Thursday, October 23, 2008

The Gap, Part Two

Yesterday I blogged about the huge gap in income between the rich and poor in the US. I posted a graph from The Economist that shows we have the biggest gap of all 30 OECD countries.

Here's a YouTube1 by Howard Zinn (a historian and author who I don't know much about but I can be a fast study). In it he says that this wide income gap in the US is responsible for the recent economic crisis (as it was during the Depression), and that the $700 billion bailout (or rescue) is a magnified version of the trickle down theory.

In his words:
"[The bailout] is a magnified version of the trickle down theory."

"The root of the economic crisis is today as it was in the 1930s, the root of it is the enormous gap between the wealth at the top and the insecurity on the bottom."

"One out of every 5 children in the US, throughout these last decades was born into poverty."

"And so the root of it, the root of the problem, is this gap between rich and poor. There's no purchasing power at the bottom."

"To me, the solution is obvious. Instead of giving the $700 billion to financial institutions, you take that money and you give it directly to the people who need it ... in direct aid to people who are going to lose their homes ... and the government should create millions of jobs ... this was done in the 30s."
If trickle down works, why when the country was experiencing an economic boom in the 90s were 20% of children still being born into poverty? Why did the income gap persist, and widen?

Maybe Zinn's idea to inject the money at the bottom is better than President Bush's idea (rather, his Treasury Secretary, Paulson's, and Federal Reserve Chairman Bernanke's idea) to inject the money at the top. I don't know. I'll say this ... I hope that $700 billion trickles down real soon.
1 The interview was conducted by The Real News Network. There's another Zinn interview there (including transcript) where he says neither McCain nor Obama have a big enough social tide behind them to make any real change. Really watchable stuff.

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