How the U.S. Is Becoming a Third-World Nation

Sep 26 2011 Published by under Uncategorized

Today, distribution of wealth in the U.S. is the worst it has been in a hundred years. When you compare the distribution of wealth across countries, our country is grouped with a lot of third world countries. Third world countries are distinguished by a great divide between a few wealthy and a mass of poor. They are places where a few live in palaces and most people scramble to get food, shelter, and clothing.

Yet most of us don’t see a third world when we look out our windows. We see paved roads, a working power grid, and overall a functioning first world economy. But first world status comes from things we don’t see from our windows: broad public services shared by all classes, shared resources, a social safety net, and a social compact that creates a foundation for long-term development. It comes from a strong middle class preventing the wealthy from getting too wealthy and the poor from staying too poor. To the extent that we have lost and continue to lose these things, we slip into the third world.

How can we recognize changes that reflect this loss? Here are some trends to watch for: stratification of rich and poor, loss of workplace protections and benefits, and mainstreaming of short-term oriented behavior.


The more difference money makes to how we experience life, the closer we are to living like third worlders.  The wealthy always get potholes fixed a little faster, but as long as we drive on the same roads, we all benefit. Conversely, the more the wealthy can isolate themselves and their resources and the more they can privatize public services, the fewer resources the rest of us will be able to access, and the closer we move to the third world.

Stories of the masses losing access or of high-end products and services created for the wealthy are stratification stories.  The wealthy already have isolated their homes on remote estates, their children in private schools and camps, and their transportation in private jets. Stories like this one may be framed as a region adapting to the changing economy, but the details reveal a region growing specialized food for the wealthy that the locals can’t always afford.

How close are we to our ideal of liberty and justice for all? How close are we to its opposite, those without the capital get the punishment? The Georgia execution of Troy Davis this month, especially contrasted with the treatment of another death row inmate in Georgia, and added to the federal non-prosecution of the well-connected bankers who caused the 2008 crash, would suggest that we are already well down the road to stratified justice.

However, these examples are of unequal enforcement, not unequal laws. In true third world economies, written laws exist to protect the property and quality of life of the wealthy.  There are actions and transactions in the lower part of the economy that are not regulated at all. For example, merchants may be regulated and held accountable for what they sell, while bartering among nonmerchants goes unregulated.

How close are we to an unregulated subeconomy? As more people fall out of the middle class, they find ingenious and unregulated ways of getting what they need to live. This kind of creative financing has gone on for years in poor areas and extremely expensive areas like Manhattan, but now it’s transitioning from a limited practice to a substantial part of the economy. This is a stratification story, too.

Worker Protections

Third world nations have no inter-class mobility. Worker protections like wage and hour laws and benefits support inter-class mobility because they give workers the ability to save and invest, not just survive.

By the beginning of 2009, it became clear that corporations were using the cover of the 2008 crash to reconfigure their work forces. They discharged salaried workers with benefits and started using freelancers with fewer worker protections to do their jobs. Currently, one third of workers are minimally regulated freelancers—and that doesn’t include the unemployed.

Payroll jobs aren’t the same either. Midlevel people who held on to their jobs with benefits are threatened with replacement if they don’t overproduce, even in violation of wage and hour laws.

Apply for a job at any major retail store these days, and they will tell you that you only can work up to 20 hours a week. Why? Because 1) 20 hours a week means you don’t qualify for benefits, and 2) there are so many people who need jobs that they can populate their workforce with part-timers. A person with a 20-hour retail job needs more than one job to survive, but stores don’t want to hire someone with another job because it affects their availability. Thus, we have an army of underemployed (a term that also includes workers who are overqualified for their jobs) who don’t earn enough for class mobility, either.

It is not only the unemployed who rely on the government to live. More and more people who are gainfully employed get government assistance because they are not able to live on their private sector income. “Wal-Mart has the largest number of employees who receive Medicaid, food stamps and state public assistance” and that includes people working full time. This is as much a subsidy to Wal-Mart’s bottom line as the direct government tax subsidies it receives.

As I’ve said before, the plutocracy wants to reduce both the cost of human labor and the value of human life. Little by little, they are transferring the cost of private labor to the public, then they are taking away public life support.

The changing work environment itself is not our problem. We can adapt to these changes in two ways, either by adapting existing protections to these new parameters (e.g., expand wage and benefit laws so that businesses can’t avoid them), or by creating whole new structures to protect workers (e.g., specific new rules to protect the rights and income of freelancers). What we can’t do is nothing. As long as we let people continue to be cut loose from social structures, we travel the road to third world nation.

Short-Term Behavior

Nations that do great things have long-term orientations, as we did when we built the railroad system, interstate highway system, and national power grid. In contrast, Short-term behavior limits an individual’s options in life. People in third world nations mostly live for today because they do not think tomorrow will be better. This mindset is shared by the long-term poor around the world, and it becomes a self-fulfilling prophecy: when there is no hope, most people stop trying. When this mindset takes hold of the mainstream of a nation, that country ceases to evolve.

In this sense, we have been increasingly thinking and acting like third world nations over thirty years of economic decline. Among the masses, our spending power peaked in the 1970s. Since then, decades of shrinking spending power have changed our mentality from long-term planning to short-term consumption: why not enjoy what we have now when life has taught us we will have less later?

Long-term thinkers support things like education, consumer protection and environmental integrity. In contrast, the short-term mindset is reflected in teen pregnancy, rollback of child labor laws, drug abuse, injuries of all kinds, violence in sports, childhood smoking, and consumer debt—and the propaganda that promotes these things. The Punk Patriot has the perfect description of this propaganda: little drops of poison the devil whispers in your ear. Even if you are not religious, you know the devil represents that which tempts you to do the wrong thing, and short-term behavior is the wrong thing.

Also, third world nations don’t regulate things that can harm their people (from chemicals to predatory lending), first because regulations reduce profitability and businesses control the government, and second because they know that things like cigarettes, drugs, and television can be useful to manage the masses. Indonesia may have unregulated smoking propaganda, but we have unregulated political propaganda, and both promote behaviors and mindsets that further third world conditions.

Don’t be fooled by outward appearances. That tidy little single-family house may now have renters in addition to the resident owners. That woman on the train with a briefcase may have had to tell her son she couldn’t afford to pay his school sports fee—a fee that used to be included in free public education—because she had to pay upkeep for her home office—a cost she didn’t have until she was laid off.

Those smiling men and women in suits may say they want to save America by destroying the public institutions that bind us together and protect us, but they are whispering little drops of poison. They are why we are becoming a third world nation.

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