In the December 14, 2006 issue of Rolling Stone, Paul Krugman takes Bush to task regarding the “biggest untold economic story of our time.” The article is titled, “The Great Wealth Transfer.” In sum, more and more of the wealth of this country is falling into fewer and fewer hands. For most Americans, wages have failed to keep up with rising prices, causing workers to fall behind inflation. Most Americans are “definitely worse off than they were in 2000.”
Back in 1969, the employees of General Motors averaged (in current dollars) more than $45,000 per year, with great benefits. Compare that with today’s Wal-Mart nonsupervisory workers, who average $18,000 per year with lackluster benefits.
Krugman’s article takes aim at three myths.
Myth #1: Inequality is mainly a problem of poverty. This is incorrect, because middle income workers haven’t seen their wages grow. “The real divergence in fortunes is between the great majority of Americans and a very small, extremely wealthy minority at the far right of the line.”
Myth #2: Inequality is mainly a problem of education. Not true, says Krugman. “Being highly educated won’t make you into a winner in today’s US economy. At best, it makes you somewhat less of a loser.”
Myth #3: Equality doesn’t really matter. Krugman argues that America now has significantly less social mobility than previously. “It’s easier for a poor child to make it into the upper middle class in just about every other advanced country-including famously class-conscious Britain-than it is in the United States.”
What is the cause of this growing economic disparity? The Bush administration has been engaging in union bashing, utilizing a variety of creative techniques described by Krugman. Combine this with the polarizing effects of the Bush tax cuts. Once the Bush tax cuts have taken full effect, “more than a third of the cash will go to people making more than $500,000 a year–a mere 0.8% of the population.”
The United States is now working on attaining the same sort of economic and social inequity attained by many Latin American countries. More and more, we are starting to award community assets to people with the right connections. In this situation, many talented people will never rise to the full potential “because they were born into the wrong class.”
The factual background of this article leads to Krugman’s final question: “Will the United States go down the path that led America followed-one that leads to ever growing disparity in political power as well as an income?
“Will the United States go down the path…that leads to ever growing disparity in political power as well as…income?"
That has been the stated goal of Republican lawmakers in Washington since the 1994 election. One of their first acts of power was to redraw political district lines to ensure a republican majority in Congress. Since then, they used their power to engineer a massive shift in wealth distribution. Keep in mind: individuals determine how much income they earn, but government tax policy determines how much income they keep. Thus, Republican tax policies — which have stressed tax cuts for the rich and benefit cuts for the poor — have radically shifted wealth distribution in America. And, absent repeal of these policies by Democrats, this shift is destined to continue for many years to come.
Speaking of the gulf between rich & poor: luxury goods retailers have been the big winners this holiday season. Sales of high end products are way up (e.g., high-end jewelry sales are up 10%) while sales of low-end products are flat (e.g., Walmart sales are up just 1% from last year). You know what that means: the rich have gotten richer and the poor have…well, you know.
This is perhaps why there are so many "law and order" Republicans. When social injustice increases, so does social discontent. This causes crime to go up, which causes nervous, rich Republicans to say we "need" more police and more prisons, even though America already imprisons a larger percentage of its population than any other nation on earth. Maybe the solution isn't building more prisons; maybe it's building fairer communities, in which people aren't tempted to commit crimes because they have better economic opportunities.
Unfortunately for America, Republicans have handled the "war on terror" in exactly the same misguided way — with policies that have caused more crime — and we see the results. Sadly, we will never know how much Bush might have reduced the terrorism threat if he had spent $300+ billion and 500,000+ man-years (140,000+ troops x 3.7 years) creating economic investments in Arab countries, instead of destroying a nation.