Friday, June 24, 2011

Income Inequality: Worse in the US Than in Ivory Coast

An interesting article from the Washington Post on the topic of CEO earnings and American income inequality. A snippet:
Repeated surveys by the National Opinion Research Center since 1987 have found that 60 percent or more of Americans agree or strongly agree with the statement that “differences in income in America are too large.”
The uneasiness arises out of the fear that extremes of wealth can unfairly reduce the economic opportunities and political rights of everyone else, according to sociologists. The wealthy, for example, can afford better private schools for their children or acquire political might by purchasing campaign advertising or making campaign donations. Moreover, as millions struggle to find jobs in the wake of the recession, the notion that the very wealthiest are gaining ground strikes some as unfair.
“Americans think income inequality is excessive and have done so consistently for years,” said Leslie McCall, a sociology professor at Northwestern University who is writing a book on the subject. “Their concerns arise when it seems that extreme incomes for some are restricting opportunities for everyone else.”
Whatever people think of it, the gap between the very highest earners and everyone else has been widening significantly.
Income inequality has been on the rise for decades in several nations, including the United Kingdom, China and India, but it has been most pronounced in the United States, economists say.
In 1975, for example, the top 0.1 percent of earners garnered about 2.5 percent of the nation’s income, including capital gains, according to data collected by University of California economist Emmanuel Saez. By 2008, that share had quadrupled and stood at 10.4 percent.
The phenomenon is even more pronounced at even higher levels of income. The share of the income commanded by the top 0.01 percent rose from 0.85 percent to 5.03 percent over that period. For the 15,000 families in that group, average income now stands at $27 million.
In world rankings of income inequality, the United States now falls among some of the world’s less-developed economies.
According to the CIA’s World Factbook, which uses the so-called “Gini coefficient,” a common economic indicator of inequality, the United States ranks as far more unequal than the European Union and the United Kingdom. The United States is in the company of developing countries — just behind Cameroon and Ivory Coast and just ahead of Uganda and Jamaica.

Just behind Cameroon and Ivory Coast and just ahead of Uganda and Jamaica! Now that's a weird rank in international comparisons for the United States. Though at this rate soon this country will be competing for the right to be called the most income-unequal country in the world.

I keep writing about this topic because it is crucially important. With increasing differences in incomes and wealth go increasing differences in political power. That we no longer have fairness in the media, that we no longer can control the financial markets running amok, that we now discuss ways to cut government spending on the poor (which will increase income inequality further) and that the conversation turned from lack of jobs to too much government spending in a heartbeat: All of this has to do with where the power lies.

It is not clear whether anyone is truly representing the bottom 90% of earners in this country, by the way. Politics needs to be financed, and if income is mostly in the hands of the few, it is those hands the politicians must lick.

But neither is it clear why people vote the way they do if they don't like this rapid march towards a Banana Republic. Too many vote for the Republicans.