Growing inequality is turning America inward
Growing inequality is turning America inward
By Jacques Mistral
Copyright The Financial Times Limited 2006
Published: July 16 2006 18:45 | Last updated: July 16 2006 18:45
The backlash against globalisation is becoming more pronounced every day in the US. We see it in rising nationalism and protectionism, which are feeding anti-immigrant sentiments. It is manifest in the eruptions in Congress against a Chinese company buying American oil assets, or in the virulent response to a proposal for an Arabic group to invest in US harbours. Economic openness – which served America and the free world so well for years – is today too frequently perceived as a threat to national security. But populism’s deeper roots are domestic and its causes should be examined, discussed and defused.
Recent events in the US reflect increasing inequalities that endanger the fundamental aspiration of this country – a land of opportunity for all. The images of poverty in a New Orleans devastated by Hurricane Katrina, or of immigrants demonstrating by their hundreds of thousands all over the country, have made it clear that prosperity does not necessarily go hand in hand with fairness.
Recent research provides mounting evidence that the American dream could, in the early 21st century, remain just a dream. Although Americans have rarely sought full equality, they believe strongly in equality of opportunity. But meticulous studies of inter-generational mobility reveal that the situation of a son is now more than ever likely to be dictated by his father’s social position than by his own merits. According to a recent study by the US Federal Reserve, if your parents are rich, the likelihood of your being rich is as high as the probability of your being tall if your parents are tall. Comparing American and European social policies, it is now recognised that social mobility is not higher in the US than in Canada, Germany or Finland and the American poor are more likely to be trapped into poverty than the European poor.
Education is often said to be the most practicable way to increase social mobility. America gave the world an incomparable example with the GI Bill, signed into law by President Franklin Roosevelt in 1944. The bill opened the door to higher education to 8m veterans who would use it to build assets for themselves and their country.
Today, US universities are increasingly expensive and access to the best of them is difficult even for middle-class students. A primary and secondary educational system based on local taxes tends to reproduce the economic inequalities of surrounding neighbourhoods. In the past two decades, this situation has worsened immeasurably. If recent increases in inequalities of income are solidified, they would be a recipe for the dynastic inequalities that America in its early days was so determined to eliminate.
The accepted view in social science is that inequalities are an inevitable condition of economic success. But that generally goes with a moral argument that inequality is justified only when increasing efficiency and improving the situation of the worst off. Rapid growth in recent decades did not deliver those results; the best-off have done so well in the past decade only because they succeeded in capturing a huge part of the increase in national income. The top one-tenth of 1 per cent of the income distribution earned as much of the real 1997-2001 gain in wage and salary income (excluding non-labour income) as the bottom 50 per cent. It should come as no surprise that the number of those without health insurance is increasing and poverty rates in the US are the highest among all Organisation for Economic Co- operation and Development countries, in particular for children and seniors.
Many present the main threats to the security of Americans as coming from the outside. But more pervasive ones begin at home. Economic insecurity has become a feature of life for many Americans. History reminds us that the “Gilded Age” of the late 19th century gave birth to a strong populist reaction. Similar ones are simmering today.
These are not the reactions one would expect from the world’s dominant economic power, one that bears a special responsibility for promoting the agenda of globalisation. Americans are certainly not protectionist by nature. What they probably want looks like a fair distribution of the burdens of a market economy across the populace. After years of indifference, questions of equality could well be on the table again in the future. That could be good news for the future of globalisation.
The writer is professor of economics, Conseil d’Analyse Economique, Paris, and senior fellow at Harvard’s Kennedy School of Government. He is also author of La préférence américaine pour l’inégalité (Temps reels, Paris, 2006)
By Jacques Mistral
Copyright The Financial Times Limited 2006
Published: July 16 2006 18:45 | Last updated: July 16 2006 18:45
The backlash against globalisation is becoming more pronounced every day in the US. We see it in rising nationalism and protectionism, which are feeding anti-immigrant sentiments. It is manifest in the eruptions in Congress against a Chinese company buying American oil assets, or in the virulent response to a proposal for an Arabic group to invest in US harbours. Economic openness – which served America and the free world so well for years – is today too frequently perceived as a threat to national security. But populism’s deeper roots are domestic and its causes should be examined, discussed and defused.
Recent events in the US reflect increasing inequalities that endanger the fundamental aspiration of this country – a land of opportunity for all. The images of poverty in a New Orleans devastated by Hurricane Katrina, or of immigrants demonstrating by their hundreds of thousands all over the country, have made it clear that prosperity does not necessarily go hand in hand with fairness.
Recent research provides mounting evidence that the American dream could, in the early 21st century, remain just a dream. Although Americans have rarely sought full equality, they believe strongly in equality of opportunity. But meticulous studies of inter-generational mobility reveal that the situation of a son is now more than ever likely to be dictated by his father’s social position than by his own merits. According to a recent study by the US Federal Reserve, if your parents are rich, the likelihood of your being rich is as high as the probability of your being tall if your parents are tall. Comparing American and European social policies, it is now recognised that social mobility is not higher in the US than in Canada, Germany or Finland and the American poor are more likely to be trapped into poverty than the European poor.
Education is often said to be the most practicable way to increase social mobility. America gave the world an incomparable example with the GI Bill, signed into law by President Franklin Roosevelt in 1944. The bill opened the door to higher education to 8m veterans who would use it to build assets for themselves and their country.
Today, US universities are increasingly expensive and access to the best of them is difficult even for middle-class students. A primary and secondary educational system based on local taxes tends to reproduce the economic inequalities of surrounding neighbourhoods. In the past two decades, this situation has worsened immeasurably. If recent increases in inequalities of income are solidified, they would be a recipe for the dynastic inequalities that America in its early days was so determined to eliminate.
The accepted view in social science is that inequalities are an inevitable condition of economic success. But that generally goes with a moral argument that inequality is justified only when increasing efficiency and improving the situation of the worst off. Rapid growth in recent decades did not deliver those results; the best-off have done so well in the past decade only because they succeeded in capturing a huge part of the increase in national income. The top one-tenth of 1 per cent of the income distribution earned as much of the real 1997-2001 gain in wage and salary income (excluding non-labour income) as the bottom 50 per cent. It should come as no surprise that the number of those without health insurance is increasing and poverty rates in the US are the highest among all Organisation for Economic Co- operation and Development countries, in particular for children and seniors.
Many present the main threats to the security of Americans as coming from the outside. But more pervasive ones begin at home. Economic insecurity has become a feature of life for many Americans. History reminds us that the “Gilded Age” of the late 19th century gave birth to a strong populist reaction. Similar ones are simmering today.
These are not the reactions one would expect from the world’s dominant economic power, one that bears a special responsibility for promoting the agenda of globalisation. Americans are certainly not protectionist by nature. What they probably want looks like a fair distribution of the burdens of a market economy across the populace. After years of indifference, questions of equality could well be on the table again in the future. That could be good news for the future of globalisation.
The writer is professor of economics, Conseil d’Analyse Economique, Paris, and senior fellow at Harvard’s Kennedy School of Government. He is also author of La préférence américaine pour l’inégalité (Temps reels, Paris, 2006)
posted by Carlos T Mock @ 7:28 AM
0 Comments:
Post a Comment
<< Home