Becoming a banana republic

In a recent op-ed for The New York Times, columnist Nicholas Kristof shines a light on the widening gap between ordinary Americans and the wealthiest among us. As it turns out, economic inequality in the United States is now comparable to or more severe than in many of the countries that remain notorious for their unequal distribution of wealth to this day. Countries like Ecuador, Nicaragua, and Venezuela—the so-called banana republics.

As Kristof puts it,

C.E.O.’s of the largest American companies earned an average of 42 times as much as the average worker in 1980, but 531 times as much in 2001. Perhaps the most astounding statistic is this: From 1980 to 2005, more than four-fifths of the total increase in American incomes went to the richest 1 percent.

How did we get here? A 2007 study by economists Frank Levy and Peter Temin at the Massachusetts Institute of Technology (MIT) found a correlation between the decline in collective bargaining and increasing income inequality. In other words, when workers aren’t in unions, they make less in terms of wages and benefits. Meanwhile, free of checks and balances, companies and the ‘superrich’ rake in record profits.

The long-term consequences for working families, and the nation as a whole, could very well be devastating—and not just for our wallets. According to Kristof, too much inequality impedes economic growth across the board. It also leads to more divorces, and less ‘life satisfaction’ as well.

Kristof emphasizes that when workers are left out in the cold, the repercussions extend to the national level: “Economic polarization also shatters our sense of national union and common purpose, fostering political polarization as well.”

If there’s a silver lining to this story, it’s that there’s a way to combat the widening income gap. And that’s unions, plain and simple.

  • Facebook
  • Twitter
  • email
  • Print
This entry was posted on Monday, November 15th, 2010 at 5:00 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

One Response to “Becoming a banana republic”

  1. sana says:

    Kristof emphasizes that when workers are left out in the cold, the repercussions extend to the national level: “Economic polarization also shatters our sense of national union and common purpose, fostering political polarization as well.”

Leave a Reply