Poverty Amid Plenty - America's Continuing Shame

[dajoki]

David Coates
Poverty Amid Plenty - America's Continuing Shame
Posted: 10/31/11 08:28 AM ET
http://www.huffingtonpost.com/david-coates/poverty-amid-plenty-ameri_b_1066957.html

The current wave of mass protest against Wall Street excess has completely reframed the public conversation in the United States. The "deficit problem" with which Washington was consumed in the first half of 2011 has not vanished from the political agenda, but its resolution will now have to be achieved against the background of a growing understanding of the sheer scale of current income and wealth inequality. If the Republicans in Congress have their way, the politicians may yet cut entitlements programs for the poor while declining to raise taxes on the rich. But if that is how the deficit problem is eventually resolved, that resolution will be more extensively recognized as class-biased in its character and impact than would have been the case before the OWS protests began. The super-rich are invisible no more, and are now being held to account.

Even the Congressional Budget Office has recently joined the fray, publishing last week Trends in the Distribution of Household Income Between 1979 and 2007.http://www.cbo.gov/doc.cfm?index=12485 The CBO reported rises in the average real after-tax household income of the top one percent of the U.S. population of 275% between the two dates, as against a rise of 65 percent for the top 20 percent of income earners, just under 40% for the top 60 percent of income earners, and a tawdry 18 percent rise for the bottom 20 percent. All the resulting headlines focused in on that top one percent and its staggering 275 percent gain in income. "Top Earners Doubled Share of Nation's Income, Study Finds," was the ruling headline in The New York Times in the immediate wake of the report. "Incomes rising fastest at the top" was the headline on October 19's EPI Economic Snapshot. "Another word for what's been happening might be theft" was the way Eugene Robinson put it in his column.http://www.washingtonpost.com/opinions/the-study-that-shows-why-occupy-wall-street-struck-a-nerve/2011/10/27/gIQA3bsMNM_story.html

All that is true of course, but even so a word of caution is in order. Though fully justified by the data in the report, those headlines help frame the public conversation in ways that might yet leave progressive forces vulnerable to rapid pushback. For by focusing on the super-rich, such headlines leave their authors (and us) open to the counter-argument that since 2007 trends have been reversed -- that the rich are no longer as excessively rich as they once were, and so are correspondingly less in need of punitive taxation than was originally the case. By focusing on the CBO Report, the headlines also open us to the argument that even the bottom 20 percent of American income earners are becoming steadily better off -- so why make a fuss if their entitlements programs are now marginally eroded in the name of a wider American need for fiscal restraint?

We can expect both responses. Indeed both are already underway. The Cato Institute's Michael Tanner recently argued that in the wake of the 2008 recession "the rich are earning a smaller proportion of U.S. income" than before, and that "interestingly, the decline in earnings by the rich has corresponded with higher unemployment and rising poverty overall. We are all poorer," Tanner said, "but at least we are more equally poor. Hooray." That response should not surprise us. Commentators on the Right have long argued that tax data fails to accurately measure income and wealth inequality in the United States, and invariably overstates the riches of those at the top of income and wealth tables. Some have also long argued that the American poor are not really poor. They are not as poor as the income data would suggest, because fiscal transfers (earned income tax credits and the like) offset much of that poverty. They are not poor by historical standards -- they live better now than many middle class families did two/three generations ago. They are not poor when compared to the genuinely poor in the global economy: the American poor have cars, fridges, televisions, cell-phones and often generous living space -- things that are still not available to the emerging middle class in many developing societies even now, let alone to the third world poor. And if some Americans are poor when measured against official U.S. poverty standards, then much of that poverty is self-induced. Had the young single mothers now trapped on welfare only stayed at school, got a job and delayed having children until they were financially secure, they could easily have slipped into the bottom rungs of the American middle class. So at least many conservatives regularly argue!

If that dismissal of American poverty is not to hold sway, we need to go beyond the statistics in the CBO Report, to say other things about the American rich and the American poor. One thing we need to say is that -- as the CBO Report indicates -- both the rich and the poor are still with us. The poor have not gone away, and their conditions of life remain seriously impaired when compared to those enjoyed by the rich. Another thing we need to say - following Eugene Robinson -- is that there are poor Americans primarily because there are also rich Americans. The rich and the poor in contemporary America are not separate categories of people, unconnected and dissimilar. Instead the two categories are organically linked: linked because the rich and the poor are ultimately just people sharing a common country and economy; and linked because in a world of scarce resources, the excessive claims of the privileged deny full access to those resources by the less privileged. In a very real sense, the pursuit of rising incomes in contemporary America is a zero-sum game -- if the man in the big office takes a big salary hike, that hike leaves less in the salary pool for those working in the smaller offices behind -- and like all games, this one only works if everyone follows the rules. Right now, the rules in America's zero-sum income game are heavily stacked in favor of the excessively wealthy and against the excessively poor; and because they are, they are rules that we need to change.

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