Thursday, 24 February 2011


MOTHER JONES magazine is running a very significant article in its current online issue. This is an article by the numbers that may surprise or perhaps shock those who believe that democracy in America translates into fairly equitable income distribution.There have been many studies before the one in Mother Jones that indicate the American middle class has been declining in the last three decades, that living standards have also been declining along with incomes for the vast majority, and that social mobility is on the decline, while the top 10 percent have seen their incomes skyrocket.

In a number of my postings about the economy and social classes during the past six months, I have noted that the income trend has been one of steady downward path for the waning middle class and workers, while rising for the super rich, among them multimillionaire senators and congressmen that have been voting to cut taxes on wealthy. The most recent figures from MOTHER JONES indicate that 90% of Americans earn an average of just over $31,000, while the top 1% earns $1.1 million. As incomes have been falling for the middle class and workers in the last three decades, they quadrupled for the top 1%. Surprisingly, according to a survey, the majority of Americans actually believe that income distribution is actually much fairer across all social classes, when in reality there is an extreme income gap.

Studies that have been conducted show that the top 1% of Americans had the same share of income in 2006 as in 1928. Some studies indicate that in 1915 the top 1% of income earners owned 18% of America's wealth, while in 2010 the top 1% owned 24% of the wealth.The top one-hundredth of 1% currently making an average of $27 million per household have seen their incomes rise substantially regardless of the 2008-2011 recession that resulted in millions of people losing their jobs, homes and health care.

The majority of the American people is still convinced that there is fair income distribution when the reality is very different. This is indicative of how successfully the media has indoctrinated people into believing myths of fairness, that political democracy equated with the right to vote somehow magically translates into economic and social democracy. Studies indicate that the majority of the American people believe that individual merit-based values determine income, rather than fiscal policy, institutional structures or the nature of the evolving capitalist economy that increasingly concentrates wealth.

Income inequality in the US is among the highest among the G-20 (richest nations in the world) and ranks according to the GINI index at the level of Russia and Turkey in terms of income gap or divergence between top, middle and bottom income earners. The US also ranks very low in opportunities for upward social mobility in comparison with Europe as well as Canada and Australia. Nevertheless, the majority of the population is convinced that the US ranks number one in the world in social mobility. 

From the Second World War to the end of Vietnam War, income inequality was dropping at a time that a single member of the household worked. Income inequality began a gradual trend toward polarization in the late 1970s when both husband and wife had to work to meet living expenses. That Americans have the highest income inequality among the G-20 is a mystery, considering that in the last three decades that this has been taking place there are more Americans with college degrees, professional and graduate degrees than ever in history.

It is true that the more education an individual has the higher the income and more job/career opportunities. However, while a high school degree was once sufficient for many jobs, today a college or technical degree is necessary in order to be marketable in an economy that has a surplus of 'human capital'. Contrary to the myth that Americans need to secure more and better education in order to secure higher incomes, the general trend for 90% of the population is steady income decline while the top 10% have dramatically raised their income.

Judging by the current fiscal policy, the current trend of gross income inequality will become much worse in America in this decade. If what is taking place in Wisconsin with the public employees having to slash their benefits and deny collective bargaining rights is an indication, and given the freeze in Social Security and federal employees salaries, the US is headed for an austerity program that the middle class and workers will be paying; an indication that income divergence will continue.

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