Wednesday, 2 December 2015


According to the latest statistics, including the CIA, the US suffers the worst level of inequality of any advanced nation and ranks among some of the most unequal societies on the planet, while its politicians, business leaders, media and pundits proudly promote it as “democratic” rather than a plutocratic which in reality reflects reality. If the CIA publicly states in its reports that the US is more unequal than Nicaragua and Venezuela, both countries that the US has covertly tried to undermine in the past because they were “less democratic”, what does this say about the US and its ‘democracy’? 

Has the US in fact become a “banana Republic” as the statistics of the CIA and every other agency compiling such statistics? Given that this is the case, what political or moral authority does the US have to lecture other nations about democracy and equality? Is the US exporting democracy, freedom and equality as it claims when intervening in the Middle East, Ukraine and around the world militarily and economically, or is it actually exporting inequality to reflect what is happening at home? 

It is no secret that the US has been heading toward wealth concentration since the end of WWII, a trend that rapidly accelerated after Reagan’s tax cuts to the wealthiest Americans in the 1980s, combined with massive government subsidies to corporations that account for the phenomenon of the corporate welfare state we have today. For example, in 1970 the worker to corporate CEO wage gap was $45 (for the CEO) to $1 for the worker. In 2014 the CEO-worker wage gap is $830 to $1, thanks to the fiscal policy that both Republicans and Democrats have been pursuing. 

According to the latest statistics by the Institute for Policy Studies, a mere 20 individuals own $732 billion or more than 152 million people own combined. If we consider that the 400 wealthiest people control $2.34 trillion in an economy totaling $17 trillion, it hardly takes a genius to figure out that this kind of wealth concentration is the result of a fiscal policy that transfers wealth from the bottom income earners and shifts it to the top.  According to The Guardian: “The top 0.1% of families now own roughly the same share of wealth as the bottom 90%. The picture actually improved in the aftermath of the 1930s Great Depression, with wealth inequality falling through to the late 1970s. It then started to rise again, with the share of total household wealth owned by the top 0.1% rising to 22% in 2012 from 7% in the late 1970s.” (

The result has been an anemic economy and a social fabric breaking apart with very dim prospects for the future, considering that both Republican and Democrat politicians favor the top 1% of the richest Americans who are the ones able to buy influence through various means, including lobbying and direct campaign contributions. It is estimated that 62% of the American people have savings of under $1000, while 21% have zero in their savings. This at a time of a ticking time bomb with regard to college loans amounting to about $1.2 trillion, with the bottom one-third finding it difficult to ever repay them because the economy of wealth concentration is not producing new jobs and certainly not high paying ones to allow college graduates the opportunity to meet their obligations. Of the 62% Americans with under $1000 in savings, the reality is that they would be unable to meet any kind of emergency – medical, large home or car repair, etc. The interest fact here is that 62% with under $1000 in savings is the highest since the Great Depression, a number that rose sharply after the deep recession of 2008 when the percentage was 57. 

In one survey after the other, the majority of Americans expect their children to be worse off than they were. One third of Generation X (35 to 55 years old) have zero savings, while about 28% of the baby boomers (55-65) and millennials (18-34) surveyed have zero savings. In short, the problem is not generational but class based. Apologists for the existing political economy based on corporate welfare where the state transfers income through various means but essentially the fiscal structure from the bottom income earners to the top, argue that this is needed to help investment and make the economy more competitive. 

Considering that the US economy is an integral part of a world capitalist system, the US through various international institutions, especially the IMF, spreads its neoliberal policies on a world scale. Therefore, inequality has been rising not just in the US in the last four decades, but also in Europe, although the Scandinavian countries remain the most equal in the world. When US-based multinational corporations, such as Pfizer refuse to pay taxes at home and take their profits overseas using non-US based companies to shield profits from taxes, this impacts the host country’s fiscal structure overseas that must provide safe haven for Pfizer, thus burdening its genera taxpayer as much as the US does. 

Has the US become more or less competitive as wealth concentration rose from the 1980s to the present? The reality is that we have witnessed rapid deindustrialization and along with that phenomenon there has been downward socioeconomic mobility owing to steady income drop in working class and middle class incomes. In other words, the exact opposite of what Nobel Prize winning economists, politicians and the media has argued is what is taking place. People know all of this not by looking at the real economy, but examining their own situation and the prospects for their children. 

Apologists of the grossly unequal system, which compares with Third World countries instead of Western Europe, Canada and Australia, further argue that the whole thing is just cyclical and eventually there will be upward mobility. Again, when we look at statistics from 1970 to the present, the trend is very clear that this is systemic and has absolutely nothing to do with cycles. In short, the neoliberal policies of using the state as a vehicle to strengthen the private sector at the expense of the public sector, the working class and the middle class is one that has deep roots and it is here to stay because the top 10% of income earners, and especially the top 1% who actually decide the course of policies, are adamant about not changing course toward any policy mix that would redistribute wealth from the top down to stimulate economic expansion in an economy dependent on consumer spending at the rate of three-fourths of GDP.

The International Monetary Fund has now inducted China’s currency – yuan – into the basket of reserve currencies, putting pressure on the euro and the dollar, and reflecting the reality that China is indeed well on its way to forging ahead as the world’s number one economy – already there if we measure it in terms of PPP index.  Both Republican and Democrat parties have every intention of strengthening the already super-wealthy one percent of Americans to the detriment of the 99%, thus sinking the economy into more frequent and deeper recessions that would in turn create even greater wealth gaps than already exist.    

Whether Hillary Clinton or any Republican candidate wins control of the White House in 2016, they will pursue the same fiscal policies that have brought America to the present situation where 20 individuals own more wealth than 50% of the population. They will continue with corporate welfare that redistributes wealth from the workers and the middle class and they will most certainly continue to pour money into the parasitic defense sector, hoping that the US can retain its global competitive edge when in fact all empire of the past 2000 years have declined and fallen because of excessive defense spending and reckless militarist adventures. While people may feel good that NATO is string and keep adding new members that surround Russia, this only adds to socioeconomic inequality at home because more money is devoted to the parasitic defense sector and does absolutely nothing about creating new and high paying jobs to allow young college graduates to repay their student loans. 

Contrary to what the media and pundits argue that the destiny of the country rests on the people, the reality is that the media and the entire institutional structure determine what people think about public policy, everything from corporate welfare to black youth unemployment and the war on terror that has been used to engender sociopolitical conformity and distract from socioeconomic inequality comparable to Third World country. The political reaction to take the country even more toward a rightwing orientation with underlying racist and overtly xenophobic messages finds an audience among a segment of the population that wants someone to blame, other than the Democratic and Republican party conducting policy to strengthen even more the very rich and weaken even more the workers and the middle class. 

This is a prescription for sociopolitical polarization. Already using the war on terror to forge a police state, the future of America with banana Republic socioeconomic inequality as the CIA describes it entails erosion of democracy and even more authoritarian policies while continuing to hold on to claims of defending democracy that no longer has any meaning in the lives of the bottom 90% of the population. Exporting inequality is inherent in any imperialist system and not unique to the US in the contemporary period. What makes it unique is the public campaign of the US that its mandate from God is to spread democracy, equality and freedom when in fact its only goal is to export inequality that mirrors the domestic socioeconomic structure.

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