Doesn’t causality go in the opposite direction – more social problems leading to wider income differences?

From time to time changes on income distribution may be triggered by new governments with different philosophies or economic theories.  This happened in a number of countries when monetarism and neo-liberal ideas became common during the 1980s.  Legislation was introduced to weaken trade union powers and changes in taxes and benefits were introduced which contributed to a widening in income differences.  However, although it can be said that a change in political and economic ideology contributed to widening income differences, there is no doubt that governments did not intend to weaken community life or to increase levels of violence, teenage birth rates, drug abuse or any of the other problems which go with greater inequality.  These were all unintended consequences of widening income differences. 

Nor can an increase in health and social problems be the cause of widening income differences.  As we have seen, a wide range of health and social problems tend to move together – countries which do badly (or well) on one outcome tend to do badly (or well) on others. If they were not all results of inequality but were instead separate causes of inequality, that would not explain why they move together.  Indeed it is not plausible to think that problems such as homicide, obesity and low standards of child wellbeing – which are all associated with inequality – could be a cause of it.