#1 Censored Story) Wealth Inequality in 21st Century Threatens Economy and Democracy

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http://www.projectcensored.org/publications/2005/1.html

 

(#1 Censored Story) Wealth Inequality in 21st Century

Threatens Economy and Democracy

 

 

 

MULTINATIONAL MONITOR, May 2003, Vol. 24, No. 5

Title: " The Wealth Divide " (An interview with Edward

Wolff)

Author: Robert Weissman

 

BUZZFLASH, March 26 and 29, 2004

Title: “A Buzzflash Interview, Parts I & II " (with

David Cay Johnston)

Author: Buzzflash Staff

 

LONDON GUARDIAN, October 4, 2003

Title: " Every third person will be a slum dweller

within 30 years, UN agency warns "

Author: John Vidal

 

MULTINATIONAL MONITOR, July/August, 2003

Title: “Grotesque Inequality”

Author: Robert Weissman

 

Faculty Evaluators: Greg Storino, Phil Beard Ph.D.

Student Researchers: Caitlyn Pardue, David Sonnenberg,

Sita Khalsa

 

THE DOMESTIC TREND

 

In the late 1700s, issues of fairness and equality

were topics of great debate—

equality under the law, equality of opportunity, etc.

Considered by the framers of the Constitution to be

one of the most important aspects of a democratic

system, the word “equality” is featured prominently

throughout the document. In the 200+ years since, most

industrialized nations have succeeded in decreasing

the gap between rich and poor.

 

However, since the late 1970s wealth inequality, while

stabilizing or increasing slightly in other

industrialized nations, has increased sharply and

dramatically in the United States. While it is no

secret that such a trend is taking place, it is rare

to see a TV news program announce that the top 1% of

the U.S. population now owns about a third of the

wealth in the country. Discussion of this trend takes

place, for the most part, behind closed doors.

 

During the short boom of the late 1990s, conservative

analysts asserted that, yes, the gap between rich and

poor was growing, but that incomes for the poor were

still increasing over previous levels. Today most

economists, regardless of their political persuasion,

agree that the data over the last 25 to 30 years is

unequivocal. The top 5% is capturing an increasingly

greater portion of the pie while the bottom 95% is

clearly losing ground, and the highly touted American

middle class is fast disappearing.

 

According to economic journalist, David Cay Johnston,

author of “Perfectly Legal,” this trend is not the

result of some naturally occurring, social Darwinist

“survival of the fittest.” It is the product of

legislative policies carefully crafted and lobbied for

by corporations and the super-rich over the past 25

years.

 

New tax shelters in the 1980s shifted the tax burden

off capital and onto labor. As tax shelters rose, the

amount of federal revenue coming from corporations

fell (from 35% during the Eisenhower years to 10% in

2002). During the deregulation wave of the ‘80s and

the ‘90s, members of Congress passed legislation

(often without reading it) that deregulated much of

the financial industry. These laws took away, for

example, the powerful incentives for accountants to

behave with integrity or for companies to put away a

reasonable amount in pension plans for their

employees—resulting in the well-publicized (too late)

scandals involving Enron, Global Crossing, and others.

 

THE GLOBAL IMPACT

 

As always, America’s economic trends have a global

footprint—and this time, it is a crater. Today the top

400 income earners in the U.S. make as much in a year

as the entire population of the 20 poorest countries

in Africa (over 300 million people). But in America,

national leaders and mainstream media tell us that the

only way out of our own economic hole is through

increasing and endless growth—fueled by the resources

of other countries.

 

A series of reports released in 2003 by the UN and

other global economy analysis groups warn that further

increases in the imbalance in wealth throughout the

world will have catastrophic effects if left

unchecked. UN-habitat reports that unless governments

work to control the current unprecedented spread in

urban growth, a third of the world's population will

be slum dwellers within 30 years. Currently, almost

one-sixth of the world's population lives in slum-like

conditions. The UN warns that unplanned, unsanitary

settlements threaten both political and fiscal

stability within third world countries, where urban

slums are growing faster than expected. The balance of

poverty is shifting quickly from rural to urban areas

as the world's population moves from the countryside

to the city.

 

As rich countries, strip poorer countries of their

natural resources in an attempt to re-stabilize their

own, the people of poor countries become increasingly

desperate. This deteriorating situation, besides

pressuring rich countries to allow increased

immigration, further exacerbates already stretched

political tensions and threatens global political and

economic security.

 

UN economists blame " free-trade " practices and the

neo-liberal policies of international lending

institutions like the IMF and WTO, and the

industrialized countries that lead them, for much of

the damage caused to Third World countries over the

past 20 years. Many of these policies are now being

implemented in the U.S., allowing for an acceleration

of wealth consolidation. And even the IMF has issued a

report warning the U.S. about the consequences for its

appetite for excess and overspending.

 

In developing countries, the concentration of key

industries profitable to foreign investors requires

that people move to cities while forced privatization

of public services strip them of the ability to become

stable or move up financially once they arrive.

Meanwhile, the strict repayment schedules mandated by

the global institutions make it virtually impossible

for poor countries to move out from under their burden

of debt. " In a form of colonialisation that is

probably more stringent than the original, many

developing countries have become suppliers of raw

commodities to the world, and fall further and further

behind, " says one UN analyst. World economists

conclude that if enough of the world’s nations reach a

point of economic failure, such a situation could

collapse the entire global economy.

 

For further information on this story, please check

out the following excellent websites:

www.inequality.org

http://www.dollarsandsense.org/

http://www.pbs.org/now/politics/income.html

http://www.guardian.co.uk/usa/story/0,12271,1118425,00.html

David Cay Johnston interview also found on Democracy

Now!, May 18, 2004.