Saturday, April 22, 2006

Tipping Point??

Every rubber band can withstand only so much force before it breaks. What about the social fabric of a society? Does the principle apply or do we have the right to assume that no force can ever break the tevlar like strength of social cohesion?

Let us take a look at the facts and nothing but the facts, and then you decide. Income distribution in the US has continued, over the past quarter of a century, to reward the few at the expense of the many. The chasm that separates the top quintile (20%) of US households from their counterparts at the bottom of the distribution has become a gulf that does not bode well for the future of the class relations. The top 20% of households has increased to an astounding 52.2% of income. This simply means that the top 20% make more than the other 80% of the population put together.

To make things worse, the distribution of income within that top 20% is also very uneven. Actually the figures for 2003 show that the top 1 % of income earners account for over 14% of income. The top 10% account for 37.2% of income. Yet inspite of all this inequality the US government does not see it fit to issue or publicize the Gini coefficient (an accepted measure of inequitable income distribution that could be generated at the push of a button. But then why inform the masses about their standing when you can make the TV rounds and proclaim, as Secretary Snow has just finished explaining last week. He said that we should be proud of the way that our system works because it distributes the spoils according to an “aspirational” compensation system set by the market. Thank you Secretary Snow for explaining to us so cogently why is it that so many Americans choose to live in fear of how to pay for an unforeseen illness, who is to fund their pensions, how to finance their children’s’ schooling and put food on the table.

According to a recent study by the Institute for Policy Studies the average compensation of a CEO was 42 times that of an average worker during 1980. That gap has risen to a multiple of 431 in 2003 which translates to $11.8 million compensation for the CEO versus the $27460.00 for the worker. How much more can the social fabric withstand?


Andros said...

What I find amazing (and it's not only my anecdotal experience but there are studies that support this) is that the majority, some 80%, of Americans believe that they will "make it big" in their lifetimes. They seem to accept the myth of economic mobility to such heights as to be compared to religious fervor.

The most important determinant of a person economic status is his ..parents. The norm is that people remain in the same economic class as their parents! Of course there are exceptions, but this is the norm. And, if you count the gap between the upper 20% and the rest, then the distribution of the national wealth is out of wack.
Even during times of war, like now, there's been a redistribution of wealth, by enriching fat companies [some with no-bid contracts] while the country is stuck with the credit card bill.

The American Dream [which may have different connotations to different people] may remain the product of ..sleep!

You ask, how much can the social fabric withstand? I say, as much and for as long as certain perceptions last. Mind you that those perceptions can be totally the product of fantacy, indoctrination, whatever. How long??!! In this 21st century US of A. we have tens of millions of people who believe in magic, Satan, and fictional writing is preferable to the scientific fact & inquiry. It just feeeeeeels gooood.

In economic terms, let me use an non-academic expression.... Some people feel they're getting ahead just because more people fall behind them!

ghassan karam said...

Your post gives me hope. I have often said that economic issues are too important to be left to economists LOL!!!