10
Economist Joseph Stiglitz on income inequality in the U.S.
U.S. Nobel Prize for Economics winner Joseph Stiglitz speaks during a meeting at Tempio di Adriano in downtown Rome, on May 2, 2012.
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
Kai Ryssdal: We've been making the rounds of deep-thinker economists this week. Paul Krugman Monday; John Taylor yesterday. Trying to get a sense of how the economy might fix what ails it.
For some, the big problem isn't the economy -- but what it's done. Rising inequality, and how fast the gap is growing. Not just the gap between the rich and the poor, but between the super-rich and everyone else.
Today, another Nobel Prize-winning economist: Joseph Stiglitz. His new book is called, "The Price of Inequality." Good to have you with us.
Joseph Stiglitz: Nice to be here.
Ryssdal: So I hate to be the one to break this to you, but it's not like this is new news, right?
Stiglitz: Well, it is new news in the following sense: Of course we've always had inequality, but the magnitude of our inequality has actually increased dramatically. The fraction of the income that goes to the upper 1 percent has doubled since 1980. The fraction that goes to the upper .1 percent has almost tripled since 1980. So yes, we've always had inequality, but not of this magnitude.
Ryssdal: I'm going to quote yourself back to you here, as a way to sort of crystallize your thoughts on this: 'Growing inequality,' you say, 'is the flipside of something else -- shrinking opportunity.' Play that out a little bit, would you?
Stiglitz: That's right. The United States has become the most unequal country among the advanced industrial countries. Some people have said, 'we don't care of equality of outcome, what we really care about is equality of opportunity.' America's the land of opportunity. We have less opportunity than not only the countries of all of Europe, but any of the advanced industrial countries for which there's data. And what that means is very simple: The life chances of an individual are more dependent on the income and education of his parent than in other countries. And an implication of that is people born in the bottom, who unfortunately chose the parents who were poor or not well-educated, will be more likely not to be able to live up to his potential.
Ryssdal: You make no secret of how you feel about the 1 percent and their pursuit of remaining in the 1 percent. But doesn't it kind of imply actual malice on their part that they just want to stay rich while everybody else doesn't get rich?
Stiglitz: I don't think anybody begrudges somebody who has made a real contribution to our society -- somebody, you know, that invented the transistor, or the laser, the computer -- from receiving a high income. The real concern is a sense of unfairness, that it's not the case that the people with the highest income have made the largest contribution to our society. Look at what happened in the Great Recession. I think most Americans understand that there's something fundamentally unfair about that. Not only unfair -- my concern is that it actually undermines the efficiency of our economy. They have incentives to behave in ways that impose costs on the rest of our society.
Ryssdal: This is essentially a political position, you're advancing here. You want to see certain things happen to change the rising inequality in this country.
Stiglitz: Yes, and for a very special particular reason: Our political system has shaped our economy in ways that have led to this high level of inequality.
Ryssdal: Right, and that gets to me to my question, which is: You know politics in this country, and you know how intractable managing the American economy is -- how and why do you believe that the congress and political Washington are going to be able to do anything about this?
Stiglitz: We're going to need political reform. I raise a question: Is there hope? And I think the answer is, if you look historically, America's made some very dramatic changes. And so, I'm hopeful that Americans will see what is going on, realize that the direction we've been going is not a good direction, and change. But I'm not confident.
Ryssdal: Joe Stiglitz, he teaches at Columbia University. His most recent book is called "The Price of Inequality." Thanks very much for your time.
Stiglitz: Thank you Kai.
Looking at our societal crisis from the standpoint of economists is a futile, and actually distractive, error.
As much as Joseph Stiglitz, Krugman, Jamie Galbraith, and even Marxist economist, Richard Wolff, have made some progress recently in critiquing predatory capitalism (which has 'captured' government), all of these attempted diagnoses are wrong and distractive of a truly “adequate diagnosis”.
As Zygmunt Bauman hauntingly puts it, “In the case of an ailing social order, the absence of an adequate diagnosis…is a crucial, perhaps decisive, part of the disease.”13
[Quoted by Berman, Morris (2011-02-07). Dark Ages America: The Final Phase of Empire (p. 22). Norton. Kindle Edition. ]
We face a vast and multifaceted "ailing social order" to be sure.
Politicians and the media talk and make us think in terms of "issues" and problems --- which are all only 'symptom problems' and 'identity issues', like; increasing foreign wars, vast economic inequality, austerity/debt, environmental destruction, spying and torture, "fiscal cliffs" [a Frank Luntz scare term], increasing tyranny and police-state, et al.
However, nobody, no diagnostic doctor of our entire "ailing social order" ever talks about the CAUSE of all these "issues", 'symptom problems', and superficial effects of the hidden and underlying disease that is the causal cancer.
Only one economist, who I can quote, seems to have touched at all at this hidden and underlying causation, and that was George Akerlof in 2001 when he stated correctly, but not completely, "This is not normal government economic policy, but rather a form of looting".
[By this Akerlof did not mean direct looting by the government itself, as right-wing deceivers and anti-tax shills like Grover Norquist would rant, but indirect "looting" which the captured government orchestrates and allows by law for private elite, wealthy, and corporate interests.]
However, even Akerlof's partial accuracy about crony economics does not provide, as Dr. Bauman requires, "an adequate diagnosis" of the hidden and causal pathology that is actually the core tumor of the disease of our woefully "ailing social order".
Both Joseph Stiglitz, in his fabulous new "The Price of Inequality; How Today's Divided Society Endangers Our Future", and Richard Wolff, in his equally fabulous new book and lecture, "Occupy the Economy; Challenging Capitalism", extensively address the problems of a dysfunctional capitalism --- which the existing Occupy Movement also addresses.
But even “capitalism” is only a tool of the real disease in our "ailing social order", and like all tools, capitalism, can be used for good or evil --- just like the other tools across all of history of; military prowess, technology, science, law, religion, politics, etc. etc.
Certainly the more modern 'tool' of capitalism is a very powerful tool, which can be used for good or evil, and which recently has turned from being used for social good to increasingly being used for evil, as the data in this article demonstrate.
But all the tools of; military prowess, law, organizational skills, religion, nationhood/nationalism, advanced technology, et al have throughout history been often employed for good or evil.
Our seminal need in doing "an adequate diagnosis" of our near existential "ailing social order" today is to answer the question, "what is the causal agency that actually employs all such 'tools', and which is using the 'tool' of capitalism today for the evil purpose of increasing our overall social ills?"
We can readily see the "issues" and 'symptom problems', and some good economists are partially diagnosing that the 'tool' of capitalism is being misused into being one visible and proximate cause of some of our "ailing social order", but the real key is to clearly understand and fully diagnose at a deeper level what is the hidden but core pathology of the disease itself that is actually employing disguise, guile, camouflage as the "crucial, perhaps decisive, part of the disease", and which by disguising itself has so perverted the 'tools' of; "capitalism", politics, law, wealth, technology, and now particularly ideology to cause all those 'tools' to be misused for evil, predatory, and parasitic purposes in our death-spiraling "social order".
If we look not exclusively at the 'tools' of; economic capitalism, nor modern technology, nor religious beliefs, nor nationalism, nor deceitful politics, nor any one 'tool', but rather at the entire history of what element/agency has always turned tools from being used for good to being misused for evil we will finally have found our "adequate diagnosis" of the real underlying CAUSE of this evil ---- and that is EMPIRE.
Best luck and love to the “Occupy Empire” educational and revolutionary movement.
Liberty, democracy, and justice
Over
Violent/Vichy
Empire,
Alan MacDonald
Sanford, Maine
The top 1% have managed, through the use of their money in buying politicians, to not only triple their incomes since Reagan and Uncle Milty introduced "Trickle Down" economics as the 'American Way', but also to privatize Profits and Socialize Loss.
We, in America, are almost in a Feudal Society where only the wealthy can afford health care and education, and where the 99% work for the 1% at the whim of the 1%. Congress Critters dance with the one what brung them, so they do the bidding of the 1% because it is only the 1% who can give them much money...thanks to Citizens United and the Supreme's singing their praises.
We have come to the point where it is not the People who make up the Country, it is only the 1% and the power of their wealth. The 1% are not even patriotic, they foster the fear that they will take their money elsewhere if they don't get their way.
(the collective) We know what it will take to get us out of this mess (brought to us by the 1%) because we have the road map from the last Great Depression...the government tightly regulated the Banks and imposed a very progressive tax on the upper incomes to pay for the Government putting people to work...which created demand ...which caused hiring to fulfill that demand...which created more demand. World War 2 helped...and it wasn't subcontracted out to the well connected companies.
I do not have much hope for change (politicians fear it) until things get so bad that we have a million boots on the street in Washington and every state capital demanding dramatic change. At some point in the not too distant future most of the People will have nothing to lose by open revolt...and history shows what happens then: it's the luck of the draw as to who rises to power after revolt.
The Republicans, with a little help from Clinton, brought us to where we are today...why are they still in office? Why isn't Jamie Dimon going to jail? Why have we allowed the 'Too Big To Fail' banks get even bigger? Arguably our most prosperous years were from 1946 to 1980 (for the average working person), so why don't we get rid of the 'Trickle Down' economic theory (that has left so many of us eating Yellow Snow) and go back to tight regulations, progressive taxes (or even a flat tax with a single $26,000 exemption and NO OTHER LOOPHOLES), and some good Tariffs and Duties to help America (ALL of America) get back on its feet. It worked last time and it will work again. Keynesian Economics work.
Kyle: I love you guys I really do, even though I am a conservative Republican. But this report was so left I just have to say something. We are a nation of consumers - not savers. The economy grows on investment. Who has the money to invest? Only those who can invest disposable income beyond their needs - not wants but needs. The top 1% earns the vast majority of their income from investments. The pool of investment income from the broader population has shrunk - not just because of the economy - but because we - as a nation - spend money not on what we need but what we want. Modern media and marketing bears much of the fault for this, but the fact remains that in a capitalist economy - capital earns returns, and if the top 1% provides the bulk of investment capital needed to grow this economy they will earn high returns by default - not by a lot of effort on their part. It is the consumerist behavior of the majority of the American people that has resulted in the current state of affairs. If we were all to adopt the behavior of our parents - the Great Generation - we would only spend what we make, we would save what we could, and we would avoid credit like the plague. That would - over time - correct the income inequality. If we start penalizing - through taxes for example - those who provide capital for investment - they will merely find ways of offshoring that money to continue receiving returns for their investment in other countries and reduce investment here in the US. That won't help solve the problem.
Joseph Stiglitz and Richard Wolff are saying the exact same thing --- which is this truth:
It's not “jobs, jobs, jobs”
It's not “the economy, stupid”
It's the need to change the whole system.
And the needed change is from this current system of capitalist Empire only posing as democracy to a new system of real and integrated political, economic, and social democracy!
There is now a growing level of ever so obvious market manipulation on WS, MSM, and Washington.
As Paul Craig Roberts correctly states in his June 5th deadly accurate article, “Collapse At Hand”, “High-frequency trades now account for 70-80% of all equity trades. The result is major heartburn for traditional investors, who are leaving the equity market.”
Today, 6/6 WED, was very obviously a day of massive market manipulation — well coordinated between the Hedgies and other Investment Bank looters on Wall Street, and with the yelling heads on CNBC, et al, to draw the suckers back into the casino/slaughter house.
WOW, I’ve never seen a day so obviously composed of coordinated manipulation in the markets themselves and on the ‘boob tube’ to rope in the rubes.
Also noticed heavy use of some new Frank Luntz-style PR terms related to the market hype, like “fiscal cliff”. They are really throwing the bullshit around to scare and move the suckers, and to ‘paint’ the market.
“I’m shocked, shocked that there is gambling and manipulation going on in this august stock market.”
Maybe this is the kick-off of the next big looting — the fast approaching next generation CDO scam, which will certainly be the ETF wipe-out.
What a bunch of con-artists and out-right thieves!
Best luck and love to the “Occupy Empire” educational and revolutionary movement.
Liberty, democracy, equality, and justice
Over
Violent/Vichy
Empire,
Alan MacDonald
Sanford, Maine
Mr. Stiglitz is "hopeful" but not "confident" that, from a historical standpoint, "Americans will see what is going on, realize that the direction we've been going is not a good direction, and change." I can state in two words why my hopefulness that the balance has not become much more heavily tipped in the favor of monied interests who want to use their already outsized influence to stay monied at the expense of the 99%.
Citizens.
United.
