When the rich get richer and the poor get poorer, you'll see all sorts of new phenomena that reflect the rise in the ranks of very wealthy people, particularly if the phenomenon allows the person to engage in intra-elite status competition (a correlate, or even a cause of the inequality).
Like that show on MTV about which wealthy family could spend the most, and in the most original way, on the daughter's 16th birthday bash. As you might expect, the spoiled daughter was never grateful and often cursed the parents out or cried about how they had ruined her party. But making their daughter happy was never the point -- it was to step up the competition against the heads of other wealthy families.
How about at the low end? There may not be an upper bound to how much wealth you can own, but it would seem that you can't get any poorer than $0. Even if you count debt, most lenders only let you get so far into negative wealth before they cut you off. Can it go lower still? Yes, if we look more broadly at quality of life rather than only income or wealth.
Health is the most obvious place to look first. Now the lower bound on "poor" goes down to being dead. Before you hit the lowest low, though, you can develop all manner of sicknesses. Or contract them -- repeatedly contracting a disease will make your life miserable for a lot longer and more intensely than the slow, barely perceptible build-up toward a debilitating disease of old age.
Let's start with an example from infectious person-to-person diseases. Despite all that antibacterial soap and hand sanitizers, influenza isn't any less common than it was 15 years ago. That quick reality check tells us to be wary of technological explanations for trends in disease.
To make the point more forcefully, we need a case with data that go back a long time. Say, whooping cough (pertussis). Here is the CDC's page on trends in the disease, which contains the following chart:
Those three acronyms with arrows pointing down refer to the introduction of different vaccines, the first coming out in the late 1940s. Right away we see that they have absolutely nothing to do with the dynamics of the disease they're supposed to protect against. Incidence is rising until a peak around the mid-1930s. The steady decline begins a good 10 years before the vaccine is even introduced, and its introduction does not accelerate the decline (it decelerates after that point, if you want to make anything of its introduction at all). Without any vaccine at all, the incidence had already dropped by roughly half as of the late '40s. Since a low-point around 1980, the incidence has exploded by a factor of 50 -- despite not one but two new vaccines introduced during that time.
That graph does not match a graph of medical technology, but of inequality. Why? Beats me, but it does. It's not access to health care -- that graph shows cases, not dire outcomes like mortality. And again the main preventative measure that could be obtained from health care doesn't explain the rises and falls anyway. For crowd diseases, I lean toward blaming increasingly crappy living conditions -- not just for the private household, but the wider crappiness of the block and the neighborhood that the bottom chunk lives in. It's a return to the dilapidated tenements of the early 20th C., which were made into much nicer places during the Great Compression of 1920-1970.
You can fill in "increasingly lax regulation" for all these examples, to explain how the conditions were allowed to worsen. In general, welfare state policies and regulation go together with falling inequality.
Speaking of ramshackle apartments, what ever happened to that children's line about "Good night, sleep tight, don't let the bed bugs bite?" Well, the suckers are back. I checked Wikipedia's page on the epidemiology of bed bugs, and poked around the JAMA source. Bed bug infestation shows roughly the same dynamics as whooping cough, even though these are macroparasites instead of a contagious bacteria. They began decreasing sometime in the 1930s and bottomed out sometime around 1980, increasing since then. I never noticed any problem with them growing up, but exponential growth looks slow when it starts out -- the part where it takes off like a rocket happens a little later, during the 2000s in the case of bed bugs. By then several major cities began freaking out.
Not knowing anything about the ecology of bed bugs, I'd point again to crappy living conditions as the breeding ground, although they may certainly spread out from there to better maintained places nearby.
Immigration also plays a huge role here, since if foreigners carrying bed bugs not only drop by but stay put in our country, there's little we can do. Immigration is another correlate of inequality (see the Peter Turchin article linked in the post below). After it was choked off during the 1920s, bed bugs began to disappear. As it began rising in the '70s, it wouldn't be long until bed bugs made a comeback.
Does immigration relate to whooping cough in the same way, being brought here and maintained by a steady influx of pertussis-stricken foreigners? Probably, though someone (not me) should look into that in more detail.
Finally, there are food-borne illnesses. We all remember the deplorable sanitary conditions detailed in Upton Sinclair's muckraking novel The Jungle from the Progressive era. I don't have any data from back then or the middle of the century, but given how little hysteria there seems to have been by the 1950s, I presume that the incidence of food-borne illnesses had fallen quite a bit.
What's the picture like since then? Unfortunately the CDC's data only go back to the late '90s. Several diseases are down, while Vibrio is way up, but the main story is Salmonella -- by far the leading food-borne illness. It shows no change one way or the other since the late '90s. Eurosurveillance, however, has some data on England and Wales going back to the late '70s, and ending in the late '90s. Aside from Shigella, they all show overall increases, including the two leading offenders, Salmonella and Campylobacter.
My hunch is that the causes today are what they were in the days of The Jungle -- crappy sanitary standards among food producers who cater to the bottom chunk (or those at the top too, for all I know). That's pretty easy to get away with because most people who get sick won't report it, and won't know which of the variety of things they ate made them sick. Only if you let it really get out of hand will people complain, the FDA or USDA figures out it was you, and recalls your product.
These three examples span a range of causes of disease -- bacterial crowd disease, macroparasitic blood-sucker, and bacterial food-borne diseases. Yet they all show pretty similar dynamics, matching up with inequality and bearing little resemblance to the state of the art in medicine. They are all symptoms of the deterioration of living standards as basic government oversight falls by the wayside for such areas (again, primarily the bottom chunk is no longer being looked out for). They also reflect the divisiveness that accompanies over-production of elites and intra-elite competition. No time to look out for the little guy -- let him fend for himself.
For our neo-Dickensian society, the simplest policy improvement is to shut off immigration, including legal immigration. Why not? They carried that out in the '20s and enjoyed a half-century of falling inequality and narrowing of political polarization. Of course other changes in the popular and elite mindset took place, but we ought to begin with the policy that is the simplest to think up and to implement.
Conservatives (or the handful of populist liberals who are still hanging around) should not get side-tracked by legal vs. illegal immigration. Both increase the supply of labor, and thereby decrease its price, i.e. wages. And it'll be asymmetric -- loads more competitors for bottom-chunk jobs, and few or none for top 0.00001% jobs.
Ditto for worsening the public health burden -- whether they came here legally or not, if they stay put, they're yet another potential spreader of whooping cough, another harborer of bed bugs, another food maker with shoddy standards. And they come from places with higher rates of those plagues than we already have to deal with here. Unlike their effect on wages, though, immigrants could very well infect the elites with their diseases, however indirectly, and albeit to a lesser extent than they would infect native bottom-chunk folks who live on the same block.
Final thought: I wonder if the 1918 Spanish Flu pandemic has to do with the turbo-charged levels of globalization and open borders that reached their peak around that time. After the borders were slammed shut in the '20s, you didn't see that level of pandemic in the Western world during the Great Compression. There was that flu "pandemic" in 2009, but that will probably go down as just the first in an escalating series of major outbreaks. We aren't right at the peak for widening inequality yet, so our return of the Spanish Flu hasn't materialized just yet. The future promises to be an interesting time.