It can be the best of times or the worst of times, but

whether in prosperity or recession, there is one constant in the United States

economy–the richest country in the world has maintained a permanent class of

Americans who are poor. That is not an accident. It is maintained by official

action as deliberate as Alan Greenspan’s protection of the prosperity of banks

and stock markets. In this case it is the scandalous maintenance by new laws and

regulations, new tax codes, and special multi-billion tax waivers for favored

giant corporations. Those in this permanent class are not the momentarily

unemployed. Most of them shift jobs. Or alcoholics, addicts and the handicapped.

Most of them work. Neither are they inevitable as temporarily unlucky in a world

of global economic change. Long before the "new economy" and after it, none of

our Western European peers of affluent nations has sustained a permanent class

of the poor like one in the U.S. Those other countries have social policies that

prevent it.

When confronted

with persistent poverty in the world’s richest country, the American mainstream

print and electronic media seem to take as their mandate the biblical words from

Matthew, "The poor ye will have always." They do this with little concern that

poverty in the midst of plenty in the world’s richest country is an American

exception among all advanced societies. (The U.S. is the richest in Gross

Domestic Product and in per capita income is second only to Luxembourg.)

The news media

may protest that they do cover the poor. And in one sense, they do. But these

are typically isolated stories about a hard-luck family in a disaster area, or

profile of the plucky Midwest downsized manager flipping burgers at McDonald’s

—sympathetic features but depicted as isolated cases. Reported only rarely and

obscurely is why the United States, among all its affluent peer countries,

retains a poor class year in and year out.

Given the

symbiotic relationship between our national politicians and the main news media,

that media failure has consequences. What the main media ignore, political

leaders know they can safely ignore. The needy appear only at election time in

stereotyped rhetoric and campaign photo ops. The empty rhetoric without

subsequent media follow-up has deepened the comfortable assumption that in

America poverty is an unavoidable act of God. When a government report documents

one element in permanent poverty, like the 1997 HUD 1997 document on the

unrelenting rental housing crisis, it passes out of print in one day, not

followed up with emphatic subsequent stories, which is the process that produces

political pressures for action. Or the mainstream news relates it to the

"millionaire-market" housing scene in San Francisco Bay or midtown Manhattan,

not the same crisis for average families in suburbs of Chicago and rural Kansas

and thousands of other cities and towns.

Permanent poverty

may have been inexorable in biblical times, when there really was inadequate

food, inefficient use of arable land, rigid class systems, slavery and serfdom.

But today’s world has enough food for everyone, and affluent countries like the

United States have enough rich resources to guarantee their populations enough

decent food, housing, universal health care, jobs and pensions. Most of our peer

countries do exactly that. Only the United States has chosen not to rid itself

of a permanent poor.

The United States

is unique among the world’s advanced industrial societies-France, Germany, the

United Kingdom, for example. It has retained this dubious exception s for so

long – almost half century —- that a poverty class in this country is now seen

as normal, inevitable, and, with parallel media unconcern, consequently


Who are "the

American poor" and are they really poor?


statistics periodically adjust the poverty level in the country to reflect

changes in the cost of living. In 1999, for example, a family of three with a

household income of $13,880 or less was classified as living in poverty. Of the

32 million Americans in poverty, 72 percent were in families. These include one

of every five American children. These are not poor because they lack Cuisinarts

and BMWs. They are poor because they lack enough food, shelter, and access to

other elementary living conditions in any modern society.

Why do we permit

this when our peer nations do not? The answers are not mysterious: official

housing policies, deliberate shifting of national wealth to the top through

destruction of the national progressive income tax, mammoth special favors for

corporations, and cynical treatment of the national minimum wage.

Why do the

mainstream news media share the blame?

A dramatic

demonstration of media’s guilty involvement occurred thirty years ago. When,

suddenly, as though from nowhere, we had homeless families living in the

streets. For national civic life it was the dead canary in the coal mine. We

know why the canaries die in the mines: it is a warning of methane gas kills

sensitive canaries before it kills human beings. The dead canary of structural

American poverty was the sudden appearance of the homeless in the early 1980s.

In the 1980s, the

number of poor Americans began climbing noticeably. By 1998-1999, the average

poor child was further below the poverty line than he or she was in 1979.

The 1979-1980s

change tells something crucial. By the mid-1980s, seemingly out of nowhere, for

the first time since the Great Depression, large numbers of individuals and

families were living in the streets. "The homeless," is a social phenomenon

usually associated with countries like Bangladesh, but has now survived as a

visible urban fixture in this richest of countries.

Emblematic is the

failure of the big newspapers and broadcasters to search out the source of the

new homeless when they first appeared in the 1980s. Most often, the media refer

to the homeless who are alcoholics, drug addicted, or mentally ill. But we

always had alcoholics, addicts and the mentally ill before without large numbers

of families living in the streets. Something radical had changed.

A hint of what’s

changed is that the homeless-a minority of the total poor – are homeless even

though, according to the Bureau of Labor Statistics, 64 percent of them have

jobs, some of them two jobs, but they are still poor by government standards.

No affluent

democracy has been able to house its low-wage families by depending on the

private real estate industry. Government-subsidized low-cost housing has been

found indispensable if all are to be housed in minimally decent homes and

apartments. Before 1979, the United States subsidized 200,000 such low-income

units a year. In the early 1980s, in the new fervor for shifting everything

possible to the free market, subsidized low-cost housing subsidies were cut by

92 percent. That is the central reason we suddenly had a permanent beggar class

and families living in the streets. Few readers or TV news watchers were ever

told the basic reasons why our homeless happened "out of nowhere."

Why the media’s

strange lack of curiosity? It was part of the main media’s gingerly treatment of

basic causes of social ills whose remedies might involve an increase in taxes.

On the contrary, the media generally celebrate the opposite-whatever reduces

taxes. Explaining the "dead canary" of the suddenly homeless might have

stimulated renewed appropriations for subsidized low-cost housing-taxes for the

benefit of the most politically powerless group in the electorate.

There are other

contributing forces to persistent homelessness. Earlier it had been found that

most of the institutionalized mentally ill were improved if they were released

to local treatment centers in their home cities and received counseling at local

treatment centers. So mental hospitals were effectively emptied, saving millions

of tax dollars. But even more taxes were saved by reneging on the promise to

shift the saved money to local treatment centers.

The majority of

the poor are not mentally ill. They are mentally sound, non-addicted individuals

and families. But they remain poor. According to the Department of Housing and

Urban Affairs (HUD), from 1985 to 1993 the private market for affordable housing

dropped another 20 percent, and, according to the Journal of Housing and

Community Development, only 33 percent of Americans eligible by law for federal

housing actually can find such housing.

The Journal’s

December, 1997 issue reported, "With affordable housing out of reach for growing

numbers of low-income Americans, the housing crisis can only be expected to

worsen…the recent actions by Congress have further disenfranchised an already

disadvantaged segment of the American family." In 1995, there were 1.3 million

low-cost housing units available for 2.6 million low-income renters, as shown by

a survey by the Center on Budget and Policy Priorities. Yet, in that same time

period, according to the National Association of Realtors, the median price for

a single family house rose 45 percent. With low-cost rental apartments

unattractive to the real estate industry and failure of the needed government

subsidies for what the private market prefers to reject, the "mystery" of both

the homeless and the impoverished 32,000,000 Americans is not very mysterious.

In addition, the

poor have been paying steadily higher percentages of their income on rent-more

than 50 percent of their disposable income. In a Catch-22, from the remaining

half or less must come other indispensable human needs, like food, clothing and

payment of their unfair burden of the most regressive taxes.

Underlying the

issue is the shameful phenomenon of a radical shift of national personal wealth

from the bottom 80 percent of the population to the top 20 percent, with the

lion’s share of that going to the top 1 percent. The fact that such a gap exists

gets into American news occasionally, but as a routine statistic, like the corn

crop in Kansas.

The United States

has the widest gap in the world between its very rich and its unrich. The gap

has grown year after year, neither by accident nor by talent and hard work by

the super-rich. American workers are unique in their low share of their

employers’ revenues compared to our counterpart countries. The typical American

CEO receives 34 times the typical American factory worker who now earns less (in

absolute dollar terms) than hourly workers in Japan, Germany, or Switzerland.

The multi-million- and billion-dollar executive compensations show no

relationship to the performance of those corporate executives, according to our

most prominent authority on executive compensation, Graef Crystal, formerly of

the University of California at Berkeley and now with Bloomberg News. He has

said, "It gets worse and worse…It’s absolutely sick."

The massive shift

of American wealth to the top has been reported in the media, but without the

sense of outrage and alarm that would puzzle a Lincoln Steffens, Ida Tarbell,

Franklin Roosevelt, or any number of political and media leaders of past eras.

Though the main media attitude toward the poor seems to take comfort from the

Book of Matthew’s resignation to their plight, the media seem less interested in

another biblical reference, "It is easier for a camel to pass through the eye of

a needle, than for a rich man to enter into the Kingdom of God.."

Other affluent

countries lack the size and causes of the permanent American poor. The answer is

simple. The other rich countries have housing, employment, pension, and tax

policies that prevent it. The overall answer is an inexcusable fantasy aided and

abetted by our major media, newspapers that, for example, have "Correction

Columns" for errors like printing the wrong middle initial of a politicians. The

media fantasy, aided and abetted by politicians, have convinced the people of

the United States of a falsehood, namely, that we are a brutally over-taxed

country. The truth is that of all the affluent democracies, Americans are the

lowest taxed in the world, including the sum of all local, state, and national

taxes. Consequently, when this fantasy is shrill in every political campaign –

promising lower taxes as a dire necessity— it is accepted as an urgently

needed rescue of that beleaguered population, the very rich. Though the main

media love to find culprits in social problems, on this they practice selective

amnesia. For more than half a century, the share of federal taxes paid by

corporations has been dropping radically and shifted onto families and

individuals. In 1940, corporations paid 40 percent of federal revenues. By 2000

it had dropped to 12 percent. Guess who pays for that shift.

Even though money

supply and national wealth have grown, in 1955 corporate taxes paid for 6

percent of our Gross Domestic Product but now pay only 2.5 percent. Except for

Japan, U.S. income taxes as 34 percent of GDP are lowest among industrialized

nations. The rate in Canada is 36 percent, Germany 39 percent, Switzerland 50

percent. It is not coincidental that most of those other countries have

universal health care, guaranteed housing and more generous social benefits than

United States.

The top federal

income tax rate for the richest Americans was once 70 percent, though people

that rich hired the best accountants and tax shelters, so few paid anything like

the top bracket. The top rate in 2000 had dropped to 39 percent, and in practice

it is closer to 33 percent, and few in that theoretical bracket pay that much

for the same reasons. Now the Bush Administration wishes to drop it to 25. The

country’s progressive income tax is now close to dead.

However, some

taxes do go up. The loss of our federal progressive income tax has year-by-year

shifted basic American taxes to the most regressive kind in which the poor pay

more of their income than do the rich. In the resulting shift of taxes from

Washington income tax responsibilities to states, counties and cities, these

jurisdictions have resorted to sales taxes, the most regressive kind. Here, of

course, the poor pay the most in terms of disposable income. In 1995, according

to Citizens for Tax Justice and The Institute on Taxation and Economic Policy,

the lowest 20 percent of family incomes paid 12.5 percent of all state and local

taxes (property, sales, and fees) while the top 20 percent of families paid 8.5

percent of their family incomes.

A 7.5 percent

sales tax on a minimum wage worker represents a significant percentage of that

person’s income. The same percentage sales tax on a millionaire is a negligible

percentage of total income, which is why, in the need for revenues, corporations

and the rich insist on sales taxes instead of higher federal income taxes.

The final insult

to the poor is the minimum wage. Corporations and the rich fight every move for

an increase, the way they fought against creation of the minimum wage in the

first place. In 1970 the minimum wage was worth 29 percent more in real terms

than it was in 2000. According to the Economic Policy Institute, in 1970 minimum

wage workers were living above the poverty level. In 1998, only 19 percent were.

A standard

objection that it will reduce the number of jobs available, or force small

businesses into failure has no basis in reality. The Institute says a raised

minimum wage has never resulted in significant reductions in jobs or closed


Objectors to

Minimum Wage have always raised the image of denying the after-school teen-ager

learning how to be productive. But in 1999, 71 percent of people earning the

minimum wage were adults.

If the Dow Jones

Industrial Average dropped steadily for twenty years it would be front page and

leading broadcast news day after day until government took action. That 32

million of our population have their housing, food, and clothing "index" drop

steadily for more than 30 years is worth only an occasional feature story about

an individual or statistical fragments in back pages of our most influential

news organizations. An unnecessary poverty class is shameful in "the leader of

the free world" and the richest one at that. A fraction of the media’s daily

attention to the Dow, the media’ role in creating the myth of overtaxed

Americans and the notion of an inexorable American poor class, make our

mainstream papers and broadcasters a party to a cruel and unnecessary flaw in

our society. Corporations and Washington legislators may point with helpless

resignation to the biblical assertion that the poor will always be with us, but

the experience of other rich countries like Germany, France, Canada, and Britain

suggests that the answer lies less in Book of Matthew, and more in The

Congressional Record.

Ben H. Bagdikian

is the author of In the Midst of Plenty: The Poor in America (Beacon Press,

1963), The Media Monopoly (6th Ed., 2000), other books. He is the former Dean of

the Graduate School of Journalism at the University of California at Berkeley.




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