Since there has been a call for statistics:
"Why should we be concerned about increased income inequality?
"It is often argued that people on low incomes are better off even if inequality is increasing, because increased inequality is associated with higher economic growth which benefits everyone in real terms—the 'rising tide lifts all boats' argument. Burtless (2001) has shown that inequality has increased most rapidly in countries with the highest average levels of economic growth. There does therefore seem to be an association between increased inequality and increasing overall wealth of a country. In terms of how the wealth is shared, however, Burtless argues that the poor in European countries have done better over the last decade, despite having lower rates of growth than the UK and the USA, because the benefits have been more equally distributed.
"Research from the Luxembourg Income Study supports Burtless' argument. While acknowledging the methodological difficulties of making international comparisons, this international study of well-being examines real income differences between income groups in each country, with a particular focus on children. It does this by adjusting income for purchasing power—what someone can buy for a given amount of money in their own country. Importantly, it allows us to explore the question 'Is someone on a particular income (measured as a point in the income distribution) in Australia better or worse off in absolute terms than someone on an equivalent income in other countries?'
"The answer depends on whether you are rich or poor. Children of the rich in the USA (belonging to a family at the 90th percentile of the income distribution) are better off in terms of purchasing power than the children of the rich in any other country. Australia comes in at about the middle. For the children of the poor (a child in a family at the 10th percentile of the income distribution) the story is the opposite. Poor children in the USA are worse off in real terms than poor children in all of the other 12 OECD countries in the study, except for the UK. Australia comes 11th out of 13: only in the UK and the USA are the poor worse off than in Australia. These findings mirror those of the United Nations Development Programme (UNDP) on poverty rates in developed countries where Australia comes 14th out of 17 countries, followed only by the UK, Ireland and the USA (UNDP 2001)."
The source is Australian (http://www.onlineopinion.com.au/view.asp?article=1868) and the author is primarily concerned with growing income inequality in his own country. Still, it is pretty shocking to read that out of 13 OECD countries (advanced industrial nations) included in the study, poor children fare the worst in the richest country-- the USA—while, no duh, the children of the rich fare best.
What does this mean to the kind of society in which we live? A suggestive set of findings can be found in the ethnographic research on the basis of which anthropologist Walter Goldschmidt developed the "Goldschmidt Hypothesis," which is one of the most influential ideas in agricultural economics.
Goldsmith studied two California farming communities. One was located in an area still dominated by family farms, the downtown was thriving, local churches and other associations were flourishing, children were growing up in close approximation to Norman Rockwell's America. The other was located in an area dominated by industrial agribusiness. The downtown was dead, local churches and other associations going out of business, schools were deteriorating and growing numbers of children were growing up in poverty.
Make no mistake about it, the second town was more "productive." Agribusiness generated a lot more money and given the depressed cost of agricultural labor, productivity (profit/labor cost) was higher. But most of that money went elsewhere and for most of that town's residents life was pretty shitty.
This is precisely what Lou Dobbs was talking about when he said, "Profit is not prosperity."
John McCreery The Word Works, Ltd., Yokohama, JAPAN
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