Columnist: Income Disparities: Our Scourge, World's Scourge
Across the world, the gap between rich and poor is widening. It's a grim harbinger for 21st-century peace and progress.
And the United States and its communities are not exempt. That's the case Nobel Prize winner Joseph Stiglitz makes in his recent book, "The Price of Inequality: How Today's Divided Society Endangers Our Future."
One percent of Americans now control 40 percent of the nation's wealth. Notwithstanding all the campaign talk about our middle class -- a group clearly vital for stable growth and a strong democracy -- we're losing economic ground. We claim, notes Stiglitz, that we're an opportunity society. But the chances of moving from childhood poverty to adult prosperity in America have become exceedingly dim.
What though does all this mean in actual communities -- the cities and towns where we live? The Internet news site GlobalPost recently engaged this question in a fascinating way -- an extended series that compared selected American cities to communities from Britain to Brazil, Thailand to China.
As a tool, it employed the "Gini Index," a scale economists use to measure income disparities. It runs from 0 (most equality of incomes) to 100 (least equality -- the most incomes hoarded at the top). Translation: the lower the number, the more shared income -- and opportunities.
So where does the United States rank? Nationwide, its Gini score is now at 45 -- more inequality than Canada (32), Germany (27), Britain (34). Scores for the semi-socialist Scandinavian countries are even better.
In fact, some American communities are suffering inequality on a scale with developing countries that we usually view as our economic inferiors. In an interesting match, GlobalPost compared Selma, the Alabama city of civil rights protest fame, with Rio de Janeiro. Both have high Gini Index scores of 52.
And what's the fundamental reason? Despite dramatic other differences, both Selma and Rio have deeply divided education systems that perpetuate economic inequality -- namely a pattern of elite private schools providing a fast track to success contrasted with deeply underfunded public education. And in both cities, the affluent can afford the top schools while the poor are consigned to dramatically underfunded and understaffed schools (and, in turn, high prospects of academic failure).
Another comparison: Bridgeport, Conn., and Bangkok, Thailand. Bridgeport was thriving in the 1950s and '60s with many factories, Remington Arms included. But Remington and others folded dramatically in the 1980s. GlobalPost's report depicts today's Bridgeport as a tough town, with significant crime, drugs and drive-by-shootings.
Bangkok and most of Thailand enjoyed boom years of per capita income growth in the 1980s and '90s. But then the gains diverged: Today Thailand has 47,000 millionaires but so many suffering poor that a "Red Shirt" movement has erupted, claiming that a corrupt elite exploits the poor.
Bridgeport's differences are suffered more quietly but are no less profound. As in Bangkok, the top 5 percent of Bridgeport families control more than 60 percent of income. In slums such as Bridgeport's East End, average household income is around $15,000 a year. In not-too-distant Greenwich, with many hedge fund executives, the figure soars to more than $250,000 a year.
GlobalPost also compares the two historic manufacturing towns of Sheboygan, Wis., and Middlesbrough in northeast England. Each -- so far -- fares well on the equity scales. But the future is not bright: Each has lost thousands of manufacturing jobs (8,400 in Sheboygan just between 2000 and 2011). Wages are stagnant, notwithstanding gains in productivity.
It's true -- the McKinsey Global Institute predicts 1 billion new middle-class consumers worldwide in the next decade. But in historic factory towns such as Sheboygan and Middlesbrough, leaders fret: "Where's our future economy?"
There have been dramatic income opportunity turnarounds in the past. Massive income differentials in the "Gilded Age" of the 1870s and 1880s with slum epidemics and strike-breaking violence, later the crushing Great Depression of the 1930s, were followed by periods of strong economic growth supported by progressive politics. One top example: the GI Bill after World War II, propelling millions of veterans into successful work and careers.
But there's little progressivism today. The United States has a moderately liberal president but the overhang of heavy budget deficits -- not to mention politics marred by inordinate special interest lobbying and the corrosive impact of the Supreme Court's Citizens United decision, removing the last legal floodgates against an avalanche of semi-secret special interest lobbying.
Plus, across the world, machines and automation are replacing human labor. Smart local action -- new export-oriented industries, for example -- can be an assist. But localities can't do it all on their own. Why won't Congress, which agreed to bail out errant banks and brokerage firms, raise the minimum wage (now just $7.25) to the $9 President Obama now urges, or even $10 (its inflation-adjusted 1968 value)? Advocates say this would give close to 30 million workers a $5,000 raise. Talk about that for stimulus and moving an economy forward!
Neal Peirce's email address is firstname.lastname@example.org.
(c) 2013, The Washington Post Writers Group
The opinions expressed in this column are not necessarily those of the National League of Cities.