If socialism is becoming attractive to millennials, there's a reason.  Lift your game, millionaires and billionaires or face the inevitable reaction.

People try to help one another

Two of the axioms that underlie much economic theory are that people are selfish and that they always want more—they are greedy.  Of course, some people are selfish and greedy.  But we often aren't.  We work for and donate to charities, for example.  We appear to have inbuilt ethical biases towards fairness, as another example.  If groups of two people are offered money, with one "owning" the money, while the other decides the split between the two of them, splits perceived as unfair are rejected even when it means that neither receives any money.  Needless to say, people may sometimes be greedy, selfish and unfair.  But to assume that they always are, which is what economics does, is false.  It does raise questions about how much of economics is valid.  Indeed, you could argue that economic theory is constructed to provide justification for capitalism, instead of being independent and intrinsically valid.

This interesting article reported by ZME Science again shows how people co-operate and help each other.

Different motivators to do good don’t drown each other out, the team reports, adding that people generally want to help those around them.

The findings help cement our understanding of reciprocity and prosocial behavior in the complex societal contexts of today. It’s also a hopeful reminder in these strange and trying times that deep down, we all want to make life better for everyone.

We all have four broad categories of motivators for which to help those around us: doing a kindness in return for someone who helped us out, doing something nice for someone we’ve seen helping a third person out, doing good as a response to people in our social circles who might be impressed with or reward that behavior, and as a way to “pay it forward” — to help someone if somebody else has done something nice for us.

The team explains that these four motivators could be at odds with one another. For example, we could prioritize rewarding someone who helped us out before to the detriment of others who might need assistance more than that person. The interplay between these four motivators during our social interactions has not been studied, however.

But there are grounds for hope. The authors report that in their experiment, people overwhelmingly chose to be generous to others, and even if they were complete strangers, even in situations where their motivators could create conflicts of interests.

“We wanted to do an exhaustive study to see what the effects of those motivations would be when combined — because they are combined in the real world, where people are making choices about how generous or kind to be with one another,” said David Melamed, lead author of the study and an associate professor of sociology at The Ohio State University.

The study included 700 participants and was designed to put them in a variety of situations where different motivators might compete. Participants took part in online interactions where they had to decide how much of a 10-point endowment they wanted to give other people. They were informed that these points would have a monetary value at the end of the study. This way, giving points away had a cost for the participants.

“[Prosocial behavior] means doing something for someone else at a cost to yourself,” Melamed said. “So one example would be paying for the person behind you’s order at the coffee shop. Or right now, wearing your mask in public. It’s a cost to you; it’s uncomfortable. But you contribute to the public good by wearing it and not spreading the virus.”

“In the real world, the conditions under which people are nice to each other are not isolated — people are embedded in their networks, and they’re going about their daily lives and coming into contact with things that will affect their decisions.”

Melamed says he expected to see the different motivators ‘crowd’ one another out. For example, a person focusing on giving back help they received might be less inclined towards the other motivators.

However, they found that “while [there is] some minor variation in how a given form of reciprocity might affect other forms,” people overwhelmingly showed an inclination towards helping others in all scenarios (each of which emphasized one type or combination of reciprocity types).

Melamed notes that from an evolutionary perspective, such behavior is very curious, as it decreases an individual’s fitness to boost that of others. [This is the old 'social Darwinism' theory that the Right so loves: of course, it is the survival of the group or tribe which matters, which is why these co-operative behaviours are in-built. Before 'civilisation', individual survival outside a group was much more difficult than survival within a group. The group/tribe matters.] Having it so deeply ingrained in our nature then shows the importance social relations played during our evolution. It also shows the extent to which they helped shape our cultures and civilizations.

Unfettered capitalism

.... vs democratic socialism

From Jeffrey Levin

The new economic order after the virus

From 2010, measures that reduced local authority spending by about 60% and imposed 40% cuts on many government departments were brought in. Photograph: Justin Tallis/AFP/Getty
Source: The Guardian

From Melbourne's The Age newspaper:

Jim Callaghan, an underrated UK prime minister, put it best just before the 1979 general election. "You know there are times, perhaps once every 30 years, when there is a sea-change in politics. It then does not matter what you say or what you do. There is a shift in what the public wants and what it approves of. I suspect there is now a sea-change and it is for Mrs Thatcher."

Give or take a few years, his analysis was spot on. Looking back from the winter of discontent, he knew that the major shift to greater government influence in economic affairs that the Depression and Second World War triggered had run its course. He did not know what would cause it, but he also understood that the Reagan/Thatcher experiment that was turfing him out of power would be time-limited, too.

These sea-changes are never watershed moments, but an accumulation of finally unstoppable forces book-ended by crises. The Depression and global conflict transformed what the public wanted to create in the post-war era; the rolling crises of the Seventies provided the intellectual justification for the new small-state philosophy that followed; and it has taken 12 years from financial crisis to COVID-19 to see the pendulum swing back again to the economic and social order that will most likely dominate the next 30 years.

What might this new order look like? My investment strategy colleagues at Fidelity have just published a paper, The New Economic Order, which predicts three key features of the new world: state intervention, fiscal activism and continued Asian economic strength.

Central banks have been intervening at scale for more than a decade now, but monetary policy is pushing up against the limits of its effectiveness. Governments have little choice but to step into the breach. There are already signs that they will embrace the opportunity and the reversal of liberalisation, deregulation and free markets will accelerate. The response to an explosion of government debt will, therefore, take the form of more red tape and higher taxes, inevitably impinging on shareholder returns in the process. We should expect to refamiliarise ourselves with nationalised public services, state-mandated industrial policies and a more insular view of national security.

The second key feature of the new economic landscape will be a reversal of the now discredited austerity that led to an anaemic recovery from the financial crisis, and its replacement by a more active fiscal approach. This will be most obvious in the US, where a rise in unemployment to levels not seen since the Thirties, will threaten a consumption-driven economic model that requires a virtuous circle of high employment and higher spending. The massive interventions required to soften the blow of lockdown may be dwarfed by the spending required to fuel recovery in the period that follows. Perhaps we will see a rerun of Roosevelt's New Deal, arguably a long-overdue investment in America's crumbling physical infrastructure.

The third characteristic of the post-COVID world is really just a continuation of the pre-Corona trend towards relative Asian strength. The region was first into the crisis and is emerging first too. This first-mover advantage will be boosted by Asia's well-organised, disciplined, we might feel intrusive, technology-driven response to the outbreak. The gap between Asia and the rest of the world may well widen further if more liberal exit strategies in Europe and the US are derailed by second and third waves of infection. Even without this short-term advantage, Asia is likely to lead the economic recovery for deeper structural reasons too: lower debts, better demographics and higher growth rates.

A world of high-spending, interventionist governments probably sounds alarm bells among the beneficiaries of the globalisation and deregulation that characterised the period between Callaghan and the financial crisis. But investors must deal with the world as it is, not as they would like it to be.

All this lies in the future, however. Before we reach this reshaped economic landscape, we must navigate a deep and foggy valley, the contours of which remain unclear. Most likely we will tumble down a steep slope, traversing a long and bumpy journey before we can climb out the other side, some time in 2021. This U-shaped trajectory is our base case, with a probability of perhaps 60 per cent.

Two alternative scenarios see, respectively, a V-shaped recovery in the second half of this year and a much slower, L-shaped pattern in which the sharpest contraction in decades is followed by slow or no recovery for the foreseeable future.

Sharemarkets are pricing in the base case. The higher weighting of the gloomier of the two other outcomes argues against rushing back too quickly into the markets. As Callaghan discovered, it pays to be a realist.

[Tom Stevenson is an investment director at Fidelity International. The views are his own.]

[Read more here]

Most political unrest caused by soaring inequality

I was a believer in the neo-liberal consensus (though with some doubts) until the GFC (global financial crisis) of 2008.   The GFC showed conclusively that many of the tenets of neo-liberalism were false.  Markets are not "self-regulating", banks are not to be trusted to manage their affairs properly,  the main burden of recovery from the crisis fell on the poor, because governments had to take over failing companies and the explosion in deficits which resulted wasn't borne by the rich but by the poor, through welfare cuts.  Since the GFC inequality has risen sharply, and our political discourse has become much more rancid and toxic.  I've talked about this often before, but this article from the Guardian puts it rather well.

The popular protests that erupted in 2019 and have continued to rumble – from France and Spain in Europe to Hong Kong and India in Asia; from Chile, Colombia and Bolivia in Latin America to Lebanon, Iran and Iraq in the Middle East – have perplexed analysts. Because they have been so far-flung and have lacked an iconic moment like the fall of the Berlin Wall, the common thread hasn’t been obvious. But there is one: rage at being left behind. In each instance, the match may differ, but the kindling has (in most cases) been furnished by the gross inequality produced by global capitalism.

Consider Lebanon. The demonstrations that erupted there in October were triggered by the government’s plan to tax calls made through WhatsApp and other internet services, but they quickly mushroomed into a broader protest against high unemployment, sectarian rule, corruption, and the government’s failure to provide basic services like electricity and sanitation.

According to the World Inequality Database, the top 1% of Lebanon’s population receives about 25% of the nation’s income. Six Lebanese billionaires have a combined personal wealth of about $11bn, according to Forbes. Three of those billionaires are the sons of Rafik Hariri, who made a fortune in construction and twice served as Lebanon’s prime minister before being assassinated in 2005. (A fourth son, Saad Hariri, was prime minister until his recent resignation amid reports that he had given more than $16m to a bikini model he had met while vacationing in the Seychelles.) Protesters maintained that the pampered elite, rather than strapped working people, should foot the bill for the country’s economic problems.

In Chile, an increase in subway fares catalyzed protest. The popular discontent caught many observers by surprise, since Chile has experienced years of steady growth and has a reputation for good governance. In fact Chile, with a per capita income of $15,800, is a member of the Organization for Economic Cooperation and Development for prosperous nations. Of the OECD’s 36 members, however, Chile has one of the highest levels of inequality. Its economy is dominated by a group of powerful oligarchs, among them its current president, Sebastián Piñera, who is worth an estimated $2.8bn (amassed largely in the credit card business). Despite their country’s wealth, working Chileans have had to grapple with rising utility costs, stagnant wages and paltry pensions. The protests have registered their fury.

In Hong Kong, months of demonstrations have had one overriding goal: resisting China’s encroachments on the city’s autonomy and democratic institutions. That the protests have become so virulent and lasted so long, however, reflects deep exasperation with the region’s sky-high cost of living. By some accounts, Hong Kong is the world’s most unaffordable city, with rents higher than London and New York for apartments half the size. It may also be the world’s most unequal city: its 93 or so billionaires have a combined worth of more than $300bn while nearly one in five residents lives in poverty.

Worldwide, the numbers are stark. As calculated by Oxfam, 26 people have the same amount of wealth as the 3.8 billion people in the world’s bottom half. In the United States, the three richest people have the same amount of wealth as the bottom 160 million.

And the political fallout continues to spread. Not only the current round of street protests but also such recent upheavals as Brexit, Trump, the gilets jaunes in France, and rightwing populist governments in Hungary, Poland and Italy all have roots in the financial crash that was set off by the fall of Lehman Brothers in September 2008 and followed by the world’s worst economic contraction since 1929.

In the US alone, the great recession erased about $8tn in household stock-market wealth and $6tn in home value. From 2003 to 2013, inflation-adjusted net wealth for a typical household fell 36%, from $87,992 to $56,335, while the net worth of wealthy households rose by 14%. Workers without college degrees and low-income Americans were especially hard hit.

In a recent New York Times article about Vladimir Putin’s growing worldwide stature, the former Kremlin adviser Gleb Pavlovsky sought to explain why Putin turned away from his earlier aspirations to join the western family of nations and toward his current brand of authoritarian nationalism. The “decisive threshold” was the 2008 financial meltdown, Pavlovsky said. Before it, Putin saw America as running the world economy. “Suddenly it turned out: no, they are not running anything.” At that moment “all the old norms vanished” and Russia set about creating its own norms.

Many members of the liberal establishment in America [and elsewhere!] have failed to come to terms with the waning appeal of the free-market model. They dismiss populism as a sort of exogenous disease to be cured by appeals to reason and facts rather than recognize it as a darkly symptomatic response to a system that has failed so spectacularly to meet the basic needs of so many.

[Read more here]

"Trickle-down" doesn't work.  The increased incomes of the rich haven't led to increased incomes for the poor.  Rather the opposite.   Rising inequality hasn't led to higher growth, but lower growth.  Rising inequality hasn't produced higher productivity growth as it was supposed to—higher inequality supposedly being the goad which pushes people to greater efforts—but lower.  The neo-liberal consensus had comprehensively failed.  

The Left will go on losing elections until it starts caring about the poorest and most disadvantaged.  Those left behind—the precariat—will continue to support extreme parties on the right and left in the hope that someone will do something about their situation. 

Source: Green Left 

Loneliness for the old and the poor

In sharp contrast, only a small proportion of the social housing tenants interviewed said they were lonely. Photo: Wolter Peeters

From Domain.com.au:

Loneliness is increasingly recognised worldwide as a critical social issue and one of the major health hazards of our time. Our research shows older private renters are at high risk of loneliness and anxiety.

This is a growing concern as more Australians are renting housing later in life. By contrast, only a small proportion of the social housing tenants we interviewed said they were lonely.

The links between housing arrangements and loneliness could have profound implications for our health. As former US surgeon general Vivek H. Murthy said: “The reduction in life span [for people experiencing loneliness] is similar to that caused by smoking 15 cigarettes a day, and it’s greater than the impact on life span of obesity … Look even deeper, and you’ll find loneliness is associated with a greater risk of heart disease, depression, anxiety and dementia.”

Many older private renters have little disposal income, because the cost of housing uses up much of their income. They also live with the constant possibility that they may be asked to vacate their accommodation. Their limited budgets mean they often end up living in a poorly located property. These features, individually or in combination, create fertile ground for anxiety and loneliness.

Their dire financial situation was often an obstacle to social activities. One interviewee told of how she had to choose between food or breaking her isolation by using public transport:

“Well, you sort of think what you can do with $2.50. That’s a loaf of bread type of thing.” – Beverley *

A 72-year-old woman living by herself said she could not afford the outings organised by her church:

“There’s quite an active social club at the church for over-55s but I can’t go to any of those … Sometimes I think it would be nice to go on something that appeals to me, yes. And they might have an afternoon at somebody’s home and you’re asked to bring a plate [of food]. You see, I couldn’t afford to do that.”

Peter, 67 and divorced, had left the workforce prematurely due to ill-health.

“I’ve become very isolated. I used to, before I had the hip operation, I used to play tennis and I loved to play tennis … but I really can’t afford it. I’ve found a few clubs that I could go and play in. I’d like to get back to it, but they say, ‘Ah, the fees are this and you pay it annually,’ and I can’t come up with $150 or $200 or whatever.”

Lack of money and insecure tenure were sources of enormous distress and anxiety, which further discouraged social contact. Brigette (67) was brutally honest:

“You do get depressed and I believe that’s why people suicide … And there have been times when I’ve thought, what is the point to life? I really have thought this can’t go on, you know … I feel sorry for people because it is hard, and once you stay in it’s like crawling out of a slime pit … I have to say, ‘Get up and go out, go up the shops … Pretend you need potatoes or something.’”

Not all of the private renters interviewed experienced loneliness. These interviewees usually had strong family ties or had managed to find affordable and secure accommodation.

In sharp contrast, only a small proportion of the social housing tenants interviewed said they were lonely. Almost all were adamant they did not experience loneliness and felt they had strong social ties. Their affordable rent, security of tenure, long-term residence and having neighbours in a similar position meant they could socialise and were not beset by anxiety.

An 85-year-old long-established social housing tenant’s response to the question about loneliness and isolation was typical:

“I do like it around here. I know where everything is and I know all the people, especially around these units you know. I know everyone and they know me. I like it around here. This is my home, you know. This is a community, I think. Like I know all the people and we’ve become really good friends. I couldn’t think of being anywhere else.” – Kay

Pam, who had been a private renter before being allocated social housing, reflected on how her life had changed:

“Well, it is changed because I’m happier and I think I’m healthier and I have a lot of new friends. I also have a lot more people around me for support if anything does happen. If I get sick and if they don’t see me for a few days someone will come and say, ‘Pam, are you OK?’ In private housing there was nobody.”

The residualisation of social housing meant some tenants were living in what they perceived to be unbearable conditions. However, they generally were able to deal with their situation. Patricia coped with her very challenging neighbours by going to the local community centre:

“No, I hate it [public housing]. I live here [at the community centre] every day. Yes, I’m on the committee here and I do things every day. This is my home, my family. Everybody is friendly with everybody. We have outings and things.”

What the interviews indicate is that the housing tenure of age pensioners often plays a fundamental role in whether they are able to escape the experience of loneliness. Older private renters are far more likely to experience loneliness than their counterparts in social housing and that loneliness can be acute.

* All the names used are pseudonyms.

Alan Morris, Research Professor, University of Technology Sydney and Andrea Verdasco, Research Associate, University of Technology Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The great push by neo-liberals has had lethal consequences.  The money that used to be provided for "council flats" or "social housing" has been used to give billionaires and corporations tax cuts.  The belief that all transactions can be monetised has turned friendship into a financial transaction.  Some economists (not me!) implicitly believe that only marketised relationships matter.  The consequence of all these forces is to make loneliness and stress normal, now.  Neo-liberal capitalism is no longer even delivering rising living standards for the 90%—only the 10% and the 1% are better off despite rising real GDP.  And at the same time, the relentless sanctification of selfishness has made our society much more unpleasant.  Neo-liberalism is a 40 year experiment which has failed.  I don't know what will replace it, but something has to, before the damage is irreparable.  And of course, for those who die of loneliness, it is already un-doable.

Viking economics

Scandinavia provides an alternative vision of economics and democracy to the kind of red-in-tooth-and-claw version that the USA practices, and which neo-liberals and economists have tried to make the standard ideology around the world.  Though policies differ in detail from country to country within Scandinavia, the general picture is one of high taxes, comprehensive welfare states, low inequality, low crime, low unemployment, free education and free health, and according to surveys, some of the happiest people in the developed world.  Despite all these things that the neo-liberal right deeply despises, somehow they also manage to have reasonable per capita growth (for developed countries—developing countries tend to have higher growth).

From the Sydney Morning Herald:

I’d like to tell you I’ve been away working hard on a study tour of the Nordic economies – or perhaps tracing the remnant economic impact of the Hanseatic League (look it up) – but the truth is we were too busy enjoying the sights around Scandinavia and the Baltic for me to spend much time reading the books and papers I’d taken along.

But since I always like telling people what I did on my holidays (oh, those fjords and waterfalls we saw while sailing up the coast of Norway to the Arctic Circle!), I’ve been looking up facts and figures in a forthcoming book comparing the main developed countries on many criteria, by my mate Professor Rod Tiffen and others at Sydney University (including me).

But first, the travelogue. Prosperous countries have a lot in common but Scandinavia is different. I have seen the future and, while some might regard it as political correctness gone mad, it looked pretty good to me.

One aspect in which the Nordics (strictly speaking, Finland isn’t Scandinavian because it’s a republic rather than a monarchy and because the Finnish language bears no relation to Danish, Swedish or Norwegian) are way more advanced is the role of women.

All of them have had female prime ministers or presidents, they have loads of female politicians and we were always seeing women out at business functions with their male colleagues.

Governments spend much more on childcare and they’re big on men actually taking paid paternity leave. They have “family zones” in trains and we were struck by how many men we saw by themselves pushing prams.

They’re much more relaxed on sexual matters. These days, any new building in Sweden will have unisex toilets, with rows of cubicles and not a urinal to be seen. Neat way of sidestepping debates about which toilet transgender people should use.

The Nordics are well ahead of us on environmental matters. They’re bicycle crazy (a big health hazard for tourists who don’t know they’re standing in a bike lane) and drive small cars.

They’re obsessed with organic food and even hotel guests are expected to recycle their paper and plastic. One hotel we stayed at in Copenhagen was so concerned to save the planet its policy was to make up the rooms only every fourth day.

The Norwegians have made and, unlike the rest of us, saved their pile by selling oil to the world but you get the feeling it troubles their conscience. So, like the other Nordics, they have ambitious targets to move to renewables and, to that end, are making more use of carbon pricing than most other countries.

The truth is, I’ve long wanted to see Scandinavia for myself. It’s a part of the world that most politicians and economists prefer not to think about. Why not? Because its performance laughs at all they believe about how to run a successful economy.

Everyone in the English-speaking economies knows big government is the enemy of efficiency. The less governments do, the better things go. The lower we can get our taxes, the more we’ll grow.

Just ask Scott Morrison. As he loves to say, no one ever taxed their way to prosperity. What’s he doing to encourage jobs and growth? Cutting taxes, of course. That’s Economics 101 – so obvious it doesn’t need explaining.

Trouble is, the Nordics have some of the highest rates of government spending in the world and pay among the highest levels of taxation but have hugely successful economies.

The Danes pay 46 per cent of gross domestic product in total taxes, the Finns pay 44 per cent, the Swedes 43 per cent and the Norwegians 38 per cent (compared with our 28 per cent).

Measured by GDP per person, Norway's standard of living is well ahead of America's. Then come the Danes and the Swedes – at around the average for 18 developed democracies (as are we) – with the Finns just beating out the Brits and the French further down the list.

The Nordics are also good at managing their government budgets.

We all know unions are bad for jobs and growth and we’ve succeeded in getting our rate of union membership down to 17 per cent. Funny that, the Nordics still have the highest rates (up around two-thirds), so, do they have lots of strikes? No.

The four Nordics are right at the top when it comes to the smallest gap between rich and poor, with Canada, Australia, Britain and the United States right at the bottom.

Other indicators show that (provided you ignore the long snowy winters) the Nordics enjoy a high quality of life and not just a high material standard of living.

Note this, I’m not claiming that the Scandinavians are more economically successful because of their big government and high taxes. No, I’m saying that, contrary to the unshakable beliefs of many economists and all conservative politicians, there’s little connection between economic success and the size of government.

So how do the Scandis do it? I read this on the wall of an art museum in Aarhus, Denmark: “In a society we are mutually interdependent. Strengthening the spirit of community, we improve society for all of us as a group but we also provide each individual with better opportunities for realising his or her own potential.”

Source
Note: US population growth rates are higher than Scandinavian

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So deeply are the neo-liberal tenets held in Anglophone countries that no matter how much evidence is produced showing that the Scandinavian model works, I doubt that we will ever move towards their system.  Sad.