Dickson Igwe. Photo: Provided

A look at recent economic and political history attempts to give a reason why this inequality exists. Is the economics of TRICKLEDOWN at play in the USA? The USA is a bellwether of what happens elsewhere, especially in countries close to its shores.

The USA has been called the Land of Opportunity, whether this is so, or not, is the subject of this story. Well documented research shows that since Ronald Reagan and his free market brand of economics of the early 1980s, inequalities between the wealthy and middle classes in the USA have increased greatly.

This increase in inequality surpasses inequalities in all other major industrialized nations. This is a wealth inequality that has further created a closed shop, with access to wealth and power increasingly restricted to a tiny and privileged subset of the US population. Unfettered capitalism and free markets, in the mould of the Reagan prototype, in the US, has been a boon: for the wealthy 1%.

In any event, much of the world appears to be following the US inequality model. Wealth inequality in Russia, Brazil, Mexico, India, Nigeria, and more, continues to increase exponentially, with a divide between rich and poor that appears ever more unbridgeable. In the meanwhile, the middle classes in these countries continue to hemorrhage economically. It is frequently stated by pundits that a third of humanity lives in poverty. That is over two billion people.

The internet and globalization has created a new middle class of over a billion around the world. That is a good thing.  Paradoxically, however, wealth inequalities have further increased as a result, most noticeably in the USA. In fact the internet may have actually created greater economic disparities between the 1% and the rest, despite the access it has given to billions of people, to the World Wide Web.

Post World War 2, and in the 1950s, 60s and 70s, the US was a much more middle class society. The American Dream of a bungalow featuring the latest appliances, a driveway, garage with two cars, and well paid permanent job, was the expected norm, especially for the white male. The nuclear family began its existence during this time. Mom stayed home while dad either worked on the production line in the new factory culture, or in one of the swiftly ascending and towering edifices sitting in cities such as New York, Seattle, and Chicago.

This middle class quality of life was based on a robust manufacturing model. Post the Second World War the US experienced a manufacturing boom that created millions of blue and white collar jobs in a burgeoning industrial power. This was a direct result of the country beating guns into ploughshares: a massive transformation from a war economy into a peaceful manufacturing model. Services were the offshoot and progeny of manufacturing, and not the other way round, as it is these early 2100s.

Today, the American Dream is more out of reach for a significant set of the population, than ever before. There is a new class of low paid worker replacing the working class father and mother who once manned the production lines that have been exported to the Far East. The middle class continues to shrink. However, the wealthiest 1% is getting even richer as more and more jobs are exported, or outsourced overseas, to low cost jurisdictions. Many will state that this is the result of the adoption of an economic system engineered to favour the wealthy, to the detriment of the poor and middle class.

Ronald Reagan was progenitor of an economics that pulverized the middle classes according to one strain of thought. Reaganism or Reaganomics, used the idea of free markets, deregulation, low taxation, and cuts in public spending to realign the American way.

This realignment was away from middle class America. It was an alignment in favour of the wealthy. Reaganomics and the thereafter created an economics that awarded an increasing share of national wealth to the owners of Corporate America.

The era of Bill Clinton saw a small reversal in the trajectory of Reaganomics and its orientation towards corporate USA. Clinton’s Economic Model was more in favour of the US middle class. Clinton was steward of an 8 year boom in the US economy of the 1990s.

This was aided by the establishment of the internet and related technologies, and interestingly, great fiscal discipline in the form of eliminating the budget deficit, national debt, and raising tax rates, especially on the wealthy.

Clinton used this sound fiscal environment, and tax money, and invested heavily in infrastructure that strengthened the US middle class, including education and research. This was also to the benefit of US industry. In fact, Clinton’s years are regarded as a golden age for the US middle class.

With the Presidency of George Walker Bush, Bill Clinton’s Middle Class prosperity model began to end. September 9, 2011, and the thereafter, led to wars that would plunge the USA into debt; albeit George Bush appears to have jettisoned Clinton’s fiscal discipline. The Post Clinton Recession was probably part of the normal economic cycle of ups and downs. Clinton’s fat years were bound to be followed by some lean years.

Under Bush, however, access to the millionaire class was restricted by the selfsame individuals that occupy that class. Bush was a child of the wealthy. And despite being considered a big spender, Bush favoured policy that helped the rich get richer, and keep that wealth in the family, so to speak.

In today’s USA, education, colour, and family background, are all major determinants of who gets to be in the 1%. Access to wealth and power is determined not necessarily by talent and ability, as the ideal of the American Dream suggests: apart from in sports, and to a certain extent, show business. A white boy, from a privileged family, with Ivy League credentials, is still exponentially more likely to be the CEO of COKE, MICROSOFT or APPLE, than a black scholar born in the Bronx, or a working class white who attended community college.

This inequality is based on the ‘veritable hijacking’ of the sources and environment of wealth, by a tiny minority. This wealthy minority further controls major areas of the power structure and power process: a wealthy class that is making the USA, despite its democratic institutions, a veritable plutocracy: a rich man’s paradise.

100 families control more wealth than 150 million US citizens, half the population: that is the reality this February 2014. This is further cemented by another metric that states that 88 families own more of the world’s wealth than 2 billion people at the bottom of the global wealth pyramid. These families are predominantly North American.

In some ways, the USA is returning to the days of the Robber Barons at the turn of the 19th Century, and the start of the 1900s. Those were the days when a super wealthy industrial elite basically owned the USA: the Rockefellers, Vanderbilts, Carnegies, and Morgan’s. These were great adventurers and speculators: oilmen, railway men, industrialists, and financiers.

One aid to inequality is digital technology. This so called equalizer has been anything but. Digitization may have democratized the internet: it has also concentrated wealth in the hands of a few who have been able to control how the internet and associated technologies are engineered. BIG BROTHER works in sync with a new digital billionaire class to control all input and output of an unimaginably vast resource.

Now, President Barack Obama has attempted to use policy to put more economic power and wealth in the hands of the US middle class. OBAMANOMICS is an economics based on the ideas of John Maynard Keynes. This is where government spends on aspects of the economy that empower those at the middle of the social pyramid. Obama sees the middle class as the true generators of wealth in the USA. Obamanomics is successor of Clintonomics.

Hence the howls and cries from the wealthy, especially the US Republican Congress: a millionaire club. The wealthy and powerful are against the President’s economic policies, designed to help the poor and middle classes.

They call Obama a Deficit President. One example is the President’s healthcare policy: socialized medicine is designed to give greater access to healthcare to the poor and middle class. Socialized medicine in the USA is symbolic of Obamanomics..

In fact, every time the US President does anything that sniffs of help to the poor, he is described as a SOCIALIST: a dangerous renegade”

Looking at the pedigree of those who call the President a dangerous re distributor of wealth, and one need not wonder why!

 To be continued 

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