The Optimist

We're All the 1 Percent

The U.S. middle class is still incredibly wealthy by international standards.

After 30 years of greed being good and rising tides lifting all boats, inequality -- or "class warfare," if you prefer -- is back on the political agenda.

The Occupiers who camped out in central squares from Melbourne to Oakland, denouncing the "1 percent" for its supposedly ill-gotten gains, have a point: Inequality is out of control. But these mainly middle-class complainers are an incredibly coddled bunch by any international reckoning. This is good news, because we're going to need to tax them more if we're ever going to solve the world's real inequality problem: the estimated 900 million people who live on less than $1.25 a day.

First things first: America's rich are really, really rich. U.S. Census data suggest every man, woman, and child in the top 1 percent of U.S. households gets about $1,500 to live on each day, every day. By contrast, the average U.S. household is scraping by on around $55 per person per day. But the global average is about a fifth of that.

So by global standards, America's middle class is also really, really rich. To make it into the richest 1 percent globally, all you need is an income of around $34,000, according to World Bank economist Branko Milanovic. The average family in the United States has more than three times the income of those living in poverty in America, and nearly 50 times that of the world's poorest. Many of America's 99 percenters, and the West's, are really 1 percenters on a global level.

Nor did the Western 99 percent "earn" most of their wealth, any more than the top 1 percent "earned" theirs. It's the luck of where you're born, according to the late Nobel Prize-winning economist Herbert Simon, who estimated that the benefits of living in a well-functioning economy probably account for 90 percent of individual income. "On moral grounds," he wrote, "we could argue for a flat income tax of 90 percent to return that wealth to its real owners" -- i.e., everyone else in the country. That radical suggestion makes the Occupy Wall Street crowd look like a bunch of free-market libertarians.

Western middle classes actually get back a good deal more from government than they pay in. Political scientists Vincent Mahler, David Jesuit, and Piotr Paradowski examined the benefits -- from pensions to child welfare payments -- that taxpayers, rich and poor, in 12 European countries and the United States received. They found that the middle 60 percent of the population had a larger income share after taxes and transfers than before. Thanks to the good folks at the Internal Revenue Service, the broad slice of the U.S. middle class gets 3 percent more of the income pie after taxes and transfers. And that doesn't account for a range of state subsidies for public goods like colleges and universities that disproportionately benefit the middle classes.

Billionaire investor and philanthropist Warren Buffett thinks he has a plan to right the ship: tax people making $1 million a year at 30 percent and those making $10 million at 35 percent. But that's not going to cut it. A 30 percent income tax for 2008's top 1 percent would have raked in $281 billion for the U.S. government -- still not enough to plug the $400 billion-plus deficit that year. Plus, taxing the West's obscenely rich to help a Western middle class that is merely very rich doesn't seem like the highest of priorities, frankly. We need to deal with inequality all the way down to the bottom of the income pyramid, for everyone's sake.

IMF research suggests that countries with high levels of inequality are far more likely to fall into financial crisis and far less likely to sustain economic growth. But this is not just about taxing the richest 1 percent to help the middle 60. It's about taxing the middle 60 to help the bottom 20. And ensuring that rich and poor alike worldwide have access to basic health care and education, with their well-documented effects on income and productivity, will work to the benefit of the Western middle class. If Americans and Europeans want to export their way out of recession, they need rich consumers elsewhere.

So stop whining, Occupiers. It is high time for the richest 1 percent to help the rest catch up. But don't fool yourself -- if you live in the West, you probably are that 1 percent.


The Optimist

The Trojan Paradox

If religious conservatives want to put a stop to abortions, there's no better tool than making contraception a lot more available. And there's a world of good it'll do.

As a bunch of men on Capitol Hill discussed whether federally supported health-care programs should have to cover contraceptive services in the United States, a new study in the medical journal the Lancet was reporting that, globally, about one in five pregnancies worldwide ends in abortion. That's a disturbingly high statistic -- whichever side of the abortion rights debate you fall. But the awkward fact for those opposed to both abortion rights and supplying contraceptives is that global evidence suggests the most foolproof way to reduce the abortion rate is, in fact, to provide more widespread access to contraceptives.

The good news is that, according to U.N. data, the percentage of couples worldwide ages 15 to 49 using a modern method of contraception expanded from 41 percent in 1980 to 56 percent in 2009. The gray lining on that silver cloud, however, is that the rate of progress slowed considerably in the new millennium, to an annual growth rate of just 0.1 percent.

Of course, some of the 44 percent of couples who aren't using modern contraceptives are trying to have a baby. But hundreds of millions of women aren't using modern contraception because they don't have access to it or can't afford it. There are traditional, "free" methods of contraception -- the rhythm method or withdrawal, for example. But, beyond being considerably less reliable, they require the cooperation of male partners. A recent 10-country study by the World Health Organization suggests that between one in 10 and one-half of women in a relationship had suffered sexual abuse by their partners. And cross-country evidence in developing countries suggests men usually want more children than do their partners. Thus, it's naive in the extreme to assume women can always rely on their partner to cooperate in using traditional methods when it comes to avoiding pregnancy.

That's one reason why four-fifths of unintended pregnancies in the developing world occur among mothers who lack access to modern contraception, according to the Guttmacher Institute. And getting pregnant when you don't want to isn't just an inconvenience -- it can be a considerable physical danger in and of itself. Roughly 300,000 women worldwide die each year as a result of pregnancy and childbirth, with about 13 percent of those deaths due to unsafe abortions.

If you are a poor woman in a country where abortion is illegal, the options for dealing with an unwanted pregnancy are particularly grim. Take, for example, migrant Burmese women living on the Thai border. Attempts to end pregnancy usually start with self-medication; local remedies include a mix of redwood, black pepper, nutmeg, cloves, and sandalwood. When that doesn't work, the two most common approaches are a pummeling vigorous enough to pull off the placenta and cause uterine rupture or "stick abortions" -- which consists of putting a 4-inch twig into the uterus and leaving it there for days at a time. An illegal induced abortion, while considerably safer, costs about 10 times as much as these treatments. So it is perhaps not surprising that about half of pregnancy-related deaths in the region are due to botched abortions, the great majority of which are dangerous traditional approaches.

The Thai case illustrates another point -- make abortions illegal, and you just drive them underground, where they are more likely to be dangerous. In the United States, the number of abortion-related deaths per million live births fell by three-quarters between 1970 -- three years before Roe v. Wade -- and 1976. And after South Africa liberalized its abortion laws in 1997, abortion-related deaths fell dramatically. For those who fear that -- like drugs, say -- legalization would create a rampant culture wherein every woman would flock to her local clinic for an abortion on a whim, fear not: Abortion rates are actually a little higher in regions where the procedure is illegal than where abortion laws are comparatively liberal, according to the Lancet study.

Happily, the number of maternal deaths worldwide is down by one-third since 1980, despite a growing global population. One major factor behind that decline is that women are getting pregnant less often in the first place. Most of that change is due to parents wanting fewer kids as education spreads and child mortality rates decline, but one additional component is that, as a result of improved contraceptive access, fewer mothers are getting pregnant by accident. The percentage of women ages 15 to 44 who got pregnant unintentionally each year dropped from 7.9 percent to 6.9 percent between 1995 and 2008 across the developing world, according to the Guttmacher Institute.

Women who don't get pregnant unintentionally have much less need to turn to abortion as a possible solution to that problem. The former Soviet republic of Georgia had the highest rate of abortions in the world at the turn of the millennium -- an annual rate of one abortion for every five married women of childbearing age in 1999. But that rate declined 15 percent over the next six years as contraceptive prevalence increased by nearly a quarter, according to an analysis by researchers at the U.S. Centers for Disease Control and Prevention. Similarly, a 46 percent decline in abortions in Turkey between 1988 and 1998 was associated with more widespread use of modern contraceptives and more effective use of traditional methods. Again, research from a decade ago in areas of Matlab in Bangladesh where high-quality contraception services were available found that about one in 50 pregnancies ended in abortion. Compare that with a national average in Bangladesh of around one in 10.

In fact, it's not at all surprising that abortion rates have been declining as contraceptive access has increased worldwide. The Lancet study suggests that there were 35 abortions per 1,000 women of childbearing age in 1995. That dropped to 29 per 1,000 in 2003. Since then, limited progress in rolling out modern contraceptives has been reflected in a slower decline in the number of abortions, which stood at 28 per 1,000 in 2008. Worse, unsafe abortions have been declining at a slower rate than safe procedures, because those countries left without widespread access to contraceptives are increasingly the poorest, while many of these same countries have outlawed elective abortion.

Nonetheless, the global evidence is clear: If you want to reduce the number of abortions, making them illegal won't work. Making modern contraceptives widely available is far more effective. And, as a not insignificant side effect, this is also a strategy that puts women more firmly in charge of their own bodies and health, saving tens of thousands from death and millions from illness each year.

For those concerned men on Capitol Hill last week, support for contraceptives may be a bitter pill to swallow. But if they really want to cut down on the practice of abortion, modern contraceptives play a vital role. And they should look on the bright side -- they aren't the ones who actually have to do the swallowing. Yet.

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