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A State Of Inequality
By Chuck Collins and Felice Yeskel
10/24/05 "AlterNet"
-- -- Fall is inequality season. Every autumn,
as the leaves change color, we get a vivid new picture of the trends
that pull us apart as a country.
This year is no different. But after almost three decades of
incrementally widening disparities of wealth and income, it's worth
noting that we've entered a new version of economic apartheid,
American-style. Let's call it Inequality 2.0.
The United States is now the third most unequal industrialized
society after Russia and Mexico. This is not a club we want to be
part of. Russia is a recovering kleptocracy, with a post-Soviet
oligarchy enriched by looting. And Mexico, despite joining the
rich-nations club of the Organization for Economic and Community
Development, has some of the most glaring poverty in the hemisphere.
In 2004, after three years of economic recovery, the U.S. Census
reports that poverty continues to grow, while the real median income
for full-time workers has declined. Since 2001, when the economy hit
bottom, the ranks of our nation's poor have grown by 4 million, and
the number of people without health insurance has swelled by 4.6
million to over 45 million.
Income inequality is now near all-time highs, with over 50 percent
of 2004 income going to the top fifth of households, and the biggest
gains going to the top 5 percent and 1 percent of households. The
average CEO now takes home a paycheck 431 times that of their
average worker.
At the pinnacle of U.S. wealth, 2004 saw a dramatic increase in the
number of billionaires. According to Forbes Magazine, there are now
374 U.S. billionaires. The growth in billionaires took a dramatic
leap since the early 1980s, when the average net worth of the
individuals on the Forbes 400 list was $400 million. Today, the
average net worth is $2.8 billion. Wal-Mart's Walton family now has
771,287 times more than the median U.S. household.
Does inequality matter? One problem is that concentrations of wealth
and power pose a danger to our democratic system. The corruption of
politics by big money might explain why for the last five years the
President and Congress have been more interested in repealing the
federal estate tax, paid only by multi-millionaires, than on
reinforcing levees along the Gulf Coast.
Now, to pay for hurricane reconstruction and the war in Iraq,
Congress is considering cuts in programs that help poor people, such
as Medicaid and Food Stamps. They have not yet considered fairer
ways of reducing the deficit by reversing special tax breaks for the
rich, such as the recent cuts in capital gains and dividend taxes.
Inequality is non-partisan. The pace of inequality has grown
steadily over three decades, under both Republican and Democratic
administrations and Congresses. The Gini index, the global measure
of inequality, grew as quickly under President Clinton as it has
under President George W. Bush. Widening disparities in the U.S. are
the result of three decades of bi-partisan public policies that have
tilted the rules of the economy to the benefit of major corporations
and large asset owners at the expense of people whose security comes
from a paycheck.
Public policies in trade, taxes, wages and social spending can make
a difference in mitigating national and global trends toward
prolonged inequality. But our priorities are moving in the wrong
direction.
For example, the failure to raise the minimum wage from its 1997
level of $5.15 an hour guarantees continued income stagnation for
the working poor for years to come. The President and Congress's
focus on tax cuts for the wealthy and their disinterest in
government spending to expand equal opportunity sets the stage for
Inequality Version 3.0.
We shouldn't tolerate this drift toward an economic apartheid
society.
Chuck Collins and Felice Yeskel are co-authors of the new book,
"Economic Apartheid in America: A Primer on Economic Inequality and
Insecurity" (The New Press).
© 2005 Independent Media Institute. All rights reserved.
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