Let’s not forget to keep an eye on another place where inequality is being abetted. The outstanding economist Joe Stiglitz has written a powerful critique of the Trans-Pacific Partnership, which is a proposed trade pact of 12 countries (not including China) that Obama is seeking to ram through the US Congress as fast-track legislation. (See “On the Wrong Side of Globalization,” at http://opinionator.blogs.nytimes.com/2014/03/15/on-the-wrong-side-of-globalization/?hp&rref=opinion.) Supposedly, the TPP will do wonders for jobs and “the economy,” the same false selling points that accompanied passage of the North American Free Trade Agreement (NAFTA). That agreement was a gift to multinational corporations; as Stiglitz points out, TPP will do the same, reducing nasty regulations and legal barriers that make CEOs unhappy while, like NAFTA, offering paper-thin protections for workers’ rights and the environment. As though these deficiencies aren’t enough, the whole package is being pushed in the greatest of secrecy—just like NAFTA’s infamous chapter 11, which protects investing corporations from environmental regulations imposed by the host country. So, Mme. Lagarde, take heart; you’re not alone.
Here are some statistics on income inequality in the United States. Thanks to my friend and colleague, Dr. Ray Maghroori, for putting these together, drawing on data from a 2011 report of the Organization for Economic Cooperation and Development (OECD), a group of 34 member countries.
*The United States continues to outpace other developed economies globally with one of the biggest divides between rich and poor. During the last 30 years:
–The income of the top 1% of Americans has grown by 400%.
–The income of America’s middle class has grown by 40%.
–The income of the poorest 20% has grown by only 18%.
*More than 90% of the growth in the U.S. wealth since 1983 has gone to the top 10% of Americans.
*Looking at wealth rather than income, the differences are even more dramatic: Since 1983, more than 90% of growth in US wealth has gone to the top 10%. The bottom 60% has lost wealth.
*Median middle-class income dropped 5% in the 2000s, while net worth plummeted 28% — to $93,150 from $129,582 — as housing prices shriveled.
*The middle class has steadily shrunk over the years, falling to 51% of the population in 2011 from 61% in 1971. That’s not all bad. The upper class rose to 20% of the population from 14% during that span, meaning more than half of the decline in the middle class is attributable to people advancing to the wealthier category. But the upper class’s share of national income has risen far more dramatically, climbing to 46% from 29% four decades ago. In other words, the rich have gotten much richer–as we all know only too well.
Where is Robinhood?
Unfortunately Mel, I fear this trend of growing inequality will continue. Many current policymakers were inculcated with the ideologies of Reaganomics and then the Washington Consensus. These are the ideologies that have had the biggest voice, and most policymakers in developed states have never bothered to consider the economics of development (human development versus growth economics and that these may actually be synergistic), which is of great importance to the developing world. In addition to that, even the UNDP doesn’t build political participation into its HDI or other ‘development’ indices. If participation was measured in money, I would guess the wealthy and corporations would have a much higher participation rate than the less well off. This of course speaks to the continued trend of policies for corporations (a corporation is an individual according the the US Supreme Court), which will translate into continued inequality. My guess is that it is the current graduating university class may be the first group of policymakers to truly address inequality beyond the lip service paid by Mme. Lagarde and other politicians. In another twenty years, they may have no choice. But, it’s only going to get worse before it gets better. (On a side note: one of the most frightening elements of the TPP is the strong arming by the US that is most certainly going on behind closed doors to eliminate capital controls and open up financial markets. The volatility that will create in every country party to the agreement just adds to future misery for those states’ citizens. Banks don’t have to worry of course, if they crash the system again, they’ll get bailed out.)