6th February 2012
Grantham says the US has become a "plutocracy, designed to prolong, protect and intensity the wealth and influence of those who already have wealth and influence." He calculates that the richest 400 in the US have assets equal to the poorest 140 million.
And he states that the average wage per hour now in the US is – adjusted for inflation – at 1970s levels.
The difficulty that Grantham and similarly minded people have is in changing a culture which has seen a one way switch from poor to rich over the past four decades. But unless the direction is reversed, then emerging nations such as China, India and Brazil will further their advantages leaving the US – and by extension the UK and parts of Europe – with an even greater probability of decline.
Unsurprisingly, Grantham says, margins are at a peak despite high unemployment and spare capacity.
He writes: "The Occupiers have a theme that social justice and tax schedules in particular have moved against the working poor. They feel that capitalism and corporate influenced governments have, for the time being let them down. I believe they are right."
Taxes have increased for the poor, but diminished for the US ultra-rich – part of the efficiency of "capital's propaganda machine". Trickle down has never happened – it's all trickle up.
But despite static real earnings, many Americans – at least those in jobs – have felt better off thanks to importing low cost goods from elsewhere.
This has a real impact on the US economy.
Can countries change course?
Much change in nations comes as a result of revolutions (the Soviet Union), conquest (European empires) and war (the UK from 1945 to 1950, eastern Europe from 1945 to 1990). But short of this form of cataclysmic change, how do countries alter course? The question has relevance for Greece, and less obviously the United States and the United Kingdom.
Now the New York Review of Books asks "What would it mean for a country to change profoundly? What real news would we get of that and how would it feel to its citizens? Would it necessarily be a good thing?"
It ponders these points about Italy and author Tim Parks has lived in Italy, with its "debt-funded decadence" for 30 years. He expects change as a result of But change a few of the specific cultural references to cities and to history, and it could easily apply to any country -very easily to other Mediterranean cultures, slightly more difficultly to elsewhere.
Of course, there are Italy-only factors such as the power of the church or the role of the family – not to forget the existence of the Mafia and organised corruption. But other nations have corruption or family ties – just different. The call for a change to a meritocracy in Italy has similarities to a UK pundit bemoaning the number of government ministers (and London mayor) who passed through the same school and same university at more or less the same time.
Countries, including Italy, experience the greatest change when faced with a real threat. For Greece, this could be default and bankruptcy. But while Grantham wishes for a more equitable tax and social system in the US, where is the external threat severe enough to cause a real change in thought patterns?
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