The Guardian has been running a series they call Broken Capitalism, and have featured articles about Jamie Dimon, CEO of JP Morgan. Warren Buffet of Berkshire Hathaway or Ray Dalio, founder of Bridgewater, the world’s biggest hedge fund. Suddenly these and others have become aware that the way capitalism is currently practiced will soon affect their bottom line and possibly their future. It is not yet clear how serious they are in fixing capitalism, in making it more equal and in addressing the economic inequalities of our society, but the mere fact they are acknowledging it is hopeful. What I found of note in the article about Ray Dalio are the figures which are prompting his interest. Here they are.
- 40% of Americans would struggle to
raise $400 for an emergency.
- The childhood poverty rate is 17.5% and
has not meaningfully improved in decades.
- In the developed world the US scores
lower than any country (except for Italy and Greece) in educational achievement.
- The US incarceration rate is nearly 5
times the average of developed countries and 3 times that of emerging ones.
- For the bottom 60% premature deaths
have increased about 20% since 2000.
Seven million Americans, according to numbers from the US Federal Reserve Bank of New York, are at least three months behind on their car payments. By the summer of 2018 Americans owed more than 1.26 trillion, more than they did at the end of the recession in 2009. It paints a troubling picture. Car delinquencies usually come after housing but nevertheless are used to reflect a measure of inequality. While some do own cars they cannot afford, car ownership which is a necessity for many to be able to go to work, is associated with more stability and a bank account that may have a bit of a balance. Experts say that the number of people defaulting on their car loan points to “financial duress”. People are delinquent on their house first, their credit cards second and their car third. So the increase in delinquencies with car debt is more significant than it first appears. It means that too many people are not able to hold on to something they consider an important or necessary asset.
We hear about near full employment,
about the economy doing well and it’s easy to forget about income inequality
and how it manifests itself, but it is a mistake to do so. It’s not only a
question of remembering those who are struggling, it’s also seeing what lies
behind a prosperity that benefits too few.