Twenty-nine urban mayors told the AP that 1 in 4 individuals needing emergency food assistance instead go hungry. What’s more, Sheldon Danziger, a University of Michigan Public Policy professor, told the AP, “If Congress and the states make further cuts, we can expect the number of poor and low-income families to rise for the next several years."
In two phone interviews with me, Hacker analogized American wealth distribution with a system of canals locks. Although rising and declining tides may raise or lower all ships, America’s economic engine - chiefly its banking and corporate governance systems - have transformed the economy into a series of locks which raise a few, select yachts higher, while the rest of us remain in dinghies at sea level. This - the 1% getting richer while keeping out the 99% - has been the primary fuel energizing both the Occupy and Tea Party movements.
Nor will any economic recovery end the uneven financial redistribution which began in the mid-70’s, said Hacker. Rather, disparities will continue and may accelerate, effectively reversing an equally distributed upsurge among all financial classes in place from World War II to the mid-70’s.
Already, the effects are profound. Between 1979 and 2007, if the economy had grown at the same rate it did without increases in inequality, the average annual income of the middle fifth of households would be $12,000 higher, he said. The major casualty of this increased economic apartheid has been the American dream: the idea that any person can rise in wealth and social rank to wherever his skills take him. In reality, says Hacker, intergenerational social mobility - children moving beyond their parents’ station in life - is now higher in eight first world countries studied. They are Australia, Sweden, Norway, Finland, Germany, Spain, Canada, and France. Only two first world countries studied - Britain and Italy - rank behind the U.S., and that difference is negligible.
While starting out poorer, Europe has generally matched our economic growth since 1980. Even as Europe matched our growth, however, the top 1%'s share of income fell in France, remained static in Germany, and barely budged in Sweden and Japan from the early 1970’s through the late 90’s. Meanwhile, the income of America’s 1% has doubled from 8% to 16%.
If you’re feeling angry, you are feeling the heat fueling the Occupy movement. But we’ve only hit the kindling.
Currently, Hacker says, the top 1 in 1,000 households collectively rake in more than $1 trillion a year including capital gains - for an average annual income of more than $7.1 million. This is seven times higher than it was in 1974, measured in 2007 dollars.
Much of this disparity is tied in to executive pay, bonuses, and stock options op echelons of Wall Street. “While a lot of other first-world countries also have close-knit systems to appoint executives, those systems are much more constrained by labor unions as well as by the manner through which corporate leaders come up through the ranks, rather than being recruited from other corporations,” said Hacker.
The result is that America’s top executives have fewer loyalties to those under them. Instead, they and the boards who appoint them engage in what Hacker calls “an arms race in top executive pay.”
Guess who pays for this race?
As in the mythical Lake Wobegon, every American corporate leader “is above average”; and each Board, which is supposed to represent every day stock holders, claims it must pay munificently to retain this “above average” talent.
Additionally, says Hacker, America does comparatively little to help the poor. In most European countries, fewer than 1 in 10 individuals lives below the median income; here it is about 1 in 6. Thus, although European median income is generally lower, most live relatively well, while a higher proportion of Americans live at or near poverty - even as the rest of us continue to lose ground.
Are you feeling the fire yet?
PART 2 - Three more experts weigh in.By Joseph Hanania, Aslan Media Contributor