The Bush Administration (and a few of our commenters) point to some happy-happy economic news -- Dow up, unemployment down, yadda yadda -- to support the idea that America's economic prospects are Not Really All That Bad. (The very fact that "not that bad" has become an acceptable benchmark should, right there, serve as a warning never to elect a C student to the White House again. Remember when America used to be run by the A students, and nothing less than Excellent was considered acceptable?)
But I'll stand by my assertion that no country can be considered financially sound as long as it's in hock up to the withers to another rising empire that will soon view it as a rival; as long as its consumption is being fueled by consumer debt rather than strong wages and investments; and as long as its entire way of life is utterly dependent on resources that are a) provided by nations that are openly hostile to it and b) rapidly rendering large swaths of the globe uninhabitable.
You can't run a sustainable household that way. You can't run a sustainable nation that way, either.
And now there's this story from McClatchy's Tony Pugh, bearing sobering news that the number of severely poor Americans -- the poorest of us all -- is up over 25% since Bush seized office. Since this is the bottom rung of the economic ladder, it follows that many of those who've landed here in the past five years are former members of the working and middle class who've run on hard times. Pugh writes:
The plight of the severely poor is a distressing sidebar to an unusual economic expansion. Worker productivity has increased dramatically since the brief recession of 2001, but wages and job growth have lagged behind. At the same time, the share of national income going to corporate profits has dwarfed the amount going to wages and salaries. That helps explain why the median household income of working-age families, adjusted for inflation, has fallen for five straight years.Pugh doesn't mention it, but the two largest categories of people who fall into poverty are women left with kids after a divorce, and people who lose their jobs and access to medical care due to illness or injury. In other words: You can thank "welfare reform" and the world-class disaster that is our health care system for much of this.
And "world-class" pretty much sums up the magnitude of our failures in this area. Pugh writes:
Over the last two decades, America has had the highest or near-highest poverty rates for children, individual adults and families among 31 developed countries, according to the Luxembourg Income Study, a 23-year project that compares poverty and income data from 31 industrial nations.The economy may be growing; but for the last 30 years, virtually all of the gains have gone to the top quintile of the economy. This is important because, as Kevin Phillips has been arging for the past 25 years or so, all modern empires require a thriving middle class to survive. Our real prosperity doesn't have much to do with how well the top quintile is doing; but it lives and dies on health of the second, third, and fourth ones. About five years ago, Phillips started warning us that we were hitting the tipping point: America has now passed the wealth inequality levels that prevailed in Spain, the Netherlands, and England when they began to topple. (For the full argument, I refer you to his excellent Wealth and Democracy). That's an important set of statistics, and it reveals yet another deep riptide flowing under the shiny happy surface of the administration's sunny economics reports.
"It's shameful," said Timothy Smeeding, the former director of the study and the current head of the Center for Policy Research at Syracuse University. "We've been the worst performer every year since we've been doing this study."
With the exception of Mexico and Russia, the U.S. devotes the smallest portion of its gross domestic product to federal anti-poverty programs, and those programs are among the least effective at reducing poverty, the study found. Again, only Russia and Mexico do worse jobs.
This is a deep structural problem that's not going to be fixed by another wave of home refis and another million Wal-Mart jobs. Paul Krugman wrote that "the concentration of income at the top is a key reason that the United States, for all its economic achievements, has more poverty and lower life expectancy than any other major advanced nation. Above all, the growing concentration of wealth has reshaped our political system: it is at the root both of a general shift to the right and of an extreme polarization of our politics."
If we want a liberal government and a sustainable economy, we have to start by equalizing wealth distribution and restoring the middle class. Until that happens, America is living on borrowed money, borrowed stability, and borrowed time.