[Peace-discuss] US social pathology

[C. G. Estabrook]

	America, the land of inequality
	13 February 2010

New studies reveal that the social divide between rich and poor in the US has 
grown much starker in the current economic crisis, and that even before it hit 
the country was the most unequal of the advanced economies, with great wealth 
and extreme poverty having become virtually hereditary conditions.

President Barack Obama has done nothing to reverse decades of wage stagnation, 
mounting poverty, and attacks on the social welfare system. On the contrary, 
following George W. Bush, he has seized on the crisis to redistribute wealth to 
a tiny financial elite through the ongoing bailout of the finance industry.

This demonstrates a fundamental political reality: no reform that benefits the 
broad masses can come from a government and two-party system so openly in the 
clutches of Wall Street. The financial aristocracy’s grip over all the levers of 
state power must be broken by the working class, independently mobilized behind 
a socialist program.

The impoverishment of the working masses amidst the current economic crisis is 
documented by a recent report from Northeastern University analyzing 
unemployment in 2009, based on income data for the previous year.

Unemployment in the fourth quarter of 2009 for those in the bottom 10 percent of 
household earnings was at the Depression level of 31 percent. A broader measure 
of unemployment, the labor market underutilization rate—which combines 
unemployment, underemployment, and those who have fallen out of the workforce 
because they have ceased actively searching for work—was over 50 percent among 
the bottom decile of earners, for the second decile, 37.6 percent, and for the 
third and fourth lowest income deciles, 17.1 percent and 15 percent, 
respectively. For the top 10 percent of earners, the underutilization rate was 
6.1 percent.

The data is indicative of “a true Great Depression,” according to the report, 
yet “there was no labor market recession for America’s affluent.”

The sharp polarization that reveals itself in fabulous wealth for a handful, on 
the one hand, and unemployment, wage cuts, homelessness and hunger for broad 
layers of working people on the other, marks an intensification of longer-term 
trends.

According to the Economic Policy Institute (EPI), “While many middle-income 
families have lost jobs, homes, and retirement savings during the latest 
recession, their economic woes date back much further.” In the 30 years before 
2008—the onset of the current crisis—nearly 35 percent of total income growth in 
the US was cornered by the top one-tenth of 1 percent of income earners. The 
bottom 90 percent shared only 15.9 percent of income growth in the same period.

According to the United Nation’s Gini coefficient, which measures the national 
distribution of family income, the US had the highest level of inequality of the 
highly industrialized countries, based on the data available in 2008. It was 
ranked as slightly more unequal than Sri Lanka, and on a par with Ghana and 
Turkmenistan. In the Central Intelligence Agency World Fact Book’s Gini ranking 
for 2008, the US fell just behind Cameroon.

The apologists for US capitalism have long claimed that, though inequality may 
be great, America is a land where anyone can go “from rags to riches” by 
“pulling themselves up by their boot straps.”

Not so, according to a new report from the Organisation for Economic 
Co-operation and Development (OECD), which concludes that in the US “mobility in 
earnings, wages and education across generations” is at or near the lowest of 
the advanced economies. The US joined Italy and Britain as the countries where a 
worker’s father’s earnings are most determinant of his or her own wages. 
Moreover, in the US the role of parents’ educational level on the educational 
achievement of their children was more pronounced than any other country, the 
report reveals.

The vast polarization of wealth in the US will only intensify. According to the 
Obama administration’s rosy economic estimates, unemployment will not return to 
its pre-crash levels before the end of the decade. More realistic observers, 
however, acknowledge that mass unemployment will be a fixture of US life, and 
higher-paying jobs destroyed in the recession will never return. Combined with 
declining home values, skyrocketing health care and higher education costs, 
chronically high unemployment will result in steadily rising poverty.

But for the CEOs and bankers perched at the pinnacle of US society, the economic 
crisis has proven an out-and-out bonanza, a recent New York Times report 
reveals. John G. Stumpf, the head of the bank Wells Fargo, took home $18.7 
million in 2009. Jamie Dimon of JPMorgan was number two in banker pay with $17.6 
million in compensation. Lloyd Blankfein, whose Goldman Sachs has reaped 
windfall profits in the financial collapse, was awarded “only” $10 million.

These big name bankers are only the tip of the iceberg. “There are probably 
thousands of people that are in the Millionaire Club—or even the Ten Millionaire 
Club—that have gotten no heat,” Wall Street compensation expert Alan Johnson 
told the Times.

Obama defends these obscene pay packages. “I, like most of the American people, 
don’t begrudge people success or wealth,” he said of the eight-figure rewards 
for the same financial executives whose firms have benefited from trillions in 
taxpayer support. “That is part of the free-market system.”

In fact “most of the American people” not only begrudge these ill-gotten gains. 
They wonder why they have yet to see news footage of bankers and traders 
arrested and hauled from their plush offices. Now working class anger is 
becoming increasingly trained on the political system, which, as a year’s 
experience with the Obama administration has taught, does the bidding of Wall 
Street regardless of which party controls the White House and Congress.

The antidote to the plundering of society that has gone unchecked for decades is 
the nationalization of the banks and their transformation into public 
institutions, democratically controlled by working people. The ill-gotten gains 
of the lords of finance must be expropriated and used to put in place a program 
of full employment, free universal health care, free higher education, and 
infrastructure development...

http://www.wsws.org/articles/2010/feb2010/pers-f13.shtml

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