By Gregor Peter Schmitz and Gabor Steingart
Business is poor in the New York banking district around Wall Street these days, even for drug dealers. In the good old days, they used to supply America's moneyed elite with cocaine and crack. But now, with the good times gone, they spend their days in the Bowery Mission, a homeless shelter with a dining hall and a chapel.
Alvin, 47, is one of them. His customers are gone, as is the money he earned during better times. And when another dealer higher up the food chain decided he was entitled to a bigger cut of the profits, things became too dicey for Alvin. "I'm afraid," he says.
Alvin, who is originally from Louisiana, cleared out his apartment and moved into the oldest homeless shelter in New York City. In the drug business, a dealer who doesn't pay his bills stands to get the maximum penalty: death. But Alvin feels safe in the Bowery Mission, even though the demand for beds is so high. "Last night I slept on the floor in front of the pulpit," he says.
Ironically, the mission's donations have fallen by 13 percent from last year, says outreach director, James Macklin. Macklin was once homeless himself and lived at the mission before he rose through the ranks to his current management position. "We will emerge stronger from this crisis," he says defiantly.
In the United States, the economic downturn has developed into a social crisis of a dimension the country has not experienced since the Great Depression early in the 20th century. In addition to bringing down stock prices and corporate earnings, the current crisis has deprived millions of people of their livelihood.
Poverty as a mass phenomenon is back. About 50 million Americans have no health insurance, and more people are added to their ranks every day. More than 32 million people receive food stamps, and 13 million are unemployed. The homeless population is growing in tandem with a rapid rise in the rate of foreclosures, which were 45 percent higher in March 2009 than they were in the same month of the previous year.
The effects of the crisis are even palpable in better neighborhoods. The streets are wide in Venice Beach, an upscale Los Angeles suburb near the ocean. But now they seem narrower than usual, because they are lined with parked campers and station wagons, the temporary homes of people whose lives have been put on hold. Many have covered the windows with cardboard to preserve a modicum of privacy. Some have put up signs that read "Come in if you dare," hoping to deter car thieves and other criminals.
The crisis is also making itself felt in posh Georgetown, a historic residential neighborhood in Washington D.C. which is home to many politicians, lobbyists and attorneys. Anyone who forgets to lock his car at night can expect to see unwanted guests sleeping in it by the next morning.
When one local woman, who works at a Middle Eastern embassy in Washington, opened her car door one morning, she was astonished to find a woman holding a purse and wearing a pearl necklace sitting on the seat. The humiliated woman covered her face, apologized politely and quickly left her sleeping quarters.
The loss of a job often marks the beginning of the end of a middle-class way of life. In a delirium of cost-cutting, American companies have even started to lay off parts of their core workforce. The unemployment rolls grew by about 690,000 people in March, 850,000 in February and 510,000 in January. Since the beginning of the crisis in the summer of 2007, the total number of the unemployed in the United States has swelled by 6 million.
The government's social safety net is insufficient to allow people who have lost their jobs to continue living their lives as if little or nothing had happened. After the consumption binge of recent years, the bank accounts of ordinary people are empty, and the investment accounts of the middle class have declined in value by an average of 40 percent. Because of these factors, unemployment is often followed a rapid plunge into abject poverty.
Nowadays, politicians spend as much time visiting homeless shelters as they once spent at Silicon Valley startups. People waiting in line at Miriam's Kitchen in Washington were recently pleased to see first lady Michelle Obama when she paid a surprise visit to the soup kitchen. Before he was sworn into office, President Barack Obama helped to paint a homeless shelter not far from the White House.
In a recent speech, Obama said that he envisions "a future where sustained economic growth creates good jobs and rising incomes." But these words seem empty in the current crisis.
The president must now look on as the country comes apart at the seams. With jobs disappearing and incomes shrinking, America's future seems vulnerable today.
The crisis in the lower third of society has turned into an existential threat for some Americans. Many soup kitchens are turning away the hungry, and even hastily constructed new facilities to house the homeless are often inadequate to satisfy the rising demand.
Many private corporations across America are withdrawing their funding for social welfare projects. Ironically, their generosity is ending just as mass poverty is returning to America.
The government is also contributing to a worsening of the crisis. Although the national government in Washington has made additional funds available to care for the homeless, many state governments have cut back their social budgets. One of the reasons for the cutbacks has to do with state constitutions, which prohibit states from going into debt, imposing a forced regime of frugality.
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