Stiglitz on the One Percent Nation by Scott Horton

[Jefferson23]

* See link to Stiglitz article below.

April 4, 2011

Writing in Vanity Fair, economist Joseph Stiglitz reminds us that, as crowds across the Middle East decry kleptocratic elites, a dramatic social transformation has taken place in the United States.

The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran.

To those who argue that this widening discrepancy merely reflects the natural rise to the top of the nation’s most gifted and most entrepreneurial, Stiglitz has some sharp retorts. First, he argues that opportunity for advancement is falling sharply. Second, he says that these income distortions actually make the economy less efficient. Third, he links this wealth concentration to declining social investment in technology, education, and infrastructure, which are key to sustained economic growth. He also sees a process of political lock-in, with the 1 percent elite having come to control the political process, so that even what is lauded as reform rarely turns out to work meaningful change. He argues that this process will ultimately feed a backlash:

The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.

http://www.harpers.org/archive/2011/04/hbc-90008046

** Joseph Stiglitz:

Inequality

Of the 1%, by the 1%, for the 1%


Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.

http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all&wpisrc=nl_wonk

[calimary]

1. LOVE this:

The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.

[handmade34]

2. posted yesterday

"One Percent" the documentary

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x813948

interesting take on how Jamie Johnson's father (when he was a young man) had done a documentary about poverty in Africa and was reprimanded sufficiently when the Johnson&Johnson heads got wind of it...

[Jefferson23]

3. Thanks for posting handmade. n/t

[pmorlan1]

4. K & R

Excellent piece by Stiglitz

[Jefferson23]

5. Interview transcript from Democracy Now with Joseph Stiglitz:

* Excerpt from Obama speech on budget cuts, so often looking forward:

PRESIDENT BARACK OBAMA: After weeks of negotiations, we’ve now agreed to cut as much spending as the Republicans in Congress originally asked for. I’ve got some Democrats mad at me, but I said, "You know what? Let’s get past last year’s budget, and let’s focus on the future." So we’ve agreed to a compromise. But somehow we still don’t have a deal, because some folks are trying to inject politics in what should be a simple debate about how to pay our bills. I mean, there’s stuff on all kinds of issues in there: abortion and the environment and healthcare. You know, there are time to have those discussions, but that time is not now. Right now we need to just make sure that we pay our bills and that the government stays open.

Snip* Stiglitz: JOSEPH STIGLITZ: The point is that there has been this growing inequality, not only in income, but actually the inequality of wealth is even much greater. There’s a shrinking of opportunity. It’s not just that the people at the top are getting richer. If they were getting richer because they were contributing more to our society and everybody else was doing well, that would be one thing. But actually, they’re gaining, and everybody else is decreasing. In fact, right now, it’s not just the bottom, but even the middle, the middle, the median income—half above, half below—are poorer today than they were more than a decade ago. So, all the growth that has occurred in our country over the last decade or more has gone to the upper one, two percent.

At the same time, there’s really shrinking opportunity. You know, we used to think of the United States as the land of opportunity—Horatio Alger, anybody could make it. And we used to think of ourselves as different from old Europe, as we used to call it. But the statistics show otherwise. Now, yes, we have some dramatic examples of people making it from the bottom to the top, middle to the top. But the statistics look at what happens on average: what is the chance of somebody at the bottom making it to the middle or the middle making it to the top? And right now, we are worse than old Europe. This is something dramatic that has happened over the last 30, 40 years.

And what’s really happened is old Europe has become more of a land of opportunity. They reformed their education systems after World War II. They said that they had—they recognized they had a problem, and they changed. Meanwhile, the United States, we’ve wound up with a more fractionated society, one where more—moved more to a private education system, where those who have money can get a really first-class education. But the average American is not. And, you know, those who come out of—those education statistics that came out not long ago where—show that, on average, Americans are doing more poorly than countries around the world.

And we—this is related to some of the issues that got raised in the context of the financial crisis. Remember the discussion about the bonuses? And that’s related to the same idea. The question was, if people were getting rewards for contributing to our society, a theory that was in the 19th century called "marginal-productivity theory," then you could say, "OK, those who contribute more should get more." But what we saw in that crisis was that these titans of the financial industry got mega-bonuses while their companies were making mega-losses. And while they were—as a result of their actions, our economy and the global economy went into a real tailspin, from which we have still not recovered. Their salaries have recovered, but not the rest of us.

in full transcript: http://www.democracynow.org/2011/4/7/nobel_economist_joseph_stiglitz_assault_on

[KoKo]

6. K&R