I’ve spent most of my adult life in societies with massive gaps in income and wealth. My second home, South Africa, is regularly cited as the second most unequal society on Earth. For years my work regularly took me to countries listed in the top 10 most unequal societies — Namibia (No. 1), Lesotho (No. 3), Haiti (No. 7), Honduras (No. 10), and so on. I know what it looks, sounds, smells and feels like to live and work in such conditions.
Take it from me — it isn’t pretty. I’m not one of those people who gets freaked out by safety and security issues, although those are a major problem in highly unequal societies. What gets under my skin is the raw human cost of poverty, and the soul-crushing effect of inequality, especially on young people. You don’t sleep well most nights when you live in a place where little toddlers are malnourished and ill-housed and reduced to begging at a stranger’s car window to survive.
One reason I came to live and work in the U.S. was so my little daughter could be spared the pain of seeing such things. But I clearly came to the wrong place … because wealth inequality in America is a clear and present danger not just to our economy, but also our personal safety.
In my interactions with members of my Plan B Club, perceptions about safety and security are often the main concern to pursuing an overseas lifestyle. Safety and equality are closely related. On balance, more unequal societies tend to have more crime.
I don’t buy the argument that some people are innately prone to criminality, which undermines their economic life and causes poverty. People are the same everywhere. No, the problem is that persistent extreme inequality creates a different set of options for people at the poor end.
Sometimes crime is the only way to feed the kids. And even when it isn’t, living in a society saturated with consumerism and images of wealthy individuals inevitably proves to be too much for young people who think they have no hope of attaining that socioeconomic status the “right” way. That’s especially true when the poor tend to be dominated by a different ethnic group than the rich.
Slow-Motion Economic Collapse, Driven by Wealth Inequality
The U.S. Census Bureau recently released a report showing that the median net worth of American households declined by more than $5,000 between 2000 and 2011 — a drop of almost 7%. The report probably understates that decline, because it doesn’t include assets like pension funds, the value of life insurance policies and possessions like furniture and jewelry in the calculation of net worth. Adding those assets into the mix would boost the median net worth of people at the top of the U.S. income ladder quite considerably, making inequality even worse.
But that $5,000 is just the change in net worth across the board. According to the report, changes in the net worth of U.S. households between the different levels of society revealed widespread wealth inequality. The median wealth in the top fifth of U.S. households went up 11%, from about $569,000 to over $630,000. The next fifth also went up, rising 10%, from $188,000 to $206,000. But the wealth drop in the bottom 60% of U.S. households was so great that it more than offset the increases in the top 40%.
The vast majority of households in the bottom 60% don’t have enough money on hand to cover three months of living expenses. Many have no assets at all, and zero to negative net worth. They are one paycheck away from a life of Third World poverty — surrounded by the spectacular consumption levels enjoyed by the top 40%.
As in many societies, in the U.S. inequality overlaps strongly with ethnic identity. The average African American household has just six cents of wealth for every $1 held by white households. For Latinos, the average is seven cents.
Where is the Border Now?
When I was a student at the University of Cape Town, a savage war raged on the border between South-West Africa (Namibia) and Angola. South African conscript troops battled Soviet-equipped Namibian insurgents seeking independence from Pretoria. Many of my fellow students were either returned conscripts or secretly members of the South West African People’s Organization, the rebel movement.
As with our own wars in the Middle East, the anger and violence up there on the Kunene River seemed remote and unthreatening. But as order began to unravel on the streets of South Africa’s major cities, a new graffiti began to appear: “Where’s the border now, folks?”
As I watch the anarchic scenes on the streets of Ferguson, Missouri — so familiar to me, even though I’ve never been there — I find myself thinking of that graffiti. Americans are used to thinking of the Third World, with its inequality, hopelessness, and violence, as somewhere comfortably far away.
Where’s the Third World now, folks? And what’s your Plan B to get out, when the time comes?
Offshore and Asset Protection Editor
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