http://www.commondreams.org/views02/0701-05.htm
Published on Monday, July 1, 2002 in DAWN,
Pakistan's leading English language newspaper
Economic Inequality in US
by Huck Gutman
Like those magicians whose hand is quicker than the eye,
the acolytes of American capitalism make arguments that are
fascinating - and deceptive. The historian Francis Fukuyama,
darling of American bankers and industrialists and conservative
politicians, famously proclaimed "the end of history".
What
he was referring to was the uncontested victory of capitalism
as the now dominant motor force of societies all over the globe.
There is no question that the United States is, by far, the
wealthiest nation in the world; there seems little doubt that
it, with its system of corporate capitalism, has amassed such
a sheer abundance of material goods and productive capacity that
it can lay claim to being the wealthiest nation in the history
of humankind. What Fukuyama, and George Bush, and Bill
Clinton
before him (though the latter less so) do not pronounce nearly
so boldly - they actually do not pronounce it at all - is who
owns this wealth. Or, in more traditional economic terminology,
they do not dwell on the manner in which this wealth is distributed.
In the United States today, the wealthiest one per cent
of the
population owns more than the bottom 95 per cent.
The United States has the greatest disparity of wealth in the
entire industrialized world. That fact is a national disgrace,
though it is largely invisible both in the media, and in the
endless accolades about the wonders of capitalism. While America
seems to be enjoying a banquet of unbelievable richness, most
Americans do not get a full plate, and a remarkable number
go hungry.
In the last quarter of a century when the United States moved
from global power to global behemoth, a quarter of a century in
which American corporations reaped huge profits while spreading
their power and influence all over the globe, American
workers
made no gains. None. The wages of American workers have,
since 1978, been flat or declining.
This may be hard to believe for those abroad who see, on television
and in movies, Americans driving sports utility vehicles and living
in well-appointed houses. But the economic reality is
that increases
in the standard of living - and many families have seen such
increases - have come almost entirely because women have entered
the work force in huge numbers, and households which formerly
depended on one wage earner now depend on two. Child
care, home
management, cooking, today are not part of the work day, but
in addition to it.
It is not only this increase in the invisible, unpaid work hours
that accounts for the ability of many American families to maintain
their standard of living. American workers today work longer hours
than workers in any other industrialized nation, even hard-working
Japan. Harvard economist Juliet Schor reported that the average
American works an additional 163 hours, or one month a year, more
than the workers did in 1969. American workers get less vacation
time than in any other nation.
Let me repeat: the wealthiest one per cent of the population
owns
more than the bottom 95 per cent. There are three causes for this
monstrous maldistribution of wealth: capitalism, government, and
pay.
The first is obvious. Capitalism depends on
capital, and some
members of society have a lot more of it than others. So the
in-built tendency of capitalism is to reward those who have
capital, which in less technical terms means that those with
money tend to see their wealth grow much faster than those who
have no money. The rich get richer is a fundamental corollary
of capitalist dynamics.
There are two ways of suppressing this tendency toward
increasing concentration of wealth. One, obviously,
is taxes;
the other is government spending. Taxes support public
services
and government functions, but they have, always, another function.
Taxes redistribute income. Governments take money
from people
via taxes, and they also give money back to people, via social
programs.
Who the government takes money from, how much it takes, and what
it spends the money on: these are decisions with redistributive
consequences.
With the exception of a Clinton tax increase on the wealthy in
1993, the major tax changes since 1978 - an era in which
Republicans Ronald Reagan and the two Bushes (father and son)
were president a majority of the time - redistributed wealth
upward. That is, larger tax breaks went to the wealthy than
went to ordinary citizens. In fact, while taxes on the rich
were reduced in a multitude of ways, the non-progressive social
security tax for federally-funded pensions and the medicare
tax for health care for senior citizens, took ever more dollars
from working people.
How egregious this tax policy has been can be seen, dramatically,
from the single most important initiative of Mr. George W. Bush's
presidency. Elected by a minority of voters only after shenanigans
in the courts, Mr. Bush insisted that what the country wanted
and
what the economy needed was a huge tax cut. He proposed, and then
rammed through the Republican Congress, a tax bill which
redistributed money from social services into the pockets
of the wealthy.
The wealthiest one per cent of the population will rake in
52 per cent of the tax benefits when the cuts are fully operative.
In the next ten years, the new tax plan will divert an astounding
$500 billion out of federal coffers and into the bank accounts
of those who earn over $375,000 a year. Diverting this money to
the wealthy has moved the US government into deficit.
Accordingly, the president and his Republican allies in the
Congress are loathe to provide money for education, housing,
health care, and other services which working people and the
poor depend on. Not only are the rich made richer, the poor
and even the middle class will see cuts in what they receive
from the government. Redistribution two ways, in a country
where the disparity of wealth is already so great that in
the world's richest nation, over sixteen per cent of
children live in poverty.
Capitalism favors the rich, and in America tax policies have
been skewed to take from the working people and give to the
wealthy.
The third cause of the huge wealth gap between the rich
and
the great mass of ordinary Americans, is pay.
In the United States today, according to the authoritative
publication, Business Week, the CEOs of large corporations earn,
in salary and other compensation, five hundred times what their
average workers make. Put in less arithmetical terms, they earn
in slightly over half a day what their workers earn in an entire
year. As the recent debacles of Enron, Worldcom, Global Crossing,
Adelphia Networks and others have revealed, corporate executives
have been running their companies for the sole purpose of
enriching themselves. And rich they have become.
While greed has been the operative guiding principle for corporate
executives - and their bankers, their accountants, their investment
advisers - American workers have seen hard times. Over the last
four years, a total of 2 million factory jobs have been lost -
ten per cent of the manufacturing workforce, which is the
best-paying sector of the American economy. The executives who
reward themselves so handsomely (the CEO of pharmaceutical
manufacturer Merck received over $250 million for one year's
compensation) nonetheless cry in outrage at any mention in a
rise in the minimum wage, currently at $5.15 an hour.
Since 1979 the minimum wage, in inflation-adjusted dollars,
has dropped 21 per cent. In the same period, corporate
executives were under no such restraint: in 1980, CEOs
made 45 times as much as their workers, while last year
they made 531 times what their workers made.
Wages have been flat, the minimum wage has not kept pace with
inflation and, to make matters worse, well-paying jobs have
declined while low paying service-sector jobs have increased
dramatically. Worse, in the last half-century concentrated
efforts by business and the corporate media have combined
to undermine unions and union-organizing activities. While
in 1954, 34.7 per cent of American workers were unionized,
currently only 13.9 per cent of the workers belong to a
labor union. This too drives wages downward.
It bears repeating, for a third time: In the United States,
the wealthiest one per cent of the population owns more than
the bottom 95 per cent. It would seem that capitalism is
scarcely triumphant, except for those who are at the top
of the pile. It is not even the case that, as capitalist
apologists always seem to claim, a rising tide lifts all
boats, for as we have just seen, the evidence reveals that
wages have been flat and wealth share declining for a
majority of American workers.
The Americans are, in general, hardworking and generous
people. But the maldistribution of wealth, and the Republican
effort to continue - with Democratic connivance - the wealth
shift, has painful consequences. For all the appearance of
material prosperity, Americans often live with large reservoirs
of economic anxiety and unfocussed political anger. Economic
injustice is the great unacknowledged specter which haunts
American society. And this injustice is, sadly, increasing.
The writer is a professor at the University of Vermont in the
US.
© The DAWN Group of Newspapers, 2002
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