The recent Center On Budget Priorities report on wealth and poverty is the latest eruption in a long firefight regarding basic values. The report showed that over the last 20 years, the average income of the bottom fifth of the population fell 6 percent while top fifth income grew by 30 percent. In the last ten years, the bottom fifth did make slight gains.
Conservative think tanks like the Cato and Hudson Institutes immediately charged that the statistics are misleading. "Underground" income isn't counted, and Americans don't worry about distribution as long as most incomes grow. Liberals retorted that even in recent years those on the bottom and the middle have seen virtually no gains. Rates of economic growth have been slower in the eighties and nineties than during the more ``liberal'' fifties and sixties.
Living on an island where million dollar yachts and food pantries quietly coexist, I am even more bothered by vast income disparities than when I started writing for The Progressive Magazine a quarter century ago. Nonetheless, the long conservative ascendancy -- coupled with the rise of an environmental movement -- do suggest some reasons why the dialogue may need to be reframed.
Economist Robert Kuttner has suggested in a recent issue of The American Prospect that the relationship between inequality and economic growth is more complex than either left or right acknowledge. Scandinavian societies, where incomes were distributed more equally, grew faster than we did through most of the post World War II era. During the same time frame, however, Brazil and South Korea, despite extensive political and labor repression, also became major economic powers. And although the United States in the '80s and '90s did not enjoy the rapid gains of the post-war generation, it faced no prolonged downturn. Recent growth rates approach those of the golden years.
I remain worried that a capitalism without safety nets and mortgaged to luxury consumption and a wild stock market is vulnerable to a quake. But these fears may reflect a background in left-wing journalism. Perhaps our modern computer enhanced capitalism will prove those concerns unfounded.
Will our modern capitalism, while remaining obscenely inegalitarian, begin to deliver on its promise to the poor? At the very least, Alan Greenspan and the financial markets must not prematurely snuff out the boom simply because worker wages at last begin to keep pace with or slightly exceed productivity increases.
I would argue, however, that even if the fruits of growth do trickle down, the poor are still likely to suffer unacceptable deprivations. Vast disparities in wealth and "life styles" are more than an aesthetic challenge. They alter the terrain on which the poor live their lives.
Perhaps no concept in the economics lexicon is more slippery than the "poverty line.'' This line is drawn in shifting sands rather than etched in stone. For many years the Federal Government has based its line on a minimum food budget. It has multiplied this figure by three on the assumption that a family spends about a third of its income on food.
In the last two decades, however, housing and transportation costs have grown faster than food costs. A recent report from the Maine Center For Economic Policy shows that when these costs are properly calculated, a livable budget for Maine citizens requires about twice what the traditional poverty line would imply. (Information about this study is available on the web at www.mecep.org. The study is invaluable in showing how to calculate local poverty lines and in the information it provides regarding living wage campaigns already underway in many states.)
Transportation and housing are examples of the ways upper income consumption has created needs for poorer citizens while imposing costs on all. The postwar urban exodus of the wealthy and upper income professionals, subsidized by Federal highway funds and mortgage deductibility, has led to a chaotic and inefficient pattern of suburban sprawl. Americans now spend far more hours in cars than a generation ago. When the poor are lucky enough to have cars, they often spend even more time commuting to suburban jobs.
Economic growth in very inegalitarian societies, even when it does trickle down, still leaves important gaps. As the absolute and relative differences grow, new needs are created for poor and working class citizens. Just as the car had become a necessity by the '60s, computers and internet access are becoming necessities. Such needs are especially pressing for children in poorly funded schools, which already have too few resources.
Someday, relative poverty may no longer kill or produce recession. Nonetheless, generations of the poor will be excluded from important educational, business, and recreational opportunities. Growth alone will never end the poverty characterized by vast disparities because consumption by the wealthy is continually raising the bar.
We are left with a strictly political choice as to where we draw the line and whether we will curb the inequalities resulting from concentrations of corporate power. In an era of growing environmental stress, greater equity in the distribution of income and wealth (through fairer taxes, adequate wages standards, and broader labor rights) is more than a strategy to achieve social justice. It also reduces the forces that impose new consumption burdens on all. Along similar lines, zoning for affordable housing, public transit, universal health care, and an emphasis on energy efficiency could also improve the lot of the poorest citizens at the same time as they reduce social and environmental costs.
John Buell lives in Southwest Harbor, Maine and writes on labor and environmental issues. He invites comments via e mail at: jbuell@acadia.net