Let Them Eat Cake – Will the Widening Gap Between the Rich and Poor Lead to Revolution?

In the  Financial Timess, Pamela Gordon, whose income lands her smack in the middle class, was asked if she felt middle class.  “I think middle class is someone who doesn’t have to wait until payday to pay their bills.  If I miss one paycheck I’m in trouble.”  Well fewer and fewer Americans are meeting that definition. 

Income Gap Between the Rich and Poor Widest Ever

Wages have been stagnant since the 1970’s and declined since the turnoff the century.  Both the relative quantity and quality of US median-income jobs has deteriorated.  Coupled with the effects of the Great Recession, this decline has undermined the American dream.  The housing crisis has left millions owing more than their homes are worth, while the distance between top earners and the median has grown, and the number of well-paying factory jobs has shrunk.

Watch This Video

In the postwar years there was a belief in developed economies that each generation could expect to have materially better living standards than their parents.  But wages have declined in countries like Germany and Japan.  Some of the pressure on the middle-income households was masked by the credit boom, which allowed families to spend more than they earned.  According to Robert Reich, former U.S. Labor Secretary, the idea that your children will do better than you now seems an illusion for many Americans.  So where did the growth in per capita national income go?  The money flowed almost exclusively to the very richest. The Income Gap has been widening for some time;  the earnings of US individuals with pre-tax income in the top 1 per cent accounted for 8 percent of growth in 1974, but rocketed to 18% by 2008.

Demand for high-skilled jobs has outweighed the growth of graduates for more than a generation.  At the bottom of the earnings distribution, technology is still irrelevant, being of little use for tasks such as cleaning or caring for the elderly.  But it has severely diminished the demand for routine but skilled task – the former backbone of employment for the middle class – from factory workers to fork-lift drivers.  In our emerging world the fork-lift truck driver has been replaced by an automated distribution center.

Although the US has long had one of the highest income gaps, this is not just an American phenomenon.  The Organization for Economic Cooperation and Development found increasing income inequality between the mid 1980s and late 2000s in 17 out of 22 “advanced” economies.  Countries such as Denmark, Germany and Sweden, which have traditionally had low inequality, are no longer spared from the rising inequality trend.   See Rising Income Gap in China

As discussed in an earlier blog, even the well-educated are finding a chilly reception in the Great Recession.  It was income inequality, the poverty and unemployment of educated youth that led to the uprisings in Yemen, Syria and Egypt.  It is the point where education and hard work does not offer the promised reward that can be the tipping point for uprising. 

Sustainable Workforces – the Necessary Evolution

The U.S. way of life is under attack.  China is poised to ascend to the global throne.  What hope is there for us?  There is a way. 

Co-authors Phelps, who won a Nobel Prize for his work on the “natural” rate of unemployment, and Tilman in  How a New Jobless Era Will Transform America, argue that dynamism in the U.S. has actually been in decline for a decade; with the housing bubble fueling easy (but unsustainable) growth for much of that time, we just didn’t notice.  They finger several culprits: a patent system that’s become stifling; an increasingly myopic focus among public companies on quarterly results, rather than long-term value creation; and, not least, a financial industry that for a generation has focused its talent and resources not on funding business innovation, but on proprietary trading, regulatory arbitrage, and arcane financial engineering.  The way out is a million points of light – innovating and redefining success.

The authors warn that lengthened unemployment will erode people’s skills so that they are no longer even qualifying for their old jobs.  What they don’t fully take into account is the resilience of the human spirit.  Recharge your battery by giving back, volunteering.  The despair you may feel will be lifted.  And then, if we form a culture and community that supports the belief in following your passion, the downtrodden unemployed will  use their “sabbatical” to redefine who they want to be and what they want to be doing.  The old adage that you help yourself by helping others can spring into life by an energized cadre of the unemployed pursuing their dreams and learning to live a life that while lean on material possessions, is rich on meaning and fulfillment.  There are stories, even in these difficult times, of people following their passion and having it lead to economic security.  I am one of them.

US Census 2010 – And The Children Shall Lead The Way

PART II of a two-part series.

Some 40 states show population losses of white children since 2000 due to declining birth rates. Minorities represented all the increases in the under-18 population in Texas and Florida, and most of the gains in the child population in Nevada and Arizona.

Growth has come from minorities, particularly Hispanics, as more Latino women enter their childbearing years. Blacks, Asians and Hispanics accounted for about 79 percent of the national population growth between 2000 and 2009, according to U.S. census data.

The result has been a changed American landscape, with whites now a minority of the youth population in 10 states, including Arizona, where tensions over immigration have flared, said William H. Frey, a demographer at the Brookings Institution.

“This is a huge demographic transformation,” Mr. Frey said. “A cultural generation gap is emerging.”

Latinos fought to be counted fairly in Census 2010 and youth were at the core of that battle.  Efforts to reach out to them, because they are often the cultural navigators for their parents, paid off in with formerly hesitant parents filling out the census forms with their teenagers.

http://vimeo.com/10645174

And what Latino youth in America have in common with youth in Syria and Yemen is social networking.  The power of Facebook and Twitter is not lost on them.  The ethnic gap in cell phone use is less pronounced. Some 72% of Hispanics ages 16 to 17 use a cell phone, compared with 82% of non-Hispanics. The “Be Counted, Represent” campaign offered music downloads and a chance at concert tickets to cell phone users who shared their e-mail addresses and phone numbers with organizers and forwarded information about the census to their friends.

Census campaign targets tech-savvy Hispanic youth

The growing divide between a diverse young population and an aging white population raises some potentially tricky policy questions. Will older whites be willing to allocate federal and state money to educate a younger generation that looks less like their own children than ever before? How will a diverse young generation handle growing needs for aging whites? Yes, I am talking bedpans in nursing homes.  Long-term care is increasingly confronted with a  cultural divide between those in residence and those who are being paid to take care of them.

And the political debates have been noisiest in the states with the largest gaps.

But whats to become of this great nation if we turn our backs on the next generation of Latino youth.  If we continue to negatively stereotype the intellect of our African American and Latino youth, impairing their ability to compete fairly in the future economy, there will be no engine for innovation and productivity.  Our nation will be weakened in our battle to maintain superiority over emerging nations such as India and China.  We are in fact educating Indian and Chinese intellectual capital when these international students return with their PhDs to their homeland.  If we don’t fill the educational gap by committing to educating our youth of color we have signed our own fate.

Just sayin.

DAVOS 2011 – THE NEW NORMAL

The New Normal

Davos 2011, the annual gathering of the World Economic Forum (WEF), began this week in Davos, Switzerland, a renowned winter ski resort for the wealthy and connected. The agenda at Davos reveals the global agenda of the World.  The Co-Chairs of the World Economic Forum made compelling statements that the world is at a turning point.  “The new reality is an acceleration of globalization,” said Jacob Wallenberg, Chairman of Investor, a Swedish investment firm. To keep pace with emerging challenges, “we need to see more collaboration and dialogue between different stakeholders, which is what Davos is all about. As the economic center of gravity has shifted East and South – to nations such as India, China, Brazil, Chile, Nigeria and South Africa – a dual-track of global economic growth resulting in high rates of growth in emerging nations, and relatively low or stagnant rates in historically rich Western nations – such as the US, Britain, Germany and France – was recognized as the “New Normal.”

DAVOS 2011:  The World Economic Forum Begins

http://globaleconomy.foreignpolicyblogs.com/tag/new-normal/

What Wallenberg said about the need for collaboration has already been experienced in the U.S.  The books “Firms of Endearment” and “The Necessary Revolution” highlighted companies that collaborate to achieve their sustainability goals AND win in the marketplace.  Companies that embraced sustainable management practices in all areas of their business outperformed the S&P 500 by an 8 to 1 ratio. 

Doing right can lead to doing well, and nation states could learn a lesson.  One of the key differentiators of sustainable companies was the commitment to focus on long-range infrastructure building and not just next quarter’s investor report.  The value was built in the long-term.  As I pointed out in my blog, The Most Powerful MAN in the World, China has a heavy advantage against the U.S. and Europe in their ability to take swift government action and commit, without dealing with opposition, to long-term infrastructure development and the education of their people. 

SEE VIDEO – WE NEED A NEW NORMAL, A BETTER CAPITALISM

So, the U.S. needs a more sustainable form of government.  Hundreds of countries have lived successfully for years not being the dominant superpower in the world.  It generally means less of the GDP is devoted to military actions in foreign countries and a greater focus on domestic economies.  So it may not be all bad.  But if we are stuck on being Number 1 then we need to get real about what it takes; a commitment to education and infrastructure. 

SHARED NORMS FOR THE NEW NORMAL – HUFFINGTON POST

Where do everyday Americans come in?  Well other nations are taking to the streets.  Demanding responsive governments and a refocus on providing opportunity for all.  Voting is great, but when your choices are corrupt or most corrupt it can feel ineffective. 

What did my parents do?  Good old civil disobedience, marching and protests.  There is no better time than the present to redefine America.  But all this is taking place while everyday Americans are struggling to make sense of their own new economic reality.  Their struggle is overshadowed by exciting announcements of more “IPAD” like devices and an IPhone from Verizon.  What does the “New Normal” mean to everyday Americans? Now is the time in our life where we will discover that – Together.

http://www.youtube.com/watch?v=Jt4aTMTGZPM

The Most Powerful MAN in the World

The Most Powerful Man and the Runner Up

THE MOST POWERFUL MAN IN THE WORLD

Hu Jintao-the-most-powerful-person-in-the-world

Forbes Magazine just named China’s President, Hu Jintao, as the most powerful man in the world.  Forbes points out to those who would insist it’s Barack Obama that Jintao only has to contend with a nine man Politburo.  Obama has to wrestle with a gridlocked US Congress that is increasingly filled with hate and acrimony.  While some critics blame Obama for naiveté about Congress, I question why dedicated “public servants” don’t understand that lives are at stake here and politics is trumped by starvation and homelessness.  Is our system of democracy grossly outdated for operating in a lightning fast global economy? 

Technology has indeed accelerated the pace of change in economies and governments.  The internet has opened the world to each other.  There is clear recognition in the global theatre that the U.S. is on the ropes.  Like so many great powers in the past; Rome and Great Britain, we are being challenged from all sides.  What system of government do we really need to stay on top as World leaders fight for power?  Can 435 Congressman and 100 senators really compete with the political powers of the world?   

Hu Jintao speaks at Yale University

Great Britain’s House of Commons has 650 members, from more than just two political parties. The House of Lords with 738 members, currently possess no governmental power whatsoever except to delay a bill passed by the Commons.  The House of Lords is like an appendix, possibly unnecessary but just in case we keep it around until it starts to explode.  Unlike the House of Commons, the House of Lords is not attained by popular election; its by inheritance, or selected from senior bishops of the Church of England (Lords Spiritual), or  appointed by the Monarch on the advice of the Prime Minister.  The full, formal title of the House of Lords is “The Right Honourable the Lords Spiritual and Temporal of the United Kingdom of Great Britain and Northern Ireland in Parliament Assembled.”  The name alone weighs it down.  But like the Queen, Brits will pay handsomely to keep God and their royals in the mix.  Despite the overtones of master worship, there may be some value in the monarchy.  What would the UK be without a Queen on the world stage?  Just another France or Australia.

Germany, home to the third-largest number of international migrants worldwide, has a political system that would require a degree in International Political Science to understand.  The Bundestag (Federal Diet) and Bundesrat (Federal Council) weigh in at anywhere between 638 and 691 members.  The Bundestag is elected through direct elections, but Bundesrat members come from state cabinets.  State governments can yank their envoys at any time.  That’s one way to guarantee responsiveness.  I can see a dozen uses for that power here in the U.S.

Brazil’s 81 seat Federal Senate and 513 seat Camara dos Deputados seem tame in comparison.  And Venezuela has the svelte Asemblea Nacional  with 167 seats; filled by popular vote to serve five-year terms.  Please note that three seats are reserved for the indigenous peoples of Venezuela.  How would that go over in Washington?

Thanks CIA World Factbook

And then there is Cuba that dispenses with costly and messy elections.  As someone whose ancestors died for the right to vote I am not a fan of that strategy.  We all just have to ignore the fact that Cuba provides universal health care to its citizens, and the number of family doctors guarantees primary health care to 99.1% of the Cuban population.  (We are headed for a shortage of primary care docs).  If my democracy, in its infinite wisdom, thinks we should be the only developed country that does not have a public medical security system to cover all citizens universally there must be a reason.  Yet, there is the possibility that our democracy needs a major tune up. 

Read more:  A Comparison of the Healthcare Systems of Japan, Cuba the US and China

Perhaps we just need two representatives from each state.  Forget redistricting and demographics.  Let’s just make the thing efficient, with perspectives from all corners of the country.  Nobody rules just on the force of the number of bodies they’ve attracted to their state.  Montana has just as much to say as California.  Everybody has got to share to make this giant warship maneuver in dangerous waters. 

If we can’t opt for elegant simplicity, at least ban all television, radio and direct mail political ads.  PLEASE.  If I really want to know what you think I will come to your pancake breakfast.  At least there you can lie to my face.  It may not make the political system more efficient, but it will make it much less annoying.

Your thoughts?