Here is the entire article:
Of the 1%, by the 1%, for the 1%
Joseph E. Stiglitz
May, 2011 (edition)
It’s no use pretending that what has obviously happened has not in fact happened. 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. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow...
...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...
Stiglitz continues on to point out the "reasons"...
1.) "...glowing inequality is the flip side of something else: shrinking opportunity..." When there is diminished opportunity for the masses, it means we're not optimizing the productivity of our most valuable asset: our people.
2.) The "distortions" which lead us along the road of income inequality, like "monopoly power and preferential tax treatment for special interests," undermine the economy's efficiency even moreso. The inequality perpetuates itself, undermining economic efficiency along the way. He cites the reality that a disproportionate amount of our most talented young people are now pursuing careers in finance, as a byproduct of all of this, rather than pursue careers in "...fields that would lead to a more productive and healthy economy."
3.) "... a modern economy requires 'collective action'—it needs government to invest in infrastructure, education, and technology." Stiglitz points out that what we're currently seeing play out is in diametric opposition to this reality.
...When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we’re doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth..."
He notes that economists in the U.S. really can't fully explain this phenomenon. And, he reminds me why I'm such a big fan of his work, as he notes with elegant simplicity:
...But one big part of the reason we have so much inequality is that the top 1 percent want it that way...
Stiglitz tells us about how the growth of monopolies creates even greater power, as he attributes today's inequality in America to the harsh realities of the "...manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever."
He points out that tax policy is, traditionally, where we'll find the most obvious example of inequality. And, Americans now are "...doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealthg."
As a byproduct of economic imbalance, Stiglitz notes that when it comes to foreign policy, "...with the top 1 percent in charge, and paying no price, the notion of balance and restraint goes out the window," when it comes to a country's dealings with other sovereign states.
Referencing Alexis de Tocqueville, he concludes that, back in his day...
...Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.
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.
It is, perhaps, Stiglitz' ability to communicate at a very basic level about all things economic which is one of the primary reasons why I'm such a big fan.
There's much more to this Vanity Fair article than that which I covered herein. I would strongly suggest a read. Here's the link again.
As Wayne State University law professor Linda Beale notes in her post on Stiglitz' latest public pronounciations (see up above):
...The rich associate with the rich, and they have very little understanding of the lives of the vast majority of the people. It seems to me that their complacency with wealth's prerogatives has grown enormously in the last few decades. They think they deserve every penny they have. So they cannot see that they are the reason that others have shrinking opportunities. They blame it on laziness, unions, globalization, lack of personal responsibility--anything but their own greed.