Measuring Growth

I was reading an article recently, “Rising-Tide Economics” by Gene Sperling. Sperling was a former national economic advisor to President Clinton, and in this article he references his time in the white house and his comments to the speechwriters, encouraging them to drop the cliche “hang together, or … hang separately” by Benjamin Franklin and instead make an economic caution that “we will grow together or grow apart.” This is an interesting point to make in our day and age of corporate globalization. The way “progression” has typically been measured is by the GDP, strictly a measure of capital, and even when the country’s economy is on the rise there is no inclusion of who sees the benefit. It would be much more progressive, in fact, if we measured positive economic growth by the solidarity and more equal distribution of wealth throughout the country. Until we include some form of equality component to our measures of the economy, inequality will always be able to be explained away or overlooked in by the rich and in politics.

Three For Three

The most obvious cause contributing to economic inequality in the US is the economic system; capitalism. Capitalism is what the United States was built from, and what we owe our current lifestyle to. However, whether our current state of living is positive or negeative is a matter of opinion. The bias of capatilism is to reward people for making money, the more money the better and more immediate the reward. So, it is only natural for a divide to occur between the rich and the poor, as the rich see their accumulated capital grow and earn intrest and the poor scrape by on minimum wage. It is not to say that this would not occur under a different economic model, or that capitalism is the root of the problem, but it does go hand in hand with a government who has a history of perverting the tax system, and global corporations driving wages down.

The Government Too?

It is one thing to see inequalities in pay, after all the people making money are making the rules. It seems that at least our government would attempt to be fair in distributing wealth, it only seems though. In fact, the government has been part of the problem. Part of the government’s job is to take in money through taxes and then use this money to fund public programs, like education, infrastructure, and health care. This is, in part, a way to redistribute wealth. However, this redistribution has been unbalanced in favor of the wealthy. We only need to turn as far as the policy that Bush implemented shortly after coming to office to see a prime example. His tax cuts, which were sold as a necessaty to boost the economy, directly redistribute 500 million dollars out of social services funds and into the pockets of a select few making over 375,000 dollars a year. It is bad enough that it is only the rich seeing their bank accounts grow through tax cuts, but as stated above, this money comes out of funds meant to support the average person’s schools, housing, and health care. Almost worse than the rich get richer, poor get poorer saying, there is a new problem developing where the rich get richer and the poor and middle class lose opportunities and adequate access to basic services.

The Pay Difference

One of the contributing factors to the economic inequality in the U.S. today is the pay difference between differing job positions. According to Business Week, it generally takes the CEO of a major corporation just over half a day to make the same as their average workers make in a year. This gross difference has not always been so wide spread. The gap has been growing as corporate executives overcompensate themselves for a company loss and chip away at union organizations. The number of American workers unionized has dropped twenty percent over the last fifty years, making it more difficult to raise the minimum wage as the cost of living increases. In fact, if we take inflation into account, the minimum wage has actually dropped twenty-one percent since 1979. Bringing the argument full circle, CEO’s in 1980 made only forty-five times that of their average worker, compared to the five hundred times more they make today. Although the U.S. has always experienced some degree of economic inequality, the problem is obviously getting worse.