WORLD AFFAIRS

Another America

Islands of poverty floating in a sea of abundance represent a less talked about aspect of life in the United States, the haven of capital.

VIJAY PRASHAD

"Poverty is terrorism.
Poverty is a terminal disease.
Poverty paralyses.
Poverty is the ultimate censor.
Poverty, a hell, is war."

Selma Waldman, "A Poor Haiku", Real Change, the newspaper of the homeless in Seattle, United States.

"In America you are not required to offer food to the hungry, or shelter to the homeless, or to visit the lonely - in fact, one of the nicest things about living in America is that you really don't have to do anything for anybody."

- Anonymous poet, Real Change.

IN 1995, Pete Du Pont, heir to the vast Du Pont family fortune, wrote that "the minimum wage turns out to be one of our leading killers - a killer of economic growth and opportunity among the young, the poor, and the minority community. It's time to stop it before it kills again." This fulmination came just as the U.S. government raised the minimum wage for the first time in over two decades, a rise in pay that was marginal and has not gone near enough to overcome the inequities that tear the nation apart.

From President Bill Clinton (Democrat) to Texas Governor George W. Bush (Republican), there seems to be a consensus that things have never been better in the U.S., and that the brief recession (during the presidency of George Bush) is now over. For almost a third of the population who live under or near the poverty line, this provides little solace. The previously unemployed may now be at work, but few ask them about their conditions at 'work', about the number of part-time jobs they must hold to maintain a household, or else about their lack of medical insurance. "Economic segregation in this country is so rigid that we literally don't know one another anymore,'' columnist Molly Ivins complained. If we did, perhaps the hoopla about the return to prosperity would not be made so cavalierly.

For those who watch the U.S. from afar (or during brief, well-orchestrated holidays), it is hard to imagine the poverty within this haven of capital. Sated by Hollywood movies and by the smooth talk of U.S. politicians, the world imagines that each citizen must bear some title to the wealth of the nation. Within the U.S., however, there are few who have illusions about the nature of the economic miracle, of the Second Gilded Age whose Rockefellers and Carnegies are named Gates and Cosses.

From 1983 to 1998, the U.S. stock market grew a cumulative 1,336 per cent. In the 1990s itself, corporate profits rose by 108 per cent, whilst the Standard and Poor's (stock) Index rose by 224 per cent. Someone seems to be doing quite well, as indeed the pay of Chief Executive Officers (CEOs) rose during this period by 481 per cent. Furthermore, the richest 1 per cent of the U.S. now enjoys 40 per cent of the nation's household wealth (1997), more than that held by the entire bottom 95 per cent of the population.

If Du Pont worried about the lack of incentive to the working people, he did not have to worry about the ample incentives provided to the CEOs and the 1 per cent from which they hail. This 1 per cent works hard to lobby with the U.S. government, which passes laws to their tune and not to the democratic sirens that occasionally emanate from the 95 per cent. In 1996, Clinton ended social welfare and let those without work find their own way in the thicket of the market. The Federal Reserve Bank Chairman Alan Greenspan held interest rates down to control inflation (as he argued), but also to keep the dollar strong (a net detriment to the working poor). In addition, the government's tax codes and licence to speculation allowed the 1 per cent to reap more benefits from their wealth, whereas the 95 per cent found themselves at a loss. In the midst of this, the U.S. population seems incensed with the buying up of Washington D.C. by what are called 'special interests'. A lazy population has not squandered democracy (just as poverty is not created by personal laziness). Democracy was assassinated by the plutocracy's assignation with wealth.

The second gilded age

In the three decades before 1900, U.S. 'robber barons' created the Gilded Age in which a few families (Rockefellers, Carnegies, Morgans and Vanderbilts) made massive fortunes and enjoyed an age of 'conspicuous consumption' (as Thorstein Veblen put it). Most of this wealth was built by the rapacious use of resources, and by the withdrawal of the state from the affairs of the wealthy (with the termination of the inheritance tax in 1870, the cession of the income tax in 1872 and the defeat of the Sherman Anti-Trust Act of 1890). If Edith Wharton worried about the 'monstrous vulgarity' of the rich, the 1892 Populist Party complained that "the fruits of the toil of millions are boldly stolen to build up colossal fortunes for a few, unprecedented in the history of mankind, and the possessor of these, in turn, despise the Republic and endanger liberty." The close relationship between money and government was tempered by the rise of organised labour and the socialists, and by the creation of a civic consciousness by an activist media (led by Ida Tarbells, Upton Sinclair, and Lincoln Steffens).

Ronald Reagan inaugurated the Second Gilded Age with his 1981 tax cut, which prompted a rise in unemployment and a polarisation of wealth (when challenged on the figures in 1982, Reagan explained that "the statisticians in Washington have funny ways of counting"). Reagan conducted what Trinity College Professor of Women's Studies Lisa Armstrong calls, "the opening salvo in the U.S. state's structural adjustment policy against itself."

If 35 per cent of U.S. workers in 1954 formed unions, by the end of Reagan's tenure only 14 per cent did. As Reaganism pulled the rug from under the U.S. worker, the strategy of business unionism followed by U.S. unions meant that they offered immense concessions to corporations in the 1980s rather than act in antagonism to them. From Reagan to the present, the bottom 60 per cent of the U.S. population saw their income drop, while only the top 1 per cent (the same 1 per cent), saw their income explode over 80 per cent. In 1965, the wage gap ratio between the highest and the lowest paid workers was 44 to 1, but by this year it stands at over 200 to 1. In 1999, Microsoft CEO Bill Gates, Berkshire Hathaway CEO Warren Buffett, and ex-Microsoft executive Paul Allen enjoy a combined wealth of $156 billion, an amount more than the GNP of the poorest 43 nations. The wealth of the world's 475 billionaires ($1.7 trillion) is well above the gross wealth of the poorest half of humanity. In the Second Gilded Age, wealth trickles upwards as the rest of humanity takes its chances at the lottery, the casino, or else the stock-exchange.

PORTER GIFFORD/ GAMMA
Begging on the sidewalks of Manhattan.

Wall Street (and its clones across the globe) advertise their power to democratise ownership without revolution and forced redistribution. In this climate, George Soros, Ross Perot and Donald Trump sell themselves as men of the people, simple businessmen who are not so very different from those small merchants who toil under the yoke of interventionist states. However, a close analysis of Wall Street reveals that most stocks (84 per cent) and bonds (90 per cent) are held by not more than 10 per cent of the U.S. population (about 10 million households). Assets of the richest 10 per cent rose by 22 per cent (in the early 1990s) - and it is these people who partly benefited from the meteoric rise in stock prices. The poor gained in one statistic, debt, which rose for the bottom 90 per cent by over 11 per cent while it fell for the richest 1 per cent by 19 per cent. This debt went toward the maintenance of some modicum of the American Dream among households long mortgaged to the will of the banks.

A state of business

The U.S. concocted a welfare state in the 1930s when turbulence in the world of finance left the bulk of the population without waged work and with depleted bank accounts. As a safety net, the U.S. government provided welfare legislation that took care of unemployed single women with children (Aid to Families with Dependent Children) and unemployed hungry people (Food Stamps). Welfare expenditure did not exceed 5 per cent of the Federal Budget, and even this amount was grossly exaggerated by escalating medical costs since the 1980s (for the Medicare programme that provides subsidised care). According to the U.S. Congress, Federal assistance in the early 1990s was lower than that provided in 1970. Yet, in 1995, the U.S. government withdrew the safety net with the argument that welfare denudes the culture of work. The "workfare" programme of the U.S. government, however, cannot deliver quality jobs, a colossal failure best represented by the increase in petty crime (and in the prison population). "The real issue," wrote Peter Edelman who resigned from the Clinton administration in 1996, "isn't welfare. It's poverty." Should the state bear any responsibility for its citizens or should it simply act as the caretaker of business interests?

In his new book, The Global Gamble (London: Verso, 1999), Peter Gowan shows how the Dollar-Wall Street regime emerged in the 1970s to maintain the power of U.S. wealth as well as to engineer the world economy to the advantage of mainly U.S.-based transnational corporations. The U.S. worker was not to be spared the harshness of structural adjustment. In the 1980s, the top tax rate was 68 per cent, but revised tax law decreased this to 28 per cent in 1988. While corporations in the early 1950s paid 33 cents of every dollar toward tax, today they pay less than 10 cents. Monies that might have been taxed for socially useful work were used in a speculation binge that, in real estate for example, raised rents to render homes unaffordable to much of the population. The speculation fever increased activity in the stock markets and allowed the 1 per cent to gradually claim the saved income of the many into their coffers.

On October 1, The Wall Street Journal reported a modest gain in incomes in the U.S., but it was forced to acknowledge the words of Rose Woolery, a working mother: "This country is still for those who have money. For the people who don't have it, you're not going to get it."

Those who 'have it', 'get it' from U.S. State's corporate welfare programme: $85 billion annually to private business, $200 billion to collapsed banks, over $30 billion to agriculture, and $440 billion on tax breaks to the wealthy. Such funds are not forthcoming to alleviate poverty. Furthermore, the U.S. economy enjoys an inflow of capital (a $2 trillion debt, $1.3 trillion since 1992) from its creditors who are pledged to uphold the dollar (in which they preserve their own wealth). In May 1999, Alan Greenspan noted that "the arithmetic of foreign debt accumulation and compounding interest costs does indicate somewhere in the future that, unless reversed, our growing international imbalances are apt to create significant problems for our economy."

From a distance, the paper tiger of the U.S. economy appears ferocious. The U.S., however, is less powerful as a national economy and far more powerful as the chosen vehicle for the maintenance of the economic power of the global wealthy. The structural adjustment of the world, including the U.S., occurs to ensure the hegemony of the Dollar-Wall Street regime. The international image of America, however, is far grander than this mundane view. Fraught with misery, many hope to find some kind of utopia within the U.S. Nevertheless, Father Gene Boyle, a priest who works along with the strawberry workers in California, warns us: "We live in a time when people are working too hard and are still in poverty. And communities and neighbourhoods are crumbling because of it. We have to bring this into the daylight." If John Locke in the late 17th century wrote: "In the beginning, all the world was America", there are many who hope that "in the end, all shall be America." The question we might ask is which America?

Vijay Prashad is an Assistant Professor of International Studies at Trinity College, Hartford, Connecticut, U.S.