Social Inequality feeds the Tension that gives way to Crisis

I was at home rather working (as I always am on my current Projects), and when The Minister (read: mater) came home, she gave me an interesting article to read, God bless her… But apart from reading that one, I went on to further read the others and the one that stood out the most for me was one which was quoting Moody’s rating agency as saying: “The budgetary decisions facing the United States and many other rich countries may “test social cohesion”” in a sense that if nothing is done about it, income inequality looks likely to continue rising at least through this year (in the USA).

Wall Street has completely recovered to pre-crisis level and the wealthy are back to doing what they do best, which is being wealthy, and going on spending sprees.

On the other side of the coin, we have increasing unemployment on Main-Street, and it (Main-Street) is poised to end the year off at 9.7 porciento where it started out, while the education gap widens (anyone seen Waiting For Superman?), as the unemployment rate for those who didn’t go to any institutions of higher learning comes up by 1 percent since January.

Apparently this pattern has been going on for more than 10 years, but has not generated enough popular support for Washington to address the income inequality. This however, is going to have to change, because the U.S finances are so completely stretched that officials will have to choose where they want to cut their spending. And this is where the smart, or socially aware rather, Americans are making an array of suggestions. Ah heck! Even the not so smart are making suggestions. Watch Bill Mayer lately? There is always someone who he invites who says something that makes me wonder whether or not every human being has a mind filter.

A scary fact is that the American government debt burden might reach a point where it grows faster than the economy, which could raise taxes and take money away from worthy causes such as Education. Moody’s analyst Steven Hess wonders whether society will accept the measures that need to be taken to stabilize the debt position of the government. He also says: “Economic growth is not going to get the country of out the negative debt trajectory it now faces”.

For us to find ourselves in the global quagmire that we were in was because banks made people think that they could afford things (and houses) that they very well could not. And even when they could not afford those houses, or assets, the bank allowed them to borrow, so perhaps that they can feel that they are closer to their part of the American Dream (who knows), and not get mad that house prices were swiftly rising and wages were remaining stagnant….

Let’s fast forward to South Africa. I am not saying that we have completely the same sort of situation where banks are allowing us to borrow out of our minds. In fact, it is almost the opposite. In South Africa, the cost of living keeps going up, but the wages and pay for MOST government um-ploy-ees does not go anywhere. And it’s not really fair is it? Hence the reason why we constantly have to deal with annoying, economically paralyzing service sector strikes, that have caused us to wonder whether there is ever going to be a better way to negotiate and express ones dissatisfaction with fiscal policy.

And at risk of sounding TOO MUCH like the BBC, it is not a phenomenon that is just unique to South Africa: Greece and many other countries in Europe have experience riots and protests that have caused austerity pushes, because as we have observed inequality can heighten social tension.

But South Africa is not America, or Europe. What makes our situation even more dynamic is not just the existence of the Plutonomy Theory (as explained by Kapur in his Thesis explaining a social existence of “The Haves and The Rest”), but rather there is a split within the Middle Class (you thought I was going to say ruling party didn’t you?).

We have the middle class that would like to build wealth, and the Middle Class that would like to maintain wealth. The Middle Class that would like to build wealth is the same middle class that does not care so much about fiscal policy with concerns to weakening the country’s currency, but their already wealthy counterparts cry foul, because it directly affects their assets.

Then on the other end of the spectrum there are those that practically refuse to participate in the economy of the country completely, since we live in an unfair so we’ll just get some welfare state.

According to economist Mike Schussler, South Africa is one of the few countries (if there are any like us) where the amount of people who claim welfare far outnumber the pool of taxpayers who can provide it, and in the next 25 years, the number is poised to increase. Marking complete and utter disaster!

But how can things change when a huge chunk of the youth (my counterparts, and older) switch on their television sets, or some read online news journals, and notice that they do not need to study further (unlike in the USA, where the average College graduate will earth $500 000 to $1 Million more in their lifetime than a non-college graduate), since all they have to do is enter politics and become tenderpreneurs. We now have a large unemployment rate, full not with people who cannot find work, but rather with those who refuse to study further and obtain it- which is a stark contrast to most economies that have: The Unemployed (by choice, here in Cuba), The Employable Unemployed, and The Employed. Due to a lack of focus on Education, and Science and Technology, and Energy and all the other ministries that would make us a formidable force, we have everyone wanting to own their own construction company, and no one wanting to study medicine, engineering, and economics. No one wants to actually contribute positively to society anymore.

But perhaps like the Plutonomic economy of the United States, the only reason why we in South Africa have allowed pillaging and looting of the states resources is that: A large amount of the electorate believes that they too have a chance to become a participant, or finally dine at the table of political self indulgence.

According to Kapur: “Why kill it off if you can join it? In a sense, this is the embodiment of the ‘American Dream’, but if voters feel that they cannot participate, they are more likely to divide up the wealth pie, rather than aspire to be truly rich.”

What are those in political offices of influence in South Africa trying to do now? (that’s a rhetorical question. I mean nothing by it)



Yes… I know that I need a masters degree to make this analysis (or maybe it’s that kind of rhetoric that put us in political, and global financial crisis), regardless, I’ll get there, I am after all only a teenager.


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