Democracy and Income Inequality America The World's Richest Banana Republic


Democracy, a form of representative government where regional segments of a population choose their leaders, has been generally defined as “government of the people, by the people, for the people”.

But this is all fantasy and fairy-tale. No such form of government has ever really existed, and certainly none exists today. In every so-called democracy today, the population has no say in anything, and no significant issues are ever even addressed, much less intelligently debated.

But the theory has been so deeply implanted in Western minds, most especially in US minds, that the propagandised population repeat this theory like parrots copying monkeys, apparently unable to see or examine the starkly different underlying reality.

Management Has Abandoned Itself to Servitude 

Democracies generally, and the US in particular, do not attract the best or brightest individuals to elected government, and power has generally accrued to the power-hungry and to the riff-raff who “couldn’t make it” elsewhere.

This is so true that there is no shortage of examples. George Bush Jr. failed at everything he tried – except becoming President of the US.

Stephen Harper, Canada’s Prime Minister, finished high school, dropped out of university, and worked in a mail room. With the benefit of fate, he become the leader of a reconstituted party that was elected in the wake of serious scandals affecting Canada’s only other major party.

There is no evidence that Mr. Harper’s credentials would qualify him as a manager for a 7-11 or a waste management company, but he became the Prime Minister of the country.

Contrary to what most Americans, and many Canadians, would tell you, this is not a manifestation of the “American Dream” where anyone can rise to the top by hard work.

It is instead a devastating indictment of the glaring shortcomings of the democratic system, demonstrating the ease with which the incompetent can obtain the power to destroy what was a perfectly good country.

Other countries like Australia and the UK have many comparable examples of truly inferior and substandard individuals taking leadership.

In large part because of this substandard human content, democratic governments have been overpowered by those who are the best and brightest, generally the captains of industry and the military/espionage/industry complex, and by those with money – the US FED, the (mostly Jewish) international bankers, AIPAC, the Jewish lobby and Israeli interests.

These powerful and wealthy private interests and special interest groups have taken almost full control of most democracies, their money and influence increasingly dictating the political and social agendas for these nations, agendas beneficial to them alone.

All democratic governments to some extent, but again primarily the US, have essentially abandoned their respondibility as “managers” of their nations and societies, have lost the thread of “management for the people”, and instead have relegated their nations to a condition of “management for the benefit of private interests”.

Actions Speak Louder Than Words 

That is the situation today. That is why the US FED and the government spent trillions bailing out the banks that created the 2008 crisis, calling it a ‘financial crisis’ instead of identifying it as the human disaster that it really was.

The banks were not too big to fail; rather they were too well-connected to fail. The people, on the other hand, were irrelevant, which was why no criminal charges were ever laid nor any punishments assessed.

As a result of the criminal activities by the US FED and the international bankers, tens of millions of Americans lost their homes and their jobs, and many millions of well-educated Americans are today living in tent cities or little cardboard boxes under the overpass.

The middle class in America has been totally gutted. During this humanitarian crisis, countless tens of millions of Americans abruptly descended from the middle class to the lower class.

The nation’s middle class today is less than half the size it was in 2007, with almost all that difference now falling into what is probably the largest lower class percentage in any developed nation in the world today.

Today, a full 25% of the US population have a zero or negative net worth, are now living below the poverty line and cannot buy sufficient food without government aid. And the US Gini index is now worse than that of China, as you will see below.

According to reports, more than half of US parents believe their childrens’ future will be poorer than their own.

From 1970 to 2008, top-tier incomes rose by 385%, second-tier by 141%. But the bottom 90% of Americans saw their incomes decline by 1% in real terms, and the average income of this 90% of Americans is not the $45,000 we read so often. It is only $31,000 and dropping.

Those statistics are not reflective of a financial crisis, but of a humanitarian one, a fact that has gone unnoticed and unmentioned, the focus being entirely on the potential financial distress to US banks and large corporations.

“Society” is a Dirty Word

The management of these nations for the benefit of special interest groups has become so embedded that ‘socialism’, which is nothing more than a concern for the overall welfare of the nation and its people, has become a dirty word.

As evidence, most Americans are energetically, and sometimes almost violently, opposed to socialism though few appear to have any understanding of the term’s actual meaning.

Socialism – caring about the people of a nation and about their welfare, is equated in the American mind to a hateful dictatorship with no rights or freedoms – in fact, to the precise opposite of the term’s real meaning. Such is the power of propaganda.

The Gini Index 

Giving the lie to popular American rhetoric, China, with a Gini coefficient of 0.415, is a significantly more equal society than is the US with a Gini of 0.450.

Income inequality is more severe in the U.S. than it is in nearly all of West and North Africa, Europe, and Asia. It is on par with some of the world’s most troubled countries, many embroiled in severe social destabilisation.

The US in fact ranks near the extreme low end of the inequality scale, comparable with a quite unflattering list of nations: Cameroon, Madagascar, Rwanda, Uganda, Mexico, Côte d’Ivoire, Serbia, Sri Lanka, Nepal, Uruguay, Ecuador, Argentina, Guyana, Nicaragua, and Venezuela.

Income inequality is actually declining in many of these nations while it continues to increase in the United States. Economically speaking, the country that once called itself “the richest nation on earth” is starting to resemble a banana republic.

The main difference is that the United States is big enough to maintain geographic distance between the villa-dweller and the beggar.

Government By the Top 1%, For the Top 1% 

Joseph Stiglitz wrote a compelling article on this problem of income inequality in the US, providing an intelligent explanation as to its causes, and a concerned illustration of its dangers to American society and to US political survival.

His article orginally appeared in Vanity Fair, and here is the link. If you cannot access the original, it has been copied and posted here.

He began by telling us, “it’s no use pretending that what has obviously happened has not in fact happened”. And what has happened is that the top 1% of Americans now take in 1/4 of all the nation’s income every year, and control 40% of the nation’s wealth.

He tells us, and it is clearly true, that as a society becomes more divided in terms of wealth, the wealthy – who control the government – are more reluctant to spend money on what Stiglitz calls “common needs” – things like health care or education.

The rich can provide for themselves and they tend to quickly lose empathy for those not as rich or fortunate as themselves. Greed and inhumanity are in control.

Since these people control the government through their power, wealth and influence, they invest time and money to keep it weak lest it use its powers for the common good.

Stiglitz claims inequality exists because the top 1% want it that way, and his point is impossible to argue.

The facts are everywhere, in the lobbying, vote-buying and extreme pressure on tax policy, lax enforcement of anti-trust laws, manipulation of the financial system, and an almost 100% immunity for corporations and their executives to not only loot the nation and the people but to be held harmless for their crimes.

He points out that the US Supreme Court has now enshrined the right of large corporations and their executives to buy politicians and the government, by removing limitations on campaign spending.

Virtually all the politicians in the US are kept in office by this top 1%, and are rewarded well for their servitude – not to the nation, as per the oath of office they took, but to those who bought and paid for their election campaigns.

Stiglitz points out too, that most of the key executive-branch policymakers on trade and economic policy also come from the top 1%, and the assistance they provide to their friends in plundering the nation’s treasury is almost breathless.

As an example, these people gave the large pharmaceutical companies a trillion-dollar gift which went totally unnoticed (or unappreciated) by the general population.

The US government, through its national medicare programs, is the largest buyer of medications in the country. But this group of friends coerced their paid lackeys in government to pass a law preventing the government from bargaining over price, and being forced to pay the highest prices for brand-name drugs when generic substitutions would save billions in the federal treasury.

Moreover, the government cannot even look for ‘volume discounts’ from these pharma companies. If that isn’t a good example of effective total control by money and corporations over a government of the people, I cannot imagine what would be.

This same 1% has enough power and influence that many of their paid politicians will attach to any proposed law or bill a provision for yet more tax cuts for the rich. Refusal to approve this add-on would kill any passage of legislation.

That is the way the system works. It was the same with the recent US health care legislation. A large part of the reason that the US Health Care System is so expensive and inefficient is that private (1%-owned) insurance companies control the system.

Americans cannot simply obtain health care at cost. They must buy insurance policies from companies that add huge percentages for reserves, overhead and profit, to the point where these costs can almost double.

Of course it is financially disastrous for the nation and for the people, but it is highly profitable for a handful of individuals in this top 1%. And since they have bought and paid for the politicians who make the laws, their position is secure.

At the end, Stiglitz makes a serious point, but I fear he might as well be wailing in a forest somewhere because there are no powers remaining in the US that would listen to his plea. He tells us:

“Of all the costs imposed on our society by the top 1%, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important.

America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe.”

I would add that the chances of a poor citizen reaching the middle class are also far higher in China than in the US. The American Dream has been killed by the 1%. In contrast, the China Dream is only just beginning.

The United States of Inequality 

Timothy Noah produced a well-written series of 10 articles titled “The United States of Inequality”, in which he examines the various causes of the alarming decline in income equality in the US. This is worth reading. You can access it here.

In these articles, he attributed the blame for this development as follows:

International Bankers and pampering of the Rich: 30%

Failure of the education system: 30%

Decline of labor: 20%

Trade and Tax policies: 15%

Mr. Noah’s examination was excellent and well-thought out, but he failed to make the one most important link, the cause that was so obvious to Stiglitz, that link being that the steady and increasingly rapid decline in income inequality in the US was not an accident, but occurred primarily because the top 1% wanted it and caused it.

To clarify, the US top 1% exerted every manner of influence, including buying politicians and votes, to ‘feather their own nests’.

An inherent and necessary part of this process was the destruction of labor and wages, the financial strangulation of the US educational system, and the skewing of tax policies and international trade practices to favor only this same 1%.

To Hell With the Country. Let’s Make Profits

The great ‘hollowing-out” or the gutting, of American manufacturing did not occur because “China stole the jobs” as the 1% were so fond of claiming, and of which they have convinced most Americans through their control of the media.

Instead, the hollowing-out happened because this same group negotiated from the US government an enormous tax break – specifically that any profits earned (and kept) outside the US would be tax-free.

The only possible result of such a success should have been immediately clear to everyone. All the US multi-nationals fired their employees, closed their factories, and moved production offshore where costs were much less and profits immeasurably greater.

It was the Mattels and the Levi’s and the General Motors, and countless firms like them who gutted American manufacturing, eliminating millions if not tens of millions of middle-class jobs and totally eviscerating America’s middle class.

And these same firms today, with their countless billions of dollars in profits remaining overseas, are now pressuring the US government to permit them to bring home all those profits on a tax-free basis on the unbelieveably disingenuous basis that they would use them “to create more jobs”.

But of course they won’t create any jobs. What they will do is repatriate their profits, pay small taxes on capital gains or dividends, and pocket the money to be used to further their destruction of American society.

This story is not playing out in Europe since the Europeans were both smarter and more socialistic than was the American government. In Europe, salaries and wages are protected, as is the social safety net. In many European countries, the people are still more important than profits. The US can no longer even pretend to make such a claim.


Dr. 龙信明 who is the Founder and the Editor for is also one of the frequent contributors for The 4th Media.


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