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.”


Not Anonymous said...

So the inequality has been growing. Let's see, in 1965, Democrats were in control in the white house. There were 8 years of a moderate Republican, but still Democrat Congress. Then four years of Democrat in the white house, but still Democrat congress. Then there were 8 years of Reagan, and he only had one chamber Republican for a term. Then there were another four years of Republican in the white house, but again, Democrats in the Congress. Then eight years of a Democrat. The first two with Democrats in Congress. Finally, after more than 40 years, Republicans took over Congress, then Republicans lost one chamber, but kept the other, but still a Democrat in the white house. Then 8 years of a Republican in the White House and Repubicans in the Congress for six of them. Now we have Democrats in Congress the past four years and a Democrat in the White House the past two years.

So, since 1965 the Democrats pretty much owned the Congress and with the exception of 14 years, the Republicans owned the White House. All during that time, if you're information is correct, the inequality continued to grow.

It's obvious you're trying to blame the Republicans for your perceived problem, but they don't take office until January 3. The Democrats still own the House, Senate and white house.

The perceived problem? Well, find me a poor man that has ever given anyone a good paying job, that is not in the government.

All tax cuts should and will be extended. They should be made permanent so that the business owners know what they can do in the future and bring that money that is sitting on the sidelines waiting to see what happens, into the economy and watch the economy thrive. The only question is, will the lame duck congress extend them or will we have to wait for the new Republican Congress to pass them and make them retroactive to January 1.

Get used to it, the economy is about to thrive due to the Bush tax cuts being extended and cuts in the wasteful spending.

Communications guru said...

That is correct, anonymous coward, inequality has been growing; it coincided with the Republicans assault on the middle class and labor unions.

The tax cuts for the middle class should be extended; but not for the richest 2 percent.

I hope the economy thrives, thanks to President Obama and the Democrat halting a depression and lifting the economy out of the Bush depression, but Republicans always screw it up. If the Bush tax cuts were so great, then why did Bush have the worst jobs-creation performance by any President in 66 years, and why did he lose more than 3 million private-sector jobs?

Once again, anonymous wimp, I am still waiting for you to back up your outrageous lie that we were “nearly shoulder to shoulder once.”