September 2000


Although the media paint a rosy picture of the US enjoying one of its most prosperous eras, the reality is that while the salaries of chief executives and billionaires are skyrocketing, an increasing number of American citizens are poor, homeless and lack health insurance. The growing economic inequality is caused by factors such as the unimpeded growth of global corporations.

By Gumisai Mutume

Washington: These are boom years for the United States, with unprecedented economic prosperity and near-zero unemployment rates; yet for the majority of the country’s poor all is not so rosy, notes a new study.

The study, Economic Apartheid in America, contrasts the skyrocketing salaries of chief executives and billionaires at the top with the growing ranks of the poor, uninsured and homeless at the bottom. It says the media paint a rosy image of a country enjoying one of its most prosperous eras, far removed from the reality of many US residents.

The report, released on Labour Day (4 September), notes how the economic boom of the 1990s has happened alongside the decline in organised labour and civic institutions, the battle over global trade and growing inequalities in income.

It points out that the United States is the only industrialised nation that ‘views health care as a privilege, not a basic human right’.

Some 44 million US citizens currently do not have health insurance. ‘Even as the unemployment rate declines, the rate of workers without health insurance increases,’ notes the study  by  Chuck Collins and Felice Yeskel  of  United  for  a  Fair  Economy,  a lobby group.

While the unemployment rate is placed at about 4%, the number of uninsured non-elderly US residents is growing by one million a year and will reach 47 million by 2005, equal to one in five US citizens under 65 years old. Health insurance and medical care have become key issues in the current presidential campaign.

Since the 1970s there has been an explosion of new products that have benefited millions here such as personal computers, satellite and cable television. Air travel has grown by roughly 300% since 1970 and the share of adults who are college graduates has doubled from 11 to 22%.

However, the percentage of people’s income spent on health care has also grown by 160% between 1960 and 1995, note the report’s authors. Harvard University professor and author William Julius Wilson termed the new study a ‘clear viewpoint on the growing economic inequality in the United States and how to combat it’.

United for a Fair Economy, a national non-partisan organisation, notes that in 1997, General Electric’s chief executive earned nearly $40 million per annum, a 45% increase from the previous year.

The General Electric CEO was the 11th highest paid in the United States that year, earning 1,400 times the average pay of the US factory worker and 9,500 times that of Mexican maquiladora workers - thousands of whom work for GE.

United for a Fair Economy notes that almost 90% of earnings from the growth in the stock market in the United States goes to the top 10% of households, while real wages are now less than they were when Nixon was president.

The report goes on to compare the US state of California with the Indian state of Kerala. It says that in many ways, Kerala is a more equal society. The income disparity in Kerala is 3.5 to one, compared to 12 to one in California.

While Kerala is the size of California, it is materially poorer. It, however, ranks higher in a number of quality-of-life indicators - low crime rates, high literacy and a longer life expectancy. Both states are home to roughly 30 million people, but Kerala has only 5,000 people in prison compared to California’s almost 200,000.

‘In Kerala there is a strong commitment to ensuring broad and affordable access to services such as education and basic needs like electricity and food,’ notes the report.

One of the factors often identified as responsible for the growing inequality in the United States and around the globe is the unimpeded growth of global corporations. Many governments are reluctant to over-regulate transnational corporations and in recent years have provided a host of incentives (tax holidays and rebates, employment subsidies) to attract such companies.

The study notes that to address these inequalities activists need to address the rules and institutions governing the global economy such as the World Trade Organisation (WTO). They also need to build coalitions across borders and press for debt cancellation.

In recent years the Western world has witnessed a revival of left-leaning and anarchist activism, much of it directed at the free trade organisations and specifically at their gatherings, such as those of the European Union, the Group of 8, the WTO, the International Monetary Fund (IMF) and the World Bank.

The report points to the WTO protests in Seattle last year and this year’s anti-World Bank and IMF protests as watersheds for a growing movement against the contradictions of global capitalism.

‘Demonstrators demanded that powerful economic actors become accountable to democratic forces, that the processes which are generating inequality and environmental degradation be stopped, and that we revisit basic questions about the purpose of economic activity,’ notes economist Juliet Schor.

‘Is the economy to serve the people who make it up, or is their labour for the sake of lining the pockets of the rich and powerful? Seattle has put this basic question back on the table.’ - Third World Network Features/IPS


About the writer: Gumisai Mutume is a correspondent for Inter Press Service, with whose permission the above article has been reprinted.