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Income Distribution and the Occupy Wall Street Movement

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Ever since the Occupy Wall Street movement was born in mid-September, many analysts have asked themselves if the Americans have valid reasons to protest in the way that they have been doing so. Some have questioned it following academic rigor, seeking justification for the movement. Others have done so following a political sense, seeking to disqualify it.

Differing with the Arab countries, where the wave of protests that has been shaking the world commenced, the United States enjoys the fruits of a mature democracy, "the mother of all democracies" -- to the point that several of the latest wars have been justified with the idea of imposing it in countries that don't have it -- and because of this, some say that it is not fair to compare Occupy Wall Street with the "Arab spring".

Although the unemployment rate in the United States has risen to levels never seen during the past decades, and maintains itself closer to 9% -- with a very small recovery during these past few months -- the country is far from achieving a similar state of stagnation as that of Spain, where unemployment rates are above 20% and where among the young adults it has reached levels superior to 40%. It's not fair, they state, to compare Occupy Wall Street with the "Indignados" movement.

In August, the US public debt surpassed the GDP by 100% (more than 14 trillion dollars), for the first time since World War II. The credit rating agencies have warned that the country could default, but given the strength of its economy, the US is far from living a situation similar to Greece, where the impossibility of paying its debt has threatened to drag with it all major social advancements it has obtained in the past half century. For this reason, it's not fair to compare Occupy Wall Street with the Hellenic protests.

It seems that not even the housing bubble would be a good reason. At the end of the day, the rate of foreclosures has not grown higher that 1.5% of the mortgage market and the responsibility of obtaining loans for housing purchases rely fundamentally on the buyers.

But if none of the reasons stated above are valid -- although, in my opinion, some of them are -- there is one that is difficult to refute, except when the ideological cliche is used that "it's the rich that generate employment": the growing income inequality in the US.

A few weeks ago the Congressional Budget Office published a report that stated that "for the 1 percent of the population with the highest income, average real after-tax household income grew by 275 percent between 1979 and 2007" while for the other 99% the growth rate didn't surpass 40% on average.

"As a result of that uneven growth", says the report, "the share of total market income received by the top 1 percent of the population more than doubled between 1979 and 2007, growing from about 10 percent to more than 20 percent." Meanwhile, the poorest 20% obtain only close to 2% of the income.

In a recent interview, the Italian philosopher Paolo Flores D'arcais, one of the most renowned intellectuals in Europe, stated that the real problem that developed economies face today -- not the economies in emerging countries as was believed before -- is the terrible wealth distribution. "The inequality, that is the central issue, even from the efficiency point of view".

It's the terrible distribution of income that gives sense to the use of the 99% slogan, every day more widely adopted by the thousands of people that have decided to support the movement, and this is what gives it a universal character. This is where -- unbeknownst and unintentionally -- the report from the Congressional Budget Office has done nothing but provide new munitions to the Occupy Wall Street movement.