Thursday, March 29, 2007

By way of contrast 

As we’ve seen Venezuela’s recent boom has been good for most Venezuelan’s. Lower income Venezuelans in particular have seen their standard of living, from purchasing power, to health care, to educational opportunities, improve significantly.

Those who are skeptical of Chavez say this is nothing more than the result of Venezuela’s oil fueled economic boom. Venezuela’s economy is growing, so of course low income people will do better, so they say.

However, looking at some other countries around the world shows that is not necessarily true. Where governments have different priorities we see economic growth leading to very different results. To see this clearly we can look at what is happening in the United States:

Income Gap Is Widening, Data Shows


Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928, analysis of newly released tax data shows.

The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression.

While total reported income in the United States increased almost 9 percent in 2005, the most recent year for which such data is available, average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent.

In contrast to Venezuela, in the U.S. economic growth is leading to the rich being much richer, and the not rich seeing their income starting to decline. And if the income disparity being the greatest since 1928 doesn’t impress you here is something that might:

The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.

Yes, you read right, the top 300,000 earn almost as much as all the bottom 150 million Americans combined!!! Certainly not a sign of a healthy society. Moreover, this incredible disparity isn’t decreasing, it is growing.

Think these numbers are exaggerating? If anything, it underestimates the disparity:

He noted that the analysis was based on preliminary data and that the highest-income Americans were more likely than others to file their returns late, so his data might understate the growth in inequality.

The disparities may be even greater for another reason. The Internal Revenue Service estimates that it is able to accurately tax 99 percent of wage income but that it captures only about 70 percent of business and investment income, most of which flows to upper-income individuals, because not everybody accurately reports such figures.

Whereas the Venezuelan government aggressively pursues businesses to pay taxes the U.S. governments allows massive evasion by the business class while making sure the working class pays every last penny it owes. Goes to show who the U.S. government cares about.

And if by chance there is still any doubt about who the U.S. government cares about just look at what they do to government employees who dare to collect taxes on oil companies.

So when you see all the good things happening to poor and working class Venezuelans remember, it is no accident. It is the result of intentional policies geared to help those who most need it. Countries with different priorities get different results.


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