Income Inequality
By Standard and Poor’s says that American income inequality is impeding the nation’s economic recovery.
Rising levels of income inequality in the U.S. is a drag on economic growth, and was a factor that contributed to S&P lowering its growth rating over the next decade from 2.5% to 2.8%, the report said. Income inequality leads to extreme economic swings, an uncompetitive workforce, and discourages investment and hiring, per S&P.
The U.S. Gini coefficient, a widely-used measure of income inequality, rose by 20% from 1979 to 2010. The non-partisan Congressional Budget Office showed that after-tax average income ballooned 15.1% fro the top 1% of earners, but grew by less than 1% for the bottom 90% of earners.
The S&P said in its report that government policies on taxation and government wealth transfers, including Social Security and Medicare, have not significantly reduced income inequality. Many government programs aren’t limited to assisting lower-incoming households and extend to wealthier groups more than they did at their inception, according to the report. The bottom 20% of households received only 36% of transfer payments in 2010, but received 54% in 1979, according to S&P.
The S&P recommended greater education levels as a key means to improve productivity, saying that if the American workforce completed just one more year of school over the next five years, productivity gains could add over $500 billion, or 2.4% to the level of GDP relative to the baseline.
But if you a member of the 1%, who cares. What incentive do you have about to do something positive the state of the nation or widespread unemployment? Isn’t income inequality good news for you? The more desperate the poor are, the more you can recreate your late 19th century fantasy of exploitation in the early 21st century. Sure, having American workers stay in school another year is fine, especially if they fork over their hard earned cash to for-profit schools that do nothing to educate them, but ultimately, it doesn’t matter much to the extreme rich.