Tuesday, March 04, 2008

Getting serious about people to protect the planet.

John Schmitt gives a facinating talk on changes in income and wealth ineqaulity in the US since the second world war.

I seem to be following US economic policy more closely that that in the UK as materials are better available. The US may now be in a recssion but even before this period Americans didn't feel as wealthy as national economic growth suggests that they should. Why arent Americans feeling welathier?

The answer comes down to distribution of income. In perticular the establishment
of govornment policies that actively shift power to the wealthiest 5% and even more
so to the wealthiest 1% of the population. It is a great irony that in the early 80's when the post-war boom had subsided the presumed saviour of the economy Ronald Ragan was voted into office. Ragan presided over an economy growing steadily, whilst at the same time singularly failing to pass on this growth to the vast majority of the population. So whilst the economy has grown from 100 units to 167 units per capita the feeling is very different:

"We are a very much richer country now than we where 25-30 years ago. And i think one of the great ideological victories of the rights is to persuade us somehow that we dont have the resources or the abillity to be able to afford the things that we used to do...that we cant afford the education, or the social security sysem...and i think that is an incredible misrepresnetation of the economic situation on the united states."

US GDP was 100 uits in 1979 and 167 in 2004. The image bellow shows the wage growth at 10th, 50th and 95th percentile. Wages have decreased slightly for the poorest, risen about 10% for the median and about 30% for the top 10%: despite 60% growth in wealth!

All of these figuers are however poor when compared to growth in GDP...the full increase in wealth reaches the top eschelons not through wages but through invesments. Govornment policies are effectively robbing from the poor and giving to the rich (but subtly). The graph bellow shows how the wealth gains from 1983 to 2001 have been distributed. And it is this economic policy that the Republicans are falling over each other to associate themselves with! The democrats also had a role in this and they have done very little to show that they have seen the light and are prepared to do something about this appaling state of affairs and move the US away from its position as most ineqaul developed nation.

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