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Spending and Tax Cuts: American Wealth in a Sea of Misery

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At the beginning of June 1998, a middle class woman, Barbara Ehrenrech, engaged in an anecdotal experiment during which she abandoned all her worldly possessions to live in poverty for a month in the Key West area. She ended up with two jobs while still desperately scratching to pay her rent. Â The deprivations, hardships and suffering she endured were chronicled in her book Nickel and Dimed: On (Not) Getting By in America.

It's a shame that presidential candidates are not forced to undergo the relentless hardship of living in poverty for a short period of time in order to understand the problems of tens of millions of Americans. Administrations blithely and without any compunction refuse to elevate poverty to a high priority. If they tasted the bitter fruit of low incomes, possibly they might cut back somewhat the trillions of dollars spent on war and defense to address the real terror of many Americans, namely living under third-world conditions.

They might then understand the major flaw in a capitalistic economic system in which the government perceives its redistributive function as interfering in the sacrosanct market system.

The dogma of the benevolent, neutral market originated with the founding Fathers who held strongly to the principle that the government which governs least governs best. Thomas Jefferson warned -- "I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them." Â James Madison admonished -- "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents." Samuel Adams concurred when he stated -- "The utopian schemes of leveling and a community of goods, are as visionary and impractical as those which vest all property in the crown."

Translated into current economic ideology framed by Milton Friedman and others, free markets, private enterprise and minimal government interference are some of the primary principles on which the American economy operates. This form of economic system inevitably leads to an unequal distribution of income and a growing gap between the rich and poor. Â The recent recession and the weak fundamentals in the U.S. economy didn't create the problems of poverty, of unemployment and homelessness, but significantly exacerbated them.

Despite the United States' number-one ranking in overall wealth as measured by the GDP, it ranks last or next to last in almost every category that measures quality of life factors such as child poverty, education and health care -- dispelling the myth that overall wealth will lift all boats.

UNICEF undertook a study in 2007 to measure the well being of children in rich countries based on a number of factors including material wealth, health care, safety and education. The lower the rating, the greater the well-being of the children. The Netherlands stood first with a ranking of 4.2, Sweden 5.0, Denmark 7.2 and the United States stood 20th with a ranking of 18.0.

The reasons that child poverty is a tragically critical problem are due to not only the potential health problems but to emotional and mental handicaps as well. Child development in poor neighborhoods results in a higher probability of criminal behavior, drug use and unemployment as adults, ultimately costing the government large sums of money in social services.

Poor health care is another area in which the U.S. ranks very poorly, mainly because it is one of the very few nations without a single-payer system. In a World Health Organization (WHO) study conducted in 2000, the U.S. ranked 37th. Â In an OECD study of the quality of health care in 10 countries, the U.S. ranked last, while at the same time spending $7,290 per capita on health care compared to the next highest spending country at $3,895 per capita. There may be "bang for the buck" in defense spending but not in health care.

As a result of poor health care, the United States has a high infant mortality rate -- 6.26 births per 1000 compared to France at 3.33, Germany at 3.99, Denmark at 4.34, Belgium at 4.44, Netherlands 4.73, and Canada at 5.04. (OECD)

Incarceration rates reflect a number of quality-of-life factors, including distribution of wealth, employment, hope for the future, health, education and early childhood experiences. An OECD study reveals the extent to which the U.S. is deficient in a number of quality-of-life measurements. Following is a list of the number of incarcerated persons in each country per 100,000 in population: Japan 63; Denmark 66; Norway 70; Germany 90; Italy 92; France 96; Canada 116; Turkey 161; Mexico 209; United States 753. America has 17 times more people in prison per 100,000 people than Iceland, the country with the lowest incarceration rate. (OECD)

Income inequality reveals who benefits from additional wealth or growth generated in the economy, both past and present. It also reveals the extent to which wealth is concentrated at the top and to what extent it is equitably distributed to the rest of the population. The GINI coefficient is one common method for measuring distribution of wealth in which 100 represents perfect inequality and 0 represents perfect equality.

Following is a list of countries with their GINI coefficient: Denmark 24.7; Sweden 25; Norway 25.8; Germany 28.3; Netherlands 30.9; Canada 32.6; France 32.7; Belgium 33; Australia 35.2; UK 36; Italy 36; United States 40.8.

Despite its great wealth, the United States has failed to provide a high quality of life compared to a number of other countries. Part of the explanation for the difference is the greater amount of taxes flowing into government coffers in other countries thus enabling them to implement stronger social programs and services.

Another explanation lies in the ideology driving government priorities with the United States believing in the effectiveness and efficiency of the private sector compared to the other countries where the underlying ideology evinces the argument that the public sector is more suited for some services such as health, education and social security.

In addition, none of the countries even remotely approaches the defense expenditures of the United States. President Dwight D. Eisenhower said it best when he lamented that: "Every gun that is made, every warship launched, every rocket fired signifies in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed."

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I have been a professor of political science at Seneca College in Toronto. I have published five books the last of which "Selling Out: Consuming Ourselves to Death" was released in May/08. As well, I have been featured in CounterPunch, Z (more...)
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