Via Real World Economic Review, the graph below is from Edward Fullbrook’s Decline of the USA.
RWER quotes from an Al Jazeera review:
Fullbrook’s book reminds us that there’s a rational order in the world – that countries can learn from one another’s experience in tackling social problems and challenges, and that by striving to match what already works elsewhere, they can make their own countries better.
Which, at least for me, raise a familiar kind of question. Is the U.S. willing to learn from others?
Joyce, I’m so glad you wrote about this crucial topic. Thank you! Some friends and colleagues of mine were talking about this in May.
Income inequality in this and other countries is serious stuff and if we don’t do something to deal with, we will really be in deep trouble as a nation. All of this talk about the deficit needs to be dealt with but not now, not in the middle of a recession and some economists believe it’s a depression. The austerity “solution” is not the answer and most clear thinking people know this even those who cast their votes for it in Congress because they lack the political courage to do what is right for fear of losing their seats. There is little light between the Dems and the GOP as you know with the grand bargain. And, that agreement between the Dems and the GOP is apparently now being abandoned by the GOP because they don’t want to cut military spending but the Dems seem to be keeping their part of the bargain, that is to cut not keep their part of the bargain by cutting non-defense spending. None of this bodes well to solving the problem of income inequality which is hardly on the radar.
There has been a high disparity in the US between inomes of those in the highest 1% compared to the rest of us. And, whatever one’s political leanings are should not cloud what this means for the US. Income inequality is real and has been growing at a rapid rate since the 1980′s.
The International Monetary Fund did extensive research to produce a report linking high income inequality to stagnant or no economic growth in any country. They found that of all of the different causes of stagnant or no economic growth, high income inequality was by far the largest cause And, when a country suffers little or no economic growth continuously, it fails, period. It’s not hyperbole to comment that this could lead to civil unrest and worse.
Here is that report from the IMF:
http://tinyurl.com/6dh2c63
And, here are the two most important paragraphs from this report:
“In fact equality appears to be an important ingredient in promoting and sustaining growth. The difference between countries that can sustain rapid growth for many years or even decades and the many others that see growth spurts fade quickly may be the level of inequality. Countries may find that improving equality may also improve efficiency, understood as more sustainable long-run growth.”
“Inequality matters for growth and other macroeconomic outcomes, in all corners of the globe. One need look no further than the role inequality is thought to have played in creating the disaffection that underlies much of the recent unrest in the Middle East. And, taking a historical perspective, the increase in U.S. income inequality in recent decades is strikingly similar to the increase that occurred in the 1920s. In both cases there was a boom in the financial sector, poor people borrowed a lot, and a huge financial crisis ensued . The recent global economic crisis, with its roots in U.S. financial markets, may have resulted, in part at least, from the increase in inequality. With inequality growing in the United States and other important economies, the relationship between inequality and growth takes on more significance.”
That wa a great article, you realize, of course that it was discussing inequality in developing rather than developing economies?
Darn: “developing rather than developed economies”, i.e., Camaroon
What article are you talking about? Neither refers to developing countries specifically. The one Joyce is discussing talks about developed countries specifically.
The IMF article linked to and quoted by New Deal Dem.
Then you don’t know what you’re talking about. It surveyed all the world’s national economies, not merely the rich ones.
Cameroon is typical. We have examined six historical cases, including Colombia, Guatemala, and Nigeria. These cases, and our broader statistical analysis of a large number of growth episodes, suggest that inequality is an underlying feature that makes it more likely that a number of factors—external shocks, external debt, ethnic fractionalization—come together to bring a growth spell to an end.
There are 160 or so nations, last I bothered checking. Most of them will be either Third World, or small in some way.
Even if you take the relative growth of the U.S. over the last seventy years, it’s pretty clear that increased income inequality is correlated with decreased economic growth. Every country is a special case in some way or another, but this trend is so widespread that the only thing that surprises me is that it’s the IMF that is pointing this out.
Joyce, thanks for posting this. Having lived and worked in Norway for 3 years I am not surprised that Norway falls in the first division. I found Norwegian society very invigorating. Not only was income high it was based on equality. Their social programs are outstanding and I looked for poverty in this country for 3 years and found none. Could we learn from countries like Norway, yes, but we won’t because the 1% will never give an inch to the 99%. We’ve become a country that has forgotten what are values are and become a country of greed and “me only.” I’m sorry to be so harsh but this statement comes from my experiences of the last 3 years working with the poor, homeless and unemployed in this country. People cannot live on a minimum wage; they need a living wage, something the countries in the first division seemed to have learned. Give people a living wage and they become true consumers. Pay them minimum wage and they are barely hanging on. Minimum wage might be ok for a teenager who wants to make a little money for their expenses but it doesn’t support a family of 5.
Start quote:
“Could we learn from countries like Norway, yes, but we won’t because the 1% will never give an inch to the 99%”
end quote
Unfortunately, a lot of the 99% buy into that mythology, too. Call it a survival mechanism – they don’t dare hope that life might not be so cruel that they don’t have to work nearly all their waking hours just to get by. Reading Joe Bageant’s Deer Hunting With Jesus would get that idea across better than I can explain it, I suppose.
I guess for those of us who built our lives to exclude as much dependency on equal outcome guarantees as possible, we can turn the stat around and say it is good to see we are #2.
As is typical here on most topics, we are long on moaning and short on being brave enough to put forth a concrete proposal of change (not to mention you also have a long row to hoe to sell it to enough people to make it implementable….and you guys make terrible salesmen.)
And to take the favorite talking point off the table, implementing the 30% AMT doeesn’t even pay off the current deficit, much less leave funding for even more spending programs.
Since Norway is proposed as a model to follow, you guys won’t even build the Keystone pipeline much less go gangbusters on drill, baby, drill…….which is exactly what funded the social programs of Norway (and no, incomes in Norway are actually not high, you just get a lot of stuff paid for by the government). Norway is starting to realize they are in for a rude awakening in a post-petroleum world (or if the North Sea wells dry up). In short, Norway cannot be a sustainable model to copy.
Next?
start quote:
“I guess for those of us who built our lives to exclude as much dependency on equal outcome guarantees as possible, we can turn the stat around and say it is good to see we are #2.”
end quote
Yes, because we all get exactly what we deserve in life, don’t we? God wants you to be better off than most of the population, so you are. It’s all those lazy people who want government to do stuff for them. Spare me. Oh, wait, that’s asking for something, isn’t it?
Get lost.
start quote:
“As is typical here on most topics, we are long on moaning and short on being brave enough to put forth a concrete proposal of change ”
end quote
You need to read more. There have been plenty of proposals made here, both in articles and comments. The budget was balanced during the late Clinton years. It isn’t now. What has changed in between is the tax laws, the higher Gini index, and the spectacular increase in unemployment. Change those back to the way they were in the Clinton years, and the problem is solved.
start quote:
“and no, incomes in Norway are actually not high, you just get a lot of stuff paid for by the government”
According to those flaming liberals at the CIA (links don’t work here, go check the CIA World Factbook’s country comparisons online), Norway’s GDP per capita is ten percent higher than ours. Coupled with their lower Gini index, it’s reasonable to assume that you are not just a little wrong here, but spectacularly so.
Great commentary, Cujo. I’m so tired of these misinformed, arrogant, blowhards whose only purpose here is to point their self-aggrandizing, piquish fingers at us. It’s the equivalent of coming into someone’s home and taking a dump in the middle of living room just to see how much chaos they can cause.
Start quote:
“You need to read more. There have been plenty of proposals made here, both in articles and comments.”
End quote.
Yes, many of us have but it falls on plugged up ears. They don’t want to listen to solutions that worked before, they just want to ship their same old, same old, trickle down failure by cutting taxes until the wealthiest pay a nominal amount and cutingt spending to the point of doing actual harm tothe people and the country’s growth. It’s madness. Now is not the time for austerity and this is where both Dems and Repubs are dead wrong and some know they are dead wrong but are political cowards who would rather particicpate in seriously doing harm to this country and it’s people than doing the right thing in the interim. If we do take the correct action, as you said, we can get ourselves out of this recession. Then we can deal with the debt. No one here is saying the debt mustn’t be dealt with but not NOW.
Jane Austin wadda you know! Just because you actually LIVED there for three years you think your first hand knowledge and experience trumps the know it all/nothing wisdom of casualobserver?!!!!! How silly and foolish of you.
Good one, sec.
Sec – what casualobserver doesn’t realize is that Norway has started to mine the natural gas off the Loften Islands. Also, while taxes were high, we got a lot in return. It wasn’t the government that was paying for it although the revenue from the oil paid a portion of it. And since the Norwegian people own the oil…well you can figure out the rest. And yes, Norway is looking towards a post-petroleum world (when that will happen is anyone’s guess) and the possibility of the North Sea oil drying up (according to what I have read, that isn’t anytime soon) and making plans. They have invested wisely. Did you know that they have some kind of facility high above the Arctic Circle that houses every known seed, plant type in the world just in case we have a cataclysmic event worldwide which destroys the vegetation of the world? I could go on and on because I studied Norwegian society and was a part of it for the 3 years I lived there. Their programs for maternal/child health were phenomenal. At the time I lived there a woman got 18 months maternity leave at full pay. And the father could opt to stay home instead as long as the mother took the first 6 weeks.
Generally speaking, I like Norway’s chances in a post-oil boom economy better than I like ours.
Thank you, Cujo, for responding about the IMF article. This happened once before, when he misread an article I posted some weeks ago and came to a conclusion that was totally inaccurate and I pointed it out to him.
Some folks just see what they want to see, and disregard the rest.
You’re welcome.
Now, now….we’re just a bunch of arrogant, self aggrandizing blow hards because we don’t recognize the brilliance and supreme being like knowledge and wisdom of our resident conSERvatives!
Doesn’t matter how wrong they are on such a consistent basis….it’s US donchaknow!
Thank you , Jane, for a substantive reply without succumbing to the thinking that epithets make your points more persuasive. As to the others, take this thought to bed tonight……..I am the one who is actually winning the argument regardless of whatever you have to say.
See Bandwagon, Fallacy Of.
LOL. I see Mr. Mensa is back with more of his innane, egotistical BS.
Reminds me of the kid who just got his tail kicked at basketball at the playground slinking away then turning and yelling back I WON!