America, the land of inequality

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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 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 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.

The fight for this program requires the mobilization of the working
class in the US and internationally, independent of the Democrats and
Republicans and all the political formations that defend the existing
capitalist set-up.

Tom Eley

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

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