Sunday, April 03, 2011

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

A very good article by Joseph Stiglitz in VF.

Some excerpts:

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin.

Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul. There are several reasons for this.

But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride.

In recent weeks we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies they inhabit. Governments have been toppled in Egypt and Tunisia. Protests have erupted in Libya, Yemen, and Bahrain. The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses—will they be next? They are right to worry. These are societies where a minuscule fraction of the population—less than 1 percent—controls the lion’s share of the wealth; where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life; and where the wealthiest often stand actively in the way of policies that would improve life for people in general.

As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.

Read the whole thing.

(h/t: Ken Layne | x-posted)


Ocean said...

Good points and so true. The US used to be proud of a hefty healthy middle class. Did people forget about that?

The idea of an ever growing pie seems to ignore some basic understanding of wealth.

andrew lawton said...

It looks like a partial solution to solving this riddle is to change capital gains tax law according to your post. How does taxing the middle and upper class creat better quality of life for the poor? Wouldn't it allow us to balloon our federal goverment so that we can distribute goods and services to our poorest people? If we can't provide for the poor now with our RECORD BREAKING federal spending then how do you supposed we'll do it with a $100B additional tax revenue.

Brendan said...

Not according to "my post," but according to the author of the article I was quoting. You may want to check his credentials. They're a little better than mine.

I am not going to bother addressing the rest of your teabagger parroting. People like you aren't capable of thinking for yourself, even in the face of the most indisputable data imaginable.