CHAPTER 7

Social scars

America’s affluenza casts an enormous shadow over the rest of the world. While even poor Americans live with luxuries unimagined by the rich a century ago, the worldwide gap between rich and poor continues to grow. Two billion of the world’s people still live in a state of destitution, on income equivalents of less than two dollars a day. Many of them make the apparel and other consumer products we buy. Try an experiment: walk through Wal-Mart (or any other big-box store) and check out where the products are from. Chances are what you can buy so cheap is made in a place where the conditions of labor are no better than they were in the United States a hundred years ago.

In 1993, a Thai toy factory burned to the ground. Unable to escape, hundreds of female workers perished. Their charred bodies lay among the ruins of the building, a firetrap similar to many throughout the developing world where millions of plastic toys are made for American children. Here and there amid the blackened rubble were the toys themselves.

Many of the women were mothers whose meager incomes would not allow them to buy for their own children the toys they were making for export. More recently, the collapse of a Bangladesh textile factory in 2013 resulted in 1,127 deaths, while a fire in another killed 112 workers. Safety conditions in these plants are like those that prevailed in the United States before the infamous Triangle Shirtwaist Factory Fire of 1911, which killed 146 female textile workers.¹

According to the Associated Press, “Bangladesh is the third-biggest exporter of clothes in the world, after China and Italy. There are 5,000 factories in the country and 3.6 million garment workers. But working conditions in the $20 billion industry are grim, a result of government corruption, desperation for jobs, and industry indifference. Minimum wages for garment workers are among the lowest in the world at 3,000 takas ($38) a month.”²

At least 1,800 workers have died in factory fires and building collapses in Bangladesh since 2005, many of them while producing cheap clothes for the American market. The grisly images from those disasters, and the facts that lie behind them, speak volumes about the widening canyon that separates the haves and have-nots in the Age of Affluenza.

As we mentioned earlier, no economic system produces consumer goods as cheap as the unfettered, deregulated free market. It can, for example (especially with the help of regimes that allow workers little freedom to organize), produce children’s toys so cheap that they can be shipped halfway around the world and still be given away with two-dollar meals at fast-food restaurants like McDonald’s and Burger King.

Americans have long considered their country—unlike those in the developing world—a “classless” one, with few citizens who are either very rich or very poor. But this notion of a classless America has always been suspect. Even in 1981, when all political efforts to counteract or quarantine affluenza were abruptly abandoned, the United States ranked thirteenth among twenty-two leading industrial nations in income equality.

Today, we’re dead last.³

THE OTHER AMERICA

The rising tide of American affluence hasn’t lifted all boats, but it has drowned a lot of dreams. A titanic gulf now separates rich and poor in America. Indeed, during the ’80s, three-quarters of the increase in pretax real income went to the wealthiest 1 percent of families, who gained an average of 77 percent. Median-income families saw only a 4 percent gain, while the bottom 40 percent of families actually lost ground. Lower-income workers did better during Clinton’s second term, keeping the gap from widening, but during the first decade of the twenty-first century, the news was even worse: most Americans saw their incomes fall, while the “1 percent” continued to capture two-thirds of the income gains.⁴

As the super-rich increased their share of national income during the ’80s, they also became stingier. They gave a far smaller share of their incomes to charity than was previously the case. In 1979, people who earned an income of more than $1 million (in 1991 dollars) gave away 7 percent of their after-tax income. Twelve years later, that figure had dropped to less than 4 percent.⁵ This, at a time when advocates of sharp cuts in government welfare programs suggested that private charity would make up much of the difference. Instead, not surprisingly, the percentages of families in poverty, which had been declining, began once again to rise. The number of people who were working (and not on welfare) but earning below-poverty wages nearly doubled during the ’80s.⁶

In spite of America’s image as a cornucopia of plenty, where the shelves of supermarkets are always fully stocked, more than ten million Americans go hungry each day; 40 percent of them are children, and the majority, members of working families. Millions of other Americans keep hunger from the door by turning frequently to programs such as food banks and soup kitchens. By 2010, the US Department of Agriculture categorized one American family in seven as “food insecure,” the highest percentage ever recorded. Before 2006, we called that “hunger,” but the name was changed during the Bush administration to allow us to look away more easily. Shockingly, Republicans in Congress now want to strip billions from the food stamp budget and hand the money to the rich in the form of even deeper tax cuts.⁷

In 1980, the top 1 percent of Americans earned about 9 percent of our national income; by 2008, they were earning 23 percent, more than the bottom 50 percent of Americans put together.⁸

The distribution of wealth is even more skewed. By 1999, 92 percent of all financial wealth (stocks, bonds, and commercial real estate) in America was owned by the top 20 percent of families (and 83 percent of stock was owned by the top 10 percent). Many of the richest Americans find ways to pay little or nothing in the way of taxes. In 2004, for example, the tax share paid by the wealthiest 1 percent of Americans fell by 19 percent, while that paid by median-income Americans rose by 1 percent. Overall, despite conservative claims of mushrooming government, tax rates have been falling since 1980; the rate for the richest 1 percent has dropped by a third, from 35 percent to 22 percent.⁹

Meanwhile, nearly fifty million Americans were living in poverty by 2010 (about the same number as those without health insurance), up from thirty-seven million in 2007 and, in absolute terms, the largest number of poor since the poverty rate was established half a century earlier. Sixteen percent of Americans fall below the poverty line, and twenty million of them live in families that earn less than $10,000 a year.¹⁰

THE BIG WINNERS …

At one point, before a drop in Microsoft stock prices halved his net worth, Bill Gates held assets worth about $90 billion, nearly as much as the bottom half of the American population (and greater than the gross national products of 119 of the world’s 156 nations). By contrast, 40 percent of all Americans own no assets at all.

Nothing better illustrates the extent to which affluenza has been embraced in America than the compensation awarded senior executives of large companies. Average CEO pay has continued to increase at double-digit rates. Nike CEO Mark Parker earned $35.2 million in 2012, up 219 percent from just a year earlier. By 2012, CEOs earned 354 times what their average workers made, up from 42 times as much in 1982 and 84 times as much in 1990.¹¹ By contrast, until recently, when they began to feel a need to keep up with their American counterparts, Japanese and German CEOs earned only about 20 times as much as average workers.

AND THE LOSERS

In 2000, the columnist David Broder reported that the people who clean the bathrooms and offices of “the masters of the universe” (as he calls high-tech millionaires) in Los Angeles were earning poverty-level wages. He found janitors picketing for a pay raise that would bring them $21,000 a year by 2003. Even at that pay scale, it would have taken 27,380 such janitors to earn as much as a single Los Angeles CEO, Michael Eisner of Disney, made in 1998 ($575 million).¹²

To the affluent, the poor have become invisible. “There are millions of people whose work makes our life easier, from busboys in the restaurants we patronize to orderlies in the hospitals we visit, but whose own lives are lived on the ragged edge of poverty,” Broder wrote. “Most of us never exchange a sentence with these workers.” In sight, but out of mind.

One fact Americans used to point to as evidence of a “classless” society was that (compared to the wealthy of Latin America, for example) few American families employed servants to do cleaning and housework. But as we become increasingly a two-tiered class society, that’s changing. Upper-middle-income Americans are turning to domestic servants in a big way. In 1999, between 14 and 18 percent of American households employed an outsider to do their cleaning, a 53 percent increase from 1995. America’s 900,000 house cleaners and servants earned an average of $8.06 an hour in 2003, below the poverty line for three-person families. “This sudden emergence of a servant class is consistent with what some economists call the ‘Brazilianization’ of the American economy,” wrote Barbara Ehrenreich in Harpers. “In line with growing class polarization, the classic posture of submission is making a stealthy comeback,” charges Ehrenreich, who worked as a maid for $6.63 an hour to research the story. She points out that one franchise, Merry Maids, even advertises its maid services with a brochure boasting that “we scrub your floors the old fashioned way—on our hands and knees.”¹³

Doing research for her best-seller Nickel and Dimed, Ehrenreich went a-scrubbing from McMansion to McMansion in Portland, Maine, working under rules that even prohibited her from taking a drink of water while cleaning a house. She discovered that some homes had hidden video cameras to be sure she stayed on track. She was amazed at the messes that people left for her, especially the children, one of whom exclaimed “Look, Mommy, a white maid!” upon seeing Ehrenreich.

Having “cleaned the rooms of many overly privileged teenagers,” as she worked as a maid, Ehrenreich concluded that “the American overclass is raising a generation of young people who will, without constant assistance, suffocate in their own detritus.”

Whether or not they are literate enough to know what that means.

THE POOR PAY TWICE—AND THEN SOME

Affluenza affects Americans across all income barriers, but its impacts are more destructive for the poor. In the first place, the poor are often the original victims of the environmental consequences of cost-cutting production strategies. They live disproportionately in areas where environmental contaminants and patterns of pollution are most severe—for example, in Louisiana’s notorious “Cancer Alley,” petrochemical companies unleash a frightening barrage of carcinogens into the air and water.

At the same time, vastly inflated wage scales paid to winners in the new “information economy” lead to competitive bidding on housing stock that drives the cost of shelter beyond reach of even average earners. Many are forced to leave the communities where they and their families have spent their entire lives.

Finally, the poor are taunted by television programs and commercials that flash before them images of consumption standards that are considered typical of the average American, but which they have no possibility of achieving—except perhaps by robbing a bank or winning the lottery.

In our poorest communities, the sense of deprivation has been intense for years. In the Affluenza documentary, the trend spotter Gerald Celente tells of a conversation he had with a man who works with youthful gang members. “I asked him, ‘What’s the one thing that you see that’s causing a lot of these problems?’” Celente says. “Without skipping a beat, he said, ‘Greed and materialism. These kids don’t feel like their lives would be worth anything unless they have the hottest product that’s being sold in the marketplace.’”

Margaret Norris, co-director of the Omega Boys Club in San Francisco, agrees. She says the ethic among the low-income youths she works with is “Thou Shalt Get Thy Money On,” and by any means necessary. Such desperation often leads to crime.

“Never mind, just lock ’em up” seems to be our social response to this situation. Overall crime rates have been falling in the past two decades, a trend that the British economist Richard Layard convincingly argues is due, sadly, in large part to the availability of abortion. Another reason is that the United States already has locked more than two million of its people behind prison bars, the largest percentage of any nation in the world, and ten times the rate in most industrial countries.¹⁴

California alone has more inmates than France, Germany, Great Britain, Japan, Singapore, and Holland combined. In some dying Rust Belt industrial cities, like Youngstown, Ohio, prisons have become the biggest source of jobs. Private companies like the Corrections Corporation of America make millions running lockup facilities. Smart Wall Street brokers play “dungeons for dollars,” investing heavily in the new privatized prison industry.

INEQUALITY HURTS EVERYONE

In their powerful book, The Spirit Level, the British epidemiologists Richard Wilkinson and Kate Pickett show that highly unequal countries have poorer outcomes in more than two dozen indicators of well-being, from health to happiness to crime. While in every country, the rich are healthier and happier than the poor, even the rich in unequal countries are not as healthy or happy as those in more egalitarian ones. Wealthy Americans live only about as long as poor Europeans.¹⁵

Nonetheless, America’s obsession with wealth continues unabated as we continue to pursue the chimera that freedom means no limits on the right to get as rich as possible. Europeans see freedom differently. A Danish student told John that she felt free because she had health care and free education and an economic safety net, and so would her children, giving her the freedom to choose a job she loved rather than the one that paid the most.

GLOBAL INFECTION

The social scars left by affluenza are being replicated throughout the entire world, as more and more cultures copy the American lifestyle. Each day, television exposes millions of people in the developing world to the Western consumer lifestyle (without showing them its warts), and they are eager to be included. David Korten, the author of When Corporations Rule the World, once believed they could and should be included. Korten taught business management at Stanford and Harvard, then worked in Africa, Asia, and Central America for the Harvard Business School, the Ford Foundation, and the US Agency for International Development.

“My career was focused on training business executives to create the equivalent of our high-consumption economy in countries throughout the world,” Korten says. “The whole corporate system in the course of globalization is increasingly geared up to bring every country into the consumer society. And there is a very strong emphasis on trying to reach children, to reshape their values from the very beginning to convince them that progress is defined by what they consume.”

Korten believes that, by pushing consumer values in developing countries, he was spreading the affluenza virus. As he continued to work in the “development” field, the symptoms of that virus became increasingly apparent. He gradually realized that his efforts were causing more harm than good. “I came to see that what I was promoting didn’t work and couldn’t work,” he reflects. “Many people’s lives were actually worse off. We were seeing the environment trashed, and we were seeing the breakdown of cultures and the social fabric.”¹⁶

As affluenza, the disease of unbridled consumerism, spreads throughout the world, the gap between rich and poor grows ever wider, and the social scars that still remain somewhat hidden in the United States fester as open sores elsewhere. The grim shantytowns of Rio tumble to the golden sands of Copacabana and Ipanema. The luxurious malls of Manila stand alongside the Smoky Mountain, a massive garbage dump where thousands of people live right in the refuse, dependent for their survival on what they can scavenge.

In some ways, a cactus-like plant that grows in the Kalahari Desert of southern Africa may be the metaphor for today’s divided world. The razor-thin Bushmen of the Kalahari eat the bitter hoodia plant because it takes away the pangs of hunger. But now pharmaceutical companies have patented the hoodia’s appetite-suppressant properties. They have created hoodia plantations and market a diet product containing hoodia to obese Americans and Europeans. The diet product, which hit the world in 2008, stands as a symbol for a divided world where some have too much food, and millions more, far too little. One-fifth of the world’s people—1.2 billion human beings—live in “extreme poverty,” on incomes of $1.25 day or less, slowly dying of hunger and disease.¹⁷ Three billion others also desperately need more material goods. Yet, were they to begin consuming as we do, the result, as we learn in the next two chapters, would be an environmental catastrophe.

It is critical that we begin to set another example for the world, and quickly.