Friday, June 09, 2006

Wake up: the American Dream is over

The gap between America's rich and poor is growing, not least because it appears to be government policy.

Over the past 25 years the median US family income has gone up 18 percent. For the top one percent, however, it has gone up 200 percent. A quarter of a century ago the top fifth of Americans had an average income 6.7 times that of the bottom fifth. Now it is 9.8 times.

Inequalities have grown worse in different regions. In California, home to both Beverly Hills and the gang-ridden slums of Compton, incomes for lower class families have fallen by four percent since 1969. For upper class families they have risen 41 percent.

This has led to an economy hugely warped in favour of a small slice of very rich Americans. The wealthiest one percent of households now control a third of the national wealth. The wealthiest 10 percent control two-thirds of it. This is a society that is splitting down the middle and it has taken place against a backdrop of economic growth.

Between 1980 and 2004 America's GDP went up by almost two-thirds. But instead of making everyone better off, it has made only a part of the country wealthier, as another part slips ever more into the black hole of the working poor. There are now 37 million Americans living in poverty, and at 12.7 percent of the population, it is the highest percentage in the developed world.

And yet - even against this background of growing inequality - Bush continues with his tax cuts for the rich which even Warren Buffet, the second richest man in the world, has said "screams of injustice."

Bush is continuing Reagan's insane idea of "trickle down economics" in which, the theory states, the more you give to rich people the better off the whole of society will be. It's hard to imagine how they passed that off with a straight face.

The top 0.01 percent of households has seen their tax share fall by a full 25 percentage points since 1980, when Reagan introduced this theory, and in the interim period America's poor have simply continued to get poorer. Reagan's theory is obvious bunkum, and it's a wonder that no-one calls Bush for his idiocy in continuing it.

The facts simply don't support their argument.

All this comes at a time when Republicans are calling for the abolition of "estate tax", a tax that you only pay if, in death, you leave in excess of $400 million.

That they can be calling for this tax cut at the same time as Bush has sanctioned millions of dollars in cuts to Medicare, Medicaid and the education budget is simply proof that these are not men who believe in the American Dream. These are greedy individuals who will take as much as they can and bugger the rest.

It is harder than ever for an American born in poverty to rise through the social scales.
A survey last year showed that economic mobility (a measure of those people trying to make the Dream come true) was lower in America than Canada, Germany, Norway, Denmark, Sweden and Finland. In fact, the only country doing as bad as America was Britain.
Robert Reich did a wonderful lecture recently at Berkeley University - see the video here - in which he spoke of the gap between rich and poor as resembling an elastic band. You can only stretch it so far before it either has to snap back or simply snap.

Patriotism and a love of the flag is the only thing that is preventing this society from snapping.

America's poor are being shafted. And one day they will wake up to this fact.

The dream is simply that, a dream.

Click title for full article.

10 comments:

Anonymous said...

Of course, a substantial part of this is the growing population of Hispanics in U.S. society. Educationally, Hispanics do not improve substantially even over a period of several generations.

http://www.parapundit.com/archives/002109.html

ParaPundit has several other articles on the negative consequences of Hispanic immigration to the United States.

http://www.parapundit.com/

I think ParaPundit explains one end of the problem. "Beat the Press" blogger, Dean Baker, explains the other end:

http://beatthepress.blogspot.com/

I particularly recommend reading his free ebook, "The Conservative Nanny State."

http://beatthepress.blogspot.com/2006/05/conservative-nanny-state-in-html.html

Anonymous said...

A clarification regarding my previous post:

When I stated Hispanics do not improve educationally, I was referring to our largest body of Hispanics; namely, Mexicans. The same likely holds true of Central Americans, as well. Puerto Ricans also perform poorly. Cubans, however, seem to do relatively well.

Anonymous said...

One other point, I should make:

You stated that the problem dates back 25 years. This may just be a rough estimate of the time, but it makes it sound as though the problem originated during the Reagan era. I also noticed that you also tagged this article with "Reagan." However, hourly wage growth for production and nonsupervisory workers (80% of the workforce) has been declining since the mid- to late-70's.

My own opinion is that the biggest factor causing this has been the decline of high paying blue-collar jobs (and there replacement by lower paying service jobs). Allowing unrestrained immigration hasn't helped, either. Dean Baker makes this point:

http://beatthepress.blogspot.com/2006/05/immigrant-labor-and-supply-and-demand.html

Kel said...

Thank you for posting.

If you click on the link in the article and listen to Robert Riech's lecture you will find that he asserts that this major change did start to occur during the Reagan administration.

And I don't think the gap between rich and poor can simply be put at the door of Mexicans and their standards of education.

The wealthiest ten percent of your nation now control two thirds of your country's wealth. That's simply an astonishing number that can't be wished away by blaming Mexicans.

That's government policy and it's a policy that was started under Reagan and his share holder economy.

With 37 million Americans living in poverty (12.7% of Americans) you have the largest poverty rates in the developed world.

Are there anywhere near 37 million Mexicans in America? I ask this because I genuinely don't know the figure.

But I am more troubled by the fact that the wealth increase in your GDP is not being even remotely evenly distributed. It's going one way - to the richest members of your society.

Anonymous said...

Kel, Hispanics, largely Mexicans, make up about 10-12% of the population. Blacks are also substantially poorer than whites. They make up about the same percentage of the population. The U.S. population is about 300,000,000.

We almost certainly have the highest poverty rates because we have the largest percentage on non-whites of any industrialized country.

I'm curious as to what the distribution of wealth looks like in Britain. I'm sure you will find it lopsided. I'm also sure that your black population is very poor by British standards. Finally, I think you'll find that Britain's immigrant population, largely from the Indian subcontinent, is another group of economic underachievers. (Though they probably perform better than Mexicans do in the United States.)

You'll probably find that blue-collar jobs are still threatened by Third World labor in your country, also.

It is the same all over the world. You are not wrong to look at the betrayal of society's elites for answers as to why this is so, but I think you are wrong to suggest it applies only to conservative elites. Business interests have a stranglehold on too much of our political life.

Anonymous said...

I was too general in my comment about non-whites. We have the largest percentage of non-whites out of any predominantly white industrialized country. Japan would be an example of a non-white industrialized country.

I hope you don't mind me inserting myself into this discussion. ;-)

Kel said...

I don't mind you joining in at all Tommy.

I'ts not that you have more poor people, though in a country as rich as yours that is an obvious concern.

I'm more concerned by the fact that the rich are taking an even larger proportion than they have in the past and that this trend took off during the period of Thatcher and Reagan which I think makes it official policy and a natural result of their share holder economy.

It's interesting that this trend reversed during Clinton's time in office and that the trend has reversed in Britain while Blair has been in power.

Since Bush II came to power it's all systems go and the rich are continuing to amass a larger percentage of your nations wealth.

This article is from Massachusetts, but the trend is national.

http://www.massbudget.org/article.php?id=394

Families in the top 20 percent of the state’s wage earners made an average of about $81,500 in 1980-1982, the report said. That rose by 77 percent to nearly $144,400 by 2001-2003.

But the families in the bottom 20 percent of the state only saw their average income rise by 16 percent, from nearly $16,900 to about $19,700, during the same time period.

That means that by 2003, the average family in the top-fifth of wage earners in the state made seven times more than the typical family in the bottom fifth. Only New York and Arizona saw a more rapid growth in the gap between the top wage earners and the bottom ones during those two decades, the Massachusetts Budget and Policy Center said.

"It just goes to show that economic growth in Massachusetts has not been evenly shared in the last 20 years," said Jeff McLynch, deputy director of the organization.

"The trend is actually pretty similar to those in other states (but) we had more extreme versions of trends that were happening nationally."

Anonymous said...

I find your claim that thinks began under Bush II interesting. That hasn't been what I've heard previously. We did experience an absurd economic bubble during the 90's due to the dot-com craze, but the economy as a whole was definitely slumping. Furthermore, all sources I've read indicate that the gap between rich and poor actually widened during the Clinton administration.

Anonymous said...

A few sources about the Clinton Administration and the gap between rich and poor:

http://pnews.org/art/4art/DISparity.shtml
http://www.jewishworldreview.com/cols/perkins012700.asp
http://www.freerepublic.com/forum/a38848a5110eb.htm

Kel said...

Firstly, apologies Tommy that it's taken me so long to reply. Hopefully you noticed that I had printed a post explaining that I was away until this morning.

And I'm actually not as stuck on this as partisan issue as you seem to believe.

I actually contend that this started under Reagan, not Bush II, and I am more interested in what happens if the US doesn't take steps to reverse this trend.

I thought the video on the page indicated that it went down under Clinton, though I'm willing to be called on it if I've misremembered that.

The fact remains though, that something will snap if the current trend continues unabated.

The American Dream depends on the ability of people to move upwards through your society.

All the signs are that this is becoming increasingly more difficult.