Nov 9, 2010
The growing inequality gap is turning the U.S. into a banana republic
Nicholas D. Kristof, a two-time winner of the Pulitzer Prize and a New York Times columnist, is seeing alarming similarities between the banana republics he has spent his stellar career covering and the U.S. because of our growing inequality.
Kristof is widely known for bringing to light human rights abuses in Asia and Africa, such as human trafficking and the Darfur conflict. He has lived on four continents, reported on six, and traveled to 150 countries and all 50 states. However, he said what marks banana republics is the huge gap between the rich and the working class; something that is happening in the U.S.
He said “in some of these plutocracies, the richest 1 percent of the population gobbles up 20 percent of the national pie,” something that is happening in the U.S., but he also said the disastrous mid-term elections could make the situation even worse.
Kristof said “The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976.” That means the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.”
I have highlighted the growing gap the average worker and the CEO in past posts, and the fact that CEOs rake in even more millions of dollars if they kill American jobs. But the problem is even worse than I thought.
In 1965 the average CEO was earning 24 times what the average worker was making. But by 2001 the C.E.O.’s of the largest American companies earned an average of 531 times as much as the average worker.
The middle class is disappearing as fast as union membership, which created, the middle class, yet there are people voting to quicken the demise of the middle class by supporting Bush’s tax cuts for the most affluent 1 percent. They sure need all the breaks they can get.
Kristof makes the argument that instead of given more unneeded break to the richest 2 percent, that at a time of “9.6 percent unemployment, wouldn’t it make more sense to finance a jobs program? For example, the money could be used to avoid laying off teachers and undermining American schools.” He also said that an “obvious priority in the worst economic downturn in 70 years should be to extend unemployment insurance benefits, some of which will be curtailed soon unless Congress renews them. Or there’s the Trade Adjustment Assistance program, which helps train and support workers who have lost their jobs because of foreign trade. It will no longer apply to service workers after Jan. 1, unless Congress intervenes.”
The growing inequality gap between the working class and the rich can and has suppressed growth.
The column cites the research of Robert H. Frank of Cornell University, Adam Seth Levine of Vanderbilt University, and Oege Dijk of the European University Institute that found that inequality leads to more financial distress. Kristof said that they looked at census data for the 50 states and the 100 most populous counties in America, and found that places where inequality increased the most also endured the greatest surges in bankruptcies.
“Another consequence the scholars found: Rising inequality also led to more divorces, presumably a byproduct of the strains of financial distress,” Kristof said. “Maybe I’m overly sentimental or romantic, but that pierces me. It’s a reminder that inequality isn’t just an economic issue but also a question of human dignity and happiness.”