It IS the Economic Inequality, Stupid

We are weeks into the Occupation of America and, despite struggles with police in numerous cities the public discussion of economic injustice and inequality persists.  At the nation’s paper of record, The New York Times, the debate continues with David Brooks furiously trying to belittle and dismiss the message of Occupy Wall Street.  In his latest column he bemoans that we are focused on “the wrong inequality” and tells us:

That’s because the protesters and media people who cover them tend to live in or near the big cities, where the top 1 percent is so evident. That’s because the liberal arts majors like to express their disdain for the shallow business and finance majors who make all the money. That’s because it is easier to talk about the inequality of stock options than it is to talk about inequalities of family structure, child rearing patterns and educational attainment. That’s because many people are wedded to the notion that our problems are caused by an oppressive privileged class that perpetually keeps its boot stomped on the neck of the common man.

Brooks then resorts to his feeble “red” and “blue” Americas argument claiming that the important gap is really between those with a college degree and those without one.  While Thomas Frank has already effectively taken Brooks to the woodshed on this in What’s the Matter With Kansas, it is still worth noting that the function of this ideological maneuver is to take our eyes off the ball.  Brooks wants to direct our attention away from the existence of a very real economic elite and focus it on the much smaller differences between those of us tiered beneath them in the economic pecking order.

Interestingly, he does not dismiss the reality of the massive transfer of wealth to the top 1%; he tries to diminish the significance of that fact—and then change the subject by creating a different boogey man.

Clearly snooty “liberal arts majors” and “media people” are the real elites.  They have fancy college degrees and would rather blame the rich than look in the mirror and see that THEY are the real villains with their disdain for the family and lack of enthusiasm for rigorous educational reform.

But, as usual, Brooks has it backwards.  In his last column Paul Krugman effectively dismantles his faulty economics, but it is still worth exploring Brooks’s wrong-headed assertion that lack of education drives poverty rather than poverty undermining education.

In a recent Education Week piece, “If Only the Billionaire Reformers Cared about THIS Data,” Anthony Cody cites a recent study on overall social justice in the participating countries of the Organization for Economic Cooperation and Development (OECD) that notes:

Poverty and the growing gap between rich and poor [are major problems] in the OECD. Of the 31 countries examined, on average, 10.8 percent of the people are poor. This means they have to live with less than half the national median household income.

U.S.: 21.6 percent of children [are] affected by poverty.

[Of] particular concern is the phenomenon of child poverty: on average about 12.3 percent of children live below the poverty line . . . The differences within the OECD are alarming: While in Denmark only 3.7 percent of children are affected by poverty, the rate in the United States is at [an] alarming 21.6 percent (rank 28). Only Turkey, Chile and Mexico are worse than the largest economy in the world.

Many of the 31 participating OECD countries have significant deficits on the question of equitable educational opportunities. Again, it is the Northern European countries, Iceland, Finland, Sweden and Denmark, which are particularly successful in this respect. The U.S. of the major economies ranked 20.

Cody then underscores the significance of this data with regard to the United States: “So the United States, according to this report, ranks next to Greece, Turkey, Mexico and Chile in terms of the percentage of children in poverty. (And interestingly, if you want to connect the dots, and you break out the international test scores according to the poverty level of the students, you will find that American schools NOT afflicted by poverty rank among the top in the world).”  Thus more people are not being made poor by our educational system; they are failing to succeed in the educational system because of our dismal record of combating child poverty and other related issues.

That same study also reveals that the United States is in the bottom 5 in the overall poverty rate, poverty prevention, and income inequality.  A sad tale indeed and one that Mr. Brooks and the other apologists for our current social order are so desperately trying to cover up.  But the truth, to paraphrase an old political mantra, is this: it IS the economic inequality, stupid.

Indeed just last week, a Congressional Budget office report showed that “after-tax incomes for the top 1% shot up by 275% from 1979 to 2007” while the bottom 80% saw their share of income decline.  Bringing the point home closer to home, the California Budget Project (CBP) just released a new study, “A Generation of Widening Inequality,” that indicated the same phenomenon happening here in the Golden State. In sum, the CBP found that, “a disproportionate share of income gains in recent decades has accrued to the very top of the distribution, in spite of continued productivity gains.  As a result, the gap between the incomes of those at the high end of the distribution and those at the low end and middle has widened significantly.”

A few more lowlights from the report include the facts that:

• Between 1987 and 2009, 35.5% of the inflation-adjusted income of all Californians went to the top 1%.  That means that $77.9 billion (an amount just less than the size of California’s 2011-12 budget) went to fewer than 144,000 people.
• 71.3% of income gains during this period went to the wealthiest 10% of Californians while 2.5% went to the middle fifth of the income distribution.
• The wealthiest Californians made significant gains while low and middle income Californians lost ground.  Thus the top 1% of Californians increased their inflation-adjusted income by 50.2% between 1987-2009 to reach an average income of $1.2 million.  Even the worst recession since the Great Depression failed to erase this decades-long gain.
• In contrast, for the middle fifth of Californians, income dropped by 14.8% to an average of $35,000 in 2009, the lowest level since at least 1987.
• The top 1% of Californians received 18.4% of income in 2009, up from 13% in 1987.  Thus one out of five dollars went to one out of 100 Californians in 2009.
• In contrast, the bottom 80% received 38.7% of total income, down from 46.6% in 1987.  Thus 2 out of 5 dollars went to 80 out of 100 Californians.
• California has one of the widest income gaps in the United States—the seventh biggest gap in America—putting us between Alabama and Texas.  In 2010, 6.1 million (or over 16%) of Californians lived in poverty (including 2.2 million children—over 23% of the total).
• In contrast 33,900 millionaire taxpayers (or 0.2%) had combined incomes of $104 billion in 2009.  That’s 11 times the income needed to lift every single Californian out of poverty.

And the report notes that most of the superrich in California are executives, managers, or financial professionals.  Take that, liberal arts majors!  But not to worry, Thomas Friedman has some advice for the superrich that should save the day, so hold your breath:

Capitalism and free markets are the best engines for generating growth and relieving poverty — provided they are balanced with meaningful transparency, regulation and oversight. We lost that balance in the last decade. If we don’t get it back — and there is now a tidal wave of money resisting that — we will have another crisis. And, if that happens, the cry for justice could turn ugly. Free advice to the financial services industry: Stick to being bulls. Stop being pigs.

Well, that ought to do it.

In the meantime, the California Budget Project has some bad news for David Brooks (if he can shed a tear for the plight of a blue state school child).  While the bulls were being pigs, the schools got slaughtered.  In “A Decade of Disinvestment: California Education Spending Nears the Bottom” the CBP explains:

After a decade of disinvestment, the gap between resources available to California schools and the rest of the US has widened substantially. California’s schools spend fewer dollars per student and have substantially more students per school staff than schools in other states. Despite a minimum funding level guaranteed to California schools by Proposition 98, the gap between California’s spending on schools and that of the rest of the US is widening. The Department of Finance projects state budget shortfalls for the near future, which means the state will continue to lack resources needed for its public systems. Ensuring California’s students the opportunities that a quality education affords requires a level of state resources that allows for adequate investment in the state’s schools. Absent additional revenue, California schools will likely fall further behind.

Currently, we rank 46^th in per pupil spending, 47^th in spending as a percentage of personal income, and dead last in the number of adults per student.  As the CBP explains, “To reach the level of the rest of the US, California would have had to spend an additional $16.8 billion on education in 2010-11, an increase of 31.1 percent.”  But that would mean demanding the “pigs,” to borrow Freidman’s label, pay their fair share in taxes and stop pushing for more austerity measures. And we all know that would make them squeal all over hog heaven.

For both California Budget Project studies go to: www.cbp.org

Images courtesy UCS Graphics Service