• Can income redistribution help fight depression?
Posted by Ron Robins on February 28, 2015
“The average poor person has about two and a half times the level of painful emotions as the average rich person… the decline in painful emotions with [increasing] income, both on average and at the mood-disorder level, is actually caused by changes in income. This means depression is a consequence of poverty. Further, the causal effect of income on emotional pain is much stronger at low incomes than high ones… Opponents of shifting the tax burden back to high earners often argue that doing so will hurt economic growth. We needn’t be too worried. Compared to the past 35 years, U.S. economic growth was actually higher under the more progressive tax regime of 1950 to 1980.”
— Can income redistribution help fight depression? By David Clingingsmith, February 25, 2015, Corporate Knights, Canada
Commentary: Ron Robins
This is an important study. However, I’d argue that the real problem of poverty and its deleterious effects for psychological health relative to those with higher incomes, can be reduced with poor people participating in the financial benefits that accrue with corporate ownership. (And I’m not talking about socialism or communism!)
I believe an enlightened approach would be for the wealthy — and for corporations themselves — in each country to entrust a certain percentage of their profits in the form of company stock to a ‘sovereign wealth fund.’ Over time, some of the dividends and stock gains could be cashed and used to directly increase the incomes of the poor. Higher taxes for the rich (which is becoming popular), advocated in the above article, could be introduced now but would probably have to be quite onerous to significantly improve the income of the poor and ameliorate their emotional distress to any great degree.
Furthermore, as it’s proving in France which imposed very high taxes on high incomes, the wealthy become very adept in finding ways to avoid the higher taxes — and many even moving themselves to other jurisdictions!