To Third World, U.S.A.
Arthur Donner & Doug Peters
02 January, 2008
"What we're seeing (in the U.S.) isn't the rise of a fairly
broad class of knowledge workers. Instead, we're seeing the rise of
a narrow oligarchy: Income and wealth are becoming increasingly concentrated
in the hands of a small, privileged elite ... It's time to face up to
the fact that rising inequality is driven by the giant income gains
of a tiny elite, not the modest gains of college graduates."
– Paul Krugman, New York Times, Feb. 27, 2006.
In the mid-1990s, the Wall Street
Journal delivered the classic insult to this nation when it called Canada
an honorary Third World country.
that time Canada's economy was coming out of a period of relative difficulty.
of payments was shaky, the federal government had posted a long string
of budget deficits and the Canadian dollar was weak.
these economic woes, as of the mid-1990s, Canada also had a long history
of posting substantially higher inflation rates than in the United States.
the trade and fiscal deficits situation has been turned on its head,
with the United States incurring huge fiscal deficits and borrowing
enormous amounts of foreign capital to balance its hefty international
trade deficit. In fact, in a relatively short time span, the U.S. has
become the largest debtor nation in the world.
And as Paul
Krugman and many other economists have pointed out, U.S. income disparity
is obscenely large and increasing, while higher education is not overcoming
the polarization of income and the shrinking of the middle class.
point is somewhat surprising, since most Western democracies see the
elimination or reduction of economic inequality as a good idea. Indeed,
it is a generally accepted principle that the underlying causes of economic
inequality based on such non-economic differences as race, gender, or
geography should also be minimized or eliminated.
words, there is a strong predilection in most Western countries to level
the economic playing field as much as possible. This seems not to be
the case in the United States.
Nations publishes a Human Development Index that ranks countries in
terms of life expectancy, literacy, education and standard of living.
The latest published data were based on 2005 statistics. The U.S., despite
its vast wealth and power, placed only in the 12th position among industrial
countries. The top four countries were Iceland, Norway, Australia and
Canada. These top four countries still pay some lip service to income
distribution as an important economic and social goal.
the U.S. today has many more features in common with Third World status
than Canada ever did back in the mid-1990s.
What is usually
meant by a Third World economy? A half-century ago, the term was associated
with the economically underdeveloped countries of Africa, Asia, South
America and Oceania. The common characteristics of these Third World
countries were high levels of poverty, income inequality, high birth
rates and an economic dependence upon the advanced countries. Third
World countries were simply not as industrialized or technologically
advanced as Western countries.
are some of the distinguishing characteristics of contemporary Third
World countries? They go beyond these nations' fiscal position or undue
concentration on natural resource exports.
features today include poverty, lack of democratic institutions, controlling
oligarchies and the unequal distribution of income and wealth. In other
words, the few enjoy a rich lifestyle while the many share subpar incomes
of Third World countries is that a major portion of their fiscal expenditures
is allocated to the military. In many Third World countries, the military
is controlled by an elite or a small collection of the wealthy.
in many Third World countries one finds that leadership is passed from
one generation to the next, often via a close relative.
country we are talking about now?
and Doug Peters are Toronto-based economists.
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