Here’s a strange fact for you.
The larger the inequality in society, the higher the murder rate.
According to the World Bank, this factor accounts for around half of the differences in murder rates between American states. And also between countries around the world.
Inequality predicts murder rates ‘better than any other variable,’ says Martin Daly, professor emeritus of psychology and neuroscience at McMaster University in Ontario and author of Killing the Competition: Economic Inequality and Homicide.
So why am I bringing this up today?
Here’s the bad news…
In the last 40 years we’ve seen a stunning rise in inequality. Especially in the US.
It started in 1979. Since then the 1% have captured 54% of all increases in income up to 2007. There was a brief pause during the GFC, before government bailouts kicked in and the gravy train began once more.
Between 2009 and 2013, the 1% took a stunning 85% of income growth. And since then, even more.
As you can guess, this polarisation of wealth is unhealthy for society.
But why the knock-on effect on the murder rate? And will this trend ever reverse?
That’s what I want to talk about today…
Getting ahead is murder…
According to the FBI, just over half of murders were set off by a category called ‘other argument’. What they mean is that it’s not the typical motive. Not a robbery, a love triangle, drugs, domestic violence or money.
Simply the sense that someone had been ‘dissed’.
As Evonomics puts it:
‘When someone bumps into someone on the dance floor, looks too long at someone else’s girlfriend or makes an insulting remark, it doesn’t threaten the self-respect of people who have other types of status the way it can when you feel this is your only source of value.’
Or as Daly writes:
‘“If your social reputation in that milieu is all you’ve got, you’ve got to defend it,” says Daly. “Inequality makes these confrontations more fraught because there’s much more at stake when there are winners and losers and you can see that you are on track to be one of the losers.”’
A rise in murder rates is the result. And for seemingly innocuous encounters.
The strive for status becomes increasingly important the less wealth you have. It’s an aspect of power still available, even when you’ve got little financial muscle.
And it probably helps explain Trump’s election success.
Those Democrat states that turned red in the general election saw Trump as a way to regain status in a society they were economically failing in.
It was about giving them the respect they felt they deserved. And craved.
The more run down the community, the better Trump did.
Put in this perspective the results are more understandable. And it also helps explain why Trump will never lose his hardcore base of supporters, no matter what he does.
His success is now their success.
So, if socials divisions and crime are a result of social inequality, surely it makes sense to tackle this?
It depends on your perspective.
The 1% have clearly shown no appetite to reverse policies that benefit them.
Indeed, Stanford historian, Walter Scheidel shows in his book The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century that historically, the only way high inequality has been flattened has been through catastrophe: disease, famine, world war, societal collapse or communist revolution.
Not the best outcomes for you and I.
Now the scales of wealth need rebalancing. And you can’t rely on the elites to do it. They’re still in a ‘let them eat cake’ world.
There’s only one viable option…
The new American dream
I’m going to blow my own trumpet for a second here.
When my colleague Sam Volkering and I launched our entry level cryptocurrency service, Secret Crypto Network, back in June this year, the sceptics scoffed.
It’s fake money.
It’s only used by criminals
It’s not real, not backed by anything, not trustworthy, etc., etc.
Thankfully, thousands of people ignored the mainstream viewpoint and got stuck into our research.
Most of them are now sitting on some hefty financial gains. And more importantly, are developing an understanding of what the technology means, how it works, and how to keep it safely.
But I know for my part at least, a strong drive behind this service was to get as many ordinary people into cryptocurrencies as possible. I could see the potential was — and still is — enormous.
And here was a chance, if we were fast and compelling, to get ordinary people in on the ground floor of the biggest investment opportunity I’ve seen in my lifetime.
It’s rare this happens.
Most of the time an ordinary investor only gets a look in once the 1% have filled up. That’s the way the financial system is designed. And why we have seen such stunning rises in inequality.
With cryptocurrencies the reverse is happening.
Ordinary people in their droves are getting in ahead of the elite.
To my mind this is good for society.
Inequality is inevitable. And not necessarily bad. But entrenched inequality is dangerous to society as whole. As the murder rates show.
Perhaps crypto’s greatest achievement will be in realigning equality to more acceptable levels?
Editor, Money Morning