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If the Middle Class Can't Make It — What's the Point of a Rich Country?
Or, Why Eliminating Poverty Might Just Be the Key to Escaping Decline
Image Credit: Spencer PlattHere's a tiny question — which might strike you as a little strange, controversial, or foolish: why should rich countries have poor people in them, anyways?
When we take a hard look at the world, a curious fact pops out: rich societies with the least numbers of people living in abject poverty do better. Today, such countries are in Northern Europe, the core of Europe, and Canada. What's interesting about them? Well, having less poverty seems to have spectacular benefits. They are more stable, resilient, and prosperous. They are more robust democratically. They are happier and kinder. They are saner, wiser, and healthier. They are better off in every single way imaginable compared to rich societies with more poverty.
What are those societies like? Well, rich societies with more people living in poverty do not just worse, but spectacularly, enduringly worse, in nearly every way imaginable. They end up like America or Russia. They do not really stay democracies, but become authoritarian oligarchies. Lives are shorter and harder and meaner and unhappier. Norms and institutions reward anger, greed, cruelty, spite, and rage, so they end up emptied of of reason, truth, courage, insight, and wisdom. Their economies end up dominated by misinformation, manipulation, bailouts, and predation. The result is that they are much, much more fragile, unstable, precarious, and just plain toxic to be than rich countries with less poverty — everyone is worse off, in the end.
All of which leads me to my second question. Is reducing poverty the single simple secret to building a successful society — the key to escaping decline? Let me put that in perspective. "A successful society needs to be a techno-utopia! Supersonic trains and robo-teachers!", says one side. "No!", cries, another, "it's about deficits!!" How do we build societies that don't end in catastrophic decline, like America, anyways? Can we? It's not sci-fi, because, Canada, Sweden, and Germany did so.
Reality says: maybe, just maybe, it's a lot simpler — and yet more difficult — to escape decline we think it is. If societies with less poor people in them are better off in nearly every imaginable way — then isn't the elimination of poverty probably the very first thing a society should try and do? The one thing with the greatest effect, that it should focus on getting done before anything else, whether cutting taxes or building Facebooks or sending billionaires to Mars?
So. Let me ask again. Why should rich countries have poor people, anyways? Maybe they shouldn't.
Now. I don't want to spend this essay on the "how". That's easy enough: whether basic income, basic assets (aka trust funds at birth), employment and income guarantees, giving people homes, and so on. Here is the curious thing. Poverty is a solvable problem — we are well on the way to eliminating extreme poverty globally. Why then don't rich countries do so? That is the more interesting question — because if the means are known, then what must be standing in the way is ideology, which is to say economics.
Economics — American economics, anyways, which is the only one you're probably familiar with — doesn't consider poverty a problem at all. It's a feature, not a bug: a kind of just moral just dessert. Poor? Sorry. You deserve it — not just because you are lazy, or less talented, and so on. Because otherwise, how would the talented end up being rewarded more? And if they are not rewarded more, then why would they bother sharing their talents with the less talented rest of us? In this way, American economics is a tale of the trickling down of human possibility — if you let those guys get rich, you'll be better off, even if you stay poor, because they'll give you awesome, wonderful, life-changing things.
Only this theory doesn't hold water in the real world, if we stop to examine it for even a second. Jonas Salk gave the polio vaccine away — just like Tim Berners-Lee did the world wide web, Einstein the theory of relativity, Darwin evolution for the price of a book, and so on. I can keep going — history's point is this: genius has never, and never will, cared much about capitalism — mostly, it is repelled by it, as are most sensible people by now.
So if genius isn't motivated by riches, then who is? Who does care about being rewarded by mega-fortune? Well, it appears to be not even the mediocre, but the worst among us: the least moral, the most cunning, and the most predatory. The Hollywood execs and the billionaires and the Wall Street CEOs and hedge fund tycoons of the world.
In economists' terms, fantastic wealth appears to do the precise opposite of what American economics says it does: it creates adverse selection for goods of transformative, life-giving value, and selects for predatory behaviour instead. How do we know? Well, because figures like the above certainly have not created the vaunted innovations that were to benefit everyone, which was the point of such riches, have they? They have only found ways to game and cheat systems. If they had really created magical and wonderful things that made everyone else's life better off — even the poor's — then American life wouldn't be getting worse in every possible way, from life expectancy to suicide rates to school shootings to stress to infant mortality: both simply cannot be the case.
So the benefits of making people lutra-rich are vastly overblown — to the point of being fairy tales of capitalism. America's example tells us that tuning a society to make a tiny, "talented" few unimaginably wealthy doesn't yield huge benefits for society, because it self-evidently hasn't yielded real breakthroughs that benefit people whatsoever — mostly, it appears to, by rewarding amorality, select for the worst among us, and turn them into predators, who'll stoop to anything to get their hands on such fortunes. Why might that be? Perhaps because, as we grow richer and richer, research shows that we lose our humanity — our capacities for empathy, connection, and meaning all fall apart.
So — why should anyone be poor, if the logic of "we need you to be poor, to make those other more talented people mega-rich, because that's the only way we can all be better off" is so vividly, obviously false?
Perhaps I'm being unfair. Let's examine the other side. What about the costs of making people poor? How high are those? Are they nuisances for a society — or something more like impediments to it?
Well, the uncomfortable fact is that we have known for a long time that the social costs of poverty are the highest ones a society can pay — because they set off a vicious spiral. The central lesson of World War II was that economic stagnation produces fascist movements, by inflaming old racial and tribal divisions, that seats authoritarians in power — and usually ends in war. Poverty, unchecked, implodes democracy — it has the highest cost of all. That is why the post-war economy was rebuilt from the ground up with new constitutions and a new financial system, whose sole goal was to prevent poverty from ever rising in rich nations again — to "never again" allow a World War to happen.
There was only one problem. One country alone (guess who?) America, chose to ignore that lesson — hoping, perhaps, that it was exceptional. Today, sadly, we know that it isn't. Stagnation did to America in the 2000s precisely what it did to Germany in the 1930s. America is repeating the same vicious cycle of democracy imploding into fascism, authoritarianism, hate, and violence — in striking, eerie ways. It's not a coincidence — it's causal: America never accepted that poverty has real social costs, and here it is, paying precisely those costs of destabilization, distrust, polarization, and fragility.
So. Here is my answer. Why should rich countries have poor people, anyways? They shouldn't. The costs are just what history says they are: so high that democracy topples into authoritarianism implosions. And the benefits of poverty are nonexistent — poor people are not a sufficient nor a necessary condition for a tiny elite of geniuses to advance the frontiers of progress for all: that is a fantasy, not an empirical reality. The idea that rich countries — or any countries — need poor people is one of the greatest, most obsolete myths of this century.
I dare to think these day, that in the end, the answer to this great question — "what is the best way that we know to build a working society, anyways?" might be, like most such answers, outrageously more elegant and simple than it appears, just like e=mc² was. Take poverty away — and societies appear to flourish. Democratically, culturally, economically, socially, existentially. The less poor people there are, the more societies become more peaceful, sane, stable, prosperous, wise, gentle, and courageous places.
One day, we will think it was quite crazy — and both sad and funny — that countries ever called themselves "rich", when people in them still lived in poverty. We will come to a better, truer definition of a rich country — one in which no life is lived in penury and indignity, and only then, we will say, can a country dare call itself rich. And we will look back, too, on the idea that anyone in a rich country could die from a lack of money, savings, food, shelter, or healthcare, exactly the same way that today, we look back on servitude, workhouses, and debtors' prisons. With repugnance for human ignorance, pity for human folly — and gratitude that we do not live in such a backwards age.
Umair
August 2023
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