Message-ID: <vines.3pY7+6pronA@BARRB0204.usaid.gov> Date: Mon, 21 Jul 1997 11:16:24 EDT From: Robert Johnston <mailto:rjohnston@USAID.GOV> Subject: Re: The Troubled American Economy To: mailto:DEVEL-L@AMERICAN.EDU
Edward,If one takes the time to actually review the statics published by both the US IRS and US Department of Labor we will see that during the time period stated the US middel class did in fact evaporate. However, the movement has be preponderently from the middle class upwards into the upper middle and lower upper classes. Also the majority of the increase in the poverty numbers over the past twenty years has been amoung female headed single parent homes.
Robert Johnston As usual my opinions do not represent the views or opinions held or expressed by the US Government or the US Agency for International Development. ------------- Original Text From: Edward Walters <mailto:ewalters@MAIL.NETBAHN.NET>, on 7/21/97 9:50 AM: To: <mailto:DEVEL-L@AMERICAN.EDU>
I'm enclosing a brief synopsis of an article by Willard Cochrane that app= ears in the Spring/Summber issue of Review of Agricultural Economics. = The article makes many points that may be of interest to readers of the = devel-l list, particularly his hypothesis that the US economy is developi= ng into a 3rd world type economy. Cochrane to make explicit many of the = thoughts I have had on the current American political/economic system, = and a lot of ideas that hadn=92t occurred to me. For those who haven=92t had the chance to read the article let me make = an attempt to summarize: Despite rising GDP over the last several years, another index - the Genu= ine Progress Indicator (GPI), demonstrates that since the early 70=92s, = overall economic well being has declined for most Americans. The GPI not= only measures output, but takes into account contributions of the family= and community, and environmental factors that the GDP ignores. In fact,= environmental damage is given a negative value in the GPI, whereas in = conventional GDP accounting, the cost of these messes is positive since = the expenditure for cleanup boosts demand for goods and services! Cochrane points out that inequality (in terms of income) in the US has = increased dramatically since 1968, and we are rapidly becoming a two-tier= ed, typically third world, society, with a shrinking middle class squeeze= d between growing poor and wealthy segments of society. He predicts a = future of increasing class struggle between the haves and have nots. Cochrane cites many factors in the slow down and decline of the American= economy - global natural resource depletion, shrinking demand for goods = and services linked to increasing poverty, inadequate education and heal= th services, growing immigration, a large trade deficit, and a large popu= lation of non-contributors (i.e. retirees) to the economy. Cochrane believes the underlying causes of these trends is the philosoph= y of extreme individualism that has existed in US society since its incep= tion and has now been legitimized in mainstream conservatism. I was interested in comparing Cochrane=92s article with the writings of = Kenneth Boulding and Herman Daly (=93Beyond Growth=94). Daly talks of = growth as being an outmoded and even dangerous goal in Economic planning = and the confusion of Growth with Development. He notes that in Micro-eco= nomics, one reaches an optimal level of production, but in Macro-economic= s there is no such optimal level - the economy can keep on growing unfett= ered - the bigger, the better. He contrasts this with the multiple goals= he proposes of population control, income redistribution, and ecological= ly compatible development. I too think that current economic thinking is too mechanistic and too = narrow. Economics needs to consider the larger social and environmental = impacts, not simply as =93externalities=94 but as a core part of the equa= tion. Cochrane has done an excellent job of identifying the current problem = and its origins. However, I still think he is focused on =93growth=94, = as the ultimate goal of an economy. Even equitable growth is going to = lead to a larger strain on already depleted natural resources and ecosyst= ems. I wish, he too, would have made the distinction between growth and= development. Another factor in the creation of a two-class society that Cochrane does= n=92t really touch on is the disenchantment with, and withdrawal from, = the political system by the underclass. The system is seen as responsive= only to large monied interests, so who represents the poor? Until corpo= rate interests are made more responsible (i.e. not only maximizing short = term profits, but acting in the longer term interests of their employees,= society at large, and the environment) and more authority is devolved = to the local level will these currently disenfranchised groups return to = the political scene. Cochrane has succeeded in raising tremendously important issues and I = hope a larger debate will result from his thought-provoking article. I = trust I haven=92t butchered his ideas too much in trying to summarize the= m.
Regards, Eddie Walters