Monday, June 07, 2010

The Poor - Prosperity Creates Poverty!

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Intergenerational Poverty in America
by Devon DB
Global Research, January 9, 2011
Poverty today is greater than ever, with about 1/6th of the American population living in such conditions, according to the US Bureau of Census.
"There are over 4 million more Americans living in poverty than previously reported and poor people make up 15.7 percent of the population instead of 14.3 percent, according to new figures for 2009 released by the US Census Bureau" (See Barry Grey, US Census Bureau: Rising Levels of Poverty in America, wsws.org, 2011-01-07)
It is a highly talked about and debated topic, yet it seems that the plight of those suffering from intergenerational poverty is ignored. Whereas poverty is ““the state or condition of having little or no money, goods, or means of support; condition of being poor; indigence,” which could potentially be limited to one person, intergenerational poverty is the state of generations of a family being impoverished.
Intergenerational poverty mainly stems from education and economics. In terms of education, being well-educated lowers the chances of being in poverty. Even having only a high school diploma or equivalent can help as “those in households headed by persons with no high school degree are the most likely to enter poverty of any educational grouping.”
And when one factors in that “urban schools systematically receive less qualified teachers than their suburban counterparts”, one can assume they will not receive a quality education, thus having a greater chance of being impoverished.
One can also assume that the children of these urban-dwellers also will be impoverished seeing as how “social and economic deprivation during childhood and adolescence can have a lasting effect on individuals, making it difficult for children who grow up in low-income families to escape poverty when they become adults.” Thus the cycle of intergenerational poverty begins.
The parent, having been the victim of circumstances, was unable to attain a quality education, and thus was unable to find a well-paying job and wound up in poverty. The child, still living in that same area, is also suffering from not having a quality education and the results are the same: more poverty.
Economically, it is a fact that children who are born poor are likely to remain poor. According to a 2009 study of the National Center for Children in Poverty, “children who were born to families at the top of the income structure have the highest probability of being in the highest income strata as adults, while those born at the bottom have the highest probability of being poor as adults.”
A cycle of poverty that starts with the adult continues for generations and only gets worse, seeing as how workers wages have not increased since the 1970s. Also, this decrease in wages is also exacerbated by globalization, in which companies pit workers from all around the world against one another in what results as a race to the bottom in terms of wages, which only serves to increase the number of impoverished people globally.
Helping to end intergenerational poverty should be a serious matter for every government, seeing as how they would benefit from it.
Spending money on eliminating poverty can be looked at as an investment “which generated returns to society over time in the form of higher real gross domestic product (GDP), reduced expenditures on crime or health care problems, reduced costs borne by crime victims or those in poor health, and improvements in everyone’s quality of life in a wide variety of other ways as well.”
Thus ending poverty helps the health of the economy and saves the government and community money in terms of not needing to aid the impoverished, as well as allowing people to reach their full potential.
Ending poverty truly aids everyone, and a full long-term plan needs to be developed to effectively break the cycle.
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What Classless Society? The Growing Rich-poor Gap in "Classless" America
Top 10% controls 96% of the wealth
by Jack A. Smith
Global Research, October 3, 2010
The so-called growing rich-poor gap in "classless" America is a euphemism for the existence of an accelerated class struggle against American workers and the poor by a relatively small minority that possesses or has access to great wealth and power.
The Census Bureau reported Sept. 24 that the income differential between rich and poor Americans was greater in 2009 than any time since such records were kept.
Another Census report two weeks earlier revealed that America's largest year-to-year increase in poverty took place in 2009, although its estimate of 43.6 million people living in poverty is considered a serious undercount based on outmoded measurement criteria. Young workers and children are fast falling to the bottom of the heap. The biggest poverty jump last year was among 18 to 24 year old "less-skilled" adults, and 20% of our children live in poverty.
The Associated Press reported Sept. 28 that "The top-earning 20% of Americans — those making more than $100,000 each year — received 49.4% of all income generated in the U.S., compared with the 3.4% earned by those below the poverty line, according to newly released Census figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.
"A different measure, the international Gini index, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations in the Organization for Economic Cooperation and Development."
Following are some recent statistics and statements that show how wide is the chasm between the upper class and the rest of American society, from the poorest of the poor through the working class and middle class.
(Note in following paragraphs the difference between "income," meaning what you earn each year, and "wealth," meaning income plus assets — assets being everything you own, from your house, car and furnishings to all your property, savings, stocks and bonds, yachts, jewelry, etc.
According to the Wall St. Journal, a 2008 study of wealth in the United States found that the richest .01% (that's one-hundredth of one percent, or 14,000 American families) possess 22.2% of the nation's wealth. The bottom 90%, or over 133 million families, control just 4% of the nation's wealth. The remaining top 9.99% made ends meet with what's left, 73.8%.
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David DeGraw also has written that "a recent study done by Capgemini and Merrill Lynch Wealth Management found that a mere 1% of Americans are hoarding $13 trillion in investable wealth...and that doesn’t even factor in all the money they have hidden in offshore accounts."
A recent report by Ray B. Williams points out that "The U.S. Census Bureau and the World Wealth Report 2010 both report increases for the top 5% of households even during the current recession. Based on Internal Revenue Service figures, the richest 1% have tripled their cut of America's income pie in one generation. In 1980 the richest 1% of America took 1 of every 15 income dollars. Now they take 3 of every 15 income dollars.... Income inequality has been rising since the late 1970s, and now rests at a level not seen since the Gilded Age (1870 to 1900), a period in U.S. history defined by the contrast between the excesses of the super-rich and the squalor of the poor."
According to Paul Buchheit of DePaul University "In 1965, the average salary for a CEO of a major U.S. company was 25 times the salary of the average worker. Today, the average CEO's pay is more than 250 times the average worker's." The New York Times reported March 31, 2010, that "Top hedge fund managers rode the 2009 stock market rally to record gains, with the highest-paid 25 earning a collective $25.3 billion, according to the survey, beating the old 2007 high by a wide margin." The annual GDP of nearly 90 UN member nations is lower than what these people took home last year. The highest paid manager on the list was David Tepper of Appaloosa Management, who made $4 billion last year."
Year 2009 may have been an economic disaster for a record number of Americans, but the U.S. billionaire caste — and millionaires as well, of course — had an excellent year. According to Forbes magazine, 2009 "was a billionaire bonanza," with Bill Gates profiting by $13 billion (enlarging his wealth to $53 billion), and Warren Buffett getting $10 billion richer (increasing his fortune to $47 billion).
There are 1,011 billionaires in the world (40% are Americans) with an average net worth of $3.6 billion — a relative trifle more than the "wealth" possessed by the bottom half of the entire world population.
Throughout their lives, average Americans are taught by their school, church and corporate mass media that theirs is a classless society, and that the notion of classes, class struggle or class war is just left wing propaganda.
Differences in income are acknowledged — but it is claimed that since upward mobility and attainment of the American Dream are available to everyone if they work hard enough, there is only one class despite gradations in wealth. It's called the middle class, presumably with statistical subsections for the very rich and very poor. But the "Dream" and upward mobility have never been available to everyone, and over the last three decades have been substantially reduced for many new generations of working families.
How often do you hear the politicians of the two ruling parties or the government they administer referring to the working class, lower middle class, the lower class or the upper class and the ruling class?
In America, virtually everyone seems to be lumped into the middle class if they are earning between $25,000 and $250,000 a year, which is a preposterous parody of real class relations. Representatives of these two income variants have little to nothing in common except the class to which they appear to have been assigned.
The millions living in poverty are called "the poor" and are in the public mind often blamed for their own plight (lazy, shiftless, ignorant). The very rich are called the "top 1%," and the simply rich are termed the "top 10%," and are often admired and thanked because they create the jobs that prevent the inhabitants of the middle class from falling into the ranks of the poor.
For the past three or four decades the upper class and its agents have been accelerating a campaign against the wages and living standards of the working class/lower middle class and more recently the middle class as well, pushing more and more people into the lower classes. One example of this is that wages no longer correlate to productivity increases, as they did in the first three decades after World War II; another is the erosion of progressive taxation.
In addition, the influence of wealth on the White House and Congress has seen to it that hardly any significant social service legislation has come out of Washington for 40 years. President Obama promotes his healthcare legislation as a major progressive achievement, but this apex of the current administration's social contribution is to the right of Democrat President Harry Truman's proposals in 1948 and Republican President Richard Nixon's program of 1972. Truman and Nixon failed, and there has been such political regress over these decades that Democratic Party programs now emanate from the center/center-right.
The problem isn't just the disproportion of money in the hands of a small minority while the standards of most American families are eroding, but it is what's done with all that money. It elects Presidents, governors and mayors in most of the major cities. It elects members of the House and Senate and state legislatures. If you have millions to spend without batting an eye, you have political clout in America, often decisive clout, and it's principally deployed to further the interests of the "haves," as opposed to the "have nots."
This is what is meant by class war, and it seems to be waged these days only by the top 10% (the upper class) that controls 96% of the wealth against the 90% (working class to middle class and lower class) which controls 4%. The bottom 50% by the way accounts for a pathetic 1% of America's wealth.
Isn't it time for the "bottom" 90% to stand up, fight back, and claim their share?
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Obama Deplores World Poverty: Welcome to the Theatre of Absurd
By Finian Cunningham
Global Research, September 23, 2010
US President Barack Obama is the latest voice from the “great and good” to bemoan the lack of achievement in the United Nation’s Millennium goals, first declared 10 years ago, to drastically reduce world poverty and generate sustainable development. Earlier in the week, former British Prime Minister Gordon Brown and ex-UN chief Kofi Annan espoused similar sentiments of disappointment with the fight against poverty and all its miseries. Welcome to the Theatre of Absurd.
Here we have the very managers and apologists for the economic system that generates poverty and environmental destruction on a massive scale seeming to lament those manifestations. Not only that, but they affect a demeanour of brooding puzzlement over why poverty remains so entrenched across the world, with over one billion people (and counting) deprived of basic necessities for a decent life.
Obama’s foray was particularly absurd and insidious. While he oversees a foreign policy involving mass murder and war crimes in several countries, Obama exhorts to the world to get serious about fighting poverty and human suffering. With his typical rhetoric of “deep concern” that sounds increasingly hollow, the US president said that we need to move beyond “managing poverty... to provide paths out of poverty”. He deplored “dependence” on Western aid (sic) and called for greater accountability among poorer nations.
There are several self-serving myths here that, if inculcated, help to reduce not poverty but the public’s understanding of the real cause of poverty. First of all, Obama and his ilk are projecting themselves as having some kind of moral authority because they appear concerned for humanity. This is particularly absurd in the case of Obama given his record of exacerbating poverty, suffering and death all over the planet. Thus, with rhetorical flourish, the enemies of genuine human development somehow are able to appear as guardian angels and escape accountability – accountability that Obama ostensibly recommends – for the misery that they help inflict on a daily basis.
A second insidious mental framework being inculcated is with the use of the words “dependence” and “accountability”. The sanctimonious implication is that the scourge of poverty in Africa, Asia and the Americas is the curse of “backward people” who are resistant to adopting Western development (sic). Perhaps with his own African ethnicity, Obama felt entitled to spout such racist cant.
The great irony is that it is not the people of Africa and elsewhere who are dependent on the West, but rather it is the Western economic system of elite enrichment that is dependent on maintaining conditions of poverty in Africa and the globe generally.
A third myth that Obama’s soliloquy on world poverty attempts to inculcate is that poverty is somehow the exclusive domain of foreign, and again, backward lands. The implication is that there is a distinction between the structural causes of poverty in Africa, for example, and recession in North America. A few decades ago when US workers happened to have a relatively larger share of wealth, the distinction between “developed” and “undeveloped” nations may have had some semblance of credibility.
But with as many as 20 million Americans now out of work and nearly 40 million individuals in the US receiving food aid, it is today clearer than ever that poverty and massive suffering is a worldwide human condition generated by the very economic system that Mr Obama presides over. The trouble for him and his other apologists is that the contradiction of elite wealth coexisting with massive poverty has become so patent and palpable that any rhetorical flourish to dissemble otherwise is now truly absurd.
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Most People Accept the Crumbs
How the Poor Vote themselves into Poverty
by Fred E. Foldvary, Senior Editor
17 May 2010
http://www.progress.org/2010/fold665.htm
The poor we always have with us, because they vote themselves into poverty. It starts out with an aristocracy that owns the land and collects rent from the poor. The aristocracy can either be smart or stupid. If they are stupid, they keep repressing the rebellions of the poor until finally the army switches sides and the royalty gets overthrown by the revolution. That’s what happened with the French and Russian revolutions, and with the Shah of Iran.
However, no revolution has ever ended up helping the poor. A new aristocracy takes over, but this time they are smarter, as for example, they don’t call it "aristocracy." In the USSR, for example, the new aristocracy was the Communist Party "nomenklatura," but they called themselves the party of the workers.
If the aristocracy is smart, they avoid revolution by enlisting the middle class as allies. They sell some of their land to the bourgeoisie. They tax the income of the middle class, but then rebate their tax money with public goods that increase their rent and land value. This financial roundtrip causes a reduction of wealth, the deadweight loss or excess burden of taxation, but the bourgeoisie is happy, as they have enough money left for café latte.
To keep the poor from rebelling, the smart aristocrats hand out welfare. Welfare consists of economic rent handed back to the poor as services. The poor pay rent to the aristocracy for the use of dwelling space, and then the ruling class hands some of it back as schooling, medical services, housing assistance, and food coupons. "Look at how much we are helping you," say the aristocrats. "To keep getting your aid, you need to vote in favor of us rulers." So they do.
The poor pay little or no income tax, but they pay sales and excise taxes. The purpose of taxes on the sale of goods, and taxes on value added during production, is to force the poor to pay taxes. There is an even bigger tax on the poor, the deadweight loss of taxation, the reduction of income and growth caused by taxation, which falls hardest on the poor. The poor get taxed much more than the value of the aid they receive, but the schooling provided by government avoids any hint of this. That is why governments provide "public education" rather than vouchers that would let parents send their children to private schools where they just might learn the hidden economic reality.
But there is a problem with this arrangement. The middle class resists being taxed too much, as they see much of the money being routed to the poor and to wealthy rent seekers. To enlist the voting support of the poor and the middle class, the ruling aristocracy borrows money to spend on more welfare. The poor also support labor unions so that they can strike to get higher wages, and government workers then get unionized also. Labor unions in the private sector end up pricing themselves out of the market, but government workers can get big pensions and higher wages if the government borrows more money. Governments end up with huge budget deficits and unpayable debts.
That’s where we are now. On the vanguard of government debt are California and Greece, which resorted to accounting tricks to keep on borrowing, but that game is now checkmated. Unable to borrow, governments cut the welfare aid to the poor. They also try to cut some of the pensions and wages of workers. Outraged, the poor go into the streets and riot.
A little voice in the corner cries out, "untax labor, tap the rent, stop the subsidies," but that voice is drowned out by the yelling of the protestors who demand their welfare aid. The middle class does not want their rent tapped for public revenue, because they feel insecure in their jobs, and see their land value as their security. They don’t understand that in a pure free market, their untaxed labor and full employment would be better security. They say, "if this were true, we would have learned this in our government schooling."
Economists are trained in graduate school that there are only two factors, labor and capital. What about land? That is part of capital. Why not tap the rent? Because it is only a tiny part of national income. Why do you think so? That is what the government reports say. Have you analyzed this? "If that were important, I would have learned this in graduate school."
Now the landed aristocracy is in deep trouble. California can’t borrow much more. Greece can still borrow from the International Monetary Fund and from the wealthier Europan countries, but only for a couple of years. The USA still has good credit, but it is doing nothing to reduce future deficits. The line of least political resistance is a default, softly in the form of a restructuring of the debt, or harshly as repudiation during a financial crisis.
The banks holding these failed bonds will get bailed out. They have to get rescued, because they loan out the money for the real estate purchases that prop up land values. But the debt crunch ends up hurting everybody, the rich, middle class, and the poor, when governments are no longer able to borrow.
We are now coming to an "end of history," of a century of government deficits that got the revenue to placate the poor. After the crunch, a new history will begin, but the price will have been paid as environmental damage, conflict, and the perpetuation of poverty. That’s what Henry George foresaw when he explained how perverse progress creates poverty.
Henry George also foresaw the rise of new barbarians. Who are they? Terrorists who have grievances, but have no clue as to the ultimate source of the injustice. The ultimate cause of the terrorist threat is injustice in land tenure, but they don’t teach that in school either.
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London's richest people worth 273 times more than the poorest
Randeep Ramesh, social affairs editor
The Guardian
Wednesday 21 April 2010
Academic argues in new book that society has the widest divide since the days of slavery
Photograph: Sarah Lee
London is most unequal city in the developed world, with the richest tenth of the population amassing 273 times the wealth owned by the bottom tenth – which creates a "means chasm" not seen since the days of a "slave owning society", according to a new book.
In Injustice: Why Social Inequality Persists published by Policy Press, Danny Dorling, a professor of human geography at Sheffield University and an expert on social disparity, paints a bleak picture of an extremely unjust Britain where differences in wealth have led to a profoundly divided society.
Dorling said Labour had managed to stop the gap in incomes from getting bigger, but this had not stopped the rich getting richer. The wealthiest had amassed assets such as second homes and expansive stock portfolios.
He says the government's latest figures show that in the capital the top 10% of society had on average a
wealth of £933,563 compared to the meagre £3,420 of the poorest 10% – a wealth multiple of 273.
"Other comparable cities like New York, Stockholm, Sydney ... have wealthy people, but not as many wealthy people as London," said Dorling. "There is an inbuilt bias towards inequality in UK society today.
"We are getting wealth inequalities in London now as far as we know that have not been seen since the days of a slave-owning elite. The lesson is that it is not enough to just stop the disparity in incomes from getting bigger – you have to make it smaller to stop wealth inequality from getting worse."
This wealth gap has produced an alarming health gap – with the life expectancy at birth of the richest group rising by a year annually, while the poorest are seeing almost no rise at all. In 2008, a female born in London's exclusive Kensington and Chelsea could expect to live until 88 and nine months – a year earlier she would have reached 87.9. In Glasgow, by contrast, where women were expected to live until 77.1 in 2007, the rise was only a month to 77.2 in 2008.
"You have rich people living longer and longer, while life expectancy has all but stalled for the poor," says Dorling.
In Europe, only Portugal appears more unequal than Britain. Instead of seeking to reduce inequalities, Dorling argues, Westminster politicians simply accept that it is unfortunate but inevitable, rather than seeing it as undoing the "warp and weft of society".
The result is that the affluent have been allowed to lose touch with the everyday norms of society. The
academic points out the cost of a flat in the City of London rose by 24% to almost £450,000 in 2009.
"Prices jumped at a time of recession. The rich really aren't like us ... they operate in a different world," said Dorling.
This segregating effect means that the wealthiest are "socially excluding themselves by choice".
"[The rich] are no longer even thinking of sending their children to the same schools as others, nor having holidays that in any way resembled the norm, nor having salaries that bore any resemblance to national averages, nor relying on the same health services as others ... as far as we can tell, at no other time had so many people in countries like the United Kingdom not felt part of the societies there," he said.
The effect on politics has been the dramatic "super concentrating" of the Conservative vote in a series of
wealthy constituencies in areas such as the south- east. By 2005, one in six Tory voters would have to shift from some of the most Conservative seats to other party strongholds to spread the Tory vote equally across the country.
Dorling says this "geographical polarisation in underlying beliefs is where David Cameron finds his party". In the past, this feature of Conservative voters, combined with large now inequalities, has led to a "decade of political instability".
"The last time the Tory vote was so geographically concentrated was when we had a similarly unequal society in 1918. The result was a decade of instability, with a coalition government between the Liberals and the Conservatives. It means this election is about real choices."
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