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Off the Chart Inequality in the US

Monday, 24 June 2013 12:24 By Jessica Desvarieux, The Real News Network | Video Interview
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Salvatore Babones: According to UN report, US is the only nation where inequality is both high and rising.

TRANSCRIPT:

JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I'm Jessica Desvarieux in Baltimore.

A recent study on inequality by a UN agency, the International Labor Organization, found that U.S. inequality is not only the highest in the world in the developed world, but is also rising faster than almost any other developed country.

Our guest today, Salvatore Babones, wrote an article in Truthout on the ILO report titled--our guest today, Salvatore Babones, wrote an article in Truthout on the ILO report, titled "U.S. inequality now literally off the chart".

Salvador is a senior lecturer in sociology and social policy at the University of Sydney in Sydney, Australia, and an associate fellow at the Institute for Policy Studies in Washington, D.C.

SALVATORE BABONES, SENIOR LECTURER IN SOCIOLOGY AND SOCIAL POLICY, UNIV. OF SYDNEY: Thanks for having me on, Jessica.

DESVARIEUX: So, Salvatore, let's first start off with your article being that the U.S. inequality is off the charts. What do you mean by that?

BABONES: Well, I mean literally off the charts, that if you want to place the United States on the same graphic with other countries, the ILO in its official report had to put a little "…" and say the United States is up there, it's not actually on the same graph with all the other countries.

DESVARIEUX: So why is it that the U.S. has such an increase and rising inequality gap?

BABONES: Well, it's really something new. The United States was pretty similar to other developed countries up until the 1970s. And since the middle of the 1970s, inequality has simply risen dramatically in the United States to the point where it now outstrips any other developed country of the world.

DESVARIEUX: How much has the U.S. income inequality actually risen, especially since the financial crisis?

BABONES: Well, there are lots of statistics on it. I mean, the usual statistic we use is something called the GINI coefficient. The GINI coefficient runs from zero--perfect equality--to 100--one person owns all the money. Historically, the United States was down in the upper 30s, just like most other developed countries, which means something like, you know, 35 to 40 percent of the way towards total inequality. Now, that may not sound bad. Some countries are down to 20 percent inequality. Other countries are up at 60 percent. The U.S. seems to be in the high 30s. Now the United States is at 47.7 percent. It's one of the highest countries in the world. Since the global financial crisis, it's been rising every year, bit by bit by bit. In 2007, it was 46.3 percent; in 2008, 46.6 percent; 46.8 percent; 47.0 percent; 2011, 47.7 percent. That's the most recent year for which data [are available].

DESVARIEUX: And what are the major factors actually contributing to this inequality?

BABONES: Well, it's hard to say. Economists have all sorts of answers. They think it has to do with globalization or it has to do with changes in the structure of work in the country or with unemployment rates. But, frankly, I think that's probably not the real solution. The fact is that other countries have those same problems. They all face problems with globalization and with high unemployment, but they don't have anywhere near the levels of inequality that we do.

DESVARIEUX: And can we talk specifically about your article? [incompr.] a look at it here. You write that out of a total of 57 countries studied by the ILO, 31 developing and 26 developed, only one--the one being the United States--has a level of income inequality both high and rising. What are some factors that are actually unique to the United States that is causing this?

BABONES: That's absolutely correct. For developed countries, the United States has a very high level of inequality. Other developed countries also have rising inequality, but from a much lower base than the United States.

On the other hand, there are some poor countries that have higher levels of inequality--Mexico, Brazil, South Africa. But in those countries inequality is coming down from its high levels.

The United States is the only country in the world that seems to be making the transition from looking more like a rich country to looking more like a poor country.

DESVARIEUX: Can you explain the runaway inequality that we're seeing in the United States?

BABONES: Well, I think I can. My own view is that it mainly has to do with government policy. There have been enormous shifts in the way the workforce is organized in the United States. Government policy no longer favors unions, so unionization rates have gone down dramatically. Government policy now makes people pay a lot more for university educations, which has resulted in a big shift in people's ability to pay for schooling. Government policy has led to a reduction in what we call the welfare state. So there's really less government-provided medical care, less government-provided services. And when the government withdraws from the economy, that essentially leads the richest to take advantage of the poorest.

DESVARIEUX: Okay. We'll get into this more in our second segment, and we'll discuss some of the policy recommendations to actually decrease the inequality.

Thank you for joining us, Salvatore.

BABONES: Oh, thank you for having me on.

DESVARIEUX: And thank you for joining us on The Real News Network.

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

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