Totally Growthed Out

Economic growth that attaches solely to the top echelons of any society is not true GDP growth. The International Monetary Fund has repeatedly implored nations with deep economic disparity to take steps to reduce that polarization, creating buying power among those in the middle and the bottom of the social ladder. They have repeated the path to such equalization through numerous studies and reports: “Investments in education, health, infrastructure can help cut inequality.” IMF.org, June 14, 2012. For years, such words were aimed at nations outside of the Western world.

Today, where 1% of the population owns 42% of the wealth, where 95% of the post-collapse income growth has benefited that 1% and where the top 10% of earners generate 50% of the income, those admonitions target the United States: “The increasing inequality in the United States has frozen the political apparatus.” IMF.org. That our stock market (think about who prospers the most from this fact) is soaring does not make up for the fact that the average American has lost buying power every year since 2002, and that austerity measures (like the Sequester and the Tea Party cry for massive further reductions, including infrastructure, education and, especially, health) have moved the United States away from the above IMF-recommended de-polarization solutions. Education is less affordable, infrastructure is falling apart (they call it “deferred maintenance”) and healthcare is still the most expensive per capita on earth.

Writing for the IMF, economist Robin Wells is more specific: “First of all, I think we need to do something to help alleviate the present-day suffering which is overwhelmingly concentrated among the working class. An economic stimulus would do that. You could do that with virtually very low-cost money. You could also do it in a way which helps our future growth by investing in school teachers, school buildings, and infrastructure that is needed very, very badly… We can also make sure that health care gets implemented. These are very basic things to lower the extreme amount of anxiety and suffering that people are experiencing in the future. These are win-win things.” IMF.org. This set of solutions appears the opposite of what a gridlocked Congress is likely to do anytime soon. Are we devolving into a banana republic?

It is interesting to note one sterling example of where stalled growth, bordering on economic collapse of the currency, might actually be addressing the inequality syndrome: India. “[S]ome prominent Indian economists believe the recent slowdown may actually be a good thing for the country. They argue that much of India’s recent boom was fueled by a toxic mix of political corruption and crony capitalism that some feared would spiral out of control.

“As in Russia, Indian oligarchs with political connections have made vast fortunes while hundreds of millions remained desperately poor. India has 55 billionaires, second-most in Asia, even though more than half of its citizens have no access to toilets. India’s democracy seemed to be offering many of its people little help or hope.

“‘For years, I have been terrified that India was being captured by the oligarchs,’ said Ajay Shah, a professor at theNational Institute of Public Finance and Policy in New Delhi. ‘I am excited about the past few weeks because I think this period shows the resilience of Indian democracy.’… Mr. Shah called the last 10 years of rapid economic growth a ‘corruption bubble,’ and he and others said the price of India’s present political and economic correction would be enormous, with growth in the next five years likely to be much less than in the last 10 years… Yet, even those who have benefited from the recent corruption-fueled boom and are now suffering with its collapse are glad to see a crackdown.” New York Times, September 13^th.

Whether India gets corruption under control and substitutes general, across-the-board shared growth remains to be seen, but the United States masks its “corruption” by legitimizing income polarization through according the mega-wealthy with special tax breaks (e.g., the carried interest rule, capital gains on invested income and the ability to shelter corporate profits offshore, etc.), greater political voice (e.g., the Citizens United ruling on SuperPacs, perpetual elections in the heavily redistricted House, where candidates are running all the time with their hands desperately outstretched for campaign contributions) and raising the cost of education beyond the average affordability index… except for their children.

Our jobless statistics do not tell the complete story. Few get better paying jobs today than they did before the financial crisis. Too many workers have just dropped out of a meaningful job search and don’t even show up in the numbers. There is too much part-time and contracting work with no benefits. Research that could generate new exciting industries has moved increasingly overseas as U.S. support for non-military research has fallen through the floor. Either we believe in our own country, and invest in its future, or we keep doing what we have been doing for the last five years and watch the bananas grow!

I’m Peter Dekom, and there is a whole new “America, love it or lose it” slogan that needs to be resurrected.