A widening rich-poor gap gets wider political play

Earlier this month, a Washington think tank reported the income gap between the rich and poor in the United States has widened.

The report got little attention.

Old news, maybe. After all, income disparities have been growing for perhaps 25 years.

And it is widely assumed that Americans don't really care much about income distribution. They are more concerned about their own prospects for greater prosperity or even getting rich.

But one of the study's authors, Isaac Shapiro, an economist at the Center on Budget and Policy Priorities in Washington, sees that attitude changing: "There are signs that the body politic has begun to hear that people are concerned about income inequality, that they are responding to it."

Both Democratic presidential candidates are starting to outline antipoverty programs.

Republican George W. Bush talks of "compassionate conservatism," but hasn't been specific.

Another income expert, Jared Bernstein at the Economic Policy Institute in Washington, hears a "drum beat" on growing inequality.

As evidence, he cites rising prospects in Congress for another minimum-wage hike and the demise of the $970 billion Republican tax cut. If not vetoed, it would have given the bulk of its benefits to the already well-off.

Alan Wolfe, a professor at Boston College and author of "One Nation, After All," disagrees. "The evidence is that Americans don't focus on this issue," he says.

Yet, in talking with 200 Americans around the country for his book, he found "subterranean" signs that middle-class people believe that both the welfare mother and the "luxury-box rich" don't deserve their incomes.

Whatever the case, Americans soon will hear more about incomes. The Census Bureau will release its annual report on personal incomes and poverty on Thursday.

Income inequality is worse in the US than in other industrial nations.

Many in Western Europe hold that capitalism must be restrained to ensure a better income distribution than the free market is providing. Most of these countries have less poverty than occurs in the US.

The income gaps, however, have been growing in Europe too.

In the US, the top 1 percent of households received 7.3 percent of the national after-tax income in 1997. By this year, this group is projected to receive 12.9 percent, a higher percentage than in any other year, Mr. Shapiro's report reckons.

But the growth in inequality has slowed as prosperity has spread in the 1990s.

An unpublished report by World Bank economist Branko Milanovic finds a sharp and surprising increase in inequality in the entire world.

"The world is becoming more unequal because poor countries don't catch up sufficiently," he says.

Many developing nations aren't able to keep up economically with burgeoning numbers of people.

Incomes in such key populous nations as Bangladesh, India, Indonesia, Nigeria, Brazil, and Pakistan are slipping further behind the well-to-do nations, such as the US, Japan, and those in Western Europe where population is stagnant or growing only modestly.

In after-inflation terms, 55 to 60 percent of the world's population saw incomes decline between 1988 and 1993, finds Mr. Milanovic, using the latest numbers available for many nations.

It was worst for the bottom 5 percent, those with incomes of less than $1 a day in "purchasing power parity" terms - a statistical device to match living standards of different nations. They lost one-quarter of their real income in five years.

In contrast, the richest 5 percent of the world population enjoyed a 25 percent increase in income.

Though middle-class people have grown in numbers, so have the extremely poor - to about 1.4 billion.

They are poor indeed: An American family living at the official poverty level is better off than 76 percent of the world's people, reckons Milanovic.

(c) Copyright 1999. The Christian Science Publishing Society

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