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.” [1] 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?
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