Wednesday, July 9, 2008

Working for a Living

¡Hola! Everybody…
I’m looking to do a series of short getaways for my vacation. A friend has suggested Maine. Her family has a vacation home somewhere up there and it sounds like a good idea. Also, I would love to visit Frank Lloyd Wright’s architectural masterpiece, Falling Water, but I would need someone to ride with me down to Pennsylvania ::sigh::

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Economic Apartheid
“Lots of people who are smart and work hard and play by the rules don't have a fraction of what I have. I realize I don’t have my wealth because I’m so brilliant. Luck has a lot to do with it.”
— Eric Schmidt, CEO of Google, Inc.

Last night, as Randy cut-and-pasted neocon websites shilling trickle-down economic theory, I was thinking about the myths that rationalize economic policies that have devastated the middle class. Since the 1980s, income inequality has risen to proportions never before seen in this country. The constant bray of neocons is that if we continue to cut taxes for the rich, we will all be better off.

In fact, the vast majority of Americans are worse off today than they were20-30 years ago. Today, most of us work far longer hours for less pay and less job security. In addition, crucial government services such as health care and education have suffered to the point that they are the laughing stock of the industrialized world.

And yet, economic conservatives continue to clamor for more tax cuts for the rich. As a percentage of wealth, you (if you’re middle class) pay more in taxes than wealthy individuals. In fact, some of you pay more in taxes than do multinational corporations. The Bush tax cuts is what’s known in the con game as a “bait and switch.” Meaning you may get a nominal r windfall on your return, but you’re paying out the ass for other crucial services such as college, oil, and other “luxuries.”

In his 2004 report, I Didn't Do It Alone: Society's Contribution to Individual Wealth and Success, Chuck Collins spotlights successful entrepreneurs and concludes that the myth of self-made success is destructive to the economic infrastructure that fosters wealth creation. Collins states, “How we think about wealth creation is important since policies such as large tax cuts for the wealthy often draw on the myth of the self-made man,” He adds, “Taxes are portrayed as onerous, unfair redistribution of privately created wealth — not as reinvestment or giving back to society. Yet, where would many wealthy entrepreneurs be today without taxpayer investment in the Internet, transportation, public education, legal system, the human genome and so on?”

When you actually ask successful people, they tell a different story than the ones being sold in the corporate media (remember that five corporations own the majority of US media). They emphasize key factors such as the advantages of privilege, like inheritance and race. Others emphasized government-provided services, like subsidized college tuition and government investments in technological research. And still others noted good old-fashioned luck. Click here to read the full report.

Neoconservative superstition would have you believe the myths so that they can continue to con you. If we’re lucky, history books will write about this era as the greatest con ever. I will be writing more on this in the coming days.

On the other side of the ledger are the vast majority of us who scrape by from paycheck to paycheck, year after year, without much to show for it. When income just covers the basic cost of living, building even a small amount of wealth becomes impossible.

As I alluded previously, income inequality has grown since conservatives have taken over economic policy. Between 1983 ands 2003, average income for households in the top 5% grew by $108,987. The gains were far smaller for every other income group. In 2003, the 20% of households with the least earnings scraped by with an average income of just $9,996, only $839 more in real dollars than what they had 20 years earlier.

Income and wealth are related in two ways. People with high incomes can accumulate wealth, and this wealth can generate additional income. However, for the vast majority of Americans, income is just a means of surviving.

So why should you care about economic inequality? You might point out that many poor people in the US today own cars and cell phones, luxuries that even millionaires didn’t have a hundred years ago. But last century’s luxuries are this yer’s necessities. Let’s see you find and keep a job without a car or telephone, for example. Furthermore, human beings tend to define their standards of living in relative, not absolute terms.

Extreme inequality (as found here in the U.S.), reduces people’s sense of inclusion in the larger society. It reduces the likelihood that they will be able to work together to solve social problems. It also contributes to overt forms of social conflict.

Studies of US states and Canadian provinces show that higher income inequality is associated with higher rates of homicide. In 1990, for instance, the homicide rate in the US was Louisiana. That state also had the highest level of income inequality.


Census, “Historical Income Tables-Households,” Tables H1 and H3

Daly, M., & et al. (2000). Income inequality and homicide rates in Canada and the United States. Canadian Journal of Criminology, 43(2), 219-236. (click here)

Wilkinson, R. (2005). The impact of inequality. New York: The New Press.

Landa, D., & Kapstein, E. B. (2001). Inequality, growth, and democracy. World Politics, 53(2), 264-296.

Kawachi, I., Kennedy, B. P., Lochner, K., & Prothrow-Stith, D. (1997). Social capital, income inequality, and mortality. American Journal of Public Health, 87(9), 1491-1498.

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