Hiện nay theo thống kê chính thức từ bộ lao Động và Lương Nông Mỹ đã có khoảng gần 46 triệu người Mỹ không có khả năng sinh sống phải nhờ phải hệ thống Tem Phiếu Lương Thực để tồn tại. Và cảnh cáo rằng con số này đang gia tăng.(Cùng tương đồng với con số 46-50 triệu công nhân túng thiếu -Working poor- Đi làm nhưng vẫn nghéo túng)
Đó là không tính đến những người đói khổ không nhà cửa nhưng vì thủ tục lãnh trợ cấp Tem Phiếu Lương Thực nhiêu khê, khiến họ bỏ hẳn và không được kể vào sổ thống kê. (có khoảng vài triệu người không nhà cửa ăn ở dưới các gầm cầu, hoặc lang thang bãi trống khắp nước Mỹ) Và đây cũng là lý do các văn phòng chính phủ tiểu bang đang thay đổi điều lệ và thủ tục hành chính để NGƯỜI ĐÓI KHỔ THIẾU THỐN dễ dàng khai báo và làm đơn.
Theo bản đồ nhân khẩu của nhà nước Mỹ đưa ra (hình trên), những nơi có mầu ĐẬM là nơi có nhiều người đói khồlãnh Tem Phiếu Lương Thực. Tỉ lệ cao nhất là 1/5 hay 21%..
Thế nhưng Quốc Hội Mỹ vẫn khăng khăng bảo vệ hệ thống Kinh tế của Tập Đoàn Đại Bản với hy vọng theo ý thức hệ là nó sẽ "nhỏ giọt" ra cho quần chúng. Dù bằng chứng hơn nửa thế kỷ qua, lý thuyết "nhỏ giọt" càng chỉ là "Giọt NHỎ" và càng ngày GIỌT càng nhỏ LẠI ..
Mức độ GIẦU CÓ của giới 1% tăng TỪ 400% đến 1000% ( 4 ĐẾN 10 LẦN) và số lượng ngừoi Nghèo càng ngày càng tăng. Mức độ nghèo khó càng ngày càng nghiệt ngã..từ thiếu lươNg thực đến phương tiện thuốc men, sức khỏe v.v. Giới Trung Luu càng ngày càng thu hẹp, chết lần mòn -lợi tức thu nhập ngưng trệ trong khi giá cả sinh hoạt tăng càng ngày càng nhanh.
Lý thuyết Tư Bản Nhỏ Giọt đã sai bét trong hơn nửa thế kỷ qua, đặc biệt là trng 20 năm cận đại. Sai từ căn bản thực hiện, lý thuyết này không do tự nguyện công khai mà phải được thực hiện bằng thủ đoạn gian trá chính trị như ngay tại nước Mỹ, và bạo lực quân đội công an như ở các nước độc tài do Mỹ dựng lên hoặc ủng hộ như ở Đông Nam Á Châu và Nam Mỹ.. Và mỉa mai thay, trong 20 năm qua, chủ trương Chính Sách Tư Bản Nhỏ Giọt lại ĐANG ĐƯỢC THỰC HIỆN TẠI VIÊT NAM và TRUNG QUỐC vừa bằng lừa bịp chính trị và bằng bạo lực công an trị..Số lượng "Đại Gia" tại Việt Nam tăng dần cùng với mức sống khó khăn của quần chúng cũng tăng nhanh dần.. Trong khi tổng số lượng tỉ phú và triệu phú của Trung Quốc đã hoăc đang có khả năng vượt cả Mỹ.. (theo thống kê năm 2009- Tỉ Phú, (không kể triệu phú) đang ở con số 300- và có khẳng năng nhân đôi.. Thì mức sống căng thẳng của quần chúng Trung Quốc cũng bắt đầu tăng nhanh, khiến đã có những cuộc nổi loạn khắp nơi. Theo các báo cáo chính thức của Trung Quốc có khoảng 8 đến 10 ngàn vụ mỗi năm gần đây.
Tuy nhiên, một điều có thể chứng minh lý thuyết này "ĐÚNG", đó chính là nhờ HOẠT ĐỘNG TẬP ĐOÀN ĐẠI TƯ BẢN dứoi sụ hổ trọ của chính trị quân sự Mỹ và Phương Tây, nên quyền lợi kinh tế đã nhỏ giọt (Trickle down) xuống qua cho một lượng quần chúng ở Trung Quốc, Viêt Nam, Ấn Độ v.v có công ăn việc làm, dù là rẻ mạt và thấp kém, bên cạnh là "Giọt" lớn cho một thiểu số ĐẠI GIA MỚI ở những quốc gia này.
Nhưng ngay trong tiến trình "nhỏ giọt" qua cho Tầu, Viêt, Ấn v.v thì với giới CÔNG NHÂN, TRUNG LUU ÂU MỸ, Nhỏ Giọt Xuống (Trickle Down) nó đã trở thành tiến trình "Nhỏ Giọt Mất Đi Ra Ngoài" (Trickle OUT)... Chỉ riêng tiến trình chuyển nguồn công nghệ (off-shoring, out sourcing) Công ăn việc làm, nguồn lợi tức công quĩ của xã hội Âu Mỹ đã chảy sang các nước Tầu Việt Ấn v.v với một giá thấp hơn và nguồn lợi về túi các tập đoàn đại bản cao hơn.
Riêng tại Trung Quốc, khi báo chí tập trung ca ngợi con số thống kê tăng trưởng và xuất cảng của Trung Quốc, ít ai biết rằng trong tổng số XUẤT CẢNG đó thì hết khoảng 60% là tài sản vốn liếng của các công ty Âu Mỹ Nhật Hàn v.v và đối với những mặt hàng KỸ THUẬT CAO CẤP như điện tử máy móc, thì đến 85% là kỹ thuật vốn liếng của Âu Mỹ Nhật Hàn v.v (60 percent of exports in China come from foreign companies. Foreign companies are responsible for 85 percent of all high-tech exports). Nghĩa là trong 1 đồng lợi nhuận thì Trung Quốc chỉ lấy có khoảng 15-30 xu.. Con số này quả thật chính xác.. Nếu chúng ta liên kết lợi tức hàng ngàn tỉ mỹ kim vào tay các đại gia đảng CS Trung Quốc (cả VN) để có những đề án "hoảnh tráng" về quân sự và đầu tư nước ngoài như mua IBM, VOLVO v.v trong khi giới công nhân vẫn tất bật với 7 ngày làm việc với số lương 20 mỹ kim một tuần; và cũng giống như vậy tại các nước đầu tư phương Tây, Âu Mỹ, nơi giói công nhân càng ngày càng mất việc- trong khi đó lượng và giờ làm việc tăng, lương bổng thu nhập không tăng- và MỨC LỢI NUẬN GIẦU CÓ của giới chủ nhân đầu tư, Tổng Giám Đốc (CEO) bỗng dưng TĂNG 400-1000% !!! ĐÓ CHÍNH LÀ do 70-85 xu họ kiếm được từ mỗi 1 Mỹ Kim Công Nhân Trung Quốc làm ra..
Nói cách khác, khi Trung Quốc báo cáo hàng ngàn tỉ thu nhập vào Tổng sản Lượng Quốc Gia hay hàng ngàn tỉ tăng trưởng, thì chúng ta biết rằng cứ 15-30 xu tăng trưởng của Trung Quốc, thì giới đầu tư Âu Mỹ có thêm từ 60-85 xu lợi nhuận. Đó là lý do giải thích tại sao các "quốc hội" Âu Mỹ đồng thuận với TQ bảo vệ chính sách đầu tư tại TQ.. và cũng giải thích chính xác tại sao nơi xã hội Âu Mỹ, trong khi quần chúng thất nghiệp nghèo khổ gia tăng thì mức THU NHẬP LỢI NHUẬN của các TẬP ĐOÀN ĐẠI TƯ BẢN lại tăng vọt đến mức khủng khiếp... nhưng KHÔNG HỀ NHỎ GIỌT vào XÃ HỘI QUỐC GIA khiến KHỦNG HOẢNG NỢ NẦN QUỐC GIA và của QUẦN CHÚNG cũng TĂNG VỌT... khiến mất việc làm , mất nhà cửa , mất phúc lợi xã hội, và phải đóng thuế cao hơn khi mua sắm buôn bán...nghĩa là mất thêm..
Con số thống kê BÁO CÁO chính qui có thể nói DỐI..
Nhưng con số thu nhập thực tiễn của đòi sống ngừoi dân và bọn tập đoàn đại bản không thể nói DỐI được. ĐÓ LÀ NGUYÊN NHÂN và ĐỘNG LỰC ĐẦU TIÊN của CAO TRÀO CHIẾM CỨ PHỐ WALL, Đó cũng chính là lý do Cao Trào này được sự ủng hộ của nhiều người và đang lan rộng khắp thế giới!
NKPTC.
-------------------
Tens of thousands of Chinese fight the police in Shishou
Tens of thousands of rioters torched a hotel and overturned police cars, accusing the authorities of trying to cover up the murder of a 24-year-old man as a suicide.
(Photos: QQ)
The deceased, Tu Yuangao, was the chef of the Yong Long hotel. According to the cops, he committed suicide by jumping off the roof of the building and left a note.
However, witnesses said there was no blood on the scene and Tu's body was already cold just after it hit the ground. His parents were surprised that he left a suicide note, since he was allegedly illiterate.
There are plenty of rumours flying around – that two other employees at the hotel had died in the same way, that the boss of the hotel is related to the mayor of Shishou, that the hotel was a centre for the local drug business and Yu was killed for threatening to expose what was going on. There's also a rumour that three further bodies have been found at the hotel.
There are more details and photos here (EastWestNorthSouth).
It's a strange story, and it gets stranger. A huge mob, of anywhere between a few thousand to 70,000 people, depending on which report you read, quickly gathered outside the building to protect the body. Tu's parents refused to let his corpse be taken away, claiming that it held vital evidence of the crime, and instead placed it inside the hotel on ice.
The crowd beat back waves of policemen. On Saturday, someone lit a fire inside the hotel, possibly to destroy the body, but it was saved.
Tu's cousin apparently then armed himself with two barrels of gasoline and threatened to blow himself up if the body was taken.
The police restored order yesterday, imposed a curfew and took the corpse to a funeral parlour. There is still a lot of anger, however, and the website of the local government has been defaced by hackers.
What's extraordinary is the speed in which the riot blew up, and the venom directed against the local authorities. Whatever was behind Tu's death, there's clearly something rotten in Shishou.
After months of calm, there have recently been a spate of riots being reported in the Chinese media, or on the internet.
Is this because media restrictions have been lifted, allowing news of riots to spread, or has there been a genuine increase in social tension in the countryside?
It is impossible to tell. China no longer publishes the figures for how many riots take place each year, but most people put the figure at around 80,000 and the vast majority go totally unnoticed.
The fact that there have been a dozen riots reported in the last couple of months may not demonstrate anything out of the ordinary. There is no theme that connects the recent protests – some are about property, some are work disputes, some are because of corruption.
But then again, a huge number of migrant workers are still out of work. Their factories have not recovered from the economic crisis. In the countryside, the harvest is finished and people's savings may be running low. Perhaps the tinderbox is drier than usual.
UPDATE: Overnight between Sunday and Monday over a thousand students rioted at Nanjing Industrial Technical School, smashing windows, television sets, their teacher's cars and an on-campus supermarket.
A policeman was attacked, but the crowd was eventually subdued by hundreds of anti-riot police, according to blogs written by participants.
The students were enraged after being told that they would only graduate with a technical degree (the equivalent of high-school diploma) rather than the associate degree (just underneath a normal bachelor's degree) they were promised at enrollment.
--
Comments
Who Rules USA
Submitted by duyvietadmin on Thu, 11/03/2011 - 12:21.
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html (retrieved November 2, 2011)
More books & articles by Bill Domhoff
• Class and Power in the New Deal (2011): How corporate leaders shaped key aspects of FDR's New Deal.
• The New CEOs (2011): Looks at the few corporate chief executives of the past 15-20 years who are not white males.
• The Class-Domination Theory of Power: An explanation of why the wealth and income distributions are so unequal in the U.S., and how the political system works.
• The Left and the Right in Thinking, Personality, and Politics: An exploration of the personality differences and psychology behind the liberal/
• Social Science & Social Change: Applying lessons from social science to egalitarian/
Wealth, Income, and Power
by G. William Domhoff
Some of the information may come as a surprise to many people. In fact, I know it will be a surprise and then some, because of a recent study (Norton & Ariely, 2010) showing that most Americans (high income or low income, female or male, young or old, Republican or Democrat) have no idea just how concentrated the wealth distribution actually is. More on that a bit later.
As far as the income distribution, the most striking numbers on income inequality will come last, showing the dramatic change in the ratio of the average CEO's paycheck to that of the average factory worker over the past 40 years.
First, though, some definitions. Generally speaking, wealth is the value of everything a person or family owns, minus any debts. However, for purposes of studying the wealth distribution, economists define wealth in terms of marketable assets, such as real estate, stocks, and bonds, leaving aside consumer durables like cars and household items because they are not as readily converted into cash and are more valuable to their owners for use purposes than they are for resale (see Wolff, 2004, p. 4, for a full discussion of these issues). Once the value of all marketable assets is determined, then all debts, such as home mortgages and credit card debts, are subtracted, which yields a person's net worth. In addition, economists use the concept of financial wealth -- also referred to in this document as "non-home wealth" -- which is defined as net worth minus net equity in owner-occupied housing. As Wolff (2004, p. 5) explains, "Financial wealth is a more 'liquid' concept than marketable wealth, since one's home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments."
We also need to distinguish wealth from income. Income is what people earn from work, but also from dividends, interest, and any rents or royalties that are paid to them on properties they own. In theory, those who own a great deal of wealth may or may not have high incomes, depending on the returns they receive from their wealth, but in reality those at the very top of the wealth distribution usually have the most income. (But it's important to note that for the rich, most of that income does not come from "working": in 2008, only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries. See Norris, 2010, for more details.)
This document focuses on the "Top 1%" as a whole because that's been the traditional cut-off point for "the top" in academic studies, and because it's easy for us to keep in mind that we are talking about one in a hundred. But it is also important to realize that the lower half of that top 1% has far less than those in the top half; in fact, both wealth and income are super-concentrated in the top 0.1%, which is just one in a thousand. To get an idea of the differences, take a look at an insider account by a long-time investment manager who works for the well-to-do and very rich. It nicely explains what the different levels have -- and how they got it.
As you read through the facts and figures that follow, please keep in mind that they are usually two or three years out of date because it takes time for one set of experts to collect the basic information and make sure it is accurate, and then still more time for another set of experts to analyze it and write their reports. It's also the case that the infamous housing bubble of the first eight years of the 21st century inflated some of the wealth numbers. The important point to keep in mind is that it's the relative positions of wealth holders and income earners that we are trying to comprehend in this document. (To get some idea about absolute dollar amounts, read the investment manager's insider account that was mentioned in the previous paragraph.)
So far there are only tentative projections -- based on the price of housing and stock in July 2009 -- on the effects of the Great Recession on the wealth distribution. They suggest that average Americans have been hit much harder than wealthy Americans. Edward Wolff, the economist we draw upon the most in this document, concludes that there has been an "astounding" 36.1% drop in the wealth (marketable assets) of the median household since the peak of the housing bubble in 2007. By contrast, the wealth of the top 1% of households dropped by far less: just 11.1%. So as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007. (See Wolff, 2010 for more details.)
There's also some general information available on median income and percentage of people below the poverty line in 2010. As might be expected, most of the new information shows declines; in fact, a report from the Center for Economic and Policy Research (2011) concludes that the decade from 2000 to 2010 was a "lost decade" for most Americans.
One final general point before turning to the specifics. People who have looked at this document in the past often asked whether progressive taxation reduces some of the income inequality that exists before taxes are paid. The answer: not by much, if we count all of the taxes that people pay, from sales taxes to property taxes to payroll taxes (in other words, not just income taxes). And the top 1% of income earners actually pay a smaller percentage of their incomes to taxes than the 9% just below them. These findings are discussed in detail near the end of this document.
The Wealth Distribution
In the United States, wealth is highly concentrated in a relatively few hands. As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one's home), the top 1% of households had an even greater share: 42.7%. Table 1 and Figure 1 present further details drawn from the careful work of economist Edward N. Wolff at New York University (2010).| Table 1: Distribution of net worth and financial wealth in the |
| Total Net Worth | |||
|---|---|---|---|
| Top 1 percent | Next 19 percent | Bottom 80 percent | |
| 1983 | 33.8% | 47.5% | 18.7% |
| 1989 | 37.4% | 46.2% | 16.5% |
| 1992 | 37.2% | 46.6% | 16.2% |
| 1995 | 38.5% | 45.4% | 16.1% |
| 1998 | 38.1% | 45.3% | 16.6% |
| 2001 | 33.4% | 51.0% | 15.6% |
| 2004 | 34.3% | 50.3% | 15.3% |
| 2007 | 34.6% | 50.5% | 15.0% |
| Financial Wealth | |||
| Top 1 percent | Next 19 percent | Bottom 80 percent | |
| 1983 | 42.9% | 48.4% | 8.7% |
| 1989 | 46.9% | 46.5% | 6.6% |
| 1992 | 45.6% | 46.7% | 7.7% |
| 1995 | 47.2% | 45.9% | 7.0% |
| 1998 | 47.3% | 43.6% | 9.1% |
| 2001 | 39.7% | 51.5% | 8.7% |
| 2004 | 42.2% | 50.3% | 7.5% |
| 2007 | 42.7% | 50.3% | 7.0% |
| Total assets are defined as the sum of: (1) the gross value of owner-occupied housing; (2) other real estate owned by the household; (3) cash and demand deposits; (4) time and savings deposits, certificates of deposit, and money market accounts; (5) government bonds, corporate bonds, foreign bonds, and other financial securities; (6) the cash surrender value of life insurance plans; (7) the cash surrender value of pension plans, including IRAs, Keogh, and 401(k) plans; (8) corporate stock and mutual funds; (9) net equity in unincorporated businesses; and (10) equity in trust funds. Total liabilities are the sum of: (1) mortgage debt; (2) consumer debt, including auto loans; and (3) other debt. From Wolff (2004, 2007, & 2010). |
| Figure 1: Net worth and financial wealth distribution in the |
 |
In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.
| Table 2: Wealth distribution by type of asset, 2007 |
| Investment Assets | |||
|---|---|---|---|
| Top 1 percent | Next 9 percent | Bottom 90 percent | |
| Business equity | 62.4% | 30.9% | 6.7% |
| Financial securities | 60.6% | 37.9% | 1.5% |
| Trusts | 38.9% | 40.5% | 20.6% |
| Stocks and mutual funds | 38.3% | 42.9% | 18.8% |
| Non-home real estate | 28.3% | 48.6% | 23.1% |
| TOTAL investment assets | 49.7% | 38.1% | 12.2% |
| Housing, Liquid Assets, Pension Assets, and Debt | |||
| Top 1 percent | Next 9 percent | Bottom 90 percent | |
| Deposits | 20.2% | 37.5% | 42.3% |
| Pension accounts | 14.4% | 44.8% | 40.8% |
| Life insurance | 22.0% | 32.9% | 45.1% |
| Principal residence | 9.4% | 29.2% | 61.5% |
| TOTAL other assets | 12.0% | 33.8% | 54.2% |
| Debt | 5.4% | 21.3% | 73.4% |
| From Wolff (2010). | |||
| Figure 2a: Wealth distribution by type of asset, 2007: |
 |
| Figure 2b: Wealth distribution by type of asset, 2007: |
 |
Inheritance and estate taxes
Figures on inheritance tell much the same story. According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000). Thus, the attempt by ultra-conservatives to eliminate inheritance taxes -- which they always call "death taxes" for P.R. reasons -- would take a huge bite out of government revenues (an estimated $253 billion between 2012 and 2022) for the benefit of the heirs of the mere 0.6% of Americans whose death would lead to the payment of any estate taxes whatsoever (Citizens for Tax Justice, 2010b).It is noteworthy that some of the richest people in the country oppose this ultra-conservative initiative, suggesting that this effort is driven by anti-government ideology. In other words, few of the ultra-conservative and libertarian activists behind the effort will benefit from it in any material way. However, a study (Kenny et al., 2006) of the financial support for eliminating inheritance taxes discovered that 18 super-rich families (mostly Republican financial donors, but a few who support Democrats) provide the anti-government activists with most of the money for this effort. (For more infomation, including the names of the major donors, download the article from United For a Fair Economy's Web site.)
Actually, ultra-conservatives and their wealthy financial backers may not have to bother to eliminate what remains of inheritance taxes at the federal level. The rich already have a new way to avoid inheritance taxes forever -- for generations and generations -- thanks to bankers. After Congress passed a reform in 1986 making it impossible for a "trust" to skip a generation before paying inheritance taxes, bankers convinced legislatures in many states to eliminate their "rules against perpetuities," which means that trust funds set up in those states can exist in perpetuity, thereby allowing the trust funds to own new businesses, houses, and much else for descendants of rich people, and even to allow the beneficiaries to avoid payments to creditors when in personal debt or sued for causing accidents and injuries. About $100 billion in trust funds has flowed into those states so far. You can read the details on these "dynasty trusts" (which could be the basis for an even more solidified "American aristocracy") in a New York Times opinion piece published in July 2010 by Boston College law professor Ray Madoff, who also has a book on this and other new tricks: Immortality and the Law: The Rising Power of the American Dead (Yale University Press, 2010).
Home ownership & wealth
For the vast majority of Americans, their homes are by far the most significant wealth they possess. Figure 3 comes from the Federal Reserve Board's Survey of Consumer Finances (via Wolff, 2010) and compares the median income, total wealth (net worth, which is marketable assets minus debt), and non-home wealth (which earlier we called financial wealth) of White, Black, and Hispanic households in the U.S.| Figure 3: Income and wealth by race in the U.S. |
 |
Besides illustrating the significance of home ownership as a source of wealth, the graph also shows that Black and Latino households are faring significantly worse overall, whether we are talking about income or net worth. In 2007, the average white household had 15 times as much total wealth as the average African-American or Latino household. If we exclude home equity from the calculations and consider only financial wealth, the ratios are in the neighborhood of 100:1. Extrapolating from these figures, we see that 70% of white families' wealth is in the form of their principal residence; for Blacks and Hispanics, the figures are 95% and 96%, respectively.
And for all Americans, things are getting worse: as the projections to July 2009 by Wolff (2010) make clear, the last few years have seen a huge loss in housing wealth for most families, making the gap between the rich and the rest of America even greater, and increasing the number of households with no marketable assets from 18.6% to 24.1%.
Do Americans know their country's wealth distribution?
A remarkable study (Norton & Ariely, 2010) reveals that Americans have no idea that the wealth distribution (defined for them in terms of "net worth") is as concentrated as it is. When shown three pie charts representing possible wealth distributions, 90% or more of the 5,522 respondents -- whatever their gender, age, income level, or party affiliation -- thought that the American wealth distribution most resembled one in which the top 20% has about 60% of the wealth. In fact, of course, the top 20% control about 85% of the wealth (refer back to Table 1 and Figure 1 in this document for a more detailed breakdown of the numbers).Even more striking, they did not come close on the amount of wealth held by the bottom 40% of the population. It's a number I haven't even mentioned so far, and it's shocking: the lowest two quintiles hold just 0.3% of the wealth in the United States. Most people in the survey guessed the figure to be between 8% and 10%, and two dozen academic economists got it wrong too, by guessing about 2% -- seven times too high. Those surveyed did have it about right for what the 20% in the middle have; it's at the top and the bottom that they don't have any idea of what's going on.
Americans from all walks of life were also united in their vision of what the "ideal" wealth distribution would be, which may come as an even bigger surprise than their shared misinformation on the actual wealth distribution. They said that the ideal wealth distribution would be one in which the top 20% owned between 30 and 40 percent of the privately held wealth, which is a far cry from the 85 percent that the top 20% actually own. They also said that the bottom 40% -- that's 120 million Americans -- should have between 25% and 30%, not the mere 8% to 10% they thought this group had, and far above the 0.3% they actually had. In fact, there's no country in the world that has a wealth distribution close to what Americans think is ideal when it comes to fairness. So maybe Americans are much more egalitarian than most of them realize about each other, at least in principle and before the rat race begins.
Figure 4, reproduced with permission from Norton & Ariely's article in Perspectives on Psychological Science, shows the actual wealth distribution, along with the survey respondents' estimated and ideal distributions, in graphic form.
| Figure 4: The actual United States wealth distribution plotted against the |
 |
| Note: In the "Actual" line, the bottom two quintiles are not visible because the lowest quintile owns just 0.1% of all wealth, and the second-lowest quintile owns 0.2%. |
| Source: Norton & Ariely, 2010. |
David Cay Johnston, a retired tax reporter for the New York Times, published an excellent summary of Norton & Ariely's findings (Johnston, 2010b; you can download the article from Johnston's Web site).
Historical context
Numerous studies show that the wealth distribution has been extremely concentrated throughout American history, with the top 1% already owning 40-50% in large port cities like Boston, New York, and Charleston in the 19th century. It was very stable over the course of the 20th century, although there were small declines in the aftermath of the New Deal and World II, when most people were working and could save a little money. There were progressive income tax rates, too, which took some money from the rich to help with government services.Then there was a further decline, or flattening, in the 1970s, but this time in good part due to a fall in stock prices, meaning that the rich lost some of the value in their stocks. By the late 1980s, however, the wealth distribution was almost as concentrated as it had been in 1929, when the top 1% had 44.2% of all wealth. It has continued to edge up since that time, with a slight decline from 1998 to 2001, before the economy crashed in the late 2000s and little people got pushed down again. Table 3 and Figure 5 present the details from 1922 through 2007.
| Table 3: Share of wealth held by the Bottom 99% and Top 1% in the |
| Bottom 99 percent | Top 1 percent | |
|---|---|---|
| 1922 | 63.3% | 36.7% |
| 1929 | 55.8% | 44.2% |
| 1933 | 66.7% | 33.3% |
| 1939 | 63.6% | 36.4% |
| 1945 | 70.2% | 29.8% |
| 1949 | 72.9% | 27.1% |
| 1953 | 68.8% | 31.2% |
| 1962 | 68.2% | 31.8% |
| 1965 | 65.6% | 34.4% |
| 1969 | 68.9% | 31.1% |
| 1972 | 70.9% | 29.1% |
| 1976 | 80.1% | 19.9% |
| 1979 | 79.5% | 20.5% |
| 1981 | 75.2% | 24.8% |
| 1983 | 69.1% | 30.9% |
| 1986 | 68.1% | 31.9% |
| 1989 | 64.3% | 35.7% |
| 1992 | 62.8% | 37.2% |
| 1995 | 61.5% | 38.5% |
| 1998 | 61.9% | 38.1% |
| 2001 | 66.6% | 33.4% |
| 2004 | 65.7% | 34.3% |
| 2007 | 65.4% | 34.6% |
| Sources: 1922-1989 data from Wolff (1996). 1992-2007 data from Wolff (2010). |
| Figure 5: Share of wealth held by the Bottom 99% and Top 1% in the |
 |
Here are some dramatic facts that sum up how the wealth distribution became even more concentrated between 1983 and 2004, in good part due to the tax cuts for the wealthy and the defeat of labor unions: Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the '80s, '90s, and early 2000s (Wolff, 2007).
The rest of the world
Thanks to a 2006 study by the World Institute for Development Economics Research -- using statistics for the year 2000 -- we now have information on the wealth distribution for the world as a whole, which can be compared to the United States and other well-off countries. The authors of the report admit that the quality of the information available on many countries is very spotty and probably off by several percentage points, but they compensate for this problem with very sophisticated statistical methods and the use of different sets of data. With those caveats in mind, we can still safely say that the top 10% of the world's adults control about 85% of global household wealth -- defined very broadly as all assets (not just financial assets), minus debts. That compares with a figure of 69.8% for the top 10% for the United States. The only industrialized democracy with a higher concentration of wealth in the top 10% than the United States is Switzerland at 71.3%. For the figures for several other Northern European countries and Canada, all of which are based on high-quality data, see Table 4.| Table 4: Percentage of wealth held in 2000 by the Top 10% of the adult population |
| wealth owned by top 10% | |
|---|---|
| Switzerland | 71.3% |
| United States | 69.8% |
| Denmark | 65.0% |
| France | 61.0% |
| Sweden | 58.6% |
| UK | 56.0% |
| Canada | 53.0% |
| Norway | 50.5% |
| Germany | 44.4% |
| Finland | 42.3% |
The Relationship Between Wealth and Power
What's the relationship between wealth and power? To avoid confusion, let's be sure we understand they are two different issues. Wealth, as I've said, refers to the value of everything people own, minus what they owe, but the focus is on "marketable assets" for purposes of economic and power studies. Power, as explained elsewhere on this site, has to do with the ability (or call it capacity) to realize wishes, or reach goals, which amounts to the same thing, even in the face of opposition (Russell, 1938; Wrong, 1995). Some definitions refine this point to say that power involves Person A or Group A affecting Person B or Group B "in a manner contrary to B's interests," which then necessitates a discussion of "interests," and quickly leads into the realm of philosophy (Lukes, 2005, p. 30). Leaving those discussions for the philosophers, at least for now, how do the concepts of wealth and power relate?First, wealth can be seen as a "resource" that is very useful in exercising power. That's obvious when we think of donations to political parties, payments to lobbyists, and grants to experts who are employed to think up new policies beneficial to the wealthy. Wealth also can be useful in shaping the general social environment to the benefit of the wealthy, whether through hiring public relations firms or donating money for universities, museums, music halls, and art galleries.
Second, certain kinds of wealth, such as stock ownership, can be used to control corporations, which of course have a major impact on how the society functions. Tables 5a and 5b show what the distribution of stock ownership looks like. Note how the top one percent's share of stock equity increased (and the bottom 80 percent's share decreased) between 2001 and 2007.
| Table 5a: Concentration of stock ownership in the |
| Percent of all stock owned: | |||
|---|---|---|---|
| Wealth class | 2001 | 2004 | 2007 |
| Top 1% | 33.5% | 36.7% | 38.3% |
| Next 19% | 55.8% | 53.9% | 52.8% |
| Bottom 80% | 10.7% | 9.4% | 8.9% |
| Table 5b: Amount of stock owned by various wealth classes in the |
| Percent of households owning stocks worth: | ||||
|---|---|---|---|---|
| Wealth class | $0 (no stocks) | $1-$10,000 | More than $10,000 | |
| Top 1% | 7.4% | 4.2% | 88.4% | |
| 95-99% | 7.8% | 2.7% | 89.5% | |
| 90-95% | 13.2% | 5.4% | 81.4% | |
| 80-90% | 17.9% | 10.9% | 71.2% | |
| 60-80% | 34.6% | 18.3% | 47.1% | |
| 40-60% | 52.3% | 25.6% | 22.1% | |
| 20-40% | 69.7% | 21.6% | 8.7% | |
| Bottom 20% | 84.7% | 14.3% | 2.0% | |
| TOTAL | 50.9% | 17.5% | 31.6% | |
| Both tables' data from Wolff (2007 & 2010). Includes direct ownership of stock shares and indirect ownership through mutual funds, trusts, and IRAs, Keogh plans, 401(k) plans, and other retirement accounts. All figures are in 2007 dollars. |
Third, just as wealth can lead to power, so too can power lead to wealth. Those who control a government can use their position to feather their own nests, whether that means a favorable land deal for relatives at the local level or a huge federal government contract for a new corporation run by friends who will hire you when you leave government. If we take a larger historical sweep and look cross-nationally, we are well aware that the leaders of conquering armies often grab enormous wealth, and that some religious leaders use their positions to acquire wealth.
There's a fourth way that wealth and power relate. For research purposes, the wealth distribution can be seen as the main "value distribution" within the general power indicator I call "who benefits." What follows in the next three paragraphs is a little long-winded, I realize, but it needs to be said because some social scientists -- primarily pluralists -- argue that who wins and who loses in a variety of policy conflicts is the only valid power indicator (Dahl, 1957, 1958; Polsby, 1980). And philosophical discussions don't even mention wealth or other power indicators (Lukes, 2005). (If you have heard it all before, or can do without it, feel free to skip ahead to the last paragraph of this section)
Here's the argument: if we assume that most people would like to have as great a share as possible of the things that are valued in the society, then we can infer that those who have the most goodies are the most powerful. Although some value distributions may be unintended outcomes that do not really reflect power, as pluralists are quick to tell us, the general distribution of valued experiences and objects within a society still can be viewed as the most publicly visible and stable outcome of the operation of power.
In American society, for example, wealth and well-being are highly valued. People seek to own property, to have high incomes, to have interesting and safe jobs, to enjoy the finest in travel and leisure, and to live long and healthy lives. All of these "values" are unequally distributed, and all may be utilized as power indicators. However, the primary focus with this type of power indicator is on the wealth distribution sketched out in the previous section.
The argument for using the wealth distribution as a power indicator is strengthened by studies showing that such distributions vary historically and from country to country, depending upon the relative strength of rival political parties and trade unions, with the United States having the most highly concentrated wealth distribution of any Western democracy except Switzerland. For example, in a study based on 18 Western democracies, strong trade unions and successful social democratic parties correlated with greater equality in the income distribution and a higher level of welfare spending (Stephens, 1979).
And now we have arrived at the point I want to make. If the top 1% of households have 30-35% of the wealth, that's 30 to 35 times what they would have if wealth were equally distributed, and so we infer that they must be powerful. And then we set out to see if the same set of households scores high on other power indicators (it does). Next we study how that power operates, which is what most articles on this site are about. Furthermore, if the top 20% have 84% of the wealth (and recall that 10% have 85% to 90% of the stocks, bonds, trust funds, and business equity), that means that the United States is a power pyramid. It's tough for the bottom 80% -- maybe even the bottom 90% -- to get organized and exercise much power.
Income and Power
The income distribution also can be used as a power indicator. As Table 6 shows, it is not as concentrated as the wealth distribution, but the top 1% of income earners did receive 17% of all income in the year 2003 and 21.3% in 2006. That's up from 12.8% for the top 1% in 1982, which is quite a jump, and it parallels what is happening with the wealth distribution. This is further support for the inference that the power of the corporate community and the upper class have been increasing in recent decades.| Table 6: Distribution of income in the |
| Income | |||
|---|---|---|---|
| Top 1 percent | Next 19 percent | Bottom 80 percent | |
| 1982 | 12.8% | 39.1% | 48.1% |
| 1988 | 16.6% | 38.9% | 44.5% |
| 1991 | 15.7% | 40.7% | 43.7% |
| 1994 | 14.4% | 40.8% | 44.9% |
| 1997 | 16.6% | 39.6% | 43.8% |
| 2000 | 20.0% | 38.7% | 41.4% |
| 2003 | 17.0% | 40.8% | 42.2% |
| 2006 | 21.3% | 40.1% | 38.6% |
| From Wolff (2010). | |||
The rising concentration of income can be seen in a special New York Times analysis by David Cay Johnston of an Internal Revenue Service report on income in 2004. Although overall income had grown by 27% since 1979, 33% of the gains went to the top 1%. Meanwhile, the bottom 60% were making less: about 95 cents for each dollar they made in 1979. The next 20% - those between the 60th and 80th rungs of the income ladder -- made $1.02 for each dollar they earned in 1979. Furthermore, Johnston concludes that only the top 5% made significant gains ($1.53 for each 1979 dollar). Most amazing of all, the top 0.1% -- that's one-tenth of one percent -- had more combined pre-tax income than the poorest 120 million people (Johnston, 2006).
But the increase in what is going to the few at the top did not level off, even with all that. As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01% -- that's one-hundredth of one percent -- receiving 6% of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917 (Saez, 2009). However, in an analysis of 2008 tax returns for the top 0.2% -- that is, those whose income tax returns reported $1,000,000 or more in income (mostly from individuals, but nearly a third from couples) -- it was found that they received 13% of all income, down slightly from 16.1% in 2007 due to the decline in payoffs from financial assets (Norris, 2010).
And the rate of increase is even higher for the very richest of the rich: the top 400 income earners in the United States. According to another analysis by Johnston (2010a), the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier. (For another recent revealing study by Johnston, read "Is Our Tax System Helping Us Create Wealth?").
How are these huge gains possible for the top 400? It's due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it's not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay. It's also worth noting that only the first $106,800 of a person's income is taxed for Social Security purposes (as of 2010), so it would clearly be a boon to the Social Security Fund if everyone -- not just those making less than $106,800 -- paid the Social Security tax on their full incomes.
Do Taxes Redistribute Income?
It is widely believed that taxes are highly progressive and, furthermore, that the top several percent of income earners pay most of the taxes received by the federal government. Both ideas are wrong because they focus on official, rather than "effective" tax rates and ignore payroll taxes, which are mostly paid by those with incomes below $100,000 per year.But what matters in terms of a power analysis is what percentage of their income people at different income levels pay to all levels of government (federal, state, and local) in taxes. If the less-well-off majority is somehow able to wield power, we would expect that the high earners would pay a bigger percentage of their income in taxes, because the majority figures the well-to-do would still have plenty left after taxes to make new investments and lead the good life. If the high earners have the most power, we'd expect them to pay about the same as everybody else, or less.
Citizens for Tax Justice, a research group that's been studying tax issues from its offices in Washington since 1979, provides the information we need. When all taxes (not just income taxes) are taken into account, the lowest 20% of earners (who average about $12,400 per year), paid 16.0% of their income to taxes in 2009; and the next 20% (about $25,000/year), paid 20.5% in taxes. So if we only examine these first two steps, the tax system looks like it is going to be progressive.
And it keeps looking progressive as we move further up the ladder: the middle 20% (about $33,400/year) give 25.3% of their income to various forms of taxation, and the next 20% (about $66,000/year) pay 28.5%. So taxes are progressive for the bottom 80%. But if we break the top 20% down into smaller chunks, we find that progressivity starts to slow down, then it stops, and then it slips backwards for the top 1%.
Specifically, the next 10% (about $100,000/year) pay 30.2% of their income as taxes; the next 5% ($141,000/year) dole out 31.2% of their earnings for taxes; and the next 4% ($245,000/year) pay 31.6% to taxes. You'll note that the progressivity is slowing down. As for the top 1% -- those who take in $1.3 million per year on average -- they pay 30.8% of their income to taxes, which is a little less than what the 9% just below them pay, and only a tiny bit more than what the segment between the 80th and 90th percentile pays.
What I've just explained with words can be seen more clearly in Figure 6.
| Figure 6: Share of income paid as tax, including local and state tax |
 |
| Source: Citizens for Tax Justice (2010a). |
We also can look at this information on income and taxes in another way by asking what percentage of all taxes various income levels pay. (This is not the same as the previous question, which asked what percentage of their incomes went to taxes for people at various income levels.) And the answer to this new question can be found in Figure 7. For example, the top 20% receives 59.1% of all income and pays 64.3% of all the taxes, so they aren't carrying a huge extra burden. At the other end, the bottom 20%, which receives 3.5% of all income, pays 1.9% of all taxes.
| Figure 7: Share of all income earned and all taxes paid, by quintile |
 |
| Source: Citizens for Tax Justice (2010a). |
So the best estimates that can be put together from official government numbers show a little bit of progressivity. But the details on those who earn millions of dollars each year are very hard to come by, because they can stash a large part of their wealth in off-shore tax havens in the Caribbean and little countries in Europe, starting with Switzerland. And there are many loopholes and gimmicks they can use, as summarized with striking examples in Free Lunch and Perfectly Legal, the books by Johnston that were mentioned earlier. For example, Johnston explains the ways in which high earners can hide their money and delay on paying taxes, and then invest for a profit what normally would be paid in taxes.
Income inequality in other countries
The degree of income inequality in the United States can be compared to that in other countries on the basis of the Gini coefficient, a mathematical ratio that allows economists to put all countries on a scale with values that range (hypothetically) from zero (everyone in the country has the same income) to 100 (one person in the country has all the income). On this widely used measure, the United States ends up 95th out of the 134 countries that have been studied -- that is, only 39 of the 134 countries have worse income inequality. The U.S. has a Gini index of 45.0; Sweden is the lowest with 23.0, and South Africa is near the top with 65.0.The table that follows displays the scores for 22 major countries, along with their ranking in the longer list of 134 countries that were studied (most of the other countries are very small and/or very poor). In examining this table, remember that it does not measure the same thing as Table 4 earlier in this document, which was about the wealth distribution. Here we are looking at the income distribution, so the two tables won't match up as far as rankings. That's because a country can have a highly concentrated wealth distribution and still have a more equal distribution of income due to high taxes on top income earners and/or high minimum wages -- both Switzerland and Sweden follow this pattern. So one thing that's distinctive about the U.S. compared to other industrialized democracies is that both its wealth and income distributions are highly concentrated.
| Table 7: Income equality in selected countries |
| Country/Overall Rank | Gini Coefficient |
|---|---|
| 1. Sweden | 23.0 |
| 2. Norway | 25.0 |
| 8. Austria | 26.0 |
| 10. Germany | 27.0 |
| 17. Denmark | 29.0 |
| 25. Australia | 30.5 |
| 34. Italy | 32.0 |
| 35. Canada | 32.1 |
| 37. France | 32.7 |
| 42. Switzerland | 33.7 |
| 43. United Kingdom | 34.0 |
| 45. Egypt | 34.4 |
| 56. India | 36.8 |
| 61. Japan | 38.1 |
| 68. Israel | 39.2 |
| 81. China | 41.5 |
| 82. Russia | 42.3 |
| 90. Iran | 44.5 |
| 93. United States | 45.0 |
| 107. Mexico | 48.2 |
| 125. Brazil | 56.7 |
| 133. South Africa | 65.0 |
| Note: These figures reflect family/household income, not individual income. |
| Source: Central Intelligence Agency (2010). |
The impact of "transfer payments"
As we've seen, taxes don't have much impact on the income distribution, especially when we look at the top 1% or top 0.1%. Nor do various kinds of tax breaks and loopholes have much impact on the income distribution overall. That's because the tax deductions that help those with lower incomes -- such as the Earned Income Tax Credit (EITC), tax forgiveness for low-income earners on Social Security, and tax deductions for dependent children -- are offset by the breaks for high-income earners (for example: dividends and capital gains are only taxed at a rate of 15%; there's no tax on the interest earned from state and municipal bonds; and 20% of the tax deductions taken for dependent children actually go to people earning over $100,000 a year).But it is sometimes said that income inequality is reduced significantly by government programs that matter very much in the lives of low-income Americans. These programs provide "transfer payments," which are a form of income for those in need. They include unemployment compensation, cash payments to the elderly who don't have enough to live on from Social Security, Temporary Assistance to Needy Families (welfare), food stamps, and Medicaid.
Thomas Hungerford (2009), a tax expert who works for the federal government's Congressional Research Service, carried out a study for Congress that tells us about the real-world impact of transfer payments on reducing income inequality. Hungerford's study is based on 2004 income data from an ongoing study of a representative sample of families at the University of Michigan, and it includes the effects of both taxes and four types of transfer payments (Social Security, Temporary Assistance to Needy Families, food stamps, and Medicaid). The table that follows shows the income inequality index (that is, the Gini coefficient) at three points along the way: (1.) before taxes or transfers; (2) after taxes are taken into account; and (3) after both taxes and transfer payments are included in the equation. (The Citizens for Tax Justice study of income and taxes for 2009, discussed earlier, included transfer payments as income, so that study and Hungerford's have similar starting points. But they can't be directly compared, because they use different years.)
| Table 8: Redistributive effect of taxes and transfer payments |
| Income definition | Gini index |
|---|---|
| Before taxes and transfers | 0.5116 |
| After taxes, before transfers | 0.4774 |
| After taxes and transfers | 0.4284 |
| Source: Congressional Research Service, adapted from Hungerford (2009). |
As can be seen, Hungerford's findings first support what we had learned earlier from the Citizens for Tax Justice study: taxes don't do much to reduce inequality. They secondly reveal that transfer payments have a slightly larger impact on inequality than taxes, but not much. Third, his findings tell us that taxes and transfer payments together reduce the inequality index from .52 to .43, which is very close to the CIA's estimate of .45 for 2008.
In short, for those who ask if progressive taxes and transfer payments even things out to a significant degree, the answer is that while they have some effect, they don't do nearly as much as in Canada, major European countries, or Japan.
Income Ratios and Power: Executives vs. Laborers
Another way that income can be used as a power indicator is by comparing average CEO annual pay to average factory worker pay, something that has been done for many years by Business Week and, later, the Associated Press. The ratio of CEO pay to factory worker pay rose from 42:1 in 1960 to as high as 531:1 in 2000, at the height of the stock market bubble, when CEOs were cashing in big stock options. It was at 411:1 in 2005 and 344:1 in 2007, according to research by United for a Fair Economy. By way of comparison, the same ratio is about 25:1 in Europe. The changes in the American ratio from 1960 to 2007 are displayed in Figure 8, which is based on data from several hundred of the largest corporations.| Figure 8: CEOs' pay as a multiple of the average |
 |
| Source: Executive Excess 2008, the 15th Annual CEO Compensation Survey from the Institute for Policy Studies and United for a Fair Economy. |
It's even more revealing to compare the actual rates of increase of the salaries of CEOs and ordinary workers; from 1990 to 2005, CEOs' pay increased almost 300% (adjusted for inflation), while production workers gained a scant 4.3%. The purchasing power of the federal minimum wage actually declined by 9.3%, when inflation is taken into account. These startling results are illustrated in Figure 9.
| Figure 9: CEOs' average pay, production workers' average pay, the |
 |
| Source: Executive Excess 2006, the 13th Annual CEO Compensation Survey from the Institute for Policy Studies and United for a Fair Economy. |
Although some of the information I've relied upon to create this section on executives' vs. workers' pay is a few years old now, the AFL/CIO provides up-to-date information on CEO salaries at their Web site. There, you can learn that the median compensation for CEO's in all industries as of early 2010 is $3.9 million; it's $10.6 million for the companies listed in Standard and Poor's 500, and $19.8 million for the companies listed in the Dow-Jones Industrial Average. Since the median worker's pay is about $36,000, then you can quickly calculate that CEOs in general make 100 times as much as the workers, that CEO's of S&P 500 firms make almost 300 times as much, and that CEOs at the Dow-Jones companies make 550 times as much. (For a more recent update on CEOs' pay, see "The Drought Is Over (At Least for CEOs)" at NYTimes.com; the article reports that the median compensation for CEOs at 200 major companies was $9.6 million in 2010 -- up by about 12% over 2009 and generally equal to or surpassing pre-recession levels. For specific information about some of the top CEOs, see http://projects.nytimes.com
If you wonder how such a large gap could develop, the proximate, or most immediate, factor involves the way in which CEOs now are able to rig things so that the board of directors, which they help select -- and which includes some fellow CEOs on whose boards they sit -- gives them the pay they want. The trick is in hiring outside experts, called "compensation consultants," who give the process a thin veneer of economic respectability.
The process has been explained in detail by a retired CEO of DuPont, Edgar S. Woolard, Jr., who is now chair of the New York Stock Exchange's executive compensation committee. His experience suggests that he knows whereof he speaks, and he speaks because he's concerned that corporate leaders are losing respect in the public mind. He says that the business page chatter about CEO salaries being set by the competition for their services in the executive labor market is "bull." As to the claim that CEOs deserve ever higher salaries because they "create wealth," he describes that rationale as a "joke," says the New York Times (Morgenson, 2005).
Here's how it works, according to Woolard:
The compensation committee [of the board of directors] talks to an outside consultant who has surveys you could drive a truck through and pay anything you want to pay, to be perfectly honest. The outside consultant talks to the human resources vice president, who talks to the CEO. The CEO says what he'd like to receive. It gets to the human resources person who tells the outside consultant. And it pretty well works out that the CEO gets what he's implied he thinks he deserves, so he will be respected by his peers. (Morgenson, 2005.)The board of directors buys into what the CEO asks for because the outside consultant is an "expert" on such matters. Furthermore, handing out only modest salary increases might give the wrong impression about how highly the board values the CEO. And if someone on the board should object, there are the three or four CEOs from other companies who will make sure it happens. It is a process with a built-in escalator.
As for why the consultants go along with this scam, they know which side their bread is buttered on. They realize the CEO has a big say-so on whether or not they are hired again. So they suggest a package of salaries, stock options and other goodies that they think will please the CEO, and they, too, get rich in the process. And certainly the top executives just below the CEO don't mind hearing about the boss's raise. They know it will mean pay increases for them, too. (For an excellent detailed article on the main consulting firm that helps CEOs and other corporate executives raise their pay, check out the New York Times article entitled "America's Corporate Pay Pal", which supports everything Woolard of DuPont claims and adds new information.)
If hiring a consulting firm doesn't do the trick as far as raising CEO pay, then it may be possible for the CEO to have the board change the way in which the success of the company is determined. For example, Walmart Stores, Inc. used to link the CEO's salary to sales figures at established stores. But when declining sales no longer led to big pay raises, the board simply changed the magic formula to use total companywide sales instead. By that measure, the CEO could still receive a pay hike (Morgenson, 2011).
There's a much deeper power story that underlies the self-dealing and mutual back-scratching by CEOs now carried out through interlocking directorates and seemingly independent outside consultants. It probably involves several factors. At the least, on the workers' side, it reflects their loss of power following the all-out attack on unions in the 1960s and 1970s, which is explained in detail in an excellent book by James Gross (1995), a labor and industrial relations professor at Cornell. That decline in union power made possible and was increased by both outsourcing at home and the movement of production to developing countries, which were facilitated by the break-up of the New Deal coalition and the rise of the New Right (Domhoff, 1990, Chapter 10). It signals the shift of the United States from a high-wage to a low-wage economy, with professionals protected by the fact that foreign-trained doctors and lawyers aren't allowed to compete with their American counterparts in the direct way that low-wage foreign-born workers are.
(You also can read a quick version of my explanation for the "right turn" that led to changes in the wealth and income distributions in an article on this site, where it is presented in the context of criticizing the explanations put forward by other theorists.)
On the other side of the class divide, the rise in CEO pay may reflect the increasing power of chief executives as compared to major owners and stockholders in general, not just their increasing power over workers. CEOs may now be the center of gravity in the corporate community and the power elite, displacing the leaders in wealthy owning families (e.g., the second and third generations of the Walton family, the owners of Wal-Mart). True enough, the CEOs are sometimes ousted by their generally go-along boards of directors, but they are able to make hay and throw their weight around during the time they are king of the mountain.
The claims made in the previous paragraph need much further investigation. But they demonstrate the ideas and research directions that are suggested by looking at the wealth and income distributions as indicators of power.
Further Information
- The 2010 Wolff paper is on-line at http://www.levyinstitute.org/publications/?docid=1235; Edward Wolff's home page at New York University is at http://www.econ.nyu.edu/user/wolffe/.
- The Census Bureau report is on line at http://www.census.gov/hhes/www/wealth/wealth.html
- The World Institute for Development Economics Research (UNU-WIDER) report on household wealth throughout the world is available at http://tinyurl.com/wdhw08; see the WIDER site for more about their research.
- For good summaries of other information on wealth and income, and for information on the estate tax, see the United For A Fair Economy site at http://www.faireconomy.org/. Their research on CEO pay can be found here: http://www.faireconomy.org/issues/ceo_pay
- For some recent data on taxes from a variety of angles -- presented in a number of colorful charts and graphs -- the Center on Budget and Policy Priorities created a page entitled "Top Ten Tax Charts" in April 2011.
- The New York Times ran an excellent series of articles on executive compensation in the fall of 2006 entitled "Gilded Paychecks." Look for it by searching the archives on NYTimes.com.
- For a brief 2010 account by tax expert David Cay Johnston on how the owners of oil pipelines have avoided taxes for the past 25 years simply by converting from the corporate form of ownership to partnerships, check out his brief video on YouTube. For the full details, see his column on tax.com.
- To see a video of Ed Woolard giving his full speech about executive compensation, go to http://www.compensationstandards.com/nonmember/EdWoolard_video.asp (WMV file, may not be viewable on all platforms/browsers)
- The Shapiro & Friedman paper on capital income, along with many other reports on the federal budget and its consequences, are available at the Center on Budget and Policy Priorities site: http://www.cbpp.org/pubs/recent.html
- The AFL-CIO maintains a site called "Executive Paywatch," which summarizes information about the salary disparity between executives and other workers: http://www.aflcio.org/corporatewatch/paywatch/.
- Emmanuel Saez, Professor of Economics at UC Berkeley, has written or co-authored a number of papers on income inequality and related topics: http://elsa.berkeley.edu/~saez/
- An update on the lack of wage growth in the 2007-2010 recession ("Recession hits workers' paychecks") can be found at the Web site of the Economic Policy Institute.
References
AFL-CIO (2010). Executive PayWatch: CEO Pay Database: Compensation by Industry. Retrieved February 8, 2010 from http://www.aflcio.org/
Anderson, S., Cavanagh, J., Collins, C., Lapham, M., & Pizzigati, S. (2008). Executive Excess 2008: How Average Taxpayers Subsidize Runaway Pay. Washington, DC: Institute for Policy Studies / United for a Fair Economy.
Anderson, S., Cavanagh, J., Collins, C., Lapham, M., & Pizzigati, S. (2007). Executive Excess 2007: The Staggering Social Cost of U.S. Business Leadership. Washington, DC: Institute for Policy Studies / United for a Fair Economy.
Anderson, S., Benjamin, E., Cavanagh, J., & Collins, C. (2006). Executive Excess 2006: Defense and Oil Executives Cash in on Conflict. Washington, DC: Institute for Policy Studies / United for a Fair Economy.
Anderson, S., Cavanagh, J., Klinger, S., & Stanton, L. (2005). Executive Excess 2005: Defense Contractors Get More Bucks for the Bang. Washington, DC: Institute for Policy Studies / United for a Fair Economy.
Center for Economic and Policy Research (2011). New Census Numbers Make it Official: 2000-2010 Was a Lost Economic Decade. Retrieved October 25, 2011 from http://www.cepr.net/data-bytes/poverty-bytes/
Central Intelligence Agency (2010). World Factbook: Country Comparison: Distribution of family income - Gini index. Retrieved October 26, 2010 from https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html.
Citizens for Tax Justice (2010b). State-by-State Estate Tax Figures: Number of Deaths Resulting in Estate Tax Liability Continues to Drop. Retrieved December 13, 2010 from http://www.ctj.org/pdf/estatetax2010.pdf.
Citizens for Tax Justice (2010a). All Americans Pay Taxes. Retrieved April 15, 2010 from http://www.ctj.org/pdf/taxday2010.pdf.
Dahl, R. A. (1957). The concept of power. Behavioral Science, 2, 202-210.
Dahl, R. A. (1958). A critique of the ruling elite model. American Political Science Review, 52, 463-469.
Davies, J. B., Sandstrom, S., Shorrocks, A., & Wolff, E. N. (2006). The World Distribution of Household Wealth. Helsinki: World Institute for Development Economics Research.
Domhoff, G. W. (1990). The Power Elite and the State: How Policy Is Made in America. Hawthorne, NY: Aldine de Gruyter.
Gross, J. A. (1995). Broken Promise: The Subversion of U.S. Labor Relations Policy. Philadelphia: Temple University Press.
Hungerford, T. (2009). Redistribution effects of federal taxes and selected tax provisions. Washington: Congressional Research Service.
Johnston, D. C. (2010b). United in Our Delusion. Retrieved October 12, 2010 from http://www.tax.com/
Johnston, D. C. (2010a). Tax Rates for Top 400 Earners Fall as Income Soars, IRS Data. Retrieved February 23, 2010 from http://www.tax.com/
Johnston, D. C. (2009, December 21). Is Our Tax System Helping Us Create Wealth? Tax Notes , pp. 1375-1377.
Johnston, D. C. (2006, November 28). '04 Income in U.S. Was Below 2000 Level. New York Times, p. C-1.
Keister, L. (2005). Getting Rich: A Study of Wealth Mobility in America. New York: Cambridge University Press.
Kenny, C., Lincoln, T., Collins, C., & Farris, L. (2006). Spending Millions to Save Billions: The Campaign of the Super Wealthy to Kill the Estate Tax. Washington, DC: Public Citizen / United for a Fair Economy.
Kotlikoff, L., & Gokhale, J. (2000). The Baby Boomers' Mega-Inheritance: Myth or Reality? Cleveland: Federal Reserve Bank of Cleveland.
Lukes, S. (2005). Power: A Radical View (Second ed.). New York: Palgrave.
Madoff, R. D. (2010, July 12). America Builds an Aristocracy. New York Times, p. A-19.
Morgenson, G. (2011, May 8). Moving the goal posts on pay. New York Times, Section BU, p. 1.
Morgenson, G. (2005, October 23). How to slow runaway executive pay. New York Times, Section 3, p. 1.
Norris, F. (2010, July 24). Off the Charts: In '08 Downturn, Some Managed to Eke Out Millions. New York Times, p. B-3.
Norton, M. I., & Ariely, D. (2010, forthcoming). Building a better America - one wealth quintile at a time. Perspectives on Psychological Science.
Polsby, N. (1980). Community Power and Political Theory (Second ed.). New Haven, CT: Yale University Press.
Russell, B. (1938). Power: A New Social Analysis. London: Allen and Unwin.
Saez, E. (2009). Striking It Richer: The Evolution of Top Incomes in the United States (Update with 2007 Estimates). Retrieved August 28, 2009 from http://elsa.berkeley.edu/
Saez, E., & Piketty, T. (2003). Income Inequality in the United States, 1913-1998. Quarterly Journal of Economics, 118, 1-39.
Shapiro, I., & Friedman, J. (2006). New, Unnoticed CBO Data Show Capital Income Has Become Much More Concentrated at the Top. Washington, DC: Center on Budget and Policy Priorities.
Stephens, J. (1979). The Transition from Capitalism to Socialism. London: Macmillan.
Wolff, E. N. (1996). Top Heavy. New York: The New Press.
Wolff, E. N. (2004). Changes in household wealth in the 1980s and 1990s in the U.S. Working Paper No. 407. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College.
Wolff, E. N. (2007). Recent trends in household wealth in the United States: Rising debt and the middle-class squeeze. Working Paper No. 502. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College.
Wolff, E. N. (2010). Recent trends in household wealth in the United States: Rising debt and the middle-class squeeze - an update to 2007. Working Paper No. 589. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College.
Wrong, D. (1995). Power: Its Forms, Bases, and Uses (Second ed.). New Brunswick: Transaction Publishers.
All content ©2011 G. William Domhoff, unless otherwise noted. Unauthorized reproduction prohibited.
Half of Chinese Millionaires Leaving China
Submitted by duyvietadmin on Thu, 11/03/2011 - 12:13.
Half of Chinese Millionaires Leaving China
Almost half of wealthy Chinese citizens are planning to move, with the United States and Canada as most popular destinations.
A report by Bank of China and Hurun Report, the publisher of luxury magazines, revealed that 46 percent of Chinese with assets of at least $1.6 million were considering emigrating. About 14 percent have already started moving.
Most of those who are planning to move said that they are seeking better education for their children. They were also concerned with the security of their assets in China. Because of this, they are also looking at bringing investments to the country where they intend to move. Some have already invested.
China has 271 billionaires as compared to 189 last year and there are 960,000 with at least $1.6 million. The country’s booming economic growth have allowed more Chinese to build their fortunes.
Of the 960,000 Chinese millionaires, 55% derived their wealth from their private business; 20% are property speculators; 15% are stock market gurus; and the remaining 10% are high earning salaried executives. It should be noted also that 30% of the millionaires are female.
Rigid education system, rising living costs and corruption is what’s playing against China and pushing millionaires to look for their place abroad.
Why are there so many ‘working poor’ in the United States
Submitted by duyvietadmin on Thu, 11/03/2011 - 12:05.
To what extent is economic restructing since the 1980s the cause of so many ‘working poor’ in U.S inner cities?*
It is proclaimed as “America’s glaring contradiction” ( Levitan,Gallo and Sharipo 1993:3) that as one of the world’s most modernised and developed capitalist countries, it inhabits so many “working poor”. According to the “Census Bureau, The Bureau of Labor Statistics”, 37.3 million people in the United States of America were living in poverty in 2007, an increase on the 36.5 million in 2006. As Paul Harris states, in his article for the Observer; “each year since 2001 the number has grown”, resulting in the amount of people under the poverty threshold to be “the highest percentage in the developed world”. Indeed, he also states in his article that a further 5.4 million people slipped under the poverty line during George. W. Bush’s administration alone (footnote 1). Despite this, focus will not reside on an analysis of the unemployed and destitute, instead of the 8.8 million inhabitants that make up America’s ‘working poor’. An underclass, that the nation's 1980s restructing was catalytic in formulating.
The working poor’ are those that, as Amy. K. Glasmeier states in her work “An Atlas on Poverty in America ”, spend at least 27 weeks per annum in the labor force (working or looking for work) but whose income still fall below the poverty line. This has lead not only to people working two or more jobs but to a growth in both the informal and underground economy. Furthermore, through a process of neoliberal deregulation and de-unionisation, ‘non-standard’ jobs have become increasingly ‘standard’. Indeed “in twelve states, the percentage of all jobs that pay poverty wages is greater than 30%” (Glasmeier, 2006: 26).
During the 1960s “poverty was considered to be transitory” (Glasmeier, 2006:14), although academic sources adamantly refute this today the politics of the last few decades seem not to want to adhere to such evidence. This is further illustrated by the quote “dealing with poverty is not a viable political issue in America. It jars with a cultural sense that the poor bring things upon themselves and that every American is born with the same chances in life”(Harris, 2006). This is also a point Levitan, Gallo and Sharipo expound upon in their work “Working but Poor”, as they express it is contrary to American ethos; the belief that work and material advancement concur. Furthermore they state that poverty, being a result of deviant behaviour and lack of commitment to work among adults, is a prevalent view. Although this maybe true in some individual cases, it is clearly not the cause of so many millions of working poor in the U.S. Instead, it is the government’s economic policy, advanced capitalism and its consequences. Essentially, “the number of poor workers reflects economic and demographic trends, individual behaviour and the effectiveness of government policy” ( Levitan,Gallo and Sharipo 1993:6).
The growth trend of working poor in the U.S commenced in the 1980s, with the industrial and economic restructuring . Between 1989 and 1999 productivity grew 20%, however, the share of wealth was not spread evenly(footnote 2).
“The group service industries that were driving the economy in the 1980s were characterised by greater earnings and occupational dispersion, weak labor unions, and mostly unsheltered jobs in the lower-paying echelons.”(Sassen, 1998:159)
The decline of mass production with movement instead to services as the main national income and growth provider, shattered the “larger institutional framework that shaped the employment relationships"(ibid). Most importantly, the majority of national income was not shared relatively between the middle and lower classes. In crude terms the rich were getting richer and the poor were getting poorer; upward economic and social mobility was not seen in the lower classes. “The changes in the employment relationship reshaped social reproduction and consumption trends which have had a feedback effect on economic and organisation earnings.”(Sassen, 1994:102). Additionally, in the 1980s Ronald Reagan and George.H.W.Bush cut back federal funding in the inner cities. This was a double edged sword, as it was both part of the parties political agenda to undermine the Democrat opposition but also give a new face and meaning to capitalism of the time. As such, federal funding in Los Angeles declined from 18% in 1977 to just 2% of the city budget in 1985. Furthermore, Democratic policies that had previously opened up public sector jobs to Afro-Americans and Black people began to diminish with budget cuts. In addition to this, training programmes designed to “keep kids of the streets”, were being eradicated. This had a huge knock on affect in all the cities and metropolitan areas of North America. The most notable and significant of these was the phenomenon of the “white flight”.
Although such a notion had existed in the U.S since World War II, ensuing economic and baby booms, the post 1970s observation of it was something unchartered. The middle and upper classes which had newly acquired, (or at least rising) wealth fled the inner cities in search of the “American Dream” in the suburbs and exurbs. This was aided by growing technology and transport facilities such as high speed freeways, which greatly reduced travel time between these new ‘edge cities’ and downtown, often bypassing some less ‘ascetically pleasing neighbourhoods’. However, the most attractive component of U.S suburbanisation was the abundance of higher paid, better jobs and the reduction of tax. This created “bounded territories of urban relegation” (Wacquant, online:1997), as poverty resided in the inner cities, forming racialised “ghettoes” that no longer had the funding for public services. Despite many Black Americans achieving social mobility, the majority of new edge cities inhabitants were the white middle class.
Between 1970 and 1990, the ten largest metropolitan cities in the U.S lost 900,000 inhabitants but gained 4.8 million Latinos, 1.5 million Asians and 800, 000 Black inhabitants. The white flight also removed the political power through political disenfranchisement, from the inner cities as well as the high tax paying citizens sorely needed to prevent urban decay: a very real facet of urban life that is now seen in many of America’s large cities. Population shifts adjoined to a process of property disrepair, economic restructuring, high unemployment and generally unattractive urban landscapes leads to discontent and the growth of not only informal economies and crime but a growing impoverished ‘underclass’.
Although much of the formulation of this new wave of ‘working poor’ of the U.S inner cities can be seen as resultant of the nation’s 1980s economic resturcting, some of the socio-political issues can be traced back a decade further. In the mid 1970s a policy of ‘planned shrinkage’, implemented by New York’s Housing Commissioner Roger Starr, was an attempt to reverse urban decay. The withdrawal of public services such as police patrol, fire workers and even ‘garbage removal’ was an attempt to regenerate the cities with the help of outside development when depopulation had occurred(footnote 3). It can be seen as nothing other than ‘social cleansing’ through the means of “the new war on the poor” (Wallace & Wallace, 2002; 18). A five faceted process the Marxist academic, David Harvey relates to as the “accumulation by dispossession” of privatisation, financialisation, management and manipulation of crises, and state redistributions.
Starr’s policies were thought, by civic leaders, to merely be aiding the “natural and inevitable” (Wallace and Wallace, 2002; 26) cycle of a city. Instead, planned shrinkage is “an aggressive policy of triage which actively looks for sick neighborhoods and pulls services from them to free resources for healthy neighborhoods” (ibid). The results of these aggressive policies are seen in the inhumane distribution of public services.
By the mid 1970s around 40% of the housing in the Bronx area had burnt down. It was not until two decades later funding started going back into New York’s inner city areas, such as the Bronx, Harlem and Lower East Side. However, planned shrinkage coupled with redlining, (the process by which housing, job access, banking and insurance are practically denied or increased in cost in racially determined areas such as the U.S inner cities), it is not hard to see how America’s class structures became so dispropotionate and racialised.
In El Barrio, dubbed the ‘Spanish Harlem’, Phillipe Bourgois explains in his 2003 work, ‘In Search of Respect: Selling Crack in El Barrio’, drug use is rife, as inhabitants resort to it in anger, frustration and powerlessness. Moreover, with very little aid to a better life, it exists as escapism from the abject poverty and conditions in which they live. Lack of heating and rodent ridden apartment blocks are just a few elements of life in El Barrio. Without government intervention of public policy for better public heath care and education system, stable welfare and work rights, what hope of social stability do the working poor or indeed unemployed poor have? As Bourgois states, it’s all too easy to resign to the irony that the richest industrial power in the world confines so many of its citizens to poverty and prison. He also comments how short term public policies maybe idealistic and naïve “given the dimensions of the structural oppression of the U.S it is atheoretical to expect isolated political power, to remedy the plight of the poor in U.S centers in the short or medium term”(Bourgois, 2003:318). This would be ignorant of the concept that “racism and class segregation in the U.S are shaped into too complex a mesh of political-economic structural forces, historical legacies, cultural imperatives, and individual actions to be susceptible to simple solutions” (ibid). They seem only to flirt with the deep underlying issues that leave so many people in America working but poor.
The complexities of these issues are shown through Latino immigrants in North America. Deborah Watson commented in her article published by the International Committee of the Fourth International, since the recession in 1991 until the beginning of this one "despite high productivity, low inflation, low unemployment, and a booming stock market, the large gap between rich and poor that begun in the 1980s has widened" (Watson,1999: online) . U.S policies shy away from dealing with this as a political-economic issue. Instead it is often commented that this is in large due to the influx of (the predominantly Latino) immigrants over the past few decades. Indeed, it is endorsed that these numbers account for the rise in the percentage of workers living in daily destitution in the last 20 years. However, this is only part of the actuality of the situation, the more prominent issue being, in a post industrial era, de-regulation and de-unionisation form the breeding ground for informal economies. As such, the legal obligations of employers have been hugely reduced. Much of the informal economy involves illegality, which can be seen as an integral part of advanced capitalism. It is the response to globalisation and market competition that drives for low cost goods, manufacturing and employees.
“Part of the demand for goods and services feeding the expansion of the informal economy comes from the fragmentation of what were once mostly homogenous middle class markets.”(Sassen, 1998:168)
Due to its nature the informal economy is difficult to define, restrict and ironically regulate. However, as Sassen argues in the U.S informalisation is not an anomaly, it is instead “embedded in the structure of our current economic system”(ibid) Entrepreneurs and large cooperate companies alike, take advantage and exploit the underclass that make up the United State’s working poor. As Richard D. Vogel states in his article, “Harder Times: Undocumented Workers and the U.S. Informal Economy”, informal economies are often considered to be the phenomena of the third world. However the concept is rapidly expanding into Western free market nations, most notably the U.S.
With such work conditions, the social implications are vast and complex. Although, as Saskia Sassen explains in “Globalization and Discontent” there are 3 major trends that cause informal economies. The incapability of low income communities to afford to purchase “goods and services in the mainstream society”(ibid).This results in an internal need to accommodate for cheaper goods. The second trend is a result of uneven wealth distribution that can be seen in the inequality of different job sectors profit making capabilities. As such, higher earning business and industries have raised the cost of commercial space, often locating them in the downtown area of large U.S cities. The escalation in the price of office and manufacturing space results in low profit companies being insufficiently funded to compete. This in turn means that they often reside in the city residential rather than commercial space, such as basements “or to use up spaces that are not up to state-mandated health, fire and safety standards.”(ibid) The third trend Sassen recognises in the informalisation of the economy is the spatial organisation. Leading, more profitable sectors “tend to be concentrated in downtown or suburban office complexes” (ibid). This unbalance in the wealth distribution is not then just ethno-racial and class bound but also spatial.
The results of such trends are key factors in creating and harbouring America’s working poor. While the economy within low-income communities becomes stagnant, high income earners demand informally produced goods and low paid service jobs in the financial sector, such as office cleaning services that are subcontracted. Such jobs are often filled by immigrant workers. However, the growth in the informal economy is not a result of a growth in illegal immigrants.
“…not immigrants, but the growing inequality in earnings among consumers, and the growing inequality in firms in different sectors in the urban economy, have promoted the informalization of a growing array of economic activities.”(Sassen, 1998; 154)
This pertains that with neoliberal deregulation it is easier for an employee to deny a workers rights if that worker happens to be an illegal immigrant. Furthermore, illegal immigrants searching for work often find themselves financially disabled from the freedom to be particular about work conditions or indeed what the work involves. This was depicted by Vicente Fox, the ex-President of Mexico who claimed “Mexicans would do the jobs even Blacks wouldn’t do”, a statement that shocked audiences due to its racial overtones. It is wrong, however, to deduce that all people working in the informal economy are illegal immigrants, nor certainly do all illegal immigrants work in the informal economy.
In America where almost 25% of jobs are low paid, one must turn towards economic and social policy for an explanation. Economic restructuring and disproportionate wealth distribution since the 1980s have formed a racialised underclass of working poor. A class that struggle on a daily basis in impoverished conditions, without the help of basic welfare and workers rights due to neo-liberal de-regulation and de-unionisation. Ethno-racial tensions are heightened by the scarcity of jobs and the hegemonic white system. Economic policy that adheres to the greed and strains of advanced capitalism leads many into the informal and underground economies. This in turn leaves the new generations of American inhabitants exposed to crime, drugs, prostitution and daily violence. Without a sufficient education system, public funding for services and welfare rights, America’s working poor are becoming more marginalised trapped within inner city cores without social or financial mobility.
Footnotes'
2. Of course it is noted that the ‘American Working Classes’ have existed since the industrial revoltution. Any assessment of Marx’s work will illustrate this. However this is a discussion is of the new wave of a racilised underclass that exists in U.S inner cities as a result of advanced capitalism and the neoliberal world.
3. This is a concept also portrayed in Spike Lee’s film “When the Levee’s Broke”, which shows the American Government’s failure to produce adequate emergency aid to New Orleans’ Hurricane Katrina victims
Bibliography
Bourgois, P(2003) ‘In Search of Respect: Selling Crack in El Barrio’,Cambridge University Press
Bourgois, P (1998) “Families and Children in Pain in the US Inner City”: in Nancy Scheper-Hughes and Carolyn Sargent (eds.) Small Wars: The Cultural Politics of Childhood, pp. 331–351. Berkeley: University of California Press.
Dunk, Thomas (2002) “Remaking the Working Class: Experience, Class Consciousness, and the Industrial Adjustment Process.” American Ethnologist 29(4): 878–900.
Glasmeier, A(2006),‘An atlas of poverty in America : one nation, pulling apart, 1960-2003’,London : Routledge
Graber,J.A, ‘Jeanne Brooks-Gunn, Anne C. Petersen(1996) ‘Transitions Through Adolescence: Interpersonal Domains and Context’, Lawrence Erlbaum Associates
James, E(1970) ‘America against poverty’ ,London : Routledge & K. Paul Levitan,(1993) ‘Working but poor : America's contradiction’ / Sar A. Levitan, Frank Gallo, an .-Rev. ed. - Baltimore; London : Johns Hopkins University Press
Sassen, S (1994)"The Informal Economy: Between New Developments and Old Regulations", Vol 30, Yale Law Journal
Sassen, S (1998) Globalization and Its Discontents: Essays on the New Mobility of People and Money: Chapter 8 “The Informal Economy: Between New developments and Old Regulations”, pp. 153¬–172. New York: The New Press. (Also in Yale Law Journal 103(8), 1994.)
Wallace, D &Wallace R (2002), A Plague on Your Houses: How New York Was Burned Down and National Public Health Crumbled, Verso
Websites:
http://www.econ.brown.edu/econ/sthesis/MattPapers/Paper7.html
http://www.census.gov/hhes/www/poverty/poverty07/pov07hi.html
http://www.wsws.org/articles/1999/aug1999/poor-a12.shtml
http://lals.ucsc.edu/directory/downloads/arredondo/arredondoJUH.pdf
http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/110208dnintgivingup.3fc2393.html
http://www.prospect.org/cs/articles?articleId=10832
http://www.cnn.com/2005/US/05/14/fox.jackson/
http://www.monthlyreview.org/0706vogel.htm
Film
Spike Lee: When The Levees Broke, 2006 40 Acres & A Mule Filmworks
It is proclaimed as “America’s glaring contradiction” ( Levitan,Gallo and Sharipo 1993:3) that as one of the world’s most modernised and developed capitalist countries, it inhabits so many “working poor”. According to the “Census Bureau, The Bureau of Labor Statistics”, 37.3 million people in the United States of America were living in poverty in 2007, an increase on the 36.5 million in 2006. As Paul Harris states, in his article for the Observer; “each year since 2001 the number has grown”, resulting in the amount of people under the poverty threshold to be “the highest percentage in the developed world”. Indeed, he also states in his article that a further 5.4 million people slipped under the poverty line during George. W. Bush’s administration alone (footnote 1). Despite this, focus will not reside on an analysis of the unemployed and destitute, instead of the 8.8 million inhabitants that make up America’s ‘working poor’. An underclass, that the nation's 1980s restructing was catalytic in formulating.
The working poor’ are those that, as Amy. K. Glasmeier states in her work “An Atlas on Poverty in America ”, spend at least 27 weeks per annum in the labor force (working or looking for work) but whose income still fall below the poverty line. This has lead not only to people working two or more jobs but to a growth in both the informal and underground economy. Furthermore, through a process of neoliberal deregulation and de-unionisation, ‘non-standard’ jobs have become increasingly ‘standard’. Indeed “in twelve states, the percentage of all jobs that pay poverty wages is greater than 30%” (Glasmeier, 2006: 26).
During the 1960s “poverty was considered to be transitory” (Glasmeier, 2006:14), although academic sources adamantly refute this today the politics of the last few decades seem not to want to adhere to such evidence. This is further illustrated by the quote “dealing with poverty is not a viable political issue in America. It jars with a cultural sense that the poor bring things upon themselves and that every American is born with the same chances in life”(Harris, 2006). This is also a point Levitan, Gallo and Sharipo expound upon in their work “Working but Poor”, as they express it is contrary to American ethos; the belief that work and material advancement concur. Furthermore they state that poverty, being a result of deviant behaviour and lack of commitment to work among adults, is a prevalent view. Although this maybe true in some individual cases, it is clearly not the cause of so many millions of working poor in the U.S. Instead, it is the government’s economic policy, advanced capitalism and its consequences. Essentially, “the number of poor workers reflects economic and demographic trends, individual behaviour and the effectiveness of government policy” ( Levitan,Gallo and Sharipo 1993:6).
The growth trend of working poor in the U.S commenced in the 1980s, with the industrial and economic restructuring . Between 1989 and 1999 productivity grew 20%, however, the share of wealth was not spread evenly(footnote 2).
“The group service industries that were driving the economy in the 1980s were characterised by greater earnings and occupational dispersion, weak labor unions, and mostly unsheltered jobs in the lower-paying echelons.”(Sassen, 1998:159)
The decline of mass production with movement instead to services as the main national income and growth provider, shattered the “larger institutional framework that shaped the employment relationships"(ibid). Most importantly, the majority of national income was not shared relatively between the middle and lower classes. In crude terms the rich were getting richer and the poor were getting poorer; upward economic and social mobility was not seen in the lower classes. “The changes in the employment relationship reshaped social reproduction and consumption trends which have had a feedback effect on economic and organisation earnings.”(Sassen, 1994:102). Additionally, in the 1980s Ronald Reagan and George.H.W.Bush cut back federal funding in the inner cities. This was a double edged sword, as it was both part of the parties political agenda to undermine the Democrat opposition but also give a new face and meaning to capitalism of the time. As such, federal funding in Los Angeles declined from 18% in 1977 to just 2% of the city budget in 1985. Furthermore, Democratic policies that had previously opened up public sector jobs to Afro-Americans and Black people began to diminish with budget cuts. In addition to this, training programmes designed to “keep kids of the streets”, were being eradicated. This had a huge knock on affect in all the cities and metropolitan areas of North America. The most notable and significant of these was the phenomenon of the “white flight”.
Although such a notion had existed in the U.S since World War II, ensuing economic and baby booms, the post 1970s observation of it was something unchartered. The middle and upper classes which had newly acquired, (or at least rising) wealth fled the inner cities in search of the “American Dream” in the suburbs and exurbs. This was aided by growing technology and transport facilities such as high speed freeways, which greatly reduced travel time between these new ‘edge cities’ and downtown, often bypassing some less ‘ascetically pleasing neighbourhoods’. However, the most attractive component of U.S suburbanisation was the abundance of higher paid, better jobs and the reduction of tax. This created “bounded territories of urban relegation” (Wacquant, online:1997), as poverty resided in the inner cities, forming racialised “ghettoes” that no longer had the funding for public services. Despite many Black Americans achieving social mobility, the majority of new edge cities inhabitants were the white middle class.
Between 1970 and 1990, the ten largest metropolitan cities in the U.S lost 900,000 inhabitants but gained 4.8 million Latinos, 1.5 million Asians and 800, 000 Black inhabitants. The white flight also removed the political power through political disenfranchisement, from the inner cities as well as the high tax paying citizens sorely needed to prevent urban decay: a very real facet of urban life that is now seen in many of America’s large cities. Population shifts adjoined to a process of property disrepair, economic restructuring, high unemployment and generally unattractive urban landscapes leads to discontent and the growth of not only informal economies and crime but a growing impoverished ‘underclass’.
Although much of the formulation of this new wave of ‘working poor’ of the U.S inner cities can be seen as resultant of the nation’s 1980s economic resturcting, some of the socio-political issues can be traced back a decade further. In the mid 1970s a policy of ‘planned shrinkage’, implemented by New York’s Housing Commissioner Roger Starr, was an attempt to reverse urban decay. The withdrawal of public services such as police patrol, fire workers and even ‘garbage removal’ was an attempt to regenerate the cities with the help of outside development when depopulation had occurred(footnote 3). It can be seen as nothing other than ‘social cleansing’ through the means of “the new war on the poor” (Wallace & Wallace, 2002; 18). A five faceted process the Marxist academic, David Harvey relates to as the “accumulation by dispossession” of privatisation, financialisation, management and manipulation of crises, and state redistributions.
Starr’s policies were thought, by civic leaders, to merely be aiding the “natural and inevitable” (Wallace and Wallace, 2002; 26) cycle of a city. Instead, planned shrinkage is “an aggressive policy of triage which actively looks for sick neighborhoods and pulls services from them to free resources for healthy neighborhoods” (ibid). The results of these aggressive policies are seen in the inhumane distribution of public services.
By the mid 1970s around 40% of the housing in the Bronx area had burnt down. It was not until two decades later funding started going back into New York’s inner city areas, such as the Bronx, Harlem and Lower East Side. However, planned shrinkage coupled with redlining, (the process by which housing, job access, banking and insurance are practically denied or increased in cost in racially determined areas such as the U.S inner cities), it is not hard to see how America’s class structures became so dispropotionate and racialised.
In El Barrio, dubbed the ‘Spanish Harlem’, Phillipe Bourgois explains in his 2003 work, ‘In Search of Respect: Selling Crack in El Barrio’, drug use is rife, as inhabitants resort to it in anger, frustration and powerlessness. Moreover, with very little aid to a better life, it exists as escapism from the abject poverty and conditions in which they live. Lack of heating and rodent ridden apartment blocks are just a few elements of life in El Barrio. Without government intervention of public policy for better public heath care and education system, stable welfare and work rights, what hope of social stability do the working poor or indeed unemployed poor have? As Bourgois states, it’s all too easy to resign to the irony that the richest industrial power in the world confines so many of its citizens to poverty and prison. He also comments how short term public policies maybe idealistic and naïve “given the dimensions of the structural oppression of the U.S it is atheoretical to expect isolated political power, to remedy the plight of the poor in U.S centers in the short or medium term”(Bourgois, 2003:318). This would be ignorant of the concept that “racism and class segregation in the U.S are shaped into too complex a mesh of political-economic structural forces, historical legacies, cultural imperatives, and individual actions to be susceptible to simple solutions” (ibid). They seem only to flirt with the deep underlying issues that leave so many people in America working but poor.
The complexities of these issues are shown through Latino immigrants in North America. Deborah Watson commented in her article published by the International Committee of the Fourth International, since the recession in 1991 until the beginning of this one "despite high productivity, low inflation, low unemployment, and a booming stock market, the large gap between rich and poor that begun in the 1980s has widened" (Watson,1999: online) . U.S policies shy away from dealing with this as a political-economic issue. Instead it is often commented that this is in large due to the influx of (the predominantly Latino) immigrants over the past few decades. Indeed, it is endorsed that these numbers account for the rise in the percentage of workers living in daily destitution in the last 20 years. However, this is only part of the actuality of the situation, the more prominent issue being, in a post industrial era, de-regulation and de-unionisation form the breeding ground for informal economies. As such, the legal obligations of employers have been hugely reduced. Much of the informal economy involves illegality, which can be seen as an integral part of advanced capitalism. It is the response to globalisation and market competition that drives for low cost goods, manufacturing and employees.
“Part of the demand for goods and services feeding the expansion of the informal economy comes from the fragmentation of what were once mostly homogenous middle class markets.”(Sassen, 1998:168)
Due to its nature the informal economy is difficult to define, restrict and ironically regulate. However, as Sassen argues in the U.S informalisation is not an anomaly, it is instead “embedded in the structure of our current economic system”(ibid) Entrepreneurs and large cooperate companies alike, take advantage and exploit the underclass that make up the United State’s working poor. As Richard D. Vogel states in his article, “Harder Times: Undocumented Workers and the U.S. Informal Economy”, informal economies are often considered to be the phenomena of the third world. However the concept is rapidly expanding into Western free market nations, most notably the U.S.
With such work conditions, the social implications are vast and complex. Although, as Saskia Sassen explains in “Globalization and Discontent” there are 3 major trends that cause informal economies. The incapability of low income communities to afford to purchase “goods and services in the mainstream society”(ibid).This results in an internal need to accommodate for cheaper goods. The second trend is a result of uneven wealth distribution that can be seen in the inequality of different job sectors profit making capabilities. As such, higher earning business and industries have raised the cost of commercial space, often locating them in the downtown area of large U.S cities. The escalation in the price of office and manufacturing space results in low profit companies being insufficiently funded to compete. This in turn means that they often reside in the city residential rather than commercial space, such as basements “or to use up spaces that are not up to state-mandated health, fire and safety standards.”(ibid) The third trend Sassen recognises in the informalisation of the economy is the spatial organisation. Leading, more profitable sectors “tend to be concentrated in downtown or suburban office complexes” (ibid). This unbalance in the wealth distribution is not then just ethno-racial and class bound but also spatial.
The results of such trends are key factors in creating and harbouring America’s working poor. While the economy within low-income communities becomes stagnant, high income earners demand informally produced goods and low paid service jobs in the financial sector, such as office cleaning services that are subcontracted. Such jobs are often filled by immigrant workers. However, the growth in the informal economy is not a result of a growth in illegal immigrants.
“…not immigrants, but the growing inequality in earnings among consumers, and the growing inequality in firms in different sectors in the urban economy, have promoted the informalization of a growing array of economic activities.”(Sassen, 1998; 154)
This pertains that with neoliberal deregulation it is easier for an employee to deny a workers rights if that worker happens to be an illegal immigrant. Furthermore, illegal immigrants searching for work often find themselves financially disabled from the freedom to be particular about work conditions or indeed what the work involves. This was depicted by Vicente Fox, the ex-President of Mexico who claimed “Mexicans would do the jobs even Blacks wouldn’t do”, a statement that shocked audiences due to its racial overtones. It is wrong, however, to deduce that all people working in the informal economy are illegal immigrants, nor certainly do all illegal immigrants work in the informal economy.
In America where almost 25% of jobs are low paid, one must turn towards economic and social policy for an explanation. Economic restructuring and disproportionate wealth distribution since the 1980s have formed a racialised underclass of working poor. A class that struggle on a daily basis in impoverished conditions, without the help of basic welfare and workers rights due to neo-liberal de-regulation and de-unionisation. Ethno-racial tensions are heightened by the scarcity of jobs and the hegemonic white system. Economic policy that adheres to the greed and strains of advanced capitalism leads many into the informal and underground economies. This in turn leaves the new generations of American inhabitants exposed to crime, drugs, prostitution and daily violence. Without a sufficient education system, public funding for services and welfare rights, America’s working poor are becoming more marginalised trapped within inner city cores without social or financial mobility.
Footnotes'
- This is the actual question that will be addressed, the title "Why are there so many working poor in the United States of America" is simply thematic.
2. Of course it is noted that the ‘American Working Classes’ have existed since the industrial revoltution. Any assessment of Marx’s work will illustrate this. However this is a discussion is of the new wave of a racilised underclass that exists in U.S inner cities as a result of advanced capitalism and the neoliberal world.
3. This is a concept also portrayed in Spike Lee’s film “When the Levee’s Broke”, which shows the American Government’s failure to produce adequate emergency aid to New Orleans’ Hurricane Katrina victims
Bibliography
Bourgois, P(2003) ‘In Search of Respect: Selling Crack in El Barrio’,Cambridge University Press
Bourgois, P (1998) “Families and Children in Pain in the US Inner City”: in Nancy Scheper-Hughes and Carolyn Sargent (eds.) Small Wars: The Cultural Politics of Childhood, pp. 331–351. Berkeley: University of California Press.
Dunk, Thomas (2002) “Remaking the Working Class: Experience, Class Consciousness, and the Industrial Adjustment Process.” American Ethnologist 29(4): 878–900.
Glasmeier, A(2006),‘An atlas of poverty in America : one nation, pulling apart, 1960-2003’,London : Routledge
Graber,J.A, ‘Jeanne Brooks-Gunn, Anne C. Petersen(1996) ‘Transitions Through Adolescence: Interpersonal Domains and Context’, Lawrence Erlbaum Associates
James, E(1970) ‘America against poverty’ ,London : Routledge & K. Paul Levitan,(1993) ‘Working but poor : America's contradiction’ / Sar A. Levitan, Frank Gallo, an .-Rev. ed. - Baltimore; London : Johns Hopkins University Press
Sassen, S (1994)"The Informal Economy: Between New Developments and Old Regulations", Vol 30, Yale Law Journal
Sassen, S (1998) Globalization and Its Discontents: Essays on the New Mobility of People and Money: Chapter 8 “The Informal Economy: Between New developments and Old Regulations”, pp. 153¬–172. New York: The New Press. (Also in Yale Law Journal 103(8), 1994.)
Wallace, D &Wallace R (2002), A Plague on Your Houses: How New York Was Burned Down and National Public Health Crumbled, Verso
Websites:
http://www.econ.brown.edu/econ/sthesis/MattPapers/Paper7.html
http://www.census.gov/hhes/www/poverty/poverty07/pov07hi.html
http://www.wsws.org/articles/1999/aug1999/poor-a12.shtml
http://lals.ucsc.edu/directory/downloads/arredondo/arredondoJUH.pdf
http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/110208dnintgivingup.3fc2393.html
http://www.prospect.org/cs/articles?articleId=10832
http://www.cnn.com/2005/US/05/14/fox.jackson/
http://www.monthlyreview.org/0706vogel.htm
Film
Spike Lee: When The Levees Broke, 2006 40 Acres & A Mule Filmworks
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