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Income inequality is surging, and there are few countries where it is rising faster than the United States. The distance between rich and poor is greater in America than nearly all other developed countries, making the US a leader in a trend that economists warn has dire consequences. GlobalPost sets out on a reporting journey to get at the ‘ground truth’ of inequality through the lenses of education, race, immigration, health care, government, labor and natural resources. The hope is to hold a mirror up to the US to see how it compares to countries around the world.

From East Coast to Far East, pulling back the curtain on income inequality

GlobalPost correspondents gauge the growing distance between rich and poor by comparing Fairfield County, Connecticut with Bangkok, Thailand.

 

Clara Bing, a Bridgeport native who commutes to affluent Greenwich each day to work at a dry cleaning business, said she is not surprised people feel little responsibility for their poorer neighbors.

“As long as we go home at night, I guess, it’s okay. It’s like we’re invisible,” she said.

Vast economic disparity is often associated with developing nations sacrificing social goals in order to emphasize growth and move up in global rankings. In Thailand, the boom years of the 1980s and 1990s saw Thailand’s per capita income — the average annual pay a person takes home — soar from $680 to nearly $5,000, making it an “upper middle income” country in the parlance of global development experts.

Thailand has 47,000 millionaires today, many of them holding the reigns of political power. The concentration of wealth in the hands of a few has touched off a backlash. The so-called “Red Shirt” movement has clashed violently with government forces, contending that the poor are deliberately exploited by a corrupt elite. Its rallies have calmed of late, but outrage over song matratan — i.e. “double standards” — is now a feature of the Thai political debate.

In America, such disparities evoke memories of the so-called “Gilded Age,” the period between the 1880s and 1920s of westward expansion, massive immigration and tycoons like Andrew Carnegie, J.P. Morgan and John D. Rockefeller. The great divide of that age, with its strikebreaking massacres, slum epidemics and child labor, launched the career of Republican Teddy Roosevelt’s progressive reform movement and, after the Great Depression a generation later, his Democratic cousin Franklin Delano’s New Deal.

Income disparity dropped markedly during the years that followed World War II, only to begin widening again about 1968. Until the 2008 financial crisis, the stagnation of middle and lower class incomes in the US were masked by asset bubbles and cheap credit. Only recently, as the housing collapse and banking crisis pulled back the curtains, has income disparity become a topic for polite conversation in US political campaigns.

"We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by,” said President Obama in his 2012 State of the Union address. “Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules."

It’s not always so polite, of course. Two very different political movements, the Tea Party and Occupy Wall Street, both sprung up, in part, out of anger over the stagnating prospects of the US middle class.

The Tea Party stresses “inequality of opportunity” and believes pro-growth policies and an unbridled free markets will lift all boats. The left sees that as discredited and wants a tax code that reverses the inequality gap.

The focus on growth has come under new pressure from studies showing that America’s vaunted ability to create pathways to success may be flagging. Multiple studies, most recently by the Pew Center for the States, show that those born poor or in the lower middle class in America are far less likely than popularly imagined to “make it.”

“Only 4 percent of those raised in the bottom quintile make it all the way to the top as adults, confirming that the ‘rags-to-riches’ story is more often found in Hollywood than in reality,” the report said.

The study found that richer people have a greater chance of moving up in American society, but that the vast majority will remain in the same income category.

With studies challenging such a central component of the American Dream as social mobility, experts say, it should not be surprising that people are angry.

“Workers’ share of the pie is falling with inequality reaching levels similar to 100 years ago,” said Harvard economist Kenneth Rogoff, co-author of what many believe to be the definitive book on the 2008 crisis. “The status quo has to be vulnerable.”

Michael Moran is a London-based GlobalPost columnist and author of “The Reckoning: Debt, Democracy, and the Future of American Power” (Palgrave Macmillan).
 

http://www.globalpost.com/dispatch/news/regions/americas/united-states/130116/income-inequality-pulling-back-the-curtain