'Democracy,' American Style

By Paul Buchheit, AlterNet. Posted January 10, 2008.

We keep hearing about the relentless march away from democracy in Russia and Venezuela. It frightens us. The feeling is that democracy is essential for the betterment of the world, and that we Americans are living in a society that serves as the ultimate democratic model, where any citizen can gain the education and skills to rise to a position of wealth and leadership.

The income gap in the United States is greater than anywhere else in the developed world. Conservative analysts attempt to justify the disparities as a necessary step to economic growth, arguing that the rich are being rewarded for innovation and risk-taking, while the poor experience smaller but meaningful gains. Everyone benefits in the long run.

But according to numerous recent studies, income and net worth have actually been DROPPING for all but the top 10 percent of American households. Because of escalating home mortgage expenses, healthcare, and childcare costs, the average two-income family today has less disposable income than one-income families had 30 years ago. The expected "trickle-down" effect has not occurred. According to the U.S. Census Bureau, the Gini coefficient (a measure of inequality) has grown steadily over 35 years, from .394 in 1970 to .469 in 2005. Low-wage earners find it increasingly difficult to escape the burdens of poverty. The Economic Policy Institute found "significant income correlations between parents and their children," to the degree that "it would take a poor family of four with two children approximately nine to 10 generations -- over 200 years -- to achieve the income of the typical middle-income four-person family."

Some oil company and military defense executives made almost $100 million in 2006. A number of hedge fund managers made over a BILLION dollars. A laborer who worked for fifty years, making $50,000 a year, would realize total LIFETIME earnings approximately equal to one day's work for a hedge fund manager. Is this democracy, where a few hours work for one individual is equivalent to a lifetime of labor for another? Where an elite group of corporate financial wizards find creative ways to direct billions of dollars into their own pockets while millions of wage earners do the nation's work?

The suggestion of impropriety seems to offend many prosperous Americans, for we want to believe that we live in a fair society and that our wealth has been deservedly earned as it will be for any American who is willing to work hard. But the realities block out the illusion.

Regressive taxes are being used to pay America's bills. When social security taxes, sales taxes, transportation fees and utility costs are included, the typical wage earner pays about a 40 percent overall tax, about the same percentage as an American with a million-dollar income. They even pay an extra dollar or so for every piece of clothing imported from developing countries such as Bangladesh and India, because of archaic tariff laws. The rich pay the extra dollar too, if they're willing to shop at local discount chains.

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Paul Buchheit is a professor with the Chicago City Colleges, co-founder of Global Initiative Chicago (GIChicago.org) and the founder of fightingpoverty.org. He is the editor and main contributor to the forthcoming book American Wars: Illusions and Realities (Clarity Press).