Obama's choices as president-elect are disconcerting

Wed, Nov 12, 2008, 00:00

Is Obama really serious about tackling inequality in the US? The signals are not encouraging, writes Vincent Browne

IT IS the scale of poverty and inequality in the US that is by far the most salient issue. Maybe not the most immediately pressing, but the most crucial. And during the presidential campaign, Barack Obama held his nerve on being taunted by John McCain about his remark to Joe the Plumber on "spreading the wealth". Maybe he is serious about undoing at least some of the inequality, an inequality he noted repeatedly in his book, Dreams from my Father.

The following data gives a sense of the depth of inequality:

In 1965, chief executives in major companies in the US earned 24 times the amount earned by the typical worker. By 2007, these chief executives earned 275 times the amount earned by the typical worker. In other words, these chief executives earned in a day the amount earned by the typical worker in a year.

The top 1 per cent of wage earners in the US now takes 23 per cent of all income, the highest inequality level in any year since 1913, bar one year - 1928.

In 2004 (the latest year for which data is available), the wealthiest 1 per cent of all households controlled a larger share of national wealth than the entire bottom 90 per cent.

The average wealth held by the top 1 per cent was some $15 million (€11.96 million) per household, while for average households it was $81,000. Approximately 30 per cent of households have a net worth of less than $10,000, and about one in six households have zero or negative net wealth.

The median wealth of white households is 10 times that of black households. Almost 30 per cent of black households have zero or negative net wealth.

According to official figures, more than 36 million people live in poverty in the US, including almost 13 million children. Other estimates put the poverty figure at 52 million. Whichever measure is used, a larger share of the population was poor in 2006 than in 2000 - and greater inequality explains entirely the rise in the poverty level.

Almost half of African- American children were poor in 1995. This proportion declined to one-third by 2000, but it is now back up at almost 40 per cent.

The gap in life expectancy between the socioeconomically best and worst off grew from 2.8 years in 1980 to 4.5 years in 2000.

Infant mortality of black infants is 2.3 times that of white infants.

(Source for figures: The State of Working America 2008-2009, a report by the Economic Policy Institute.)

In Dreams from my Father, there is lots of anger about the scale of inequalities Obama encountered in Chicago, and it led him to reflect on how globalisation had devastated communities in Indonesia, where he spent four years as a child.

Now, as president-elect, what will his priorities be? Will he "spread the wealth" and defy the system that has consolidated the wealth among the few? Or do as they all have done? Some of the signals are not encouraging.

The economic advisers Obama had around him at the press conference last Friday were the usual suspects, all attuned to the economic orthodoxy that there is no other way than the way that has caused such poverty amid plenty.

His first appointment was Rahm Emanuel as chief of staff in the White House. Emanuel worked in the Clinton White House and then went off to make millions for himself as an investment banker before becoming a congressman. The background in investment banking is hardly reassuring.

Emanuel, the son of an Israeli immigrant, volunteered as a civilian to work on an Israeli military supply base during the Gulf war. This suggests an identification with the "cause" of Israel which, if decisive, will massively compromise Obama's Middle East initiatives.

Also disconcerting is what appears to be the informed speculation that the current US defence secretary Robert Gates will be retained.

In a recent speech on why the US should retain nuclear weapons, Gates said: "As long as other states have or seek nuclear weapons - and can potentially threaten us, our allies and friends - then we must have a deterrent capacity that makes it clear that challenging the US in the nuclear arena - or with other weapons of mass destruction - could result in an overwhelming, catastrophic response." So challenging the US in the nuclear arena, not by the use of nuclear weapons, but by merely "challenging" the US such as, presumably, by refusing to disavow the option of acquiring a nuclear weapon, "could result in an overwhelming, catastrophic response".

A contributor to the letters page in this newspaper last week challenged me to explain why I had been critical of Obama some months ago and then effusive, as I was last week.

The answer is twofold. I was impressed by his steadfastness during the campaign. But, more significantly for me, by his book about his father. In its candour about his insecurities and early rages, in its reflectiveness about black nationalism, about racism, about inequality and globalisation, about personal relationships and about himself, it is a remarkable work of literature. I came to read that book only in the last 10 days.

But now I am nervous all over again.