Posted by: CS | March 8, 2012

Life in America on Two Dollars a Day. Or Why American Poverty Will Soon Match That of the Third World

A catchier title might have been Life on Two Dollars a Day: The Third Worldization of America. But one must try always to be accurate, and the Third World was defined by Mao Tse Tung by distinction from the first two worlds: America and its tributaries, the so-called Free World (a term now hardly ever used — I wonder why), and the Soviet Empire. So although America may come to look like the Third World, it will never be part of the Third World — at least, not until another country becomes Number 1.

However, that the U.S. is beginning to look like the Third World is confirmed by the latest poverty statistics that show the number of American families with an income of less than two dollars per person per day more than doubled between 1996 and 2011, from 636,000 to 1.46 million. Note, those are households, not people, and the number of children, alone, who were in extremely poor households rose from 1.4 million to 2.8 million between 1996 and 2011.

These income figures exclude benefits in kind such as food stamps and charitable assistance. Still, a cash income of barely sixty dollars a month plus food and a few hand-me-down garments donated via a community church is hardly enough to enjoy the American way of life, as that term has come to be understood.

How is it that a country with a per capita GDP of $48,100 has a such a large and growing number of extremely poor citizens?

The answer may be complex, but a critical factor is globalization, a momentous transformation of the World’s economy set in motion by the 1994 GATT agreement, which opened the West to competition with the teaming masses of Asia where hundreds of millions of workers are sweated for pennies an hour.

The result, a tsunami of cheap stuff from the Rest to the West: from shoes, and ships, and sealing-wax to cabbages and kings (bronze sculptures, thereof), which wiped out a million Western manufacturing companies and tens of millions of Western manufacturing jobs.

As we’ve spelled out elsewhere, the unemployment problem will be solved, if not sooner in the way we propose, then later through natural processes of impoverishment and falling expectations.

What this means is that income differentials in the West between the 1 percent and the 99 will be about what we see today in Calcutta or Shanghai, not the relatively egalitarian distribution that all of us who grew up in the West during the early post war period took to be a natural, necessary and permanent economic arrangement.

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