Sixteen Facts About Growing US Income IN-equality

 

27 May 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com

Quite aside from the human and social justice aspects, income equality is a crucial factor in creating and continuing sustained economic growth.

The fact that – as income inequality BETWEEN nations decreases, something we think is a good thing –

income inequality WITHIN nations, in general, and among those both “old” – US / UK / Germany / Japan –

 

 

27 May 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com

Quite aside from the human and social justice aspects, income equality is a crucial factor in creating and continuing sustained economic growth.

The fact that – as income inequality BETWEEN nations decreases, something we think is a good thing –

income inequality WITHIN nations, in general, and among those both “old” – US / UK / Germany / Japan –

and “new” – above all, China and India, but also other emerging markets like Brazil, Russia and Mexico – is, sadly, growing.

What follows is a list of salient factors that detail how income inequality is increasing WITHIN the US.

And while income in-equality is problematic anywhere, it is ESPECIALLY so in the US, because, as we have said so many times,

since 1947, we have had an American-centered world political economy,

meaning, very simply, that countries either SELL to the US – or they SELL to countries that SELL to the US.

In this sense, as we have pointed out before, the US differs RADICALLY from the British Empire,

which, to put it bluntly, was basically a protection racket run by the British Navy for the benefit of manufacturers in the English Midlands,

who took raw materials from England’s colonies, turned them into some kind of product, and then sold it back to them –

all the while NOT allowing other imperial countries – France / Germany / Italy / in a way, the US –

access to either the raw materials of, or the chance to sell finished products to, those protected Third World markets, especially Lectures 11 and 13.

Indeed, it was precisely the fact that income was so relatively equally divided in the US after World War II –

thanks largely, if not exclusively, to the policies of the 20^th century’s greatest President, Franklin Delano Roosevelt –

that made the creation of the US-centered world political economy possible:

basically because there were so many Americans, with so much broadly-distributed purchasing power,

that they could serve as a market for the productive capacity of the rest of the world.

And the fact the US today has more income in-equality than at any previous time in its history is a fundamental factor in its continued bad economic shape, most notably in the housing market, but in other areas as well.

This is not a list we present with any pleasure, but with a profound hope people in general, and Americans in particular, can do something to change this deeply anti-human reality – peacefully – from within.

With that understood, here are sixteen VERY unpleasant facts that we definitely do NOT expect to “make your day”.

#1) In 1950, the ratio of the average executive’s paycheck to the average worker’s paycheck was about 30 to 1.

Since the year 2000, that ratio has exploded to between 300 to 500 to one.

#2) A USA Today analysis of government data has found that paychecks from private business shrank to their smallest share of personal income in U.S. history during the first quarter of 2010.

During the same time period, government benefits – Social Security, Medicare, unemployment insurance, food stamps, etc. – rose to a record high.

#3) According to the United Nations, the United States now has the highest level of income inequality of all of the highly industrialized nations.

#4) Four of the biggest banks in the United States – Goldman Sachs, JPMorgan Chase, Bank of America and Citigroup – had a “perfect quarter” with zero days of trading losses during the first quarter of 2010.

#5) According to economists Thomas Piketty and Emmanuel Saez, two-thirds of income increases in the United States between 2002 and 2007 went to the wealthiest 1% of all Americans.

#6) 39.68 million Americans are now on food stamps, which represents a new all-time record.

But things look like they are going to get even worse.

The U.S. Department of Agriculture is forecasting that enrollment in the food stamp program will exceed 43 million Americans in 2011.

#7) For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.

#8) Over just one three day period, approximately 10,000 people showed up to apply for just 90 jobs making washing machines in Kentucky for $27,000 a year.

Of course, we just noted a similar radical imbalance in the ratio of applicants to jobs in the teaching profession.

#9) Executives at many of the big banks that received massive amounts of government bailout money during the financial crisis are being lavished with record bonuses as millions of other Americans continue to suffer.

#10) Younger generations of Americans are particularly struggling.

For example, according to a National Foundation for Credit Counseling survey, only 58% of those in “Generation Y” pay their monthly bills on time.

#11) Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.

#12) Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.

Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005.

#13) An analysis of income tax data by the Congressional Budget Office found that

the top 1% wealthiest households in the United States now own nearly twice as much of the corporate wealth as they did just 15 years ago.

#14) A staggering 43 percent of Americans have less than $10,000 saved up for retirement.

#15) Once great blue collar manufacturing cities such as Detroit have turned into rusted-out war zones,

while corporate executives rake in record bonuses by moving factories to third world nations.

#16) The bottom 40 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.

So what does that say about America when nearly half the people are dividing up just one percent of the pie?

Indeed.

With great thanks for the inspiration and research leads of our great friend, Richard Martin of GFA Wealth Design, Singapore.

 

David Caploe PhD

Chief Political Economist

EconomyWatch.com