Bye bye American pie

Americans do not resent the rich man next door but as more of them say goodbye to their slice of the American pie, anxiety is creeping  

Tomas Mega, U.S. correspondent, Nevada 

America has its share of dirty little secrets.  They tend to be the closely guarded themes that make politicians, business leaders, bureaucrats and others in power anxious. They are the issues that opinionated strategies are built to counter, political manifestos are designed to offset and legislative efforts crafted to cancel out.

Occasionally, and horrifyingly to some, America’s dirty little secrets grab national attention.  Such was the case with the ‘Occupy Wall Street’ movement, which began in September 2011 in New York City.  Their slogan, “we are the 99%” referred to the income inequality and wealth distribution in America between the wealthiest one percent of Americans, and the 99% rest of Americans.

Since the mid-70s, income inequality in America has grown significantly.  Studies report that while income inequality has grown most among developed, English speaking countries, it is the highest in the United States. According to a 2010 paper authored by the Levy Economics Institute of New York’s Bard College, the top one percent of Americans control 43% of the country’s financial wealth, while the bottom 80% control seven percent.  The wealthiest 400 Americans have the same combined wealth as 150 million of the poorest Americans.

Historically, Americans have not vilified the rich or the inequalities in income distribution.  Unlike their European counterparts, who tend to have more worry about the slice of the wealth pie, Americans have always wanted to join the rich, not extract from them.  Indeed, getting rich has always been a fixture of the ‘American dream.’ But nearly 40 years of a widening income gap among Americans is creating anxiety.

The Great Recession  of 2009 and the subsequent ‘good jobs deficit recovery’ America now finds itself in is exacerbating income inequality. Various statistics also indicate America’s long term income inequality will continue to rise.

But does any of this really matter to Americans outside of the one percent?  Polls indicate that while Americans care about jobs, they care far less about any perceived inequalities in income.  A persistently high unemployment rate seems to carry more weight with Americans than the fact that the folks across town have a lot more money than they do.  And any talk of income re-distribution by Liberals is immediately countered by Conservatives who view such rhetoric as nothing more than Marxism.  Even after the fall of the Berlin Wall, the term Marxism, synonymous to Americans with the term Communism, is enough to make any blue collar working American who hasn’t seen his middle-class income rise much in years, still shutter.  Add to that the endless Republican discord over Obama’s ‘socialist’ and ‘un-American’ initiatives like Obamacare, gun control, immigration and tax reform and they have plenty to keep the 99% politically occupied.

While there is little question that income inequality in American is a growing problem, most Americans still feel pretty good about themselves.  When, according to a statistics from Credit Suisse Global Wealth Report, the median net worth of the world was about $4,200 per adult and the median net worth of adults in American is $53,000, perhaps it’s best to not worry – be happy.

Conservatives are quick to point out that there is nothing wrong with the one percent.  They create investment, which creates jobs. Without them, we would have less innovation, and economic growth would stagnate.  The problem lies with too much government regulation on small businesses, overly complex and ridiculous tax laws on individuals, corporations and job creating innovators.  This stifles economic growth and the prospect of pursuing economic growth versus income redistribution still resonates high with most Americans.

Whether income equality matters to Americans or not, there are consequences. Studies show that countries with significant inequalities in income have more homicides, illness, teenage pregnancies, mental illness, high school dropouts, larger prison populations and unsustainable family debt.  It also disproportionately affects minorities, in a country where minority populations, especially Hispanics, are growing rapidly.  Income inequality is not perpetually sustainable.

America has deep capitalistic roots and talk of income re-distribution is largely viewed with great suspicion. The arguments on both sides will inevitably continue, as more and more Americans say goodbye to their slice of the American pie.

A recent report by the National Employment Law Project paints a bleak picture:

 

Table : Income growth of the top one percent of earners and the rest of Americans, from 1979 to 2007, prior to the Great Recession

Source: Congressional Budget Office 

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