As the Crisis Grows Deeper, the Wealth Gap Gets Wider


8-12-09, 9:10 am

Original source: Cuba News

One of capitalism’s unquestionable rules is that, in times of crisis, it’s the poor who suffer the effects of each major budget cut. So even if crises spare no one, the gap gets wider rather than narrower.

The current world economic crisis is not an exception to this maxim in the case of the United States.

“Over the coming months, as many as 1.5 million jobless Americans will exhaust their unemployment insurance benefits, ending what for some has been a last bulwark against foreclosures and destitution,” says an article published on August 2, 2009 by The New York Times, signed by journalist Erik Eckholm under the title Prolonged Aid to Unemployed is Running Out.

As Eckholm explains, by virtue of the unemployment insurance program created in 1930 and because of emergency extensions enacted by Congress, laid-off workers in nearly half the states can collect benefits for up to 79 weeks, whereas in others they can do it from 46 to 72 weeks. “But unemployment in this recession has proved to be especially tenacious, and a wave of job-seekers is using up even this prolonged aid. Tens of thousands of workers have already used up their benefits, and the numbers are expected to soar in the months to come, reaching half a million by the end of September and 1.5 million by the end of the year.”

The columnist points out that for every job that becomes available, about six people are looking. The wages offered are increasingly lower, and even low-paid fast-food jobs traditionally filled by teenagers are being taken by laid-off, overqualified adults.

According to journalist Don Monkerud’s article, 'U.S. Income Inequality Continues to Grow,' published by Wisconsin’s daily Capital Times, in June 2009 “the U.S. economy saw its second steepest decline in 27 years. New jobless claims increased, business inventories fell and exports plunged as bad economic news persisted” (…) “During eight years of the Bush administration, the 400 richest Americans, who now own more than the bottom 150 million Americans, increased their net worth by $700 billion. In 2005, the top 1 percent claimed 22 percent of the national income, while the top 10 percent took half of the total income, the largest share since 1928.”

What Monkerud reveals is that the root of disparity in U.S. society, formerly sprung from the relations of property, now hinge upon the growing disproportion between the salaries paid to executives and what the rest of the labor force receives.

“The source of wealth has changed over the past 30 years; corporations have become the engine of inequality in the U.S.,' says Sam Pizzigati, professor at the Institute for Policy Studies in Washington, D.C., quoted by Monkerud. 'In the past, wealth came from ownership. Today it comes increasingly from income. The highest incomes come from executive pay at top corporations. In the ‘60s, ‘70s and ‘80s, the ratio of CEO pay to the average paycheck fluctuated between 30 and 40 to 1. This year’s ratio is estimated to be 317 to 1.”

In 1955, IRS records indicated the 400 richest people in the country were worth an average $12.6 million, adjusted for inflation. In 2006, the 400 richest increased their average to $263 million, that is, over twenty times more, representing an epochal shift of wealth upward in the U.S.

“Bubble economies over the past 30 years helped CEOs pump up their income, and efforts to corral their pay are weak and ineffective. CEO pay may fall during these economic hard times, but disparity isn’t going away. Without a strong movement for change, the wealth gap will only increase in this downturn,” the analyst concludes.

This lack of balance in the payroll is merely the newest outcome of a capitalistic engine built on the dictatorship of wealth in a system thoroughly designed to make of capital ownership the driving force of society.

Consequently, the wealth gap grows larger and deeper, so deep that it may even become its graveyard some day.

--A CubaNews translation. Edited by Walter Lippmann.