The 1 Percent’s Problem - Joseph E. Stiglitz - VanityFair

[WillyT]

The 1 Percent’s Problem
Why won’t America’s 1 percent—such as the six Walmart heirs, whose wealth equals that of the entire bottom 30 percent—be a bit more . . . selfish? As the widening financial divide cripples the U.S. economy, even those at the top will pay a steep price.
By Joseph E. Stiglitz - VanityFair
May 31, 2012

<snip>

Let’s start by laying down the baseline premise: inequality in America has been widening for dec­ades. We’re all aware of the fact. Yes, there are some on the right who deny this reality, but serious analysts across the political spectrum take it for granted. I won’t run through all the evidence here, except to say that the gap between the 1 percent and the 99 percent is vast when looked at in terms of annual income, and even vaster when looked at in terms of wealth—that is, in terms of accumulated capital and other assets. Consider the Walton family: the six heirs to the Walmart empire possess a combined wealth of some $90 billion, which is equivalent to the wealth of the entire bottom 30 percent of U.S. society. (Many at the bottom have zero or negative net worth, especially after the housing debacle.) Warren Buffett put the matter correctly when he said, “There’s been class warfare going on for the last 20 years and my class has won.”

So, no: there’s little debate over the basic fact of widening inequality. The debate is over its meaning. From the right, you sometimes hear the argument made that inequality is basically a good thing: as the rich increasingly benefit, so does everyone else. This argument is false: while the rich have been growing richer, most Americans (and not just those at the bottom) have been unable to maintain their standard of living, let alone to keep pace. A typical full-time male worker receives the same income today he did a third of a century ago.

From the left, meanwhile, the widening inequality often elicits an appeal for simple justice: why should so few have so much when so many have so little? It’s not hard to see why, in a market-driven age where justice itself is a commodity to be bought and sold, some would dismiss that argument as the stuff of pious sentiment.

Put sentiment aside. There are good reasons why plutocrats should care about inequality anyway—even if they’re thinking only about themselves. The rich do not exist in a vacuum. They need a functioning society around them to sustain their position. Widely unequal societies do not function efficiently and their economies are neither stable nor sustainable. The evidence from history and from around the modern world is unequivocal: there comes a point when inequality spirals into economic dysfunction for the whole society, and when it does, even the rich pay a steep price.

Let me run through a few reasons why...

<snip>

Much More: http://www.vanityfair.com/politics/2012/05/joseph-stiglitz-the-price-on-inequality

[Egalitarian Thug]

1. K&R, more later... n/t

[nashville_brook]

2. if cutting taxes for the 1% created jobs, we'd be at +100% employment

but, cutting taxes for the 1% doesn't create jobs. it creates inequality.

ultimately, pandering to the rich has destroyed our country.

[sendero]

15. freaking..

.... exactly.

[malaise]

3. Thanks for this

I do like Stiglitz

[pscot]

4. Kicked

and recommended.

[Doctor_J]

5. Stiglitz misses two points

1. The 1% don't really need a functioning society any more. They can buy their own water supplies, police forces, gated communities, roads, airplanes & pilots, and so forth. this didn't used to be true, but is now. And with the "global economy" in place, they don't need US consumers of their goods per se. The chunk being taken by the upper crust has been growing for more than 30 years now with no interruption and no meaningful pushback.

2. There won't be any turmoil among the hoi polloi that will endanger the 1%. Since Warren Buffett's class completely control the media the vast majority of the ignorant masses believe the lies they hear on Fox "News". the rest are content to blog, post on DU, and engage is other useless activities (OWS). Thus the rich will not be in any physical danger.

So I think Stiglitz's thinking is rational but is based on old assumptions that no longer hold.

[WillyT]

6. LOL !!! - Well, Maybe... As Long As They Stay Nicely Imprisoned In Their Ivory Towers...

If they want to go anywhere, they're gonna need more helicopter pads, becuase everybody on the ground had plenty of guns and ammo dontcha know ???

[pinboy3niner]

10. "Look, the people you are after...

...are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not... fuck with us."

--Tyler Durden

[canuckledragger]

24. +1

always loved that quote..

[HiPointDem]

8. +1.

[AnotherMcIntosh]

14. x2

[WillyT]

7. Kick !!!

[hifiguy]

9. Brilliant article.

A conclusion which can only be reinforced by the pinhead Randians responding to it in their sophomoric, addle-pated ways.

[Poiuyt]

11. Who would have ever guessed that someone with a Nobel Prize would know what he's talking about

When will people realize that Keynesian economics is the way out of a recession?

[davekriss]

12. Excellent article, k & r!

[Zalatix]

13. They think that they will escape like the rich do every day in Mexico

They'll hide behind their walled fortresses while everyone else lives like The Road. Or, at best, Hunger Games.

[Waiting For Everyman]

16. The 1% are eating the goose that lays the golden eggs

because that's just how damn dumb they are. Expertise, my ass. They are frauds, perpetrating frauds. And the sooner we realize that and take steps like Francois Hollande is proposing to do in France, the better. It's common sense cause-and-effect, not rocket science.

Economics only exists to numberfy and mystify the subject so that more webs can be spun. GHW Bush said it... "smoke and mirrors", "voo doo economics". Every once in a while, one of them tells the truth. I go back to that saying, "when someone tells you who they are, believe them".

This can be turned around, anytime we (the 99%) want to deal with reality and not ideology. To paraphrase FDR, the only thing we have to fear, is bullshit.

Excellent article. Good to see some prominent people are still working on making the case for the obvious. It'll take a lot more for the message to get through to most of the 99%. To a large degree, since Reagan, Americans have been living in a la-la-land sick fantasy. To a large degree, I fault the "intellectuals" on our side for not shooting down this nonsense idealogy adequately. The brains are supposedly on our side predominantly, so I can only think that they were largely bought off. Either that, or they are vastly overrated. We should not have lost the "argument competition" this badly for this long.

The "experts" on our side have a lot of work to do, to clean this thought-mess up. They need to keep at it until "trickle down" is dead and gone forever, never to be revived.

I'm waiting to see when the experts will get brave enough to come out and say that CDS's are frauds which should be declared void and made illegal. That day will inevitably come sometime and it should be now. It should've been 4+ years ago.

[cbrer]

17. Well written. Worth the time.

Class warfare is real and deadly.

[xchrom]

18. Du rec. Nt

[sinkingfeeling]

19. If there weren't armed guards surrounding Bud Walton Arena, I'd run

across the street and ask Alice Walton how she feels about it. Walmart is conducting their annual shareholders meeting as we speak.

[raouldukelives]

20. I'd be willing to imagine quite a bit of that money

is in the stock market. How sick is that? The huge amounts of profit made off of the suffering of exploited poor people. The vast amount of irreparable damage done to the climate directly causing the coming horrible deaths of millions, if not billions, of people and animals.
Seems like only a heartless, thoughtless automaton who bore no interest but it's latest pleasure could derive any comfort from money made off the backs of that kind of intense suffering.
I could be wrong though. They could just be using that vast wealth to shop locally. Or it maybe even worse. Maybe they use the proceeds derived from the soul sickening investments to purchase things locally and at farmers markets. "Oh yes, I love to shop locally! Thankfully my investments in third world sweatshops, military contractors, prisons, denying people health care & Chevron allow me to purchase handmade goods directly from artisans. We have to support the earth! You know, for the kids." Then hop in the SUV and spew away into the mountains.

[JDPriestly]

27. Why do people shop locally?

So that the food they buy does not have to be transported from Chile or Argentina into a huge supermarket in which the employees work for low wages and no benefits.

Shopping locally or from a farmers' market means that you are shopping from small business owners. My local green grocer is run by a large family. Not only the owner but his grandparents live in the neighborhood. So when I shop there, I can be sure I am not supporting a sweat shop in the third world although I cannot always know how well paid the folks are who pick my vegetables. That's what shopping local means.

[raouldukelives]

30. Exactly. The total opposite of what the stock market stands for.

That leads to some people who think they are doing good by spending stock market money made from the most heinous and exploitative practices against people and the environment possible on shopping locally or even on charities.
Shopping locally is an answer . It is, I believe, something that must happen to try to save what little is going to be left of the gifts of nature. But if people are shopping locally using gains made from the destroying the planet and the lives of third world people, what are they really accomplishing? We need to both earn and shop locally. A tall order but one that needs to happen if we are to start saying we take things like climate change seriously.

[JDPriestly]

31. Agreed. Of course, the idea of shopping locally is to buy things produced locally.

One thing I notice is that we don't seem to make things like fabrics much if at all any more. Even if I sew my own clothes, I have to buy fabrics produced in other countries. I do not like that, but I cannot change it by myself. We have to work together to get the changes we need in this respect.

[nxylas]

21. The fictions of Horatio Alger and Ayn Rand are more pervasive than any amount of rational argument

The 1%, most of whom inherited their wealth, believe they got there through their hard work and talent, and that they owe nothing to those who failed to pull themselves up by their bootstraps. No amount of actual facts will pierce this wall of self-aggrandizing mythology they've built around themselves.

[JDPriestly]

26. Yet, the Waltons, the Kochs and even Mitt Romney inherited enough to give them

a huge headstart over the rest of us. No wonder they are so "successful."

[Alcibiades]

22. Income inequality is what's dragging this economy down

It's why the recovery has been so slow: the middle class, which ought to be the engine of economic growth, simply does not have enough gas in the tank to turn around after a recession, especially after 30 years of stagnating wages that have only been compensated for by debt (which does not work in the long run) and by women working more hours outside the home.

Progressives and Democrats have done a poor job of telling this story.

"It is no accident that the periods in which the broadest cross sections of Americans have reported higher net incomes—when inequality has been reduced, partly as a result of progressive taxation—have been the periods in which the U.S. economy has grown the fastest."

It is a compelling story, mainly because it's true. If you contrast the facts of the case with the Republican "argument," a univariate analysis wherein the top marginal tax rate wholly determines economic growth, a story already falsified by the laboratory of history, it could help to get us back on track to creating a new majority Democratic coalition, the likes of which we have not seen since the Johnson administration.

[Uncle Joe]

23. Kicked and recommended.

Thanks for the thread, WillyT.

[JDPriestly]

25. K&R. Really great. Well written and reasoned.

[DonCoquixote]

28. The Elephant in the room

Is that they think China and india will replace us with their middle class, a group of obedient servants.

[magical thyme]

29. they are global citizens. the crux of the problem is they don't care about America

beyond the resources they can exploit. Until Stiglitz and Krugman, et al, get that, they will be missing the real point.


Look to areas that are protected to see where the 1% will retreat to after they've decimated the rest.

"Countries rich in natural resources are infamous for rent-seeking activities."

America is still rich in natural resources. I got a goofy energy investment thing in the mail yesterday. Normally it would have gone straight into the trash. But I brought this home to read.

It included a US map of new drilling permits (mostly for fracking). It clearly shows the part of the US that will be protected. The New England, the southeast one strip of states in the center (Wisconsin, Minnesota, Iowa, Missouri) and the Pacific Northwest plus Wyoming are the only areas not touched. And then, of course, there will be the pipeline.

Before I moved to Maine, I meditated on where to go. The message I got was "there will be water in Maine." At the time, I thought it referred to global climate change. Now I'm thinking it referred to the aquifer underneath us.

Since moving up here,they've started to develop the Moosehead lake region, which was supposed to be protected land, into a new playground for the wealthy. They've also started to return Somerset county to organic wheat. Long before they re-forested it, Somerset was "the breadbasket of Boston" in the 1800s.

[barbtries]

32. it would be great

if some among the 1% read and understood this. it would also be nice if they had any empathy to speak of. sigh.