UNITED STATES - by Bob BrowningNews Weekly
America's forgotten people
, December 18, 1999
The latest US Census report could make economic rationalists think twice about pushing Australia towards the American model - if only such ideologues were amendable to facts.
The annual US Census Bureau report on wages and household incomes is one of the best annual snapshots of economic well-being in America, according to the Wall Street Journal (October 1, 1999). Under a heading referring to 'the pain behind the gain', it said the report:
'Offers stark proof that life is still a struggle for millions of Americans. All the fanfare about this record-breaking expansion ... masks statistics showing that, overall, wages have barely budged for the decade as a whole. Last year's poverty rate was still 1.6 percentage points higher than it was in 1973 ...'.
The Wall Street Journal is one of the world's leading financial newspapers. It cannot be easily dismissed as an economic dunce or covert protectionist.
The Census showed that while the US boom was certainly generating 'more wealth for more Americans', it also showed that the fruits of the booming US economy had been 'heavily skewed towards the rich'. Income equality rose sharply through the 1980s and early 1990s. From 1994 on, the disparity had been 'locked in at an historically high level'.
Wages for low-paid workers had been rising slightly, the WSJ said, but still were 'not high enough to lift significant numbers out of poverty'. Work may be plentiful due to the 4.2 per cent US unemployment rate, but that gives no guarantee that jobs are secure or full-time.
The New York Times (October 1, 1999) agreed that 'the most troubling aspect of the report concerned income inequality'. Average incomes certainly rose, but statistical averaging obscures the gap. And the gap increased sharply. Not only did it yawn between the rich and poor, but it widened between the rich and middle class.
Shortly before the Census report was tabled, the New York Times published some eye-popping figures (September 5, 1999):
'The gap between rich and poor has grown into an economic chasm so wide this year that the richest 2.7 million Americans, the top 1 per cent, will have as many after-tax dollars to spend as the bottom 100 million ...
'Among the most prosperous one-fifth of American households, or about 54 million people, whose share of the national income grew, that fatter slice of the pie was not sliced evenly. More than 90 per cent of the increase is going to the richest 1 per cent of households ...'.
Income inequality is proving resistant to the economic boom. It has grown so much under the current US socio-economic system that four out of five households, or about 217 million people, are taking home a thinner slice of the economic pie today than they were 20 years ago.
The New York Times called attention to another revelation. The Census report found that the rise in average income during the late 1990s was 'due in part to Americans working longer hours'. In 1998, Americans spent an average of 60 hours a week at work.
The 'optimism' of neo-liberal economic true-believers is irrepressible. Any but they would find food for thought in the Census report. But past experience advises us against holding our breath. When it comes to the current orthodoxy dominating the Treasury - and consequently much public policy - eyes wide shut is the fashion, as it is with corporation-funded think tanks and PR agencies.
Economic rationalists will probably take comfort from the determinedly optimistic response of US President Bill Clinton. He saw the Census figures quite differently. 'Finally we have stemmed the tide of rising inequality', he said. America has had strong income growth among 'all groups of people'.
Others were less sanguine. The economy had lifted many boats, but it had certainly not lifted them all, the New York Times said.
The poverty rate, especially among children, was still well above the US rate back in 1970. It was higher now than in Canada and Western Europe.
The boom had made more people rich and wealthy, but, because of the way the 'market' was distributing national wealth, it had increased rather than reduced income inequality.
An Economic Policy Institute labour economist told the New York Times:
'If the strongest economy in 30 years is unable to ameliorate this serious economic and social problem, there is a strong rationale for public policy that addresses these concerns'.
Here then is another point to be taken into account when the promised wide-ranging debate actually takes place over likely changes by Coalition governments to the welfare system in Australia.
Should public policy address the widening gap? Or will it continue redistributing in favour of economic growth for the benefit mainly of lucky winners and the well-placed?
The well-off can probably afford to be optimistic.