Episode 21: Jail Psychologist Predicts the Future
Over the past several videos, I’ve laid out a theory about the relationship between wealth concentration and mental health. The basic argument is that rising concentrations of wealth don’t just affect the economy—they affect how people feel about their lives, their futures, and their place in society.
I’ve received some feedback on these videos. Some people found the economic concepts difficult to follow, while others questioned whether this theory can actually explain what we’re seeing in the real world.
That’s a fair criticism. A theory is only useful if it helps us understand reality. More importantly, a good theory should allow us to make predictions.
Before making those predictions, it’s worth briefly reviewing the mechanism.
The Domino Effect
I think of this process as a line of dominos.
The first domino is wealth concentration. The last domino is population-level mental health.
Everything in between is the chain reaction.
Imagine a society in which a relatively small percentage of people control most of the assets. By assets, I mean things like stocks, businesses, investment properties, and other forms of wealth that generate income.
Assets produce profits. The more assets someone owns, the more money those assets generate.
At a certain point, wealthy asset owners begin earning far more money than they could ever reasonably spend on themselves. If someone earns a billion dollars per year from assets, they don’t suddenly start consuming a billion dollars worth of goods and services. Most of that money gets reinvested into additional assets.
This creates a feedback loop.
The people who already own large amounts of wealth continually acquire more wealth-producing assets. As demand for assets rises, asset prices rise as well. Housing is one example. Houses are places to live, but they are also assets.
Businesses are assets too.
The managers of those businesses are expected to maximize returns for shareholders. Since labor is often one of a company’s largest expenses, businesses have strong incentives to keep wages as low as possible while still maintaining a workforce. At the same time, they are incentivized to keep prices as high as the market will tolerate.
As wealth becomes increasingly concentrated, large firms gain the ability to acquire competitors, increasing market concentration. This creates opportunities for monopolies and oligopolies, which can drive prices higher for consumers. It also creates opportunities for monopsonies, which can put downward pressure on wages.
The result is a feedback loop in which the cost of living rises while the purchasing power of ordinary workers declines.
That is the key point.
High concentrations of assets create a system that tends to drive the cost of living up while simultaneously limiting wage growth.
At first, this creates instability for low-income households. Eventually it begins affecting the middle class as well.
People find it harder to buy homes. Harder to raise children. Harder to save money. Harder to retire.
As these pressures accumulate, more people begin to realize that their economic circumstances are unlikely to improve. They work hard but continue to fall behind. Over time, that creates a sense of helplessness and pessimism about the future.
In my view, that is one of the primary pathways through which wealth concentration contributes to rising rates of depression and other mental health problems.
In short:
Wealth Concentration → Declining Living Standards → Economic Insecurity → Helplessness → Population-Level Mental Health Problems
How We Know Wealth Taxes Are Necessary
If asset concentration is the problem, then reducing asset concentration must be part of the solution.
That doesn’t necessarily mean eliminating wealth inequality altogether. It does mean finding ways to prevent assets from becoming concentrated in fewer and fewer hands over time.
My view is that some form of wealth tax is necessary to accomplish this.
Without it, the cost of housing, healthcare, education, childcare, and other necessities will continue to rise faster than wages. Living standards will continue to decline for ordinary people, and rates of depression and suicide will continue to increase.
That is the theory.
Now comes the part that matters most: the predictions.
Economic Predictions
If the United States does not implement some form of wealth tax, I predict the following.
1. Housing and Healthcare Will Continue to Outpace Wages
Housing and healthcare costs will continue rising faster than wage growth.
If homeownership feels out of reach today, it is likely to become even less attainable in the years ahead.
2. First-Time Homebuyers Will Get Older
The average age of first-time homebuyers will continue to increase.
I also expect parental financial assistance to become increasingly necessary for people purchasing their first home.
3. Institutional Ownership of Housing Will Increase
A larger share of single-family homes will be purchased by private equity firms and other institutional investors, while first-time homebuyers will make up a smaller share of the market.
4. Birth Rates Will Continue to Fall
Young adults are increasingly delaying or avoiding having children because of economic pressures.
I also expect fertility rates to become increasingly stratified by wealth. Wealthier families will maintain relatively stable fertility rates, while the largest declines will occur among middle- and working-class households.
5. Marriage Will Be Delayed
The average age of first marriage will continue to rise.
People generally do not like entering marriage when they feel financially unstable.
6. Multigenerational Housing Will Become More Common
As housing becomes more expensive, more families will share living space.
I expect multigenerational households to become increasingly common over time.
7. More Older Adults Will Remain in the Workforce
Retirement is becoming increasingly difficult to achieve.
As a result, labor force participation among people aged 65 and older will continue to increase as more individuals work longer to maintain financial stability.
8. The Stock Market Will Continue to Outperform the Economy
One of the most direct indicators of asset concentration is the persistent tendency for asset prices to rise faster than the broader economy.
I expect the stock market to continue outperforming both economic growth and inflation.
The reason is straightforward. Wealthy asset owners have a low marginal propensity to consume. They simply cannot spend all of the income generated by their assets. Most of that money gets reinvested.
At the same time, much of the money flowing into financial markets is used to purchase existing assets rather than create new productive businesses.
As a result, asset prices can continue rising even when ordinary people are struggling with affordability.
9. The National Debt Will Continue to Increase
I expect the national debt to continue growing.
In my view, there is little political appetite for significant spending cuts, and ordinary households are already under considerable financial strain. That leaves policymakers with limited options.
Without some mechanism for redistributing wealth, I don’t see a realistic path toward reversing the long-term growth of the national debt.
10. Household Debt Will Continue to Increase
Credit card balances, household debt, and buy-now-pay-later debt will continue rising.
Savings rates will continue falling.
I also expect increases in mortgage defaults, vehicle repossessions, and other signs of financial distress as households struggle with affordability.
Mental Health Predictions
If the economic trends above continue, I expect corresponding changes in population-level mental health.
11. Depression Rates Will Continue to Rise
This is the central prediction of the theory.
As wealth concentration increases and living standards decline, more people will become pessimistic about their future prospects. I expect rates of depression to continue increasing as a result.
12. Young Adults Will Report the Highest Levels of Depression
I expect depression rates to remain highest among young adults.
Older adults often possess assets, home equity, or retirement savings that provide at least some protection from economic instability. Young adults, by contrast, are facing the full force of rising housing costs, declining affordability, and increasing uncertainty about the future.
13. Suicide Rates Will Continue to Rise
If people become increasingly hopeless about their future, I expect suicide rates to continue increasing as well.
14. Homelessness and Evictions Will Increase
As affordability continues to deteriorate, I expect homelessness and evictions to rise.
15. Mental Illness Within the Criminal Justice System Will Increase
This prediction is somewhat more difficult to test, but I expect several trends to emerge.
I expect the percentage of incarcerated individuals with serious mental illness to increase.
I expect jail suicide rates to increase.
I also expect the number of forensic and civil referrals to state psychiatric hospitals to continue rising.
I may only be able to collect reliable data on some of these measures within my own state, but I intend to monitor them over time.
A Theory Is Only Useful If It Can Be Tested
These predictions are admittedly bleak. But if my theory is correct, these are the outcomes I would expect to see over the next several years.
The good news is that these predictions are measurable. We don’t have to guess. We can look at housing affordability, fertility rates, depression rates, labor force participation among seniors, household debt, homelessness, and other indicators to see whether the theory holds up.
That’s ultimately how science works. We develop theories, make predictions, and compare those predictions against reality.
For those of us who work in mental health, understanding these broader economic forces is especially important. If economic insecurity is contributing to the mental health problems we see every day, then we need to understand that relationship. Otherwise, we risk treating symptoms while ignoring the conditions that helped create them.
Whether you agree with my conclusions or not, I think these are conversations worth having. And if the predictions above prove accurate, we will need to take the problem of wealth concentration much more seriously than we do today.