Unequal: America pulling apart

During the 1920s, America grew increasingly unequal. By 1928, the richest 1 percent of families reaped one-fourth of all U.S. income. But the stock market crash and the Great Depression brought drastic change. America's wealth gap gradually narrowed during ensuing decades. By the late 1970s, the top 1 percent got only about 9 percent of American earnings.

However, since the Reagan-Bush era of the 1980s, relentless polarization has returned. Today, once again, the richest 1 percent get a quarter of U.S. income. Nobel Prize-winning economist Paul Krugman says a "Great Divergence" is pulling U.S. society apart.

"Inequality in America" was the title of a July essay by Robert Reich, who was President Clinton's labor secretary in the 1990s. He wrote:

"Each of America's two biggest economic crashes occurred in the years immediately following these twin peaks [of income inequality] -- in 1929 and 2008. This is no mere coincidence. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don't have enough purchasing power to buy what the economy is capable of producing."

Various factors cause the spreading gulf. Blue-collar work has been decimated by ever-advancing technology -- while the snowballing "Information Age" rewards educated specialists in brainpower careers. Fewer manufacturing workers are needed. Labor unions have shrunk to a mere 7.5 percent of America's private-sector work force. Lower-paying female jobs are fairly secure, while men have been laid off  by millions.

Reich explained:

"The structural problem began in the late 1970s, by which time a wave of new technologies (air cargo, container ships and terminals, satellite communications and, later, the Internet) had radically reduced the costs of outsourcing jobs abroad. Other new technologies (automated machinery, computers and ever-more-sophisticated software applications) took over many other jobs (remember bank tellers? telephone operators? service station attendants?) By the '80s, any job requiring that the same steps be performed repeatedly was disappearing -- going 'over there' or into software."

While ordinary jobs dwindle, more pay goes to well-educated executives and professionals in thinking careers. The result is an ever-worse divide between haves and have-nots -- a harmful condition.

A new book, The Spirit Level, contends that happy societies are those with the greatest equality -- while severe inequality causes a welter of social evils. Reviewing the book, the London Timeswrote: "This is why America, by most measures the richest country on Earth, has per-capita shorter lifespan, more cases of mental illness, more obesity, and more of its citizens in prison than any other developed nation."

The best cure for inequality is burgeoning new industries that open multitudes of new jobs, creating widespread opportunity. President Obama hopes this goal will be achieved through "green energy" -- solar, wind, biomass, tidal and such fields. We hope he's right, and we hope the development comes quickly.

Perhaps America should take its cue from Cuba

In the classic children’s story, “Alice in Wonderland,” a little girl falls down a rabbit hole and finds herself in a strange world where everything is upside down, where all the rules have changed and peculiar people do inexplicable things.

I know how she feels.

According to a Sept. 14 BBC broadcast, Cuban President Raul Castro will lay off at least 500,000 state employees by mid-2011 and boost opportunities in the private sector to help those workers find new jobs. He suggested that as many as one million government workers will be laid off to ease the burden on the Cuban government. Currently, the state employs five million people, 95 percent of the Cuban workforce.

The move is seen as an attempt to stabilize the Cuban economy, which has suffered from economic boycotts and the loss of subsidies from the now-defunct Soviet Union.

Castro’s privatization plan includes allowing more Cubans to run their own businesses, form non-government cooperatives and shift more state land, businesses and infrastructure into private hands through long-term leases.

The Cuban Workers Confederation, the only labor union allowed by the government, supports the move, saying, “Our state cannot and should not continue supporting businesses, production entities and services with inflated payrolls.”

Here in the U.S., we seem to be going in the opposite direction. Government employment is increasing while private-sector employment is decreasing, and while the Cuban government is expanding private enterprise, our government is steadily encroaching on the private sector.

Take government jobs, for instance. The Obama administration says the federal payroll will grow to 2.15 million workers this year. The federal government has added almost 200,000 jobs during the recession while private employers have shed some 8 million net jobs.

And while the Cuban government is easing its grip on private businesses, the U.S. government is broadening its reach into the private sector. Bailouts, financial reform legislation and aggressive federal regulators are all increasing the government’s control of the private sector.

At a minimum, the situation is ironic. At most, it is unfathomable.

While Cuban officials warn of the danger of supporting bloated inefficient businesses, our government borrows billions to prop up companies deemed “too big to fail.”

While the Cuban government vows to promote private-sector opportunities, our new health-reform law and the proposed cap-and-trade legislation threaten to trap private employers in a complex and costly web of mandates, restrictions, fines and penalties, and regulations that will continue to drag our economy down.

Like Alice, we find ourselves in a mystifying world where down is up and up is down.

Cuba, one of the world’s most high-profile communist nations, appears to be recognizing that government control of the economy doesn’t work. Propped up for decades by billions in Soviet subsidies, Cuba is now on its own, and its economy is crumbling. Even the revolution’s old guard acknowledges that things must change, so they are beginning to embrace capitalism and economic freedom as a way to save their country.

Cuba is realizing that stifling federal control of the private sector doesn’t work, period. Castro found out the hard way that individual economic freedom to innovate and be creative is the key to growth, prosperity and just plain making family life better.

I know this sounds bizarre, but perhaps the U.S. should take its cue from Cuba.

Stimulus projects ‘changing America’?

The White House says seven stimulus projects in Colorado are creating thousands of jobs and adding to an overall effort to “change America.”

A report released Friday points to the seven Colorado projects as part of 100 stimulus projects highlighted by the White House as being “some of the most innovative and effective Recovery Act projects nationwide.”

The projects in Colorado include:

Ą $400 million for the Abound Solar Manufacturing, LLC facility in Longmont to manufacture thin-film solar panels. Expected to create 2,000 temporary jobs and 1,500 permanent jobs;

Ą $45 million for UQM Technologies in Frederick to build a new electric vehicle propulsion plant. Expected to add 230 jobs by next year, growing its workforce from 70 to 300;

Ą $28 million contribution to the $500 million redevelopment of Denver Union Station. Expected to create 7,000 jobs during construction and add $3 billion in new economic activity to Colorado over the next 20 years, according to the governor’s office;

Ą $3 million for a new interchange at Crossroads Boulevard and Interstate 25 in Loveland. Expected to handle about 24,000 vehicles per day. An average of 84 people worked on the project per month during construction;

Ą $39.4 million to install 35 acres of solar panels on the roofs and grounds of the Denver Federal Center. Nearly 40 people have been put to work so far;

Ą $500,000 to expand the Crossroads Safehouse in Larimer County from 15 units to 25 units; and

Ą $10 million contribution to the construction of a tower for the senior and disabled at 1099 Osage St. in Denver. At least 50 construction/sub-contracting construction jobs will be created, according to White House officials.

Democratic Gov. Bill Ritter on Friday praised the $814 billion economic stimulus Ń signed in Denver last year Ń for an anticipated injection of at least $7.3 billion into the state by the time the dollars run out, and for creating, saving or “indirectly producing” 50,000 jobs in Colorado.

“The Recovery Act is helping Colorado’s economy by investing in ambitious projects like the redevelopment of Denver Union Station and the expansion of Abound Solar in Longmont,” Ritter said. “These projects are creating and retaining thousands of jobs, shifting the economy in the right direction and providing long-term benefits to the people of Colorado.”

Republicans and critics of the stimulus point to the nation’s nearly 10 percent unemployment rate in arguing that the stimulus has been a waste of money and a failure. The unemployment rate in Colorado has held relatively steady at around 8 percent. The state unemployment rate for July of last year was 8.1 percent.

Jeff Crank, state director for the conservative group Americans for Prosperity, told the Denver Daily News recently that the stimulus will only leave the country further in debt. He says the majority of the jobs created have been government jobs, including thousands of temporary jobs due to the Census count. Meanwhile, private sector employment continues to decline, said Crank.  Crank also points to reports that the White House mistakenly double- and triple-counted jobs during stimulus impact counts.  “The American people are growing in their concern for the amount of spending that is burdening our children and future generations,” he said last month. “I guess (the White House’s) only hope is to continue saying that it’s worked.”