The American Dream Has Become A Myth

The finance industry is to blame for the growing divide between the rich and poor in the United States, says Nobel Prize-winning economics professor Joseph Stiglitz. In an interview with SPIEGEL, he accuses the industry of preying on the poor and buying government policies that help them get richer.

Economist Joseph Stiglitz:

...recognize that there is a problem. Watching inequality grow is like watching the grass grow. You don't see it happening day by day, but over a period of time it becomes visible.

In the last decades, income and wealth disparity have grown dramatically in this country. Let me give you an example: In 2011, the six heirs to the Walmart empire commanded wealth of almost $70 billion, which is equivalent to the wealth of the entire bottom 30 percent of US society.

...the American dream has become a myth. The life chances of a young US citizen are more dependent on the income and education of his parents than in any other advanced industrial country for which there is data. The belief in the American dream is reinforced by anecdotes, by dramatic examples of individuals who have made it from the bottom to the top -- but what matters most are an individual's life chances. The belief in the American dream is not supported by the data.

There has been no improvement in well-being for the typical American family for 20 years. On the other side, the top one percent of the population gets 40 percent more in one week than the bottom fifth receive in a full year. In short, we have become a divided society. America has created a marvelous economic machine, but most of the benefits have gone to the top.

...when the Democrats say that they are supporting the middle class, they are really talking about inequality. And they highlight the contrast with the Republican candidate Mitt Romney, who is emblematic of the top one percent of the population. Romney's denigration of the 47 percent of Americans who don't pay income taxes had an enormous reaction, partly because it showed how out of touch those at the top were with the rest of the country.

It is the group of people who get 20 to 25 percent of the income. Their share has doubled in the last 30 years. And they own about 35 percent of the wealth or more. They have the best houses, the best education and the best lifestyles.

...the top one percent in the United States has an average tax rate of less than 30 percent of their reported income, and the large proportion who take much of their income as capital gains pay far less. And we know that they are not reporting all of their income.

There is nothing wrong if someone who has invented the transistor or made some other technical breakthrough that is beneficial for all receives a large income. He deserves the money. But many of those in the financial sector got rich by economic manipulation, by deceptive and anti-competitive practices, by predatory lending. They took advantage of the poor and uninformed, as they made enormous amounts of money by preying upon these groups with predatory lending. They sold them costly mortgages and were hiding details of the fees in fine print.

The financial elite support the political campaigns with huge contributions. They buy the rules that allow them to make the money. Much of the inequality that exists today is a result of government policies.

In 2008, President George W. Bush claimed that we did not have enough money for health insurance for poor American children, costing a few billion dollars a year. But all of a sudden we had $150 billion to bail out AIG, the insurance company. That shows that something is wrong with our political system. It is more akin to "one dollar, one vote" than to "one person, one vote."

The United States doesn't have much of a revolutionary spirit. My real concern is that people get alienated from politics. In the last election we had a voter turnout among young people of around 20 percent. These are the people whose future is most at stake, and 80 percent of them think it's not worth to vote because it is a rigged system and in the end the banks are going to run the country anyway.

The main problem in Europe right now are the austerity packages, they depress demand and weaken economic growth. The reversal of this policy is absolutely essential to develop growth and more equality. Spain, for example, gets weaker and weaker, money flows out of the country, and it is a vicious downward spiral.

Europe's crisis is not caused by excessive long-term debts and deficits. It is caused by cutbacks in government expenditures. The recession caused the deficits, not the other way around. Before the crisis Spain and Ireland ran budget surpluses. They cannot be accused of fiscal profligacy. More fiscal discipline will only worsen the downturn. No economy ever recovered from a downturn through austerity.

The crisis countries don't suffer from excessive spending. The problem is not supply but demand. It is the responsibility of monetary and fiscal policy to maintain the economy at full employment.

... if the government cuts back its spending, it has a major effect. An expansion of spending can increase production by creating jobs that will be filled by people who would otherwise be unemployed.

We need roads, bridges and airports. That's obvious. The returns from public investments in technology on average have been very high -- think about the Internet, the Human Genome Project and the telegraph.

Europe is facing a critical point. The alternatives are "more Europe" or "no Europe." The halfway configuration is unstable.

Via: "Der Spiegel Online"

Why Society Doesn’t Change: The System Justification Bias

"Society's tendency is to maintain what has been. Rebellion is only an occasional reaction to suffering in human history: we have infinitely more instances of forbearance to exploitation, and submission to authority, than we have examples of revolt." (Zinn, 1968)

Have you ever wondered why society hardly ever changes? I think most of us have.

One answer is that humans have a mental bias towards maintaining the status quo. People think like this all the time. They tend to go with what they know rather than a new, unknown option.

People feel safer with the established order in the face of potential change. That's partly why people buy the same things they bought before, return to the same restaurants and keep espousing the same opinions.

This has been called the 'system justification bias' and it has some paradoxical effects (research is described in Jost et al., 2004):

• Poor people don't strongly support the sorts of political policies that would make them better off. Surveys find that low-income groups are hardly more likely than high-income groups to want tax changes that mean they will get more money. Generally people's politics doesn't line up with their position in society.
• Oddly, the more disadvantaged people are, the more they are likely to support a system that is doing them no favours. This is because of cognitive dissonance. In one US example of this low-income Latinos are more likely to trust government officials than high-income Latinos.
• Most disturbing of all: the more unequal the society, the more people try to rationalise the system. For example in countries in which men hold more sexist values, women are more likely to support the system.

People seem to rationalise the inequality in society, e.g. poor people are poor because they don't work hard enough and rich people are rich because they deserve it.

Via: "Psy Blog"

15 Mind-Blowing Facts About Wealth And Inequality In America

By Gus Lubin
Business Insider
Friday, April 9, 2010
Courtesy Of The San Francisco Chronicle

The rich are getting richer and the poor are getting poorer.

Cliché, sure, but it's also more true than at any time since the Gilded Age.

The poor are getting poorer, wages are falling behind inflation, and social mobility is at an all-time low.

Here's 15 Mind-Blowing Charts About Wealth And Inequality In America >

The gap between 1% and everyone else hasn't been this bad since the roaring Twenties

Source: The Nation

Half of America has only 2.5% of the wealth

Source: Institute for Policy Studies

Half of America has only 0.5% of the stocks and bonds

Source: Institute for Policy Studies

Look at the gap grow!

Source: Professor G. William Domhoff

The last two decades were great... except for American workers

Real average earnings have not increased in 50 years

But savings rates are sinking

Poor Americans have a SLIM CHANCE of rising to the upper middle class

Source: NBER

Republican tax cuts have significantly increased the gap

Source:

Taxes get better and better for the rich

America spreads the wealth FAR LESS than other developed countries

America's income spread is nearly twice the OECD average

Source: Economist

The gap is NOT growing in many countries, like France

Inequality is worst around Wall Street and Oil Land

If you aren't in the top 1%, then you're getting a bum deal

Now Read...

20 Cities That Have Completely Missed The Recovery

Inequality: The Root Source Of Sickness In America

By Susan Rosenthal
November 3rd, 2009
Courtesy Of Dissident Voice

The United States spends more on health care than any other industrial nation, yet it has the highest infant death rates and the lowest life expectancy.

This problem is attributed to a fragmented, profit-oriented medical system that denies millions of people access to care.¹ While a national medical plan that covers everyone is desperately needed, improving the general health of the population requires more fundamental change.

Studies show that social inequality affects the health of populations more than any other factor – more than diet, smoking, exercise, and even more than access to medical care.²

Americans suffer the worst health statistics in the industrialized world because they live in the most unequal society in the industrialized world.

Poor health and lack of access to medical care are both symptoms of social inequality. In 1970 the wealthiest 0.1 percent of Americans took in 100 times the average annual income. By 2001, they were taking 560 times the average annual income. In 1980, U.S. life expectancy ranked 14th in the world. By 2007, it ranked 29th.

Inequality is built into and generated by the capitalist system. Capital is created when employers pay workers less than the value of the goods and services they produce. The resulting profit, or capital, is used to extract more capital. As this process repeats over time, capital accumulates at the top of society and misery accumulates at the bottom.

The strategy of divide-and-rule generates even more inequality: between men and women; White and Black; national and foreign-born; straight and gay; etc.

As social inequality grows, the health of the entire population suffers, not just those on the bottom.³

Inequality Kills

A study of 282 metropolitan areas in the U.S. found that the greater the difference in income, the more the death rate rose for all income levels, not just for the poor.

Researchers calculated that if income inequality could be reduced to the lowest level found in the United States, it would save as many lives as would be saved by eradicating heart disease or by preventing all deaths from lung cancer, diabetes, motor vehicle crashes, HIV infection, suicide and homicide combined!⁴ We would see even greater benefits if we eliminated social inequality entirely.

Consider the lives that would be saved just by ending racial inequality.

Without racism, death rates for Black and White Americans would be the same. Yet, every year, Black Americans suffer 300 more deaths per 100,000 people than White Americans. Compare these 300 additional deaths with the 2005 U.S. homicide rate of fewer than 6 per 100,000. Do the math. Racism kills 50 times more people than die at the hands of individual murderers.

Inequality kills kids. Forty-two nations have lower infant death rates than the U.S. The infant death rate in the capital of the U.S. is more than double the infant death rate in the capital of China. In 25 nations, people live longer, on average, than they do in America.

Inequality is so destructive that it can even counter the benefit of higher incomes. Studies show that poorer people living in more equal nations tend to be healthier and live longer than more-affluent people living in more unequal nations. For example, middle-income people in Britain enjoy better health than wealthier Americans.⁵

Men living in Bangladesh, one of the world’s poorest countries, are more likely to reach age 65 than Black American men living in Harlem. Harlem men have higher incomes than Bangladeshi men but live in a more unequal society. Black Americans tend to die prematurely from cardiovascular and other diseases that are linked with class and race inequality.⁶

How does inequality do so much damage?

Power = Health

A study of the highly-stratified British civil service found that health deteriorated as social status fell. This decline in health could not be explained by smoking, exercise or body weight.⁷ Income is not the factor, because professionals who earn less than non-professionals still enjoy better health.⁸

The answer lay in the surprising finding that those near the top of the power structure had worse health than those at the top, even though their life-styles were essentially the same.⁷ The only difference that could account for this is social power.

People with more control over their lives enjoy better health. Bosses live the longest, healthiest lives because they have the most power. As power diminishes, stress rises and health deteriorates. This relationship between social status and health has been found in every nation studied, including the United States.⁹

A 2008 study found widening differences in health between income levels in America. (Income level is often used to measure social status.) The nation’s poorest adults were nearly five times more likely to be in “poor or fair” health than the richest, and at every income level the wealthier group was healthier than the next lower one. This trend was seen in all racial groups.¹⁰ Michael Marmot, who studies the link between social status and health, explains,

Your position in the hierarchy very much relates to how much control you have over your life…Sustained, chronic and long-term stress is linked to low control over life circumstances.¹¹

Under capitalism, only a few people get to make the important decisions. The rest of us get no say over how work will be organized and how social resources will be used. We don’t get to decide if we will build more schools or more prisons, wage war or make peace.

Exclusion from decision-making is strongly linked with cardiovascular disease,¹² and the more powerless a person feels, the faster the disease progresses.¹³ Oppressed sections of the working-class suffer the highest rates of cardiovascular disease,¹⁴ because they have the least social control.

People with little control over demanding jobs are more likely to be overweight and have high cholesterol regardless of age, amount of exercise and smoking habits. By itself, hard work is not bad for your health unless there is also a lack of control. The most health-damaging jobs saddle workers with great responsibility (e.g. caring for patients) while denying them the resources required to meet those responsibilities (enough time to do what is needed).¹⁵

In Unhealthy Societies: The Afflictions of Inequality, Richard Wilkinson links inequality with health-damaging stress. Children show rising levels of stress hormones as their social position falls.¹⁶ Nurses who work under “unfair and unreasonable” bosses have higher blood pressure.¹⁷ Simply speaking with someone with higher social status will raise your blood pressure.¹⁸ The greatest damage is done to those who are put down and ordered around their entire lives.

Stress triggers a higher heart rate, a release of adrenaline, glucose and other neurological responses to help the body respond to a short-term threat. But when extended over long periods of time, they can harm the cardiovascular and immune systems, making individuals more vulnerable to a wide range of conditions including infections, diabetes, high blood pressure, heart attack, stroke, asthma and aggression.¹¹

Solidarity is the Best Medicine

Human survival has always depended on the cooperation that flows from strong social bonds. People who pull together enjoy better health and longer lives.¹⁹ Strong social ties may explain why Hispanic Americans have lower rates of chronic illness than White Americans, despite having lower incomes.²⁰

Human beings cannot be healthy in class-divided societies. From birth to death, capitalism ranks people on a vertical scale, with those higher up being treated as more worthy than those lower down. The unequal relationship between bosses and workers is maintained by divide-and-rule policies that generate more inequality based on sex, skin color, religion, nationality, etc. These divisions rupture social bonds and generate sickness throughout the population.

Universal access to medical care would reduce some of this inequality. However, even the best medical system cannot eliminate the health-damaging effects of poverty, social discrimination, unsafe work, bad housing, poor schools and being denied the right to make decisions that affect our lives. To end these miseries, we must eliminate class divisions and all the other inequalities that follow.

Human sickness is a product of sick social relationships, and human health is a product of healthy social relationships. Replacing class divisions with a cooperative, socialist society would reduce the burden of disease and raise the level of health more than any other measure.

1. Hadley, J. (2002). Sicker and poorer: The consequences of being uninsured. Kaiser Family Foundation. [↩]
2. Wilkinson, R.G. (1992). National mortality rates: the impact of inequality? Am J Public Health, Vol 82:8, p. 1082-1084. See also, PBS (2008). Unnatural Causes: Is Inequality Making Us Sick? [↩]
3. Rosenthal, S. (2006). POWER and powerlessness, Chapter 11, “Divide and Rule.” [↩]
4. Lynch, J.W. et. al. (1998). Income inequality and mortality in metropolitan areas of the United States. Am J Public Health Vol. 88, p. 1074-1080. [↩]
5. Quoted in Bowe, C. (2008). U.S. society helping to make people sicker. The Financial Times Limited, February 29. [↩]
6. McCord C, Freeman H.P. (1990). Excess mortality in Harlem. New England Journal of Medicine Vol. 322, p. 173-7. [↩]
7. DHSS (1980). Inequalities in health: Report of a research working group. Middlesex: U.K. Author. [↩] [↩]
8. Cited in Schmidt. J. (2000). Disciplined minds: A critical look at salaried professionals and the soul-battering system that shapes their lives. Rowman & Littlefield, p. 103-104. [↩]
9. A discussion of American studies linking class and heath can be found in Schmidt. J. (2000). Disciplined minds: A critical look at salaried professionals and the soul-battering system that shapes their lives. Rowman & Littlefield, p. 103-104. [↩]
10. Robert Wood Johnson Foundation. (2008). Overcoming Obstacles to Health. [↩]
11. Cohen, P. (2004). Forget lonely. Life is healthy at the top. New York Times, May 15. [↩] [↩]
12. Raphael, D. (2001), Inequality is bad for our hearts: Why low income and social exclusion are major causes of heart disease in Canada, North York Heart Health Network, Toronto, Canada. [↩]
13. Everson S, et. al. (1997). Hopelessness and 4-year progression of carotid atherosclerosis. Arteriosclerosis, Thrombosis, and Vascular Biology, Vol. 17:8, p.1490-5. [↩]
14. Raphael, D. (2002). Poor choice or no choice?: Even more evidence links low income with disease so why keep blaming lifestyle choices like fries? Toronto Star, October 11, p. F6. [↩]
15. Kivimääki, M., et. al. (2002). Work stress and risk of cardiovascular mortality: prospective cohort study of industrial employees. BMJ October 19. Vol. 325, p. 857. [↩]
16. Lupien S.J. et al. (2000). Child’s stress hormone levels correlate with mother’s socioeco­nomic status and depressive state. Biol Psychiatry Nov 15. Vol. 48, p. 976-80. [↩]
17. CBC. (2003). Bad bosses bring blood pressure to boil: Study. June 24. [↩]
18. Long, J.M, et. al. (1982). The effect of status on blood pressure during verbal communication. Journal of Behavioral Medicine Vol.5, p. 165-71 [↩]
19. Cacioppo, J.T. et al. (2002). Loneliness and health: Potential mechanisms. Psychosom Med May/June, Vol. 64, p. 407-17. Also, House, J.S. et. al. (1988). Social relationships and health. Science, Vol. 24, p. 540-545. [↩]
20. Cited in Cohen, P. (2004). Forget lonely. Life is healthy at the top. New York Times, May 15. [↩]

Susan Rosenthal is a practicing physician and the the author of POWER and Powerlessness (2006) and Class, Health and Health Care (2008). She is a founding member of International Health Workers for People Over Profit. She can be reached through her web site www.susanrosenthal.com or by email: susan@susanrosenthal.com. Read other articles by Susan, or visit Susan's website.

This article was posted on Tuesday, November 3rd, 2009 at 9:00am