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Land of the Poor

I recently watched a short documentary item titled “Land of the free, home of the poor” which discussed the inequality of the spread of wealth in the US. The documentary presenters asked some members of the public to identify which of three different pie graphs they thought represented America’s wealth distribution.

In each graph the pie was broken into 5 parts showing the top, upper, middle, lower, and bottom 20% of the population in terms of total financial value. The first graph showed the segments evenly split representing a flat distribution where the bottom had about the same as the top. The second showed a distribution with the top fifth owning 36%, the next with 21%, the middle with 18%, the lower with 15%, and the bottom with 11%. And the final graph showed the top with 84% of the wealth then 11%, 4%, 0.2%, and 0.1% at the bottom.

Most people thought the middle graph was most realistic. They realised the rich do have more wealth otherwise they wouldn’t be the rich, so the equal graph was obviously unrealistic, but the bottom graph showing the bottom half with about 1% was too outrageous to be true, wasn’t it?

As you will probably have guessed, no it wasn’t. The bottom graph did show the position in the US and the middle graph showed one of the most equal societies: Sweden. The first graph didn’t represent any real economy.

So the top 20% have almost a thousand times as much wealth as the bottom 20% and the second bottom aren’t much better off. Is this really the way the world’s (allegedly) greatest democracy works? It’s barely better than slavery although I do admit that even the poorest in the US are better off than many populations in third world countries: at least there isn’t mass starvation in America.

So the rhetoric around how great America is is clearly just that: unsubstantiated propaganda. This is the land of opportunity, the place where anyone can pursue the American dream? Apparently that promise is real but only if you are in the top income group and prepared to exploit your fellow citizens or preferably those of another country.

An economist commented that the natural reward for commercial success is wealth and that was somehow a justification. But let’s examine that claim. He’s saying having lot’s of wealth is OK if you are successful in business, but the measure of success is accumulating wealth. Is this not a circular argument? Having wealth is OK if you are successful and that success is measured by wealth. It sounds like a typical economist’s double-speak to me!

Those numbers show what a horrendously unequal society the US really is but they barely begin to reveal the real truth. Apparently, in the last 30 years those with the top 1% of the wealth have increased their share by 10% of the total. it’s just obscene. I guess the main reason the American people don’t revolt against this unfairness is because they have been affected by years of propaganda telling them how great their country is and how deserving the rich are.

But it’s all just lies. The US was great once but is rapidly sinking as it becomes more inward looking and corrupt. It seems inevitable that it is on the way out as the world’s leading power. Whether China will make a good substitute for this position is, of course, extremely debatable. America has it’s problems but on balance it is probably one of the more benign global empires the world has seen.

There is an argument to say that the rich create companies which create jobs and wealth through exports, manufacturing, providing services, etc. OK, that is true and I think someone who works hard and creates employment does deserve some reward. But making a thousand (or a lot more) times what the bottom part of the population does is just too much.

Many big companies and most of the rich pay no taxes yet they benefit from the military, scientific, and social outcomes the taxes of others pay for. So the poor are effectively subsidising the lifestyles of the rich. Again I ask, why has their not been riots in the streets like there has been recently in Britain which is similarly afflicted with a grossly unfair society?

I’m not condoning mindless rioting but I can understand why it happened. And I think it is likely to get worse before it gets better. All grossly corrupt societies are eventually brought down by their own citizens and the western countries following neo-liberal economics will be no exception.

The US often criticises China for its unfair work conditions and “slave labour” economy yet its distribution of wealth is almost identical. The same applies to many African dictatorships. I agree that although the distribution is the same the absolute income is greater in the US, but even that is mainly because of their exploitative business practices in other countries.

The truth is beginning to spread though. The right-wing French government recently introduced more taxes on the rich because they asked for them. Yes, some of the most wealthy people in the country asked to be taxed more. A similar thing has happened here in New Zealand. Sam Morgan, who made millions by selling TradeMe to a foreign corporation, pays no tax and wants to know why.

Billionaire philanthropist, Warren Buffet commented on the documentary that he’s rich because he’s good at guessing at what to invest in. But he said himself he thinks teachers and nurses are more valuable members of society than he is. Yeah sure, there’s probably a bit of rhetorical false modesty there but he has a point. Does he really deserve all that wealth and to make little contribution to society through taxes while enjoying it’s benefits? Of course not.

Buffet, along with an increasing number of the very rich such as out old friend Bill Gates, are making donations to worthy causes and I commend them for that. But if they and all the other extremely rich who make no donations paid their fair share of tax I think the world would be a far better place.

The current economic system in most western countries (excluding some of the more progressive social democracies such as Sweden) is just unfair, immoral, and yes, I’ll say it: evil. It must change and it will. It’s just a matter of how soon.

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