From the fracas in Washington, it would be impossible to know that Americans still live in the world’s richest country. In 2010, the U.S. GDP was about two-and-a-half times that of its nearest competitor, China—you know, the country that’s building new cities everywhere and a bullet train system to ferry citizens among them. But to listen to the political discourse that currently dominates the airwaves, the U.S. is facing financial collapse, if not now then in another decade, and it cannot afford another dollar for many collective goods, whether an improved mass transportation system or health care for senior citizens.
As a number of commentators have observed, the political crisis over the debt ceiling is a distraction from graver and more urgent problems: especially the stagnation of the economy, which is not generating enough jobs to make much of a dent in the unemployment rate or to give young workers solid footing for the beginning of their career climbs. The Great Recession, supposedly over, is threatening to turn into a Japanese-style stagnation that could endure for a decade or more.
The state of the U.S. economy is bound up with the plight of the American middle class, as Robert Reich has acutely observed. That plight has been developing for decades, a lot longer than the debt problem, which dates back just a decade, to George W. Bush’s entry into the White House. The economic gains since the 1970s have been concentrated at the top of the income distribution, in the top few percent, and little has trickled down into the middle class. One widely cited statistic has it that the top 1 percent now take home about a quarter of the national income, up from just 9 percent in 1976; the distribution of wealth is even more unequal. (By the standard statistical measure of income inequality, the Gini coefficient, the U.S. is now considerably more unequal than any other economically developed country and more resembles a developing nation like Nicaragua.)