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News :: Globalization
25 Oct 2005

By Chuck Collins and Felice Yeskel

Fall is inequality season. Every autumn, as the leaves change color, we get
a vivid new picture of the trends that pull us apart as a country.
This year is no different. But after almost three decades of incrementally
widening disparities of wealth and income, it¹s worth noting that we¹ve
entered a new version of economic apartheid, American-style. Let¹s call it
Inequality 2.0.

The United States is now the third most unequal industrialized society after
Russia and Mexico. This is not a club we want to be part of. Russia is a
recovering kleptocracy, with a post-Soviet oligarchy enriched by looting.
And Mexico, despite joining the rich-nations club of the Organization for
Economic and Community Development, has some of the most glaring poverty in
the hemisphere.

In 2004, after three years of economic recovery, the U.S. Census reports
that poverty continues to grow, while the real median income for fulltime
workers has declined. Since 2001, when the economy hit bottom, the ranks of
our nation¹s poor have grown by 4 million, and the number of people without
health insurance has swelled by 4.6 million to over 45 million.

Income inequality is now near all-time highs, with over 50 percent of 2004
income going to the top fifth of households, and the biggest gains going to
the top 5 percent and 1 percent of households. The average CEO now takes
home a paycheck 431 times that of their average worker.

At the pinnacle of U.S. wealth, 2004 saw a dramatic increase in the number
of billionaires. According to Forbes Magazine, there are now 374 U.S.
billionaires. The growth in billionaires took a dramatic leap since the
early 1980s, when the average net worth of the individuals on the Forbes 400
list was $400 million. Today, the average net worth is $2.8 billion.
Wal-Mart¹s Walton family now has 771,287 times more than the median U.S.

Does inequality matter? One problem is that concentrations of wealth and
power pose a danger to our democratic system. The corruption of politics by
big money might explain why for the last five years the President and
Congress have been more interested in repealing the federal estate tax, paid
only by multi-millionaires, than on reinforcing levees along the Gulf Coast.

Now, to pay for hurricane reconstruction and the war in Iraq, Congress is
considering cuts in programs that help poor people, such as Medicaid and
Food Stamps. They have not yet considered fairer ways of reducing the
deficit by reversing special tax breaks for the rich, such as the recent
cuts in capital gains and dividend taxes.

Inequality is non-partisan. The pace of inequality has grown steadily over
three decades, under both Republican and Democratic administrations and
Congresses. The Gini index, the global measure of inequality, grew as
quickly under President Clinton as it has under President George W. Bush.
Widening disparities in the U.S. are the result of three decades of
bi-partisan public policies that have tilted the rules of the economy to the
benefit of major corporations and large asset owners at the expense of
people whose security comes from a paycheck.

Public policies in trade, taxes, wages and social spending can make a
difference in mitigating national and global trends toward prolonged
inequality. But our priorities are moving in the wrong direction.

For example, the failure to raise the minimum wage from its 1997 level of
$5.15 an hour guarantees continued income stagnation for the working poor
for years to come. The President and Congress¹s focus on tax cuts for the
wealthy and their disinterest in government spending to expand equal
opportunity sets the stage for Inequality Version 3.0.

We shouldn¹t tolerate this drift toward an economic apartheid society.


Chuck Collins and Felice Yeskel are co-authors of the new book, "Economic
Apartheid in America: A Primer on Economic Inequality and Insecurity" (The
New Press). Yeskel is co-director of Class Action (
Collins is Senior Fellow at United for a Fair Economy (

This work is in the public domain
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