Is Capitalism Working Today?

From 1977 to 1989 the top 1% (income over $350,000/yr) received 72% of the country’s income gains (while at the same time their taxes were cut $83 Billion a year). During this same period, the bottom 60% of us actually had our incomes go down.

From 1973 to 1993, wages of low income laborers (janitors, etc.) went down 15%. Wages of production workers went down 20%. Wages of young male high school grads went down 30%. Wages of middle-age men with 4 years of college went down 24%. And the total wages of those earning a million dollars or more a year shot up an average of 243% per year !!!

In 1952, the average factory worker had to work one day to earn the closing costs for a brand new home in Levittown, PA. In 1991, it took the average factory worker (if he was lucky enough to have a job) 126 days to earn the closing costs on the same (now 40-year old) house! What’s worse, the average factory worker now doesn’t make enough to qualify for a mortgage on that 40-year old tract house.

In 1970, the median Philadelphia family paid $1,689 in income and social security taxes. In 1989, they paid $8,491. Meanwhile, the average taxes paid by millionaires went down by $436,389 each per year.

In 1982, 75% of workers at companies with 100 or more employees had fully-paid health coverage. In 1989, only 48% of them were covered.

From 1980 to 1993, the Fortune 500 companies eliminated 4.4 million jobs, while sales increased 140%, assets 230%, and CEO compensation 610%. These companies employ 0.05% of the world’s population, but control 25% of its output and 70% of the world’s trade.

The standard of living in this country is going down fairly rapidly. All too often both husband and wife must work, and many have two and three jobs, none of which have benefits or retirement plans. Why is this happening? We used to be told productivity was everything. Has productivity gone down? Hardly! In fact, productivity has been going up so fast that companies can get by with a small fraction of the work force they once employed.

So what’s happening? Why hasn’t increased productivity paid off for workers with higher wages and shorter hours? Here’s your answer.

Manufacturing workers produce an average of $95,519 worth of product per year, or $1,837 per week. Of this, $330 goes to the worker, $64 goes to the government in taxes, and $1,443 goes to the corporation for overhead, interest, advertising, and profits. Corporate lobbyists try to get workers excited about the $64 in taxes they’re not getting. Nobody mentions the $1,443 per week they’re being "taxed" by the corporation. In the good old days, the average CEO made a salary 10 to 15 times that of the average factory worker. Today, they make 150 times as much!

All this helps explain why the net assets of the 400 richest Americans is $300 Billion, while the total net assets of the 150 million poorest Americans is zero.

Capitalism is working???

If just the unearned income of the fatcats were redistributed, every adult American could be given $30,000 a year!! (See The $30,000 Solution by Robert Shutz, PhD, Fithian Press.)

In 1970, the richest 1% of Americans owned 20% of the nation’s wealth. By 1989, it was 40%, and it’s still going up. In England, with its royalty, its class system, and all that, it’s only 18%.

The rate of child poverty in the U.S. is four times that of Western Europe. Among all industrialized countries, we’re #1. Number one in child poverty. Number one in the gap between rich and poor. Number one in unimmunized children. Number one in teen pregnancy. Number one in deaths by gunfire. Number one in poverty among the elderly. Number one in citizens without medical coverage.

And just for a second, let’s take a look at capitalism on a global scale. At last count, there were 358 billionaires. Their assets exceed the total annual income of over 2.8 billion people and whole nations containing 45% of the earth’s poplulation. The common myth is that there’s not enough rich people to make a dent in poverty even if all their wealth were taken away. The fact is that while nobody’s advocating doing it, redistributing the assets of 358 people could double the income of half the people on earth!

Nike pays Michael Jordan more to advertise their shoes than they pay all the workers in all the factories who make them. If Michael were willing to get by on just the several millions a year he gets for actually playing basketball, he could double the salary of all the women and children making Nike shoes. Throw in his salary from Wheaties and he could do better than that. (This is not meant as a criticism of Michael Jordan, but of Nike and its priorities.)

In the last 30 years, the richest 20% of the world’s population saw their share of global income rise from 70% to 85%. And the share of the poorest 20% fell from 2.3% to 1.4%.

Global capitalism is working??

But things are changing. We have welfare "reform." As Jerry Brown points out, Franklin Roosevelt made it possible for widows and single mothers to stay home and raise their children to be solid citizens. Now the goal is to institutionalize the children and force the mother to find a job for $5.50 an hour. (Where we are going to find jobs for the 14 million officially unemployed and the 35 million who have dropped out of the system, nobody knows. The Federal Reserve is committed to maintaining unemployment at near present levels to keep inflation down. The bond holders like it that way.)

So much for pragmatism. Our current form of capitalism may be working for the wealthy few, but it’s sure not working for the many. It never has worked for the African-American youth in the inner cities. (Even in the glorious 50s, they were largely left out. It’s just that nobody noticed back then.)

It isn’t even working for what’s left of the middle class. Job security is a thing of the past. And as things get more and more intolerable for the underclass, everyone is endangered. As Rev. William Sloane Coffin used to say, "Those who make peaceful change impossible make violent change inevitable," and "You can’t have a revolt without revolting conditions."

The truth is that capitalism isn’t working. It’s not working in the United States. And it’s a living hell for people in Russia, Mexico, Honduras, Peru, Indonesia, and around the world.

Continue to Next Page Capitalism and Consumption

Return to Beginning of Christian Economics

Return to United Catholic Church Home Page