In an interview with AlterNet’s Lynn Parramore (link here), Joseph E. Stiglitz — Nobel Prize winning economist and author of the newly published The Price of Inequality: How Today’s Divided Society Endangers Our Future (2012) — urges that massive economic inequality in America threatens the nation’s very core.
It’s a lengthy, substantive interview, well worth a full read. Here are some highlights:
Deepening inequality since 1980
Stiglitz notes that although comparative figures to other eras are not available, data going back to 1980 clearly show the widening wealth gaps between the wealthiest Americans and everyone else:
But we do have data sets that go back more than 30 years and what is clear is that the share of the top 1 percent has almost tripled since 1980. So, this kind of inequality at the top has unambiguously gotten much, much, much worse. We also have data on the extent to which there’s been a hollowing out of the middle class. The data that recently came out from the Fed indicated that we’ve wiped out 20 years of increases and wealth for the middle American.
The nightmare scenario
And more of the same will lead us to a very bad place:
But if we go down the route that we’re going, we’re going to a world where people live in gated communities. We already have by far the largest fraction of our population locked up in prison. We will have an increasingly insecure society. Americans will be facing insecurity, of economic insecurity, healthcare insecurity, a sense of physical insecurity. We will be worrying politically about the role of extremism. Extremism on the right, extremism on the left.
Stiglitz isn’t ranting against capitalism. Rather, he’s looking at who has benefited from massive inequalities, and at what costs:
Well, capitalism does have a lot of strengths, including producing things that are very innovative. But what drives capitalism is the profit motive. You can profit not only by making good things, but also by exploiting people, by exploiting the environment, by doing things that are not so good. . . . And if you look at the people at the top, what is so striking is that the people who’ve made the most important creative contributions are not there.
Student responses to his book talks have been telling:
I guess the thing that was most moving in a number of the talks that I’ve given is the large number of young people that have come to the microphone and asked questions where you can sense their sense of despair, their sense of frustration at being saddled by student loans, their sense of job prospects being not very good.
. . .And these were, you know, intelligent kids, who obviously played by the rules, done everything right, worked hard at school. But they were hitting the kind of frustration that you shouldn’t be getting from young people. To me, that was really heart-rending. And it came from not just one kid. Not in just one talk.
Paths toward change
Will the American people start to get it and demand a fairer economic system and appropriate regulation? Stiglitz sees two paths toward understanding and eventual responses:
In my book, I described this very comprehensive economic agenda. . . . What I try to put forward are two hypotheses of how that might happen. In one of them, what I call the “1 percent” will finally realize that it’s in their enlightened self interest, rightly understood, to care about the rest of society. . . . And the other one is that the 99 percent realize that they’ve been sold a bill of goods. And they realize that some of these ideas that we’ve been talking about — trickle-down economics that destroy the interests of the poor, the middle class — are just wrong.
So what’s new?
To anyone paying close attention to economic trends over the years and the impact of the Great Recession, much of what Stiglitz is saying is hardly news. And yet, it’s important when leading thinkers validate what people are seeing and experiencing in their day-to-day lives.
This helps to remind us that many of the economic challenges that folks are dealing with are not due to their own failings, but rather are elements of systemic forces that threaten our individual and collective well-being.
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