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The Income Gap


We all believe that a growing economy is a good thing. Corporate successes make America strong, and international monetary policies have been designed to promote economic growth around the world.

But something is wrong. The income gap is growing faster in the United States than in any other developed nation. Between 1990 and 2000 in the U.S. worker pay and inflation remained approximately equal, while corporate profits rose 93% and CEO pay rose 571%. Meanwhile, the portion of federal revenue derived from corporate income tax has decreased from 33% in the 1950s to 11.9% in 2005, reaching a low of 7.4% in 2003. Hundreds of companies have avoided taxes by relocating to tax havens such as Bermuda and the Cayman Islands. Eighty-two of our largest corporations paid no tax in at least one of the first three years of the Bush administration.

Around the world, the income gap has increased between and within countries. Workers’ share of national income in developed countries is at its lowest level in 30 years. Our agricultural subsidies enrich a few people while making it impossible for farmers in the developing world to sell their crops in their own countries. According to the United Nations Report on the World Social Situation 2005, the OECD countries that have most vigorously implemented economic policies have experienced the greatest increases in inequality within their countries. The money doesn’t reach the people most in need. The New Economics Foundation reports that only 60 cents out of every $100.00 of world income goes to those in extreme poverty, much less than in the 1980s before the growth of structural adjustment policies. Globalized markets seem to reward those with the education, financial wherewithal, and business skills to make them work.

We’re letting domestic and multinational corporations, with their uncompromising profit motive and strong connection to the military, determine the future course of our country and the world. Terrorism has replaced communism as the major threat to our lifestyle. But corporate defense contractors — Lockheed Martin, Boeing, Raytheon, Northrop Grumman, and General Dynamics — take millions of dollars from the federal treasury every DAY to produce Cold-War-era weapons, with their profits guaranteed by the American public. We’re the leading seller of arms to the world. We intervene in more countries than ever before, even though studies show that intervention is tied to terrorism. Our elected representatives listen to businessmen and generals rather than to scientists, doctors, humanitarians, teachers, mothers. And we’ve been conditioned to believe that this is the way it must be.

But it doesn’t have to be this way. While macroeconomic business models have benefited the rich and the well educated, projects like the Millennium Villages in Africa go in the other direction, empowering poor communities by supporting agricultural improvements, clean water facilities, schools, and health care centers. Microcredit programs, as exemplified by Nobel Peace Prize winner Muhammed Yunus’ program of small loans to Bangladesh women, has allowed people to liberate themselves by working their way out of poverty. The independence and self-respect achieved by millions of small entrepreneurs is making a difference where IMF and multinational corporate policies have failed. Initiatives like these make the whole world safer, more productive, and more respectable. And they suggest that our brand of capitalism may not be the best way to help people.

PAUL BUCHHEIT is a Professor, Harold Washington College in Chicago. He can be reached at:


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