General Discussion

xchrom

(108,903 posts) Sun Oct 6, 2013, 05:26 AM Oct 2013

America Has Become a "Cheater-Take-All" Nation

http://www.alternet.org/economy/fraud-and-american-economy

Tyler Cowen’s new book Average is Over: Powering America Beyond the Age of the Great Stagnation warns that inequality will only get worse as a "hyper-meritocracy" of smart, energetic people at the top commanding machines and data speed ahead and the lazy, not-very-bright folks at the bottom fall further behind.

One thing seems to be left out of the discussion: those hyper-meritocrats are led by criminal morons.

Cowen’s embrace of Social Darwinism assumes that the winners have a selective advantage that arises from “merit” – which Cowen conflates with the ability to create wealth. This is passing strange as we are still suffering from an orgy of wealth destruction led by the “winners.” The people who grew wealthiest were often the people most responsible for the largest destruction of wealth in history. That it is an anti-meritocratic system. We do not live in a “winner-take-all” nation. We increasingly live in a “cheater-take-all” system.

What Cowen has missed is the famous (but nearly famous enough) warning sounded by George Akerlof and Paul Romer in 1993 in their classic article “Looting: The Economic Underworld of Bankruptcy for Profit.”

“[M]any economists still [do] not understand that a combination of circumstances in the 1980s made it very easy to loot a [bank] with little risk of prosecution. Once this is clear, it becomes obvious that high-risk strategies that would pay off only in some states of the world were only for the timid. Why abuse the system to pursue a gamble that might pay off when you can exploit a sure thing with little risk of prosecution?” (Akerlof & Romer 1993: 4-5).