Sunday, July 10, 2016

Look both ways ...

At the border, to the north is wealth, to the south is poverty.  Why?

In the case of Nogales, the difference between the two sides of the border is the governance under which they live. Everything else is pretty much the same, isn't it.  On Mexico's side of the equation, there's a distinct favoritism and an elite structure that limits competition and keeps the common folks from making any particular economic progress.  To the north, entrepreneurship, competition, patent rights, monopoly law, and property rights open the door for many. Minimum wage used to help; now not so much.

Life in Nogales, Mexico, 1999.  Little
has changed since then.
To be sure, there are wealthy people and poor people living on this planet. Some have mansions, others are homeless. Some have caviar for breakfast while others starve. Some avoid paying taxes, others die of curable diseases because they can’t afford medicine.

Agriculture in North Korea is inefficient and
vulnerable.  Half the country's population
 lives in extreme poverty.
North and South Korea are an interesting case.  One of the poorest and one of the wealthiest countries in the world; they come from the same history, geography, ancestry, language, and culture, yet the difference is stunning.  North of the border, famine kills people, and half the population lives in extreme poverty. Again the only difference between the two is governance.

The wealth of an honest man is different than the riches of an oppressor, or a usurper of rights.  Mubarak, for instance; he and his family were worth billions, all extracted from the Egyptian economy before he was driven from office.

We have governments and regulatory agencies that do or don't serve us well.  All of us.

That brings us back to our issue of inequality.  

In the U.S., inequality (the GAP) began accelerating in the 70's, and the wealthy have made extraordinary gains.  Note the household income chart here.  For the bottom economic half, gains are due to more household members in the workforce while wages have been stagnant.  Below the halfway mark, household income hasn't kept up with increases in cost of living.  Particularly, education and healthcare are less accessible.

For too many, there have been difficult choices between children's education, retirement savings, and owning a home.  Typically, households live payday to payday, and the only option for some is living in a high-density, high-turnover neighborhood, not the best place to raise children.

Both education and healthcare costs have been inflated by programmatics rather than by value.  The student loan initiative caused college costs to elevate well ahead of nominal inflation rates.  It was supposed to make it more available but has had a significant detrimental effect opposite to intent.  Health care costs have followed a similar path.

Inequality between countries is a result of governance, internal and international.  

Inequality inside a country is the result of preferential governance.  It's perhaps not intended to be abusive to the lower economic segment, but it's certainly as effective as if designed for that purpose.

A failed minimum wage policy gave us Walmart and an end to many local businesses. Originally intended to protect workers, the minimum wage has lagged behind cost of living increases until today, it is worth 20% less than in the 60's.  Households now can't survive on a minimum wage job, of course. Even two full-time minimum wage jobs don't get a family above the poverty line.  We pay for welfare and assistance programs for the underpaid workers, something their employers should be paying, but they don't.  

The wage policy and regulatory processes weren't intended to do harm, and early on, they helped significantly.  After years of inattention, however, it appears that they've detrimentally reshaped a large portion of our economy and culture.

College costs have increased about 800% since I enrolled at UT fifty years ago.  Household income has increased less than a twentieth of that for all but the wealthiest.  That means that every year, fewer regular folks can send their kids to college.  That didn't just happen, it was the result of governance and regulation.  It served the wealthy quite well, but we've seen an accelerating inequality that affects more and more of our citizens.  It's not an accident, and it's not something chosen by the less fortunate among us.

Poverty isn't something you choose.  It's done to you.  Do the research for yourself.

Today's troublesome issues:
Fair treatment
Fair wages
Fair representation
Religious extremism
Opportunity denied
Willingness to do harm to another

As if we didn't have enough to do. :)

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