Whilst US remains the poster boy of capitalism, its failings have also been evident, where its benefits have accrued to a handful of its populace leaving plenty behind resulting in the push towards socialism in some quarters, most notably in the recent mayoral elections in New York City. In contrast, China with its own brand of capitalism has done much better, indeed remarkably well in terms of poverty alleviation.
“The Chinese did rather well in the age of globalization. In 1990, 943 million people there lived on less than $3 a day measured in 2021 dollars – 83% of the population, according to the World Bank. By 2019, the number was brought down to zero. Unfortunately, the United States was not as successful. More than 4 million Americans – 1.25% of the population – must make ends meet with less than $3 a day, more than three times as many as 35 years ago.”
The much-held promise of trickle-down effects of progress haven’t played out with technology, globalisation and low interest rates ensuring much of the benefits have accrued to the owners of capital i.e, the rich as opposed to the working class.
“The story of US inequality is known by now. It is nonetheless breathtaking how its lopsided distribution of income keeps getting worse. In 1980, the income of Americans in the middle of the income distribution added up to a bit more than 52.5% of the income of those perched at the top 90th percentile. At the turn of the century, it was 48%. By 2023, it had slipped further, to 42.5%.
The poor’s share of the US economic pie is shrinking to developing-world levels. The income of Americans in the top 90th percentile of wealth grew more than twice as fast between 2000 and 2023 as that of Americans in the bottom 10th percentile. These days, Americans in the poorest 10th of the population draw about 1.8% of the nation’s income, about the same as poor Bolivians. In Nigeria, they reap 3%, in China 3.1%, in Bangladesh 3.7%.”
The article argues that whilst the new administration came on a plank to fix this, its policies so far suggest otherwise:
“…a summary glance at the Trump administration’s main initiatives – the president’s Big Beautiful Bill Act and his indiscriminate tariffs, which will raise the price of many staples and produce a drag on business spending and employment – underscores how the US’s dismal performance at sharing the fruits of its success with the less well-to-do in its society is not some bug in American capitalism. It is a feature.
The legislation will take health coverage from millions of people and dramatically raise healthcare costs for millions more through massive cuts to Medicaid and the health insurance subsidies under the Affordable Care Act. It will trim hundreds of billions from the Snap nutrition assistance program for the poor. Altogether, the latest estimate by the Budget Lab at Yale finds that the impact of Trump’s tariffs and his big, beautiful bill will trim household income for all except the richest fifth of American families. The bottom 10% would suffer a 7% cut.
Sure, America’s indifference towards its poor did not appear suddenly during the Trump administration. It’s been a feature of Democratic and Republican governments over the last 50 years, letting appeals to market efficiency trump calls to address the US’s growing inequalities. Since Jimmy Carter left office, the income of the rich has grown more than that of the poor in every administration except that of Bill Clinton and, yep, Donald Trump’s first, when subsidies to respond to the Covid pandemic raised incomes across the poorer half of the population.”
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