Of The 1%, By The 1%, For The 1%
By Joseph Stiglitz
Americans have been watching global 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.
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.
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. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.
Jul 8, 2011 at 12:06 PM
Reader Comments (17)
http://news.yahoo.com/s/ap/20110404/ap_on_sc/us_sci_japan_radioactive_water
i don't trust this...
http://www.presstv.ir/detail/172567.html
http://www.rawstory.com/rs/2011/04/04/house-republicans-propose-deep-cuts-to-medicare/
http://www.publicintegrity.org/articles/entry/3112/
I learn as much from te comments (same true here at DB) as I do from the articles themsleves. For ie:
>>YIPPEEEEEEEEE!
If the radioactivity doesn't bother Ocean life than let's dump our our spent nuclear fuel rods
into our Oceans!!!
Thanks Experts! You're the guys!<<
LOL!! Don't be giving them ideas now.
The Peasants Need Pitchforks
http://www.truthdig.com/report/item/the_peasants_need_pitchforks_20110405/
[snip]
My book on the banking meltdown, “The Great American Stickup,” begins with the following words. “They did it. Yes, there is a ‘they’: the captains of finance, their lobbyists, and allies among leading politicians of both parties, who together destroyed an American regulatory system that had been functioning splendidly. …” They got to rewrite the laws to enable their massive greed over everything from the tax codes to the sale of toxic derivatives over the past quarter century, smashing the American middle class and with it the nation’s experiment in democracy.
What is a billionaire? A person who holds over a billion paper dollars? A person who owns assets priced at over a billion dollars in todays market? Or a person who holds a combination of assets and debts that total 1 billion in dollars without cancelling each other out?
Your money is debt. We are all indentured lenders now, of the least senior kind, with a narrowing window to get the debt out of our assets. Think inversely. Turn your charts upside down, then back again. You're both a borrower and a lender. You're money is debt. And your borrowers are defaulting all around you ... stop thinking in terms of the world you are used to and get ready for the world that is coming.
Ask yourself why the marketable skills of your life's work is called "a trade"...
http://letthemfail.us/archives/9709
I have absolute faith in TRICKLE DOWN VOODOO economics.
Wealth trickled down from the ULTRA RICH to the SUPER RICH & I should be receiving my share soon.
Wil Martindale, The only skill I have is BS & can't seem to trade it for anything.
ROFLMAO
I continue to think that it will not end well for the ELITES.
http://theeconomiccollapseblog.com/archives/rampant-unemployment-the-death-of-the-middle-class-22-facts-that-prove-the-working-class-is-being-systematically-wiped-out
Likely very few readers of DAILYBAIL would agree with Stiglitz on much else, I suspect.
Twenty-five years ago there was much less globalization...How much of Bill Gates' worth was generated from sales in the U.S. only? Wouldn't the increase in globalization benefit those most able to take advantage of it? Wouldn't we expect their incomes to rise?
"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."
Here Stiglitz is pulling a Keynes on us. Just as Keynes claimed the J. B. Say was wrong (he wasn't!), Stiglitz is claiming that Menger, Walras, Jevons, et. al., were wrong (they weren't!).
"The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative..."
This has become the mantra of the anti-capitalist crowd: blame all capitalists for the sins of a few financial manipulators on Wall Street.
"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."
For a Nobel Prize winner (no longer that much of a distinction for economics) he certainly seems naive about how the economy works. In this sentence he is implying that the economy is a zero-sum game!
His contention that American's are doing worse and worse are explained by claiming there is shrinking opportunity, undermining of efficiency, and a dearth of "collective action". And all of this, according to Stiglitz, is the result of socity's distribution of wealth having become lopsided.
He then goes on to blame this on the wealthiest 1% of the nation! I am not defending the immoral and possibly criminal elements on Wall Street. They were all really just taking advantage of the system we the people have allowed to be created in Washington, DC. It's the Dodds and Franks and many others of both political parties in Congress we should be screaming to lynch!
The income inequality in America is the result of bad government policies and programs more than evil capitalists.
The vast majority of capitalists, many of them millionaires, some of them billionaires, are not guilty of whatever wealth inequality exists. Sixty years ago there was no shortage of money available to build infrastructure in this country and a lot got built. Of course, at that time there were no massive entitlement programs either. Infrastructure creation and maintenance was one of the tradeoffs for the massively expanded welfare state. It also helps explain some of the growing wealth inequality that resulted from creating a non-productive segment of society with no incentives to seek higher incomes. The average was bound to trend downward!
And finally, Mr. Stiglitz, if the 1% have as much power as you claim, why isn't John McCain in the White House today?
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yeah, blame Reagan's socialism. lol. Are you serious?