Americans spend more on health care than people in 29 other rich countries but our health is near the bottom of the list. Shouldn’t more money buy better health? This is the American health paradox. What causes it?

In the latest issue of The New Yorker, Atul Gawande, in an excellent article, tries to find out how the money is wasted. He visits a small Texas town where he finds an entrepreneurial attitude among doctors — a tendency to order more tests and do more procedures because doing so will generate more revenue. (A weakness that my own surgeon may have succumbed to.) Gawande does his best to figure out how things could be better but comes up short. He finds better systems of care — but they seem to be losing rather than winning. I think Gawande is too close to the problem he is writing about to see the really large forces at work.

In The Economy of Cities, Jane Jacobs pointed out that Marx got it wrong: The fundamental conflict in society isn’t between owners and workers, it’s between those who benefit from the status quo and those who benefit from change. There are plenty of owners and workers on both sides. The balance — or rather imbalance — of power determines what happens. The more powerful the status quo, the less change. Lack of change means lack of innovation; lack of innovation means that problems build up unsolved.

If the status quo is powerful enough, the problems get worse and worse, remaining unsolved — until the whole thing collapses. (This is what Jared Diamond failed to understand in Collapse.)Â A city economy relies heavily on a single product; the resources to make that product run out (Jacobs often pointed out that nothing lasts forever), often suddenly; and the whole city dies. Manchester (cloth) and Detroit (cars) are modern examples. Was the current financial crisis due to reckless lending? Not really. That was an opportunistic infection. It was due to a problem building up unsolved: lack of affordable housing, which was due to lack of innovation in the housing industry. Lack of real solutions made room for a phony solution that, funny coincidence, benefited the powerful: rip off poor people by lending them too much money. (A new form of predatory lending that took advantage of the human tendency toward speculative bubbles.) Just like resource depletion, the phony solution worked and worked and worked, until, all of a sudden, it stopped working and the whole giant structure fell down, hurting the poor and powerful alike.

The cause of the American health paradox is American inequality. America is more unequal than other countries. Everywhere, in every country, the powerful prefer the status quo but in America the rich and elite are especially powerful relative to the poor, so the status quo is especially entrenched and innovation especially well-squelched. America has a lot of health problems building up unsolved. Perhaps the most obvious is obesity, which affects the poor far more than the rich. The further the rich from the poor — that is, the more inequality — the more the rich can ignore it. And they have: The healthcare establishment’s record on prevention and treatment of obesity is terrible. Staggeringly bad. In one tiny example, when I proposed a rat experiment to test an idea behind the Shangri-La Diet, I was denied permission by the UC Berkeley Animal Care and Use Committee: My idea couldn’t possibly be true, I was told. Had there been plenty of poor people on the committee, instead of none, I think the outcome would have been different. Problems such as depression, allergies, autoimmune disorders, and autism are likewise building up with no real progress being made. An example of a real solution is home glucose monitoring for diabetes. This came from outside the healthcare establishment — from Richard Bernstein, an engineer with diabetes.

Although The Economy of Cities was published in 1969, it has not received the attention it deserves. Lots of well-read people dislike inequality, and the connection between inequality and poor health has been documented many times, especially by Richard Wilkinson, but the Jacobian point that more inequality means less innovation means problems stacking up unsolved is not widely appreciated. In a whole book about the badness of inequality (Inequality Matters, 2005), I didn’t see this point made even once. In his New Yorker article, Gawande fails to understand Jacobs’s point that farmers didn’t invent tractors; the big improvements to American (and world) health are not going to come from doctors or anyone now powerful in healthcare. They are too wedded to the status quo. (Notice that this recent innovation in affordable housing, the nano home, comes from a car company — an Indian one.) Gawande, being a doctor, surrounded by the powerful at Harvard (where he teaches), is in a poor position to figure this out. Where will the big improvements in health actually arise? From people who benefit from change. A reasonable healthcare policy would try to empower them.