Two
new studies show, once again, the magnitude of the inequality problem
plaguing the United States. The first, the US Census Bureau’s annual income and poverty report,
shows that, despite the economy’s supposed recovery from the Great
Recession, ordinary Americans’ incomes continue to stagnate. Median
household income, adjusted for inflation, remains below its level a
quarter-century ago.
It
used to be thought that America’s greatest strength was not its
military power, but an economic system that was the envy of the world.
But why would others seek to emulate an economic model by which a large
proportion – even a majority – of the population has seen their income
stagnate while incomes at the top have soared?
A second study, the United Nations Development Program’s Human Development Report 2014,
corroborates these findings. Every year, the UNDP publishes a ranking
of countries by their Human Development Index (HDI), which incorporates
other dimensions of wellbeing besides income, including health and
education.
America
ranks fifth according to HDI, below Norway, Australia, Switzerland, and
the Netherlands. But when its score is adjusted for inequality, it
drops 23 spots – among the largest such declines for any highly
developed country. Indeed, the US falls below Greece and Slovakia,
countries that people do not typically regard as role models or as
competitors with the US at the top of the league tables.
The
UNDP report emphasizes another aspect of societal performance:
vulnerability. It points out that while many countries succeeded in
moving people out of poverty, the lives of many are still precarious. A
small event – say, an illness in the family – can push them back into
destitution. Downward mobility is a real threat, while upward mobility
is limited.
In
the US, upward mobility is more myth than reality, whereas downward
mobility and vulnerability is a widely shared experience. This is partly
because of America’s health-care system, which still leaves poor
Americans in a precarious position, despite President Barack Obama’s
reforms. Those at the bottom are only a short step away from bankruptcy
with all that that entails. Illness, divorce, or the loss of a job often
is enough to push them over the brink.
The 2010 Patient Protection and Affordable Care Act (or “Obamacare”) was intended to ameliorate these threats – and there are strong indications that it is on its way to significantly reducing the number of uninsured Americans. But, partly owing to a Supreme Court decision and
the obduracy of Republican governors and legislators, who in two dozen
US states have refused to expand Medicaid (insurance for the poor) –
even though the federal government pays almost the entire tab – 41 million Americans remain uninsured. When economic inequality translates into political inequality – as it has in large parts of the US – governments pay little attention to the needs of those at the bottom.
Neither
GDP nor HDI reflects changes over time or differences across countries
in vulnerability. But in America and elsewhere, there has been a marked
decrease in security. Those with jobs worry whether they will be able to
keep them; those without jobs worry whether they will get one.
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