The Crisis: The Second Great Depression

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There is a crisis of urban devastation and increasing global poverty for the past thirty years. The definition of an economic recession is where there is a decline in economic growth for more than six months. What about a decline in growth for more than 30 years?  That is what the poor in America have been going through since the 1970s—The Second Great Depression.   You don’t read about it, because it is only affecting poor and working class families.

For the past 30-40 years, by most measures while the US and global economy has grown, the average income of the poorest 20% in the USA has decreased by 17%.  Globally, the "bottom billion" in terms of income have also seen their incomes decrease over the same period.  The poorest 50% globally only have 5% of the global income, while the top 300 corporations control 25% of global assets. Changes in government policy, globalization and technology have eliminated most of the jobs in urban communities. Only those with education can get adequate jobs. Those without jobs have become more desperate in poverty, leading to a skyrocketing of social problems.

• Imprisonment rate has increased by more than 5 fold
• Gang involvement has increased more than 10 fold
• Unwed births have more than doubled
• US is more segregated than before the civil rights movement

To understand the cause of this, we have to understand our recent history.  Before the 1970’s, the way the economy grew was that it was true the “rising tide raises all boats.”  With progressive government policies toward poverty and a large number of manufacturing jobs, people of all incomes saw their income grow between 1947 and 1979.  The graph on the left below indicates this overall pattern of growth - each income group, from the lowest to the highest, saw a sizable increase in household income.

Between the 1970’s and now economic growth has radically changed due to government policy changes, globalization and technology shifts.  Most manufacturing jobs were either automated or shifted to other countries.  The result was that only those with a 4 year college degree saw growth in income.  Taxes for the rich were cut in half, while taxes for the poor remained about the same and government services to the poor were dramatically reduced. The graph on the above right illustrates the widening gap between rich and poor: while the top 1% of society saw a 72% increase in income, income dropped 16% for the lowest fifth.  The facts show economy switched from one where "a rising tide that raises all boats" to an economy where the "rich get richer while the poor get poorer."

There has been more social decay over the period from 1970 to now than there has been in history.  As people become more desperate in poverty, there is a skyrocketing of the imprisonment rate, gangs, drugs and unwed births. While many might focus on the moral causes of these declines, the fact that the timing of this social decline directly mirrors the economic decline shows that there are also major social and economic causes.  This is not surprising given that studies have shown a high correlation between poverty and unwed births, imprisonment, gang involvement and drug use.

To respond to this, we need a massive shift in resources to reverse this Second Great Depression.

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