2015 Social Progress Index

by user








2015 Social Progress Index
Is the United States Still the Best Country in the World? Think Again
Hershey H. Friedman, Ph.D.
Professor of Business
School of Business
Brooklyn College of the City University of New York
E-mail: [email protected]
Sarah Hertz, Ph.D.
Assistant Professor/Mentor
Business, Management, and Economics
Empire State College, State University of New York
Email: [email protected]
This paper examines the rankings of the United States in key areas so that people can see for
themselves how well the country is actually doing. Areas examined include: percentage of
people living below the poverty line, children living in poverty, income inequality, median
wealth per adult, happiness, GDP per capita, Corruption Perception Index, quality of education
and health, democracy ranking, size of prison population, and stability as a nation. Sadly, the
United States does poorly on many of the above measures. The 2015 Social Progress Index,
which considers 52 different measures, ranks the United States 16th out of 133 countries. It is
hoped that examination of the above statistics will make people aware of how much needs to be
done if the United States wants to remain a world power.
Keywords: Ranking of United States, income inequality, Gini coefficient, poverty, social
progress index, OECD better Life Index, happiness, Corruption Perception Index, prison
population, and Fragile States Index.
Electronic copy available at: http://ssrn.com/abstract=2622722
Americans must stop convincing themselves that nothing is wrong and that the United States is
still number one in the world. Let us examine our rankings in key areas and see how well the
United States is actually doing on various measures of well-being. The first myth to be
dispelled: we are no longer the world’s largest economy when adjustments are made for
purchasing power parity. On the basis of purchasing power (and not by converting everything
into dollars), China overtook the United States at the end of 2014. At the end of 2014, China
accounted for 16.48% of the world's purchasing-power adjusted GDP (or $17.632 trillion), and
the US made up 16.28% (or $17.416 trillion) (Bird, 2014). The United States will continue to
shrink if changes are not made.
Percentage of People Living Below Poverty Line: U.S. Ranks 35th best out of 157
Chad, Liberia, and Haiti are tied for last place with 80% of the population living below the
poverty line. Data is based on CIA World Factbook and is accurate as of January 2012
(http://www.indexmundi.com/g/r.aspx?v=69). Taiwan is in first place with only 1.16% of its
population living below the poverty line. It should be noted that countries define poverty
differently; in general, wealthier nations use higher standards of living to define poverty than do
poorer nations.
More than 50 years ago on January 8, 1964, President Lyndon Baines Johnson (LBJ) declared
an unconditional war on poverty in the United States. He said: “The richest nation on Earth can
afford to win it” (Page, 2014). Apparently, we lost the war: the official poverty rate was 19%
Electronic copy available at: http://ssrn.com/abstract=2622722
in 1964 and had fallen to 12.1% in 1969. The poverty rate was 14.5% in 2013, but the number
of poor people has been stuck at 45.3 million
It should be noted that the demographics of the poor have changed. One key change is in the
sharp drop in the number of elderly poor. In 1966, 28.5% of senior citizens (ages 65+) were
poor; in 2012, only 9.1% were poor. This was due to Social Security and the fact that it was
indexed to the cost of living. Poverty among African Americans has also dropped sharply from
41.8% in 1966 to 27.2% in 2012 (http://www.pewresearch.org/fact-tank/2014/01/13/whos-poorin-america-50-years-into-the-war-on-poverty-a-data-portrait/).
Children Living in Poverty: Rank = 34 out of 35
The United States ranks in 34th place out of 35 countries surveyed in children living in poverty.
Poverty is defined by UNICEF as living in a household that earns less than 50% of the national
median. The United States is behind all European countries as well as Australia, Canada, Japan,
and New Zealand. We are only above Romania
Approximately 25% of children in the United States live in poverty – the highest among all
developed nations (http://www.povertyprogram.com/usa.php).
Income Inequality: U.S. is Fourth Worst in the World
The Gini coefficient (or index) is the most commonly used measure of income inequality. It
ranges from 0 (a state of perfect equality) to 1 (where all wealth is held by one person, or a state
of perfect inequality). Countries with the most serious problems of income inequality are Chile
(Gini = .501), Mexico (.466), Turkey (.411), United States (.38), and Israel (.376)
(http://www.therichest.com/rich-list/poorest-list/10-countries-with-the-worst-incomeinequality/?view=all). [See also Max Roser (2015) – ‘Income Inequality,’ Published online at
OurWorldInData.org. Retrieved from: http://ourworldindata.org/data/growth-and-distributionof-prosperity/income-inequality/ ].
According to Altman (2014), it is not only about income; distribution of wealth may be an even
better measure of true economic power than distribution of income. In 1992, the top 10% of the
population controlled 20 times more wealth than the bottom 50%; in 2010, this number
skyrocketed to 65 (Altman, 2012). Senator Sanders of Vermont (Independent) declared: “The
American people are angry; they are hurting; they are sick and tired of Wall Street and the very
rich becoming richer while the middle class disappears” (Page, 2014).
Sadly, most Americans do not understand what it means to be poor in the United States. A
recent Pew poll indicated that more than 75% of self-described conservatives feel that “poor
people have it easy because they can get government benefits without doing anything” (Reich,
2014a). Another survey demonstrated that most Republicans believe that people are poor
“because of a lack of effort” and that people are wealthy because “they work harder than others”
(Blow, 2014). According to Reich (2014a), the truth is very different. He asserts:
In reality, most of America’s poor work hard, often in two or more jobs.
The real non-workers are the wealthy who inherit their fortunes. And
their ranks are growing. In fact, we’re on the cusp of the largest intergenerational wealth transfer in history. The wealth is coming from those
who over the last three decades earned huge amounts on Wall Street, in
corporate boardrooms, or as high-tech entrepreneurs. It’s going to their
children, who did nothing except be born into the right family. The
“self-made” man or woman, the symbol of American meritocracy, is
disappearing. Six of today’s ten wealthiest Americans are heirs to
prominent fortunes. Just six Walmart heirs have more wealth than the
bottom 42 percent of Americans combined (up from 30 percent in 2007).
Income inequality is becoming a serious problem in the United States. Surging executive pay –
median compensation of a CEO is $13.9 million – is seen as contributing greatly to income
inequality (Eavis, 2014).
One way to help the poor and reduce income inequality is by raising the minimum wage.
Effective July 24, 2009, the federal minimum wage was set at$7.25 an hour. Since this rate is
not indexed to actual prices as measured by the Consumer Price Index, it must be examined in
real terms. The minimum wages in real terms (in July 2013 dollars) peaked in February 1968 at
$10.69; on November 2013 it was at $7.25. Thus, it actually fell considerably in real terms
(Elwell, 2014). Raising the minimum wage will almost certainly not reduce the number of jobs
since most of these jobs are in industries where it is difficult to outsource (e.g., fast–food and
the hospitality industries). A higher minimum wage often lowers costs since the employee
turnover rate declines as wages go up (Yanklowitz, 2014). Thus it seems more likely that
raising the minimum wage would benefit the economy by increasing consumer spending.
The United States has been more concerned with keeping the minimum wage low than in
reducing excessive executive compensation, demonstrated by the following tables (Heritage
Institute, 2007):
2005 - 262:1 (Av. CEO-$10,982,000/Av. Worker- $41,861)
2004 - 238:1
2003 - 181:1
2002 - 143:1
2000 - 300:1
1989 - 71:1
1978 - 35:1
1965 - 24:1
2005 - 821:1 (Worker- Minimum wage $5.15/hr plus benefits)
2004 - 725:1
2003 - 540:1
2002 - 416:1
2001 - 668:1
2000 - 815:1
1992 - 319:1
1989 - 207:1
1978 - 78:1
1965 - 51:1
A study conducted by Alyssa Davis and Lawrence Mishel at the Economic Policy Institute
found that the CEOto average worker ratio was 295.9 in 2013 (it was 20 in 1965) (Morgenson,
2015). A different 2013 study showed that CEOs earn approximately 331 times as much as the
average worker; and the CEO-to-minimum-wage worker pay ratio was an outrageous
774:1 (Dill, 2014).
Middle Class in the United States: U.S. Ranks #27 –Median Wealth per Adult.
The United States is #27 when it comes to median wealth per adult
Here is the list of the top 27 countries by median wealth per adult:
Median Wealth
Per Adult
1. Australia
2. Luxembourg
3. Japan
4. Italy
5. Belgium
6. United Kingdom
7. Iceland
8. Singapore
9. Switzerland
10. Denmark
11. Austria
12. Canada
13. France
14. Norway
15. Finland
16. New Zealand
17. Netherlands
18. Ireland
19. Qatar
20. Spain
21. United Arab Emir.
22. Taiwan
23. Germany
24. Sweden
25. Cyprus
26. Kuwait
27. United States
$ 95,685
$ 95,542 (non-OECD)
$ 87,137
$ 87,121
$ 81,649
$ 81,610
$ 81,274
$ 79,376
$ 73,487
$ 63,000
$ 61,880
$ 60,953
$ 57,027 (non-OECD)
$ 53,292
$ 47,998 (non-OECD)
$ 45,451 (non-OECD)
$ 42,222
$ 41,367
$ 40,535 (non-OECD)
$ 40,346 (non-OECD)
$ 38,786
Median household income in the United States was $53,891 in June 2014. It has been going up
for the past three years but is still below its June 2009 level of $55,589, and 4.8% lower than it
was when the Great Recession began in December 2007. The median income of Americans is
still 5.9% below its January 2000 level
According to researchers at Luxembourg Income Study (LIS) database, median income of
Canadians is now higher than that of Americans. Median per capita income of Americans in
2010 was $18,700, virtually unchanged since 2000. Impoverished people in the United States
(those, say, at the 20th percentile) are making less than their counterparts in countries including
Canada and the Netherlands. Wealthy Americans at the 95th percentile make considerably more
than their counterparts in Canada, Britain, Germany, and the Netherlands (Leonhardt and
Quealy, 2014).
The middle class is shrinking. The most potent tool for escaping poverty is education; young
adults continue to advance their education by going to college in the hope of improving their
economic status. A large number of them, especially those from poor families, will still be
unable to join the middle class. Approximately 90% of first-year college students from the top
income quartile will earn a degree by age 24; only about 25% of students from the bottom half
will manage to do so (Tough, 2014). Those from the bottom quintile of income who obtain a
college degree have a 40% chance of moving into the top two income quintiles. Without the
college degree, that probability is only 14% (Tough, 2014). Exacerbating this problem is the
reality that colleges are becoming stratified on the basis of income and ethnicity:
80 percent of the white young men and women in this country
who have headed off to college have gone to schools ranked in the
top 500 by Barron’s. But 75 percent of the black and Latino
young men and women who have entered college over the same
period have gone to two-year or open-admissions schools outside
the top 500 (Bruni, 2014).
One way to reduce income inequality is by raising taxes on the wealthy. However, many
conservative politicians are claiming that this will hurt our growth rate. The nonpartisan
Congressional Research Service was coerced into withdrawing an economic report that
questioned a crucial belief of conservatives. The report, released on September 14, 2012,
demonstrated that there is no statistical relationship between the marginal tax rate at the top
with economic growth — raising the tax rate for the wealthy will not have adverse effects on
saving, investment, and growth. The report was withdrawn at the request of the Republicans
(Weisman, 2012).
Piketty’s (2014) book, based on more than two centuries of data, provides support for the view
that capitalism, if left alone, has a tendency to lead to greater income inequality and concentrate
greater wealth at the very top. This is because the rate of return on capital is greater than the
economic growth rate. To counterbalance this, government must intervene. As Piketty says:
“But capitalism and markets should be the slave of democracy and not the opposite”
(Schuessler, 2014).
According to a recent study, by the age of 60, more than 30% of Americans have been very
affluent (earning over $200,000 in 2009 dollars) for at least one year. However, by this age,
almost 80% of Americans have also been at the poverty level or drawn on unemployment
insurance or welfare for at least one year. More than 50% of Americans will have the
experience of being at the poverty line for at least one year (Cohen, 2015). This income
volatility may explain why there is so much middle class anxiety. Another reason is that real
income has not increased significantly for the people in the middle class (Cohen, 2015).
Happiness: U.S. Ranks 17th out of 36 countries on Life Satisfaction
The United States does not score well on life satisfaction according to the 2015 OECD Better
Life Index; it ranked 12th out of 36 (http://www.oecdbetterlifeindex.org/topics/lifesatisfaction/). Denmark (7.5 on a 0 to 10 scale), Iceland, Switzerland, Norway, and Israel were
in the top 5 spots. A major reason the United States keeps declining in happiness has to do with
income inequality which is among the worst of the OECD countries
The World Happiness Report 2013 ranked the United States as 17th in happiness. Denmark,
Norway, Switzerland, Netherlands, and Sweden were in top 5 spots (http://unsdsn.org/wpcontent/uploads/2014/02/WorldHappinessReport2013_online.pdf).
1. Denmark (7.693)
2. Norway (7.655)
3. Switzerland (7.650)
4. Netherlands (7.512)
5. Sweden (7.480)
6. Canada (7.477)
7. Finland (7.389)
8. Austria (7.369)
9. Iceland (7.355)
10. Australia (7.350)
11. Israel (7.301)
12. Costa Rica (7.257)
13. New Zealand (7.221)
14. United Arab Emirates (7.144)
15. Panama (7.143)
16. Mexico (7.088)
17. United States (7.082)
Quartz & Asp (2015) note an interesting paradox. There is no question that income inequality
has been soaring in the United States. In fact, almost all the wage gains since the start of the
Great Recession in 2008 have gone to the people at the top 1%. Yet, happiness has not
plummeted in the United States. They make the point that for much of human history,
“inequality of wealth meant inequality of happiness.” Consumerism, however, has changed
things since people now gain a great deal of satisfaction from products that are relatively
inexpensive but are “cool”. For example, Apple’s products are seen as cool, not because they
are expensive. To many consumers, a Smart car is “cooler” than a Rolls Royce. We currently
live in a time period where “rebellious consumption changed the game, by making a product’s
worth depend on how it embodied values that rejected a dominant group’s status.” Quartz &
Asp conclude, “The proliferation of consumer choice helps explain why today’s Gilded Age
hasn’t sparked as much outrage as the last one.”
GDP Per Capita: U.S. Ranks 14th out of 228 countries
Gross domestic product (GDP) is a major measure of a country's economic performance and is
the value of all final goods and services produced in a country during the year. Per capita GDP
is calculated by dividing GDP by the population. It is sometimes used as an measure of the
standard of living of a country. According to the CIA World Factbook, Per Capita GDP for the
United States is $52,800, ranking it 14th. Qatar is ranked #1 with a per capita GDP of $102,100.
Corruption Perception Index: U.S. ranked 17th out of 175 countries.
The United States was ranked #17 in 2014 in Transparency International’s Corruption
Perceptions Index. Denmark was #1 and viewed as the least corrupt country; Somalia and North
Korea (rank tied at #174) were perceived as the most corrupt countries in the world
A report entitled Testing Theories of American Politics: Elites, Interest Groups, and Average
Citizens examined more than 1,800 U.S. policies from 1981 to 2002 and claims that the United
States political system does not serve the interest of the majority of Americans. Rather, it serves
the needs of special interest groups such as corporations and the extremely affluent. Legislation
is much more likely to follow the preference of the wealthy elite at the 90th percentile of income
than the majority (people at the 50th percentile) (Boren, 2014). The conclusion of the researchers
was that:
US government policies rarely align with the preferences of the
majority of Americans, but do favour special interest and
lobbying organisations: ‘When a majority of citizens disagrees
with economic elites and/or with organized interests, they
generally lose. Moreover, because of the strong status quo bias
built into the US political system, even when fairly large
majorities of Americans favour policy change, they generally do
not get it’ (Boren, 2014).
Apparently, special interest groups are gradually transforming the United States into an
oligarchy that is concerned only about the needs of the wealthy.
Education, PISA Test: U.S. Ranked 26th in Math Compared to 64 Countries
The Program for International Assessment (PISA) exam is given to almost half a million 15year old students in 64 countries and economies every three years. The PISA tests are used to
measure performance in reading, math, and science and the scores are available at the OECD
website (http://www.oecd.org/pisa/). According to the 2012 PISA scores, 15-year olds in the
U.S. scored 17th in reading, 21st in science, and 26th in math. American teenagers are average in
reading and science and below average in math when compared to the 64 countries.
Higher Education:
Indubitably, the United States has some of the best colleges in the world; one study showed that
19 of the top 25 colleges in the world are in the United States. This statistic, however, is
misleading. The more accurate measure is how well do American college graduates do when
compared to college graduates from other countries? The answer is provided by the Programme
for the International Assessment of Adult Competencies (PIAAC), of the Organisation for
Economic Co-operation and Development (OECD). PIAAC tests the literacy and math skills of
graduates in OECD member countries throughout the world. The results show how weak our
college graduates are when it comes to math and problem solving skills: only 18% score at the
top two levels of numeracy. American college graduates are mediocre when it comes to literacy
(Carey, 2014).
According to OECD’s Skills Outlook 2013: First Results from the Survey of Adults Skills, the
United States ranked in 16th place out of 23 countries in adult literacy, in 21st place in adult
numeracy, and in 14th place in problem solving (http://www.ncee.org/cieb/piaac-skills-outlook2013-from-oecd/).
Broadband Speed: U.S. ranked 16th out of 34 OECD Countries in Broadband Speed
Broadband is “the enabling platform of the Internet age” and is important for education as well
as business. Since it is a major way that information is retrieved today, it is important to keep
the price low. Compared with 34 members of the O.E.C.D, the United States is in 16th place in
broadband speed. Moreover, the price of broadband in the United States is among the highest.
Thus, for example, the price in Japan is $0.04 per megabit per second vs. $0.53 for the United
States (Porter, 2014). What may also be surprising is that we are 87th in cellphone use (Kristof,
Health, Bloomberg Rankings of World’s Healthiest Countries: U.S. ranked 33 out of 145
The Bloomberg Rankings are calculated as follows:
To identify the healthiest countries in the world, Bloomberg Rankings created
health scores and health-risk scores for countries with populations of at least
one million. We subtracted the risk score from the health score to determine
the country's rank. Five year averages, when available, were used to mitigate
some of the short-term year-over-year swings.
The United States ranked 33 out of 145 countries.
Health, Maternal Deaths: U.S. Ranks 60 out of 180 Countries.
A recent report published in Lancet shows that the United States is now ranked 60 out of 180
countries in maternal deaths during pregnancy and birth; in 1990, we ranked 20. For every
100,000 births in the United States, 18.5 women died (that number is 8.2 in Canada and 2.4 in
Iceland). This is an increase since 1990 when the maternal death rate per 100,000 births in the
United States was 12.4 (Reich, 2014b).
The United States healthcare system has been declared a “mess” by the Institute of Medicine
and is nowhere near being the best healthcare system in the world. It wasted about $750 billion
in 2009 (30% of healthcare spending). Approximately 75,000 people died in 2005 because of
inefficiencies in the health care system (Fox, 2012). A report issued by the Center for Disease
Control cited two major problems:
One is the increasingly unmanageable complexity of the science
of health care. During the past half-century, there has been an
explosion of biomedical and clinical knowledge, with even more
dazzling clinical capabilities just over the horizon. But the current
system doesn’t help providers learn this material and it doesn’t
give them any incentive to apply it. Second is the ever-escalating
cost of care, which is widely acknowledged to be wasteful and
unsustainable. Unless ways are found to provide more efficient,
lower-cost health care, more and more Americans will lose
coverage of and access to care.
According to the Institute of Medicine, one big problem is that hospitals, health insurers, and
health providers keep repeating mistakes; nothing is built into the system so that they learn from
their mistakes.
Life Expectancy: U.S. Ranked 55th out of 228 Countries
Life expectancies ranged from 89.57 for Monaco to a low of 49.44 for Chad. The United States
ranked 42nd with a life expectancy of 79.56 years
Rank Country Life expectancy
1 Monaco 89.57
2 Macau 84.48
3 Japan 84.46
4 Singapore 84.38
5 San Marino 83.18
6 Hong Kong 82.78
7 Andorra 82.65
8 Switzerland 82.39
9 Guernsey 82.39
10 Australia 82.07
11 Italy 82.03
12 Sweden 81.89
13 Liechtenstein 81.68
Canada 81.67
France 81.66
Jersey 81.66
Norway 81.60
Spain 81.47
Israel 81.28
Iceland 81.22
Anguilla 81.20
Netherlands 81.12
Bermuda 81.04
Cayman Islands 81.02
Isle of Man 80.98
New Zealand 80.93
Ireland 80.56
Germany 80.44
United Kingdom 80.42
Greece 80.30
Saint Pierre and Miquelon 80.26
Austria 80.17
Malta 80.11
Faroe Islands 80.11
Luxembourg 80.01
Belgium 79.92
European Union 79.86
Taiwan 79.84
Korea, South 79.80
Virgin Islands 79.75
Finland 79.69
United States 79.56
Democracy Ranking: U.S. Ranked 14th out of 150 Countries
The United States is ranked #14; Denmark is in first place and Finland is in second place.
Lowest ranked was North Korea in last place at #150
(http://www.worldaudit.org/democracy.htm). See study cited by Boren (2014) which concludes
that the United States is becoming an oligarchy in the way it passes legislation.
Most Charitable Countries: U.S. is Tied for First Place
According to the World Giving Index 2014 Report, Burma (Myanmar) and the United States
were tied for first place in 2014. They are followed by Canada, Ireland, and New Zealand
In the United States, people at the bottom quintile contribute approximately 4.3% of their
income to charity; people from the top quintile contribute only 2.1% of their income (Blow,
Prison Population Totals: U.S. ranked 1st out of 224 Countries
Approximately 2,217,000 people are incarcerated in the United States. We are ranked number
one in incarcerating our people. China is in second place with a total prison population of
1,657,812; the Russian Federation is third with 673,818 behind bars
(http://www.prisonstudies.org/highest-to-lowest/prison-populationtotal?field_region_taxonomy_tid=All). We have more people in prison than Stalin had (The
Economist, 2013). According to the Bureau of Justice statistics, approximately 80,000 people a
year are sexually abused in prisons. This number is certainly on the low side given that there is
underreporting because of fear of retaliation and/or shame. The cost to society (this includes
recidivism and victim compensation) is about $51.9 billion per year (Bozelko, 2015).
Spending on Military: U.S. is number 1
The United States spends more on defense ($640 Billion) than the next eight countries (China,
Russia, Saudi Arabia, France, United Kingdom, Germany, Japan, and India) combined.
Stability of Nations: U.S. Ranks 20 out of 178 countries.
The Fund for Peace publishes a Fragile States Index which considers various factors including
income inequality, corruption, and factionalism to measure the stability of a nation. The United
States trails 19 other countries in stability (http://www.foreignpolicy.com/fragile-states-2014).
New Zealand
United Kingdom
United States
It is difficult to believe that a democracy such as the United States is a country that is somewhat
Social Progress Index (A Measure of Wellbeing): U.S. ranks 16 out of 133 countries
According to the social progress index, a new measure of well-being, the United States is
ranked 16th out of 133 countries. The social progress index is a broad measure of social wellbeing that includes 52 economic indicators (e.g., literacy rates, access to clean water, access to
clean air, access to advanced education, access to basic knowledge, health of citizens, personal
safety, etc.) and is more meaningful than per capita gross domestic product (GDP). Our overall
score on social progress is 82.85. Countries that are ahead of us on the social progress index are:
Norway (score = 88.36), Sweden (88.06), Switzerland (87.97), Iceland (87.62), New Zealand
(87.08), Canada (86.89), Finland (86.75), Denmark (86.63), Netherlands (86.50), Australia
(86.42), United Kingdom (84.68), Ireland (84.66), Austria (84.45), Germany (84.04), and Japan
(83.15). The lowest ranked country was the Central African Republic with a score of 31.42
If one prefers using one measure rather than examining several ones, the social progress index is
a good overall measure of well-being.
The OECD provides a Better Life Index which consists of 11 topics (housing, income, jobs,
community, education, environment, civic engagement, health, life satisfaction, safety, worklife balance). The Better Life Index is available at the organization’s website:
http://www.oecdbetterlifeindex.org/#/11111111111 . A user of this index can compare the 36
OECD countries on any of the 11 topics. The average household net-adjusted disposable
income per capita is number one among the OECD countries at $41,355 (OECD average is
$25,908). However, the top 20% earn about eight times more than the bottom 20%. The United
States ranks 29th out of 36 on work-life balance.
When a country has no compassion for the working poor, that is a sign that something is
seriously wrong. As noted above, a 2013 study showed that CEOs earn approximately 331 times
as much as the average worker; and the CEO-to-minimum-wage worker pay ratio was an
outrageous 774:1 (Dill, 2014). This may be one reason the United States is among the countries
with the highest level of inequality. CEOs have incomes that are approximately several hundred
times greater than that of the typical employee; median incomes are lower today than they were
25 years ago; and about 25% of children under the age of 5 live in poverty (Stiglitz, 2014).
Stiglitz (2014) provides the answer to the question as to why income inequality is so out of
control in the United States:
The American political system is overrun by money. Economic inequality
translates into political inequality, and political inequality yields
increasing economic inequality. In fact, as he recognizes, Mr. Piketty’s
argument rests on the ability of wealth-holders to keep their after-tax rate
of return high relative to economic growth. How do they do this? By
designing the rules of the game to ensure this outcome; that is, through
So corporate welfare increases as we curtail welfare for the poor.
Congress maintains subsidies for rich farmers as we cut back on
nutritional support for the needy. Drug companies have been given
hundreds of billions of dollars as we limit Medicaid benefits. The banks
that brought on the global financial crisis got billions while a pittance
went to the homeowners and victims of the same banks’ predatory
lending practices.
The United States does not have a level playing field. Everything is being done to benefit the
very wealthy and little is being done for the working poor. Pope Francis has expressed
dissatisfaction with the direction government and corporate leaders have taken; he has attacked
the inequities of unfettered, free-market capitalism and crony capitalism:
We have to say, ‘Thou shalt not’ to an economy of exclusion and
inequality. Such an economy kills. Some people continue to defend
trickle-down theories which assume that economic growth,
encouraged by a free market, will inevitably succeed in bringing
about greater justice and inclusiveness. This opinion … expresses a
crude and naive trust in the goodness of those wielding economic
power and in the … prevailing economic system (Allen, Jr., 2015).
The Pope has been accused by some people as promoting “pure Marxism” for these views
(Allen, Jr., 2015). In actuality, Adam Smith was not a believer in unregulated, “greed is good”
free-market capitalism; what he actually believed in was moral capitalism (Friedman & Adler,
2011). Adam Smith, were he alive today, would be very critical of the direction the United
States is taking. Capitalism has been amazingly successful; research by Pinkovsky and Sala-iMartin demonstrates that the percentage of people in the world living on a dollar a day dropped
by an astounding 80% between 1970 and 2006 (Brooks, 2014). However, the wrong kind of
capitalism can cause great damage. Robinson (2007) asserts that the single-minded pursuit of
self-interest has caused much harm to society and that we should stop associating Adam Smith
with this doctrine. On the contrary, Adam Smith did not believe that pursuit of profits and selfinterest would ensure that society would thrive but rather believed in the importance of
morality. This is not surprising given that he was a moral philosopher. Smith believed that
“society… cannot subsist among those who are at all times ready to hurt and injure one
another.” In The Theory of Moral Sentiments, Smith makes it clear that he believes that
economic growth depends on morality. To Smith, benevolence — not pursuit of self-interest —
is one of the highest virtues. Smith (2002:162) argues that:
Man… ought to regard himself, not as something separated and detached, but
as a citizen of the world, a member of the vast commonwealth of nature and to
the interest of this great community, he ought at all times to be willing that his
own little interest should be sacrificed.
In 1992, the Soviet Union unexpectedly collapsed. The reason, as explained by Mikhail
Gorbachev is as follows (Aron, 2011):
The Soviet model was defeated not only on the economic and social
levels; it was defeated on a cultural level. Our society, our people, the
most educated, the most intellectual, rejected that model on the cultural
level because it does not respect the man, oppresses him spiritually and
Nikolai Ryzhkov, Gorbachev's prime minister, was most concerned about the "moral
[nravstennoe] state of the society" and averred:
[We] stole from ourselves, took and gave bribes, lied in the reports, in
newspapers, from high podiums, wallowed in our lies, hung medals on
one another. And all of this -- from top to bottom and from bottom to
Russian President Dmitry Medvedev stated in 2012 that “The best investment [the state can
make in man] is Liberty and the Rule of Law. And respect for man's Dignity.”
The leadership of the Soviet Union was taken by surprise by the collapse of their regime. The
main reason for the downfall appears to have been the total indifference to the needs of the
people. All that mattered to the leadership was that the elite would maintain its wealth and
power; they had no concern or compassion for their own people. This indifference to the
economic plight of the masses can have a deleterious effect on the economy of a country.
Ferguson (2009) affirms:
Habsburg Spain defaulted on all or part of its debt 14 times between
1557 and 1696 and also succumbed to inflation due to a surfeit of New
World silver. Prerevolutionary France was spending 62 percent of
royal revenue on debt service by 1788. The Ottoman Empire went the
same way: interest payments and amortization rose from 15 percent of
the budget in 1860 to 50 percent in 1875. And don't forget the last
great English-speaking empire. By the interwar years, interest
payments were consuming 44 percent of the British budget, making it
intensely difficult to rearm in the face of a new German threat.
According to Porter (2015):
The challenge America faces is not simply a matter of equity. The
bloated incarceration rates and rock-bottom life expectancy, the
unraveling families and the stagnant college graduation rates amount
to an existential threat to the nation’s future…The silver lining in these
dismal, if abstract, statistics, is that they portend such a dysfunctional
future that our broken political system might finally be forced to come
together to prevent it.
It is hoped that examination of the above statistics will make people aware of how much needs
to be done if the United States wants to remain a world power. The first step, however, is to
admit that change is needed. Americans are the most charitable people in the world so it should
not be that difficult to convince them of the importance of providing jobs and livable wages to
those that desire to be self-sufficient. To simply state that America is exceptional – there has
been a growing debate between those that believe American is in decline (declinism) and those
that feel American is special (exceptionalism) – and nothing needs to be done will ensure that
we will become a second-rate power.
Allen, Jr., J. L. (2015, March 5). Pope Francis’s report card. Time. Retrieved from
Altman, D. (2012, November 19). To reduce inequality, tax wealth, not income. New York
Times, A21.
Aron, L. (2011, June 20). Everything you think you know about the collapse of the Soviet
Union is wrong. ForeignPolicy.com, Retrieved from
Bird, M. (2014, October 8). China just overtook the US as the world's largest economy.
Business Insider. Retrieved from http://www.businessinsider.com/china-overtakes-usas-worlds-largest-economy-2014-10#ixzz3WjmbMnEP
Blow, C. M. (2014, May 19). Poverty is not a state of mind. New York Times, A17.
Boren, Z. D. (2014, April 16). The US is an oligarchy, study concludes. Telegraph. Retrieved
from http://www.telegraph.co.uk/news/worldnews/northamerica/usa/10769041/The-USis-an-oligarchy-study-concludes.html
Bozelko, C. (2015, April 18). Why we let prison rapes go on. New York Times, A19.
Brooks, A. C. (2014, April 18). Capitalism and the Dalai Lama. New York Times, A23.
Bruni, F. (2014, May 4). America the shrunken. New York Times, SR3.
Carey, K. (2014, June 29). Who has the world’s best colleges? New York Times, SR3.
Cohen, P. (2015, April 11). Identifying as middle class, but shaken by a lack of economic
security. New York Times, B1, B6.
Dill, K. (2014, April 15). Report: CEOs earn 331 times as much as average workers, 774 times
as much as minimum wage earners. Forbes. Retrieved from
Eavis, P. (2014, April 13). Invasion of the supersalaries. New York Times, B1, B4.
Elwell, C. K. (2014, January 8). Inflation and the real minimum wage: A fact sheet.
Congressional Research Services Report. Retrieved from
Ferguson, N. (2009, November 27). An empire at risk. Newsweek. Retrieved from
Fox, M. (2012, September 6). U. S. health care: It’s officially a mess, institute says. NBC News.
Retrieved from http://vitals.nbcnews.com/_news/2012/09/06/13689103-us-health-careits-officially-a-mess-institute-says?lite
Friedman, H. H. and Adler, W. (2011). Moral capitalism: A biblical perspective. American
Journal of Economics and Sociology, 1014-1028.
Heritage Institute (2007). Spotlight on CEO compensation. Retrieved from
Kristof, N. (2015, April 9). Enjoying the low life? New York Times, A29.
Leonhardt, D. and Quealy, K. (2014, April 23). U.S. middle class is no longer the richest. New
York Times, A1, A14.
Morgenson, G. (2015, April 12). Comparing paychecks with C.E.O.s. New York Times, BU1,
Page, S. (2014, January 7). New battle lines drawn on poverty. USA Today, 1A, 2A.
Piketty, T. (2014). Capital in the twenty-first century. Cambridge, MA: Harvard University
Porter, E. (2015, April 29). Income inequality is costing the nation on social issues. New York
Times, B1.
Porter, E. (2014, May 28). Concentrated markets take big toll on economy. New York Times,
B1, B2.
Quartz, S. & Asp, A. (2015, April 12). Unequal, yet happy. New York Times, SR4.
Reich, R. (2014a, July 17). Robert Reich: Deadbeat 1 percenters endanger U.S. democracy
Salon. Retrieved from
Reich, R. (2014b, May 12). How the right wing is killing women. Huffington Post. Retrieved
from http://www.huffingtonpost.com/robert-reich/maternal-health-care_b_5312184.html
Robinson, Joan. (2007). “Morality and Economics.” Economist’s View. Retrieved from
Schuessler, J. (2014, April 19). Economist receives rock star treatment. New York Times, C1,
Smith, Adam (2002 [1759]). The Theory of Moral Sentiments. (Edited by Knud Haakonssen.)
Cambridge: Cambridge University Press.
Stiglitz, G. (2014, June 29). Inequality is not inevitable? New York Times, SR1, SR7.
Tough, P. (2014, May 18). Who gets to graduate? New York Times Magazine, 26-54.
Trumbull, M. (2014, April 14). Social progress index: Why does US rank No.
16? Christian Science Monitor. Retrieved from
Weisman, J. (2012, November 2). Tax report withdrawn at request of G.O.P. New York Times,
B1, B5.
Yanklowitz, S. (2014, January 3). What makes a wage just? Jewish Journal, 10-11.
Fly UP