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Features, Guest Columnists

Unequal Springtime

sectitle-featuresglenn1Here we are, its early spring 2014 and a harsh winter is now behind us. A good time for a reality check on how inequality is doing. Yes, just as springtime progresses unequally, growing numbers of people will find themselves choking and short of breath ahead of the monthly bills and payment deadlines while the select few, take in the constant, invigorating sea-breeze along the shores of their reserved economic privilege world.

One may be excused for thinking that poverty is a simple word or a straightforward concept. There is no single definition of what poverty is but it is certainly an economic condition that most everybody hopes to avoid. Poverty is a very relative term, as it clearly depends where one lives and what measures of poverty are used to determine the extent and impact of poverty on an individual, a group of people or even a whole society. It is hard to gauge who is drowning and who is sailing smoothly through the uncertain economic tides. Appearances can of course be deceiving. Some people drive high-end cars and live in 5-bathroom homes but they’re three mortgage payments in arrears and the repo-man is looking out for their car. Meanwhile down the street, a thirty-one year old son moves back into his parents’ basement and by doing so, will be debt free in about a year and have money saved up to launch a small business. Clearly, first impressions shouldn’t be taken at face value.

We never really see behind the facades of status symbols and lifestyles. Although many people around us are seemingly better off, the buddle of cash in their wallets, might just be what’s left from this month’s pay-day, the BMW they drive a rental and the down-payment on the new-homemade with contributions from an extended family of 30. We notice material things, but don’t really know how other individuals navigate through the shifting economic currents, if they are staying afloat or going under.

The point is living standards and indeed personal economic conditions are never easy to recognize simply from the way a person presents him or herself. Displayed wealth can be leftover from good times gone by, or maybe it’s rented, stolen or borrowed. Still today, maybe even more so than in years bygone, poverty is something most people are ashamed of, its stigma diminishes their inner pride. In a get-rich-fast and shop-till you-drop free-market society, poverty is considered an individual failing or fate. You may be down and out now, but you can pull yourself up by your boot-straps (rarely seen nowadays) we have been taught to believe.

True is that poverty is an alarmingly global concern that affects many millions of people. It is caused and sustained by many factors, in particular by entrenched economic inequality in society. But apart from personal, bad choices that can lead to poverty, it is mostly the result of unfair and unjust political and economic systems. In our age of free market driven globalization, these systems exist around the world and thus, extremely lopsided distribution of wealth and deep-rooted poverty also within the borders of the worlds’ richest country is no exception to the rule.

Last month, protesters in economically suffocating Spain, stood up against the miracle economic cure of ‘austerity’ that the wealthy and their democratically hollowed out institutions have been trying to impose upon the working class.

“Demonstrators were protesting over issues including unemployment, poverty and official corruption, calling their protest the march of dignity. They want the government not to pay its international debts and do more to improve health and education. Although analysts say that Spain came out of recession in the second half of 2013, unemployment soared with the government’s labor reforms which reduced the cost of hiring and firing.” [1]

Of course, those countries now imposing austerity on their working classes, in Spain and elsewhere, may well have been among the big spenders in the ‘coalition of the willing’. [2] Perhaps one can say that Spain “has been a useful but low-key contributor to the mission in Afghanistan”. Apparently in the greater scheme of things, half a billion dollars is a modest amount.

glenn1

2 Billion Dollars & Caskets               –
A military truck with $2 Billion dollars and fallen soldiers of countries that participated in the Afghanistan and Iraq wars since 2001. Source: Economic Infographics: see more graphics at http://demonocracy.info

Wasting a half a truck-load on a war is somehow always easier to arrange for a country’s political elite than to rectify the social and economic injustices that diminish the well-being and erode the livelihoods of their citizens at home.

Meanwhile, in the imperial homeland, food stamp usage remains at all-time high. It is not uncommon that even in a family with two fulltime wage earners, making ends meet is a constant struggle. The US Government has taken on increasing levels of unsustainable debt, to try and cover the costs of its wars as well as the costs of poverty, including for the food stamp program ‘Supplemental Nutrition Assistance Program’ (SNAP).

glenn244.5 million people are on Food Stamps in America, that’s 14,588 participants for each Walmart Super Center. The program is called Supplemental Nutrition Assistance Program (SNAP). To remove the stigma of food stamps, the EBT card was created and is used the same way as a credit card. Source: Economic Infographics – http://demonocracy.info

In addition to the incalculable human costs waging wars costs money, poverty takes a deep, painful social toll. As I have argued in a previous Newtopia article, “One serious consequence of prolonged inequality that results from ‘the war on salaries’ is the erosion of health and life expectancy among the poorer segments of society. Simply speaking, the poor live less healthy and shorter lives than the rich.” [3]

Resources directed towards military efforts are in principal, nothing else but state consumption of raised taxes and of debts incurred. Increasingly, as inequality deepens, wage earners, people dependent on a salaried job, are footing the bill while share-holder corporations get enormous tax breaks. The confused logic the ruling elites try to sell us on, is based on some miraculously natural mechanism whereby for the tax breaks accorded to them, the corporations will deliver on vague promises of creating jobs (which are more likely than not, to be low-wage ones). While it is true that military spending has sizeable economic impacts and keeps many people employed, it is just as true that for the money spent on everything military, many more people could be productively and sustainably employed in socially necessary and environmentally needed civilian occupations.

The US almost consistently spends about 5% of its Gross domestic product (GDP), more than 700 billion in 2012, on military spending (equivalent to over 40% of global military spending). China by comparison, which holds about 8 percent of publicly held U.S. debt, allocates 2% of its GDP to the military. Most of the U.S. debt, some $9.8 trillion, is owned by the American people and its government (it can be neatly recorded on wildly ticking debt clocks.

To be clear, debts are expenditures made in the past for which interest continues every second of the day. The portion of US citizen’s income tax that goes to the military and related purposes is a staggering 54%.

In other words, more than half of income taxes go to non-social or community purposes. The growing debt load could be reduced easily by as much as half, if those income taxes that are now used to pay for military expenditures were instead used to pay down debt.

The second major factor that has led to the massive debt overload has been the enormous transfer of wealth in the US from the working class to the rich and privileged. It is no secret that the often cited middle class has shrunk or nearly disappeared as an economically prospering section of US society. There is ample statistical evidence to illustrate how working Americans have seen their share of prosperity, along with the aspiration to achieve prosperity thought decent paying jobs, slip away.

Most salaries of working people have been seriously eroded by decades of inflation and by a tax system that is heavily biased in favor of the wealthy. This has led to a situation where it has become necessary for Government to take on increasing levels of unsustainable debt, simply because there is a powerful political lobby that successful prevents tax increases on the wealthy and larger corporations. In virtually no other modern economy than the US, do the wealthy pay such a small portion of their income in taxes.

Seen historically, the citizens of the US have been growing apart economically for decades and it is hard to see any reversing trend emerging at this time. [4]

Last September, here on Newtopia we ran “A cross-Atlantic, online Armchair conversation with Professor John Weeks” as a feature article. Weeks’ hope was for a “linking of the workers’ movement to the struggle against racism and sexism….to replace the capitalism of the 1% with a social democracy of the 99%”. [5]

Since then, John’s book ‘The Economics of the 1%: How mainstream economics serves the rich, obscures reality and distorts policy’, has been published. It is the kind of book no school-board will be allowed to place on a high-school reading list, especially as our youth needs to be accepting of ingrained inequality as something to tacitly accept through life-long self-searching within the consumer society rather than by collectively organizing against it. As Weeks states in an accompanying YouTube clip during the book launch in February, “the strong devour the weak – that is the market system’.

Reviews so far have been very positive, one for example observing that the book

“.. is also a sound and necessary indictment of the dominant stream of economic doctrine and commentary and the so-called economic experts in our televisions, our universities, and our governments.”. [6]

Increasing and entrenched poverty is not only characterized by economic hardship and marginalization. It is accompanied by social erosion and cultural deprivation of those who are unable to participate in shaping the society they live in. Many poor people have to live low-rent, often crime-riddled neighborhoods: their access to public goods such as quality healthcare, good education or to clean, safe parks and recreational facilities is seriously compromised. Cultural events, public libraries, arts and creative avenues for self-expression are rarely available to most people living below or barely above debilitating minimum wage-levels. Extra-curriculum activities for their children are just that: out of reach extras. It is important to underline that this is the social reality in the USA, still one of the richest countries in the world. Oddly enough it is sort of ’expected’ that deep poverty is a third-world phenomenon. However the borders between first and the rest of the world have long been leveled when it comes to inequality in different countries. Poverty may rarely be absolute in a richer country, but its effect on a person’s well-being, health and opportunity to partake in a societies’ accumulated wealth and achievements, may be very corrosive.

To those living in material affluence, it may sound consoling that ‘in-the-know’ wanna-be global analysts reassure them that

“..the underclass (might be) taking their relative plight in stride because they have decent refrigerators (and cell phones). Or (that) maybe the gradual demise of the labor movement and the power differential between rich and poor Americans make it unlikely we will see a raid on the barricades any time soon. “[7]

To his credit, President Obama has remained sensitive to the ever more visible impacts of growing income inequality. His efforts to enact a rise in the minimum wage to $10.10, is at least, well, a minimum, albeit so far, politically blocked effort. [8]

Of course this is, or rather would be far too little to reduce economic inequality, but as a political gesture, it may well suffice to console our growing, largely unorganized proletariat. Today, throughout the industrialized economies, average households in all industrialized countries have seen prolonged declines of their incomes, significantly increased household, including credit card debt and in parallel; they have experienced steep declines in household savings. Such trends are also being tracked by the somewhat gloomy sounding ‘Misery Index’ which presumes that ‘a combination of rising inflation and more people out of work implies deterioration in economic performance and a rise in the misery index.’ [9]

At the beginning of this essay, attention was drawn to the protests in Spain against the deep economic crisis. Labor unrest has continued there and in other European countries. Yet outside of the core capitalist countries, discontent appears to have been expressed more vividly in recent years. This trend has not gone unnoticed by critical social scientists who have observed that

“ The past few years have witnessed successive mass flare-ups in India, Turkey, Brazil; street protests have ricocheted up the Balkans …. Paradoxically, it is not so much in the recession-struck Northern heartlands but in the neo-capitalist Second World, and in the—supposedly booming—brics and emerging economies that popular anger has made itself felt. The weakness of resistance in the advanced-capitalist zones, despite the provocatively regressive policies of austerity and financial bail-out, remains to be explained—and, hopefully, transcended. But the marginalization since 1990 of capital’s historic antagonist, organized labor, must be part of the answer. “[10]

It remains important to articulate discontent with an economic system that systematically favors the few at the expense of the many. Too many of the many find little if any time or energy to look for answers to the supposedly grandiose economic questions to which self-anointed experts ventilate half-baked opinions in support of the status quo.

Fortunately there is abundant evidence to discredit the myths of social harmony and economic opportunity regurgitated time and time again through the institutions of the capitalist state. Sharing discontenting voices and information through social media alongside increasing one’s awareness of political and economic forms of opposition to the rule of the one-percent, continues to pose the most immediate challenge for the 99% to address in order to restore democratic accountability, social justice and equality, across the US and throughout the global commons.

References:

[1] BBC, 22 March 2014, Spain austerity: Huge Madrid protest turns violent.

Although the counter-productiveness of state driven economic austerity has not been widely or prominently reported in much of mainstream media, there is a growing body of well-researched analysis available for review by the interested public, see for example:

‘Up to 146 million risk poverty if EU’s austerity drags on’ , Sept. 2013 (http://on.rt.com/l1nobh)

Where reference is made to a report titled ‘A Cautionary Tale: The true cost of austerity and inequality in Europe,’ which argues that the European model is under attack from ill-conceived austerity measures: “Left unchecked, these measures will undermine Europe’s social gains, creating divided countries and a divided continent, and entrenching poverty for a generation.”.

[2] Edward Burke. Spain’s War in Afghanistan’ FRIDE policy brief 12/01/2010 (FRIDE is a European think tank for global action, based in Madrid).

[3] Crumbs of Capitalism for You and Me, G. Brigaldino in Newtopiamagazine, January 2013.

[4] Growing Apart – A Political History of American Inequality by Colin Gordon

http://scalar.usc.edu/works/growing-apart-a-political-history-of-american-inequality/index

[5] We Are the Experts and the Economy Belongs to the Working Class, Newtopiamagazine, September 2013.

·       The Newtopia essays and interview with John Weeks are also available as an e-book. Readers of Newtopia can download them for free until 20 May 2014, from http://www.smashwords.com/books/view/378125 using this coupon code: AD64X

[6] John Weeks, Economics of the 1%.

The quoted book review on Amazon is by Craig David: http://tinyurl.com/ol3xxgs

[7] Why aren’t the poor storming the barricades?, The Economist, Jan 21st 2014.

[8] Obama calls for action on ‘profoundly unequal’ economy, BBC, 4 December 2013.

It is quite possible, Obama’s advisors have been catching up on their reading and the costs of

keeping the income divide growing, are beginning to be felt all across the US. One such possible reading

might be the ‘Poverty and Inequality Report 2014’ by the Stanford Center on Poverty and Inequality. Its results

point to

“..an economy that is failing to deliver the jobs, a failure that then generates much poverty,

that exposes the safety net to demands well beyond its capacity to meet them that produces too many children

poorly prepared for school, and that places equally harsh demands on our healthcare, penal, and retirement systems. These are profound downstream costs that are challenging and costly to address in a piecemeal institution-specific fashion.”

Download link (60 page report).

[9] The index is generated simply by adding the unemployment rate to the inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation both create economic and social costs for a country. A combination of rising inflation and more people out of work implies deterioration in economic performance and a rise in the misery index. The flip side of economic hardship is of course the generous tax cuts to large corporations, examined in ‘Tech Untaxed’, a report on the declining U.S. corporate tax rates. The report presents “ ..a sample of 30 high-tech companies in the Fortune 500, whose average effective tax rate has steadily decreased in recent years–from 23.6 in 2009, to 19.9 percent in 2010, and down to 16 percent in 2011. Meanwhile, collective profits of these companies rose, from approximately $98 billion in 2009, to $153 billion in 2010, and up to more than $181 billion in 2011.”

http://tinyurl.com/ppnhm66

[10] New Left Review 85, Jan.-Feb. 2014, New Masses?.

Article Written by Glenn Brigaldino

Glenn Brigaldino is an independent political analyst living above the 49th parallel. He was a contributor to the 2002-2005 Newtopia Magazine venture and remains loosely affiliated with the new project.

In the early 1980s he was an active member in the German Green party, until it became absorbed in the political mainstream. As a specialist in international cooperation, he has worked for aid and relief organizations in Africa, Europe and elsewhere.

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