=======================Electronic Edition========================
RACHEL’S ENVIRONMENT & HEALTH WEEKLY #451
—July 20, 1995—
News and resources for environmental justice.
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Environmental Research Foundation
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THE BIG PROBLEMS–PART 2: POSITIVE FEEDBACK
This week Congress is expected to finish dismantling 25 years
worth of environmental laws (though they have reserved the right
to come back later to undo more). Precisely what form the
outcome will take is unclear, though it will almost certainly be
a serious setback for environmental protection. In any case the
visible process is what seems most important. As the NEW YORK
TIMES said, “All over the Capitol, legislators are considering
changes to the principal laws that govern mining, grazing,
logging, toxic wastes, water quality, endangered species, and
pesticides, in each case considering proposals to make the laws
more favorable to industry.” [1] It seems clear that industry
(the word the TIMES uses for “corporations”) has firm control of
Congress.
This is not a partisan attack on the environment; both political
parties are participating to the best of their ability. The
TIMES reports that “Congressional Republicans, aided by many
conservative Democrats, intend to limit sharply actions by the
E.P.A. (U.S. Environmental Protection Agency), the Interior
Department, the Energy Department and any other agency involved
in environmental programs.”
For example the House Appropriations Committee has recommended
cutting $2.3 billion (or 32%) from the EPA’s budget. The TIMES
gives the flavor of the coming changes: “The subcommittee removed
money for the agency to enforce air pollution permits, to
regulate toxic air pollution from oil refineries, to encourage
tough state automobile inspections, to require accident
prevention plans in the chemical industry, to limit pollution
from cement kilns, to encourage state car-pooling plans, to
gather and publish data on chemical use, to protect wetlands, to
set water quality guidelines for the Great Lakes, to write new
industrial water pollution regulations, to issue stormwater
runoff rules, to control sewage overflows into rivers, and much
more.” As the TIMES said, “Some of the proposals are
breathtaking in their potential effect.”
How can the two major political parties go down this road without
fear that the public will throw them out of office? Ask
yourself, what alternatives does the public have? To put it
bluntly, none.
In truth, the election process in the U.S. has fallen under the
control of a small corporate elite. Regardless of party
affiliation, this small group of people now provides roughly 75%
of the funds needed for most federal and state election
campaigns, thus giving a tiny fraction of the American people the
power to elect a Congress that then fulfills the wishes and needs
of the few.
What is known about the financial power of this corporate elite?
The TIMES recently described it this way: “Federal Reserve
figures from 1989, the most recent available, show that the
wealthiest 1 percent of American households… owns nearly 40
percent of the nation’s wealth.” [2] “Further down the scale, the
top 20 percent of Americans… have more than 80 percent of the
country’s wealth, a figure higher than in other industrial
nations.”
So 40% of all privately-held assets in the U.S. are held by only
2.5 million people. These are the truly wealthy. Eighty percent
of all U.S. assets are held by 50 million people, the well-to-do.
And the remaining 20% of U.S. assets are shared among the
remaining 200 million Americans. If the total net worth of the
U.S. is 23 trillion dollars [3]and if it is divided as the TIMES
describes it, then it breaks down like this: 2.5 million people
each have average (mean) net worth of $3.7 million; another 47.5
million people each have an average net worth of $368,000; and
the remaining 200 million Americans each have an average net
worth of $23,000. (Net worth is assets that remain after debt
has been subtracted.) Within the bottom 80% of the population,
net worth is further skewed by race. In 1988, whites had an
average (median) net worth of $43,280, Hispanics had an average
net worth of $5520, and African-Americans had an average net
worth of $4170. [4]
If America were the land of opportunity that most Americans like
to think it is, these figures might not be cause for concern
because many people might work their way out of a bad situation.
But in actual fact, as time passes the rich are getting richer
and the poor are getting poorer, and there seems to be nothing to
prevent the gap from continuing to widen. For example, in 1969,
12.1 percent of Americans lived in poverty; by 1992 the figure
had risen to 14.5 percent, despite the fact that average
per-person income (adjusted for inflation) had increased 65%
during those years. [5] During 1993, a bountiful year for the
economy, the top 40% of Americans saw their incomes increase, but
the other 60% lost ground: “While incomes rose for the most
affluent two-fifths of the nation’s households as the economy
expanded in 1993, the rest of the country suffered from falling
incomes, after adjusting for inflation,” the NEW YORK TIMES
reported. [6] Furthermore, during 1993 an additional one million
Americans fell below the poverty line (defined as an income of
$14,763 or less for a family of 4). [7]
There are at least 7 trends driving the nation toward greater
inequality:
1) Automation is reducing the number of high-wage blue-collar
jobs. The better-paying jobs are increasingly held by
better-educated people. For example, machine tools guided by
microprocessors have reduced the need for blue-collar workers on
the shop floor, but have increased the demand for skilled
programmers. As economist Paul Krugman points out, in 1979 a
young man with a college degree earned only 30 percent more than
one with a high school diploma; by 1989 the premium had jumped to
74 percent. [8] Thus the wage gap between highly-educated workers
and less-educated workers is growing.
2) Corporations are moving jobs overseas because they can hire 47
workers in Bangladesh, India or Vietnam for the price of one U.S.
worker. [9] Even the threat of such moves is sufficient to exert
strong downward pressure on U.S. wages. As a result of
automating, and moving jobs overseas, corporations are creating
jobs in the U.S. that are temporary, part-time, and without
benefits (pension plans and health-care).
3) Taxes on the rich and on corporations dropped dramatically in
1986, [10]rose slightly in 1993, and are now dropping again as
the present Congress rewards those who paid to put them into
office. The greatest cuts are expected in inheritance taxes [11]
(the main tax on wealth in the U.S.) and in the capital gains tax
(a tax cut which will benefit only the wealthiest 7% of all
taxpayers; 93% of taxpayers have no capital gains income at
all). [12]
4) Trade unions, which exerted strong upward pressure on wages
from the 1890s through the 1960s, have declined in numerical
strength and bargaining power. Partly this has resulted from
American firms opening plants overseas. For example, if U.S.
workers strike for better wages or conditions at a Caterpillar
tractor plant in Illinois, Caterpillar can ramp up production
overseas and wait out the strike, depriving U.S. workers of their
work-stopping power, and ultimately resisting their demands.
5) The present low minimum wage, which is $4.25 an hour. If it
remains at this level in 1996, it will be at a 40-year low in
terms of purchasing power. [13] President Clinton says he wants
to raise it 90 cents over 2 years, but Congress has vowed to stop
him.
6) The share of national income that goes to workers has begun to
decline, relative to income received by owners of capital (from
dividends and investments). For 150 years, workers have
consistently taken home 2/3rds of the nation’s economic output in
the form of wages, salaries and benefits. Owners of capital
(like stocks or bonds, or small businesses) have received the
other third in the form of dividends, profits, and investment
gains. Now even this time-honored relationship is changing, as
the share of national income shifts from workers to the owners of
capital. “The strongest evidence so far that workers are
receiving less of the fruits of their labors came last week, when
the Labor Department revised its estimates of wage and
compensation growth. After adjusting for inflation, average
wages and salaries apparently fell 2.3 percent over the 12-month
period that ended in March. Productivity rose 2.1 percent during
the same period,” the NEW YORK TIMES reported June 25, 1995. [14]
“Include fringe benefits, and the current numbers look even worse
for the wage-earners. Overall compensation fell 3 percent in the
12-month period through March, as companies and state and local
governments provided fewer health care benefits,” the TIMES
reported.
7) Elections are costing more each year, and they already cost so
much that only individuals with serious money, or with access to
serious money, can run. This means the political system is for
the most part closed to people with ideas different from the
majority of Republicans and Democrats in Congress today.
What we seem to have is positive feedback –public and private
policies are pumping money upward in the population, providing a
fortunate few people with a fabulous reward but leaving the
majority poorer each passing year. Sufficient monies are sent
back down from the top to guarantee the re-election of officials
dedicated to keeping the big pump running, pushing benefits ever
upward.
Stanford University economist Paul Krugman says, “There is no
purely economic reason why these growing disparities cannot go on
for decades. But they may eventually trigger a social crisis…
The ultimate effect[s] of growing economic disparities on our
social and political health may be hard to predict, but they are
unlikely to be pleasant.” [15]
                
                
                
                
    
–Peter Montague
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[1] John H. Cushman, Jr., “G.O.P.’s Plan for Environment Is
Facing a Big Test in Congress,” NEW YORK TIMES July 17, 1995,
pgs. A1, A11.
[5] Proxmire, cited above, says per-capita income (adjusted for
inflation) grew 3-fold during the last 50 years; this means it
grew an average rate of 2.2% per year. From this we can
calculate that during the period 1969 to 1992, per-capita income
grew 65%; see RHWN #199.
[6] Bradsher, cited above in note 2, pg. D4.
[8] Paul Krugman, “Long-Term Riches, Short-Term Pain,” NEW YORK
TIMES September 25, 1994, pg. F9.
[9] Sir James Goldsmith, THE TRAP (New York: Carroll & Graf
Publishers, 1994), pgs. 25-52.
[12] Barlett and Steele, cited above in note 10, pg. 30.
[13] “Clinton Proposes Minimum Wage Hike,” FACTS ON FILE WORLD
NEWS DIGEST, February 9, 1995, p. 87.
[15] Paul Krugman, cited above in note 8, pg. F9.
Descriptor terms: congress; legislation; contract with america;
environmental protection agency; epa; republicans; democrats;
income; wealth; poverty; taxation; corporations; environmental
policy; inequality; free trade; unions; minimum wage; election
finance; campaign finance reform;