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Third World America
When the top 1 percent has a higher net worth than the 90 percent of the country, you have a problem. When the living on the country's median household income feels like poverty, you have a problem. When the wants of the wealthy outweigh the needs of everyone else, you have a problem.
We have a problem.
According to the Economic Policy Institute, the top 1 percent wealthiest households in 2009 had net worth that was 225 times greater than the median family net worth, up from 181 times greater in 2007. In 1983 the ratio was 131 times the median family net worth. All indications are that the ratio got even worse in 2010. In terms of income, the richest 1 percent of Americans now brings in almost 24 percent of ALL income, up from almost 9 percent in 1976. As 2010 ended and the new year has begun with a rally in the markets, the wealth of the wealthy continues to expand while the majority still feels the recession with an unemployment rate near 10 percent.
As the wealthiest among us see income and assets swell, the least of us are seeing their ranks swell. EPI reported, "While 14.3% of all Americans were living in poverty last year [2009], a record 6.3% were in so-called deep poverty, earning less than half the official poverty threshold, or subsistence rate, according to the new data on poverty released last week by the Census Bureau." Brookings reported, "Suburbs saw by far the greatest growth in their poor population and by 2008 had become home to the largest share of the nation's poor" in their paper "The Suburbanization of Poverty: Trends in Metropolitan America, 2000 to 2008." By November 2010, the nation's unemployed totaled 15.1 million, 41.9 percent of whom have been jobless for 27 weeks and more. Some have even suggested that the sustained high rates of unemployment we saw throughout 2010 and are still seeing could result in an unemployed underclass disconnected from the workforce. Each week more and more of the unemployed give up and no longer appear in the regularly reported labor statistics.
The gut reaction to all of this varies according to ideology. Those on the left whine about the unfairness of it all. Those on the right downplay these statistics out of fear of more aggressive taxation. Everyone else shrugs it off, as if to say, "So, the rich are getting richer and the poor are getting poorer. What else is new?"
But, this is "a very disturbing trend" as former Fed chief Alan Greenspan noted. Fairness is beside the point. This is bad for business and therefore the recovery and growth of the economy. This is the direction of a "Third World America" not that of the greatest economic powerhouse on the planet. Using the worsening income disparity of America as a metric, we find ourselves moving away from the standing of a developed nation and toward the what is more typical in the underdeveloped world.
According to the CIA World Factbook, the US Gini coefficient, which is a measure of the inequality of a distribution with a value of 0 expressing total equality and a value of 1 for maximal inequality, at 0.45, is about the same as Uganda, Philippines, and Iran. We have greater income inequality than Albania, Bangladesh, and scores of other countries. There are a few, like Zimbabwe, Sierra Leone, and Namibia that are worse, countries where a few oligarchs hold all of the power and wealth of their nations leaving everyone else in stark poverty. Yet, we are trending in that direction as a matter of empirical fact. Do we really want the economic conditions of an impoverished African autocracy?
There is an old story of Henry Ford being asked why he paid his workers so well. He reportedly said that someone has to be able to buy his cars. As a business owner, I can really relate to that statement. I had to close down one of my operations because, in the wake of the recent economic crisis, there just weren't any more buyers for what I was selling. Some of the unemployed used to work for me and other business people like me. I can honestly say that tax cuts alone would not cause me to hire anyone back. Businesses need customers.
Something has to be done about income and wealth disparity, not because of some liberal ideology, but because of the simple fact that no one wants to try to run a business in a nation of broke people.
About the Author
Michael Hill, author of Cannibal Capitalism-A Nonpartisan Look at What's Undermining American Prosperity (cannibalcapitalism.com), had a net worth of more than $40 million, before the 2007-9 economic collapse left his home-building business bankrupt. As he picked up the pieces, he became determined to drill through the politically biased noise and understand the "flaw" former Federal Reserve chairman Alan Greenspan described in our model of the economic world. Hill explains his findings on the causes and conditions that brought on the worst economic crisis since the Great Depression from the often-overlooked perspective of a nonpolitical, small business owner.The results of his research are clear-sighted, surprising solutions that give us reason for hope in an era of bitter, deceptive political divides. He offers us ways in which we can:. strengthen the middle class, compete globally but bring the money home, and break our dependence on OPEC without destroying the planet or chasing alternative energy pipe dreams. By describing how to use our inflated money to build real wealth, Hill gives us some hard-hitting straight talk about today's economy-and how to fix it. Michael C. Hill works as a venture capitalist in Washington DC and is editor in chief and founder of the unbiased news site www.thenuuz.com. He formerly owned an award-winning home-building business and is an occasional contributor to the Washington Post. Hill lives in Maryland with his wife and two daughters.
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