Inequality and plutocracy in America
By Rodrigue Tremblay
Journal Contributing Writer
Jul 13, 2006, 00:42
"Democracy [is] when the indigent, and not the men
of property, are the rulers." --Aristotle, (384-322 BC)
"Money becomes evil not when it is used to buy goods
but when it is used to buy power . . . economic inequalities become evil when
they are translated into political inequalities." --Samuel Huntington
One of the greatest
benefits of a well functioning democracy is its capacity to bring about change:
change of government, change of policies, change in the distribution of income
and wealth, etc., and to avoid stagnation and immobilization.
In any society, the
tendency is for a few to concentrate power and wealth in their hands, leaving
the many in a situation of dependence and despondency. The right to vote and to
engage in political activity changes the balance of power in a country and
opens the door for the establishment of a government, in Lincoln's words,
"of the people, by the people, and for the people." However, too
great a concentration of wealth inevitably brings forth corruption in
government and a concentration of the tools of propaganda, both of which
constitute the greatest threats to democracy.
The United States
is technically a democratic republic, its leaders being elected at certain
intervals. Economically, it is also a wealthy country, being endowed with a
large and freely functioning domestic market. However, this is also a country
where income and wealth inequalities are on the rise and where there is still a
lot of poverty.
indicators show that income and wealth inequalities are rising in the U. S. For
example, in 2005, chief executive officers
(CEOs) in the United States earned 262 times the pay of an average
worker, the second-highest level in the 40 years for which there is data. In
other words, a CEO earned more in one workday than an average worker earned in
the entire year. This was not always the case: In 1980, a CEO earned 42 times
the average worker�s pay, and the ratio was 85 times in 1990. Wealth
concentration and poverty follow income inequality. Today, the richest one
percent of Americans own 40 percent of the nation�s household wealth. On the other
hand, one in five American children lives in deep poverty, while economic
opportunity and the chances for social mobility are reduced for an ever-growing
proportion of children.
The likelihood that
a child born into a poor family will make it into the top 5 percent of income
earners is just one percent, according to "Understanding Mobility in
America," a study
Tom Hertz from American University. By contrast, a child born in a rich family
had a 22 percent chance of also being rich as an adult. In other words, the
chances of getting rich are about 20 times higher if one is born rich than if
one is born into a low-income family. Even for children born in middle-class
families (family incomes of $42,000 to $54,300), their chances of one day
attaining the top 5 percent of income earners are only 1.8 percent. This is
lower than in most other democratic countries. For example, intergenerational
mobility in the United States is lower than in France, Germany, Sweden, Canada,
Finland, Norway and Denmark. Among high-income countries for which comparable
estimates are available, only the United Kingdom had a lower rate of mobility
than the United States.
One of the main reasons
for poverty in the USA is the high proportion of American families, even among
those who have at least one member who is working, who have no health plan
whatsoever. A study
by the Commonwealth Fund indicates that, in 2005, 41 percent of
American workers did not have health insurance coverage. This amounts to an
estimated 48 million American adults who spent any time uninsured in the past
year. As a consequence, more than half of uninsured Americans either had
problems paying their medical bills or had to go into debt to pay them. This is
in a country where health care spending is climbing by more than 7 percent per
Another reason for
increased income inequality in the future is the shift taking place in pensions
for workers. An established trend in many companies is to reduce, freeze or
eliminate pensions for ordinary workers, while increasing the pensions reserved
There are social
and political consequences when income and wealth disparities become too great.
A wealth aristocracy can appear that will demand special privileges in
controlling various institutions, not the least of them being the government.
right-wing politicians, with the support of ultra conservative media, are busy
building a wealth aristocracy in the United States. They are busy cutting taxes
for the very wealthy and for large corporations, while reducing assistance,
pensions and social services to the very poor. They are content tilting the tax
code in favor of the very rich and against the working poor, while freezing the
minimum wage and lowering -- and even abolishing -- the tax on large fortunes.
Meanwhile, middle- and working-class families are being priced out of college
education for their children, because of cuts in government grant aid and the
failure to extend the college
tuition tax deduction. The end result will be a workforce badly
prepared for the 21st century. That may be what the conservatives really want,
i.e. an uneducated workforce that can be more easily manipulated.
The move toward an
obscene concentration of wealth was reinforced on June 22, when the House of
Representatives, supposedly there to represent the people, passed a law to
substantially cut the estate
tax, by an estimated $750 billion for the first 10 years of
implementation, after 2010. President George W. Bush has sought the complete
repeal of the tax on large inherited fortunes, even though his administration
has built up public deficits and the public debt by $1.3 trillion, between
2002 and 2005.
As a consequence of
rising income and wealth inequalities in the U. S., politics has become more
and more a rich man�s game, supported by an army of lobbyists and their
campaign cash, and a concentrated media spin machine. For example, in the
435-member House of
Representatives, 123 elected officials earned at least one million
dollars in 2005, according to released financial records made public each year.
In the U. S. Senate, one-third of them are millionaire income earners. By
comparison, less than one percent of Americans make seven-figure incomes.
In conclusion, the
United States seems to be moving more and more away from a government "of
the people, by the people and for the people," towards a government of, by
and for the rich and influential.
Tremblay lives in Montreal and can be reached at email@example.com. Visit his
blog at thenewamericanempire.com/blog
and his website: thenewamericanempire.com.
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