A Word From Failed States

Noam Chomsky's Failed States: The Abuse of Power and the Assault on Democracy is published as part of The American Empire Project.



The following is taken from Chapter 6: Democracy Promotion at Home (pages 211-212)

...When neoliberal-style programs began to take shape in the 1970s, real wages in the United States were the highest in the industrial world, as one would expect in the richest society in the world, with incomparable advantages. The situation has now dramatically changed. Real wages for the majority have largely stagnated or declined and are now close to the lowest level among industrial societies; the relatively weak benefits system has declined as well. Incomes are maintained only by extending working hours well beyond those in similar societies, while inequality has soared. All of this is a vast change from the preceding quarter century, when economic growth was the highest on record for a protracted period and also egalitarian. Social indicators, which closely tracked economic growth until the mid-1970s, then diverged, declining to the level of 1960 by the year 2000.* [end notes and citations: See the biennial studies of the Economic Policy Institute, The State of Working America; the most recent, by Lawrence Mishel, Jared Bernstein, and Sylvia Allegretto, covers 2004-2005. Marc and Marque-Luisa Miringoff, The Social Health of the Nation (Oxford, 1999), Index of Social Health report of the Fordham Institute for Innovation in Social Policy, which monitors social indicators (as is done by government agencies in other industrial societies).]

Edward Wolff, the leading specialist on wealth distribution, writes that "living conditions stagnated in the 1990s for American households in the middle, while rapid advances in wealth and income for the elite briskly pulled up the averages." From 1983 to 1998, average wealth of the top 1 percent rose "a whopping 42%," while the poorest 40 percent "lost 76 percent of their (very modest) wealth." He concludes that even "the boom of the 1990s has bypassed most Americans. The rich have been the main beneficiaries," in a continuation of tendencies that go back to the late 1970s. The Bush administration's dedication to wealth and privilege accelerated these tendencies, leading to a surge in "corporate profits, professionals' incomes, gains from investments and executive compensation," while, by mid-2005, "average hourly wages for production and non-supervisory workers" had yet to rise to the low point of the 2001 recession. Census Bureau 2004 figures revealed that for the first time on record, household incomes failed to increase for five straight years. Median pretax real income was at its lowest point since 1997, while poverty rate increased for the fourth consecutive year, to 12.7 percent. Median earnings for full-time workers "dropped significantly," for men, by 2.3 percent. Inequality continued to rise to "near all-time highs," not including "gains from stock holdings, which would further increase inequality," given the extremely narrow concentration of stock ownership. The Labor Department reports an additional decline in real wages in 2004 for most workers, apart from a small percentage of the highly skilled. Economist Dean Baker reported in October 2005 that "the economy went through its longest period of job loss since the Great Depression following the 2001 recession. The employment to population ratio is still almost 2 percentage points below its pre-recession level. Using the recovery of the labor market as a metric, the economy has never been less resilient throughout the post-war period."* [Edward Wolff, Milken Institute Review, 3rd quarter, 2001. Eduardo Porter, New York Times, Business section, 14 July 2005. Census Bureau, see David Leonhardt, New York Times, 31 August 2005; Robert Guy Matthews, Wall Street Journal, 31 August 2005. Jessica Vascellaro, Wall Street Journal, 13 September 2005. Dean Baker, Center for Economic and Policy Research, 17 October 2005.]

The number of people who go hungry because they cannot afford to buy food rose to over 38 million in 2004: 12 percent of households, an increase of 7 million in five years. As the government released the figures, the House Agricultural Committee voted to remove funding for food stamps for 300,000 people, and cut off school lunches and breakfasts for 40,000 children, only on of many illustrations.* [Libby Quaid, AP, 29 October 2005.]

The results are hailed as a "healthy economy" and a model for other societies. Alan Greenspan is treated with reverence for having presided over these achievements, which he attributes in part to "atypical restraint on compensation increases [which] appears to be mainly the consequence of greater worker insecurity," an obvious desideratum for a healthy economy. The model may in fact be without many precedents in harming the "underlying population" while benefiting the "substantial people," in Thorstein Veblen's acid terminology.* [Alan Greenspan, testimony, Senate Banking Committee, February 1997, cited in Multinational Monitor, March 1997. Edward Herman, Z Magazine, March 2005.]

Buy Failed States and the other great titles in The American Empire Project series