The Rich Get Richer, and That's O.K.
In the 1990s, the gap between rich and poor widened. But poverty rates fell to record lows
American culture is fundamentally egalitarian. Wide gaps between rich and poor make most people uncomfortable. So when CEOs take home huge pay packages compared with the wages for ordinary workers, the norms of fairness and social justice seem to be violated.
Income inequality has long been worrisome on economic grounds as well. In most of the postwar era, periods with a widening gap between the top and bottom of the income scale--such as the two decades from 1973 to 1993--have been marked by weak economic growth and rising poverty rates. By contrast, periods of narrowing inequality--say, the 1960s and the early 1970s--have been accompanied by strong growth and falling poverty rates.
But let's contemplate a heretical notion: Maybe inequality is getting a bad rap, at least from the economic point of view. Since 1993, a widening gap between high- and low-income workers has coexisted with strong growth and plummeting poverty. During the New Economy boom, every measure of income inequality clearly got worse. In particular, wage gains for managers and professionals far outstripped those of blue-collar and service workers, and the top fifth of households collected a bigger share of income.
But unlike other periods during the past 50 years when the gap has widened, the economy prospered, and the poor did well, too. From 1993 to 2000, the latest numbers available, the percentage of people in poor families plunged from 13.6% to 9.6%, the lowest level on record. The poverty rate for 2001, when it is released in the fall, is likely to be nearly as low, because real wage gains for low-income workers stayed strong that year. Blue-collar wages, adjusted for inflation, rose by 2.4% in 2001, their largest increase in years, with an even bigger jump for service occupations.
Similarly, the post-Civil War U.S. had an economic boom resulting from such factors as the dramatic expansion of the railroads. Wealth was highly concentrated, and the wage premium for skilled workers, such as engineers and machinists, widened sharply compared with less skilled workers. Despite the increasing inequality, living standards rose at the bottom as well. From 1865 to 1895, real wages for employed urban unskilled workers increased at a 1.8% annual rate.
A critical factor that heightens inequality but decreases poverty is the growing role of education. In the past 10 years, the percentage of Americans aged 25-29 with a college degree has risen from 23% to 29%, as people realize that higher education has a big payoff. The poverty rate for people with a college education is 3.2%, compared with 9.2% for those with a high school diploma.
But, surprisingly, as Americans move up the education ladder, inequality actually increases. How so? Among a group of college-educated people, there will be a much wider spread of incomes than among a group of workers with a high school education. That's because there's a fairly clear limit on the maximum amount of earnings for those with a high school diploma. Only 1% of high-school-educated workers earn over $100,000 annually. By comparison, 13% of college-educated workers earn six figures or more--but an equal number earns less than $25,000 annually. The result is that the trend toward an increasingly educated population actually increases the amount of inequality in the economy.
Then there's immigration, which also spurs inequality. In recent years, the new entrants have varied greatly in terms of education and income. On the one hand, immigrants are more likely to have a college degree than are average Americans. Meanwhile, about 30% of workers without a high school diploma are immigrants, far out of proportion to their share of the population. Without immigrants, inequality would be less--but so would growth.
Still, the gap between rich and poor can have pernicious effects. Often, societies with a rich elite suffer from an undesirable concentration of political power. And the U.S. can certainly take steps to mitigate the impact of inequality by providing better medical care and education for the poor. But as long as growth is strong and poverty is low, a little inequality is a small price to pay.
Georgetown, S.C. -- For five generations, my wife's family has vacationed in the low country along the Carolina coast. Down here, where the weather is important to the livelihood of so many, people look to the skies and the sea for signs of what conditions will be like tomorrow, or next week or even next month.
Folks here talk a lot about the weather and often claim they trust the clouds, wind and tide to be better prognosticators than anything they learn from television, radio or the newspapers. But this summer the talk isn't about tropical depressions, fishing or atmospheric conditions -- it's about rumors of war.
"Are we going to attack Iraq or not?" I was asked this morning as I walked into the bait shop.
"Do you think Saddam helped the 9-11 terrorists last year?" queries a caller to WGTN, the local affiliate that carries my radio show.
"I saw your (FOX News) reports from Jerusalem and Tel Aviv. It looks like the Israelis will be our only allies if we attack Baghdad before Iraq does anything to us," posits a gentleman who describes himself as a vacationing college professor.
"If Saddam has nukes, would he use them against us?" asks another.
And that's just today's sample of comments and questions from people here on the coast of the Atlantic Ocean, as they try to gauge how the storm clouds gathering over the Middle East will affect them.
A few miles south of here, at the sprawling Air Force Base in Charleston, S.C., a C-141 crewmember just returned from Afghanistan and told me that he was preparing for a flight "to a country neighboring Iraq." I didn't press him on the destination out of respect for his security awareness, but then he volunteered, "I wonder how many more of these trips we'll be making once they figure out we're serious about Iraq." Whether he was talking about Kuwait, Saudi Arabia, Qatar or Turkey, hardly matters. What does matter is that without the overt availability of bases in these places, a major military campaign against Iraq is all but impossible.
It's clear the U.S. airman I spoke with knows where things are headed with Iraq. And it's equally clear from questions I've been getting here in the Low Country and from the confusing cacophony emanating from Europe's capitals, the Middle East, the Persian Gulf and Washington that the patriotic people of the Carolina coastline are confused about what we aim to do about Saddam. They like and admire President Bush but, like most Americans, they want to know what to expect. It's not too much to ask.
Unfortunately, what's lacking is a clear, unambiguous statement from President George W. Bush necessary to building a consensus for preventing Saddam Hussein from using the weapons of mass destruction he already has at his disposal. Failure to do so invites every barroom brigadier and couch-potato commando on the planet to continue flaying the administration.
Look what has happened each time a report surfaced over the past several months that -- until this week -- the Joint Chiefs were opposed to a war in Iraq. Ignore the fact that we should want the leaders of our armed forces to be reluctant warriors -- until it's time to fight. What we got instead was a phalanx of sound-bite special forces popping up on cable television telling us that our uniformed military wasn't ready to do the job. That's not the message to send our allies or adversaries.
Bush needs to present a Bill of Particulars against the brutal regime in Baghdad. It is not enough to simply state that "a regime change is necessary," as he did earlier this week in Mississippi. He must describe the formidable threat Saddam poses today, the kind of menace he represents for our future and the kind of people we will accept in his stead. That means he must reveal otherwise secret data and classified details of what we know to be indisputable facts about Saddam's nefarious weapons programs, his meddling in Middle Eastern terrorism and those we have been cultivating in the Iraqi opposition. And as unpalatable as it is, George W. Bush must accept the fact that he will go down in history as the first American president to launch a preemptive attack against a lethal adversary.
What the administration cannot afford is to continue on the present course of leaks, counter-leaks and "anonymous sourcing" for building consensus. It is, for example, irrelevant that "administration sources" are "convinced Mohammed Atta (the alleged mastermind of the 9-11 suicide-hijackings) met with an Iraqi intelligence agent in Prague" before the attack. Far more important is the irrefutable fact that Saddam Hussein is actively engaged in fomenting terror today. His cash payments of up to $25,000 to the families of Palestinian homicide-suicide bombers and $1,000 to every wounded Palestinian are incontrovertible -- and proof that Saddam is willing to fight to the last Palestinian.
Tom Daschle wants the Senate to debate Iraq, but he won't schedule it. The Europeans will continue to dither. The Saudis have buried their heads in the sand. Meanwhile, as Khidhir Hamza, the former head of Iraq's nuclear weapons program, told me, "Saddam believes his weapons of mass destruction will make him the Arab world's undisputed leader." If President Bush wants to prevent that -- and all the attendant consequences -- he must tell the world that when it comes to replacing Saddam, it's not if but when. And when must be soon.
There is a life lesson in watching how America's alleged allies are dealing with the Saddam Hussein situation. Just this week, Germany and Saudi Arabia said flat out that the United States could expect no help from them in attempting to remove the Iraqi tyrant. The Saudi behavior was predictable, as that nation has proved over and over it will not cooperate with America's war on Islamic terror. But Germany's stance is extremely interesting.
Chancellor Gerhard Schroeder is up for re-election this fall, and things are not looking good for the big burgomaster. He is running behind in the polls to a conservative candidate, and his only hope is to galvanize the anti-American German left. So Schroeder is putting his political career ahead of doing the right thing -- supporting his friends the Americans.
There is no question that Saddam Hussein is a murderous thug. He has started two wars, gassed Kurdish children, fired Scud missiles at Israeli civilians, and killed and tortured thousands of his own people -- including his son-in-law. According to defectors, Saddam has highly paid scientists working on biological, chemical and nuclear weapons. Does anyone believe the man is not capable of handing over deadly germs to al Qaeda operatives?
Still, we hear the drumbeat of skepticism about Saddam's intentions and capabilities. This same drumbeat was heard 65 years ago in Germany itself. It was in the late 1930s that journalists like William Shirer began reporting on the murderous intentions of Adolph Hitler. Yet many refused to believe the Third Reich was bent on world domination and savagery. President Franklin Roosevelt and Ambassador Joseph Kennedy scoffed at early reports of mass executions by the SS and the Gestapo. Millions of Americans wanted to see more "proof."
Saddam Hussein is not nearly as powerful as Hitler was, but his mindset is similar. He hates the Jews, hates the decadent West, hates just about everyone. Yet millions clamor for more evidence that Saddam is a danger.
Of course, this is foolish and dangerous. And it is exactly the way the United States handled Osama bin Laden in the '90s. The Clinton administration thought it could contain bin Laden after he ordered the bombings of two American embassies in Africa and the attack on the USS Cole off the coast of Yemen. The men captured and tried for those crimes gave up Bin Laden, but the United States did not aggressively go after him because of the perceived political damage killing him would have caused in the Arab world and Afghanistan.
U.S. intelligence rightly concludes that it is just a matter of time before Saddam finds a delivery system for whatever weapons he is able to develop. We know from Czech intelligence that one of Saddam's top spies met with 9-11 hijacker Mohammed Atta in Prague a few months before the attack. We also know from Russian intelligence that former Soviet weapons experts are on the Iraqi payroll.
Gerhard Schroeder knows all this as well. But he is calculating that Saddam will not attack his country, and Schroeder seems to be ready to accept a first-strike by Saddam somewhere else. Danke, Gerhard.
For sheer, colossal ingratitude, it is hard to beat Germany. America rebuilt that country after World War II and protected the majority of Germans from the Soviet Union. We have spent trillions over there, and now, when we need them, the Germans are not there for us. This is a very vivid lesson that generosity does not always swing both ways.
Even if Schroeder and his countrymen have doubts about the wisdom of America's Saddam policy, they should give the United States the benefit of the doubt. Don't they owe America that much after all it has done for them?
It disturbs me greatly that so many people all over the world are willing to play Russian roulette with the likes of Saddam Hussein. They are comfortable betting that this madman might not strike them. That if he attacks, somebody else will bear the brunt of the carnage. This is cowardly and unacceptable after 3,000 American civilians were killed last September.
The Gerhard Schroeders of the world are terrorist enablers. There is no reason on this earth why a man as dangerous as Saddam Hussein should be able to continue to operate. The rest of the world may not have the courage to deal with Saddam, but America knows that with weapons of mass destruction "a one strike and you're out" policy is simply irresponsible. Saddam has to go. And so does Schroeder.
