Joseph Stiglitz, a Nobel Prize-winning economist at Columbia University, writes that the increasing inequality in the U.S. is neither inevitable nor necessary. Other nations have experienced economic growth while assuring greater equality. We could as well, but the super-rich have managed to capture control of enough politicians to prevent any legislation that might increase their tax rates and assure a fairer society “with justice for all.”
Stiglitz writes:
“So why has America chosen these inequality-enhancing policies? Part of the answer is that as World War II faded into memory, so too did the solidarity it had engendered. As America triumphed in the Cold War, there didn’t seem to be a viable competitor to our economic model. Without this international competition, we no longer had to show that our system could deliver for most of our citizens.
“Ideology and interests combined nefariously. Some drew the wrong lesson from the collapse of the Soviet system. The pendulum swung from much too much government there to much too little here. Corporate interests argued for getting rid of regulations, even when those regulations had done so much to protect and improve our environment, our safety, our health and the economy itself.
“But this ideology was hypocritical. The bankers, among the strongest advocates of laissez-faire economics, were only too willing to accept hundreds of billions of dollars from the government in the bailouts that have been a recurring feature of the global economy since the beginning of the Thatcher-Reagan era of “free” markets and deregulation.
“The American political system is overrun by money. Economic inequality translates into political inequality, and political inequality yields increasing economic inequality. In fact, as he recognizes, Mr. Piketty’s argument rests on the ability of wealth-holders to keep their after-tax rate of return high relative to economic growth. How do they do this? By designing the rules of the game to ensure this outcome; that is, through politics.
“So corporate welfare increases as we curtail welfare for the poor. Congress maintains subsidies for rich farmers as we cut back on nutritional support for the needy. Drug companies have been given hundreds of billions of dollars as we limit Medicaid benefits. The banks that brought on the global financial crisis got billions while a pittance went to the homeowners and victims of the same banks’ predatory lending practices. This last decision was particularly foolish. There were alternatives to throwing money at the banks and hoping it would circulate through increased lending. We could have helped underwater homeowners and the victims of predatory behavior directly. This would not only have helped the economy, it would have put us on the path to robust recovery.”
Educators see the results of what Stiglitz describe in the unwillingness by politicians to provide equality of educational opportunity. Our Secretary of Education is a champion of privatization who prefers competition to equity and doesn’t care about segregation. State legislatures are cutting school budgets. Class sizes are growing. Teachers pay for school supplies. Public education is dying in urban districts like Philadelphia and Detroit, as rich white bankers pump money into privatization. Some see public education as a sector ripe for profit and plunder. In some states, such as Ohio, Michigan, and Florida, the for-profit charter industry has captured control of the government and suffers little or no regulation.
Stiglitz concludes:
“The problem of inequality is not so much a matter of technical economics. It’s really a problem of practical politics. Ensuring that those at the top pay their fair share of taxes — ending the special privileges of speculators, corporations and the rich — is both pragmatic and fair. We are not embracing a politics of envy if we reverse a politics of greed. Inequality is not just about the top marginal tax rate but also about our children’s access to food and the right to justice for all. If we spent more on education, health and infrastructure, we would strengthen our economy, now and in the future. Just because you’ve heard it before doesn’t mean we shouldn’t try it again.
“We have located the underlying source of the problem: political inequities and policies that have commodified and corrupted our democracy. It is only engaged citizens who can fight to restore a fairer America, and they can do so only if they understand the depths and dimensions of the challenge. It is not too late to restore our position in the world and recapture our sense of who we are as a nation. Widening and deepening inequality is not driven by immutable economic laws, but by laws we have written ourselves.”
“Public education is dying (The Death and Life of the Great American School System) in urban districts like Philadelphia and Detroit, as rich white bankers pump money into privatization.” (And we have a new acronym: RWB)
“Some see public education as a sector ripe for profit and plunder. In some states, such as Ohio, Michigan, and Florida, the for-profit charter industry has captured control of the government and suffers little or no regulation” (The Hoax of the Privatization Movement)
Not from Harvard economic reasoning is wonderful to start the day, but the way forward is not clear.
One clear and simple change: make the tax rate on dividends and capital gains the same as it is for earned income. Stop listening to the whining that investors need this special rate because they are taking risks with their money.
This wouldn’t fix the problem, but it would be a step forward.
I would go even further. All taxes should come from a progressive income tax. As income goes up whether due to inflation and/or productivity, and regardless of its source, that would automatically provide the government with increasing revenue to pay for higher labor costs such as teachers. Property taxes require a legislative act to increase them in order to pay for the increasing costs of municipal services like education hence the push to replace higher cost veteran teachers with new lower cost teachers, which of course means getting rid of tenure and seniority rights.
Michael,
If you do not adjust for inflation, positive inflation rates will result in a higher percentage of income going to taxes for people who have not changed their real income.
If you decide that it is appropriate that folks earning, say $70,000 transfer 20% of their purchasing power to the government today, why would you think it appropriate that after a period of inflation a household with the same real income should now transfer 30% of their purchasing power (though without inflation they should still pay only 20%)?
So adjust the marginal tax rate steps to go up with inflation. Doesn’t sound too complicated.
So you would not have taxes go up if income increased because of inflation? A much more reasonable position than your original one.
Incomes go up partially due to inflation. I proposed that the inflection point for the increased marginal tax rate coincide with inflation. So lets keep things simple: 0-100,000 taxed at 10%, everything over 100,000 taxed at 20%. Assume inflation of 10% a year past and adjust for it. Now the 10% applies for those earning up to 110,000 and everything above that is taxed at 20%. I dare say the government would see a lot more revenue without having to “raise” taxes.
Spending trillions on wars in Afghanistan and Iraq is totally acceptable. Professional athletes are paid justifiable salaries. Finance professionals who nearly toppled the economy are rewarded with outlandish bonuses. The only workers not deserving of their pitiful remuneration are teachers.
Right, NJ. Our government will spend hundreds of billions of tax dollars to bail out corporations because they are too big to fail. I need a $5K bailout to prevent me from becoming homeless, but there is nowhere for me to turn to apply for help, since I am a lowly adjunct professor and too small to succeed.
“Widening and deepening inequality is not driven by immutable economic laws, but by laws we have written ourselves.”
I didn’t write the laws that have condemned me to a life of poverty, but some of the people I voted for did, so I have pledged to never, ever vote for any of them again, and I voted for a progressive Green party candidate in the last presidential election, Dr. Jill Stein.
Forget the two party system that has morphed into one party for the rich. Vote for the people, not the party. Vote for those with genuine integrity, people who care more about humanity than their personal bank accounts! That means do the legwork and research the candidates before casting your votes in any and ALL elections, including those for school boards and judges!
I feel you, chi- town. I really do.
But an the national level, we have to consider the appointment to the federal bench. See recent court decisions. One party does seem to appoint more worker, woman, minority friendly judges than the other.
Suggestion, go 3 party for local elections. Use primary elections to push candidates with integrity, not ALEC attached, etc.
Supreme Court judges still have to be confirmed by the Senate.
Several other countries, including England, have more than just two major parties, which work together in coalition governments. With the Tea Party firmly entrenched in the GOP, we actually have a three party system now as well. This means we really need another path towards representation.
We could strengthen our representation through the election of genuine progressives, as opposed to the neoliberal Democrats who claim to be progressive and are as phony as a three dollar bill. This can only be done by voting for truly progressive candidates, not voting for a specific party. Increasing the number of genuine progressives in Congress could potentially over-ride the effects of the corporate loving neoliberal GOP/Tea Party/Democrats.
Again, I feel you.
And I am very familiar with the fact that most other developed countries have more than 2 parties. Also fully understand how the SCOTUS appointed, confirmed.
Thank you.
Not sure tea party counts as a third party, they are reliably GOP at the poles and have succeeded mightily at pulling the party right. Just my HO there.
Not disagreeing a that our current crop of democrats, while perhaps tossing a bone to a few social issues ( though, noticeably to me, not so much on many women’s issues), are corporate tools. Very intent on lining their own pockets while selling out the working, middle class and selling off all public assets as fast as possible.
However, I still contend, if you want to see the current trend accelerated, let’s get a GOP president next term.
Who do you think might replace some of our more senior judges such as Ginsberg? Much more terrifying than anything a democratic president could get through, even with a divided senate.
Again, just something to think about.
Happy 4th.
The Koch brothers changed the game for the GOP, with their invention of the Tea Party, as did Clinton for with his neoliberal New Democrats, so this is a whole different ballgame than existed in the past, only it’s taken quite awhile for progressive Democrats to catch on to it.
When it’s the Democrats who have taken aim at busting unions. like Obama’s buddy Rahm and the rubber stamping city council in his home town of Chicago, it is glaringly apparent that the party is not liberal anymore. The party has been consumed by the influence of big money, and there is absolutely no guarantee that the next Democratic president will appoint a liberal minded judge to the Supreme Court. You are hanging your hat on a wing and a prayer.
As long as progressives and liberals keep throwing their votes away to Democrats, instead of making each candidate EARN their vote, the party will continue on their merry way supporting neoliberal policies that promote privatization and benefit the 1%.
Kagan and Sotomayor were both appointed by our neoliberal , corporatist, Obama, yes?
Now who gave us Thomas, Alito, Scalia ? These geezers actually frighten me.
Look, you have no idea how much I generally agree with you. But I am very concerned with the federal bench.
Push as hard to the left as possible, my friend. Especially locally and in primaries. Tweet, Facebook, march, donate, go door to door, write to the editor, attend rallies, anything, everything. Yes, let’s pull left.
But think very carefully about the next Supreme Court appointment before ” throwing away” a presidential vote.
While it is true there is no guarantee of a even a progressive appointment from the next democrat, there is at least a chance that they will be left of center and a good possibility they will not be looney.
However, there IS a guarantee of an extremely conservative, activist judge who is very hostile to women’s, labor and minority rights as well as anything public, from the GOP.
They are appointed for life.
PS: some of us progressive democrats “caught on” when Clinton pushed NAFTA and signed DOMA. 🙂
Keep the faith, my friend.
The best thing that Obama did was to appoint Sotomayor and Kagan. That was reason enough to vote for him.
Twenty-five years ago, I was a lot more sympathetic to the argument that there was no meaningful difference between the Republicans and the Democrats than I am now. Exhibit A through Y was George W. Bush. President Romney would have been Exhibit Z.
No, you do not feel me! Are you paid enough money to have food to eat and pay your rent and utilities? Or are you hungry and going to become homeless by the fall, like me? Have you been unable to secure full time work for the past 6 years? Have you had to resort to hobbling together a bunch of low paying part time jobs, despite your three college degrees and decades of experience?
Capitulation to the supposedly lesser evil is what got us here today. I see people like you as enablers, who LET the Democrats continue in disguise, especially since you admit you knew they were not the progressives they claim to be.
Democrats have absolutely no reason to change as long as folks like you keep voting for them. People must stop voting for evil. They need to organize and rise up against these injustices, or they too will be hungry, homeless and living on the street very soon.
“Grass Roots Grow Against Greed”
http://billmoyers.com/episode/full-show-grass-roots-grow-against-greed/
Look, blaming me ( someone you don’t know at all or know anything about, BTW) for the goings on at the highest levels of the Democratic Party is unhinged.
You also seem to be missing my point entirely. Or at least you refuse to even acknowledge the point I am trying to make.
Disagree all you wish, but the personal stuff was over the top.
I am very sorry for your troubles.
I sincerely hope things work out for you
.
Everyone is responsible for their own votes. If that’s personal for you, so be it.
I guess you’re one of the many who have to hit rock bottom themselves before they can gain perspective and see MY point –to not give in and get involved in grassroots organizations that will pressure politicians to change, instead of just planning to follow the party wherever it happens to go…
Guess I’ll see you in the gutter! (If I don’t die first.)
It must be easy to be pleased with yourselves for re-electing the same man who ramped up the privatization of public education, the trashing of teachers and high-stakes testing merely on the basis of Obama’s Supreme Court appointments, especially when you have a full stomach and are secure in your cozy homes because you have work with livable wages.
It didn’t occur to you to organize and get behind politicians who will support an amendment that places term limits on Supreme Court judges?
If you are supposed to be the good guys, there is no hope for those of us who are destitute.
Solely as a point of information, the national Democratic Party provides no funding for the local county Democratic parties, per our county chair.
This documentary speaks to this posting : Park Avenue: money, power and the American dream-Why Poverty? Just google it.
The way forward would require the immediate reinstatement of the Glass Steagall Act. It has already been introduced in the House and the Senate with several bills. ( H.R. 3711 and S.1282) Call incessantly to get your elected representatives to cosponsor it. Contact all of your friends and relatives in other states to get their reps to cosponsor it. Make this a priority in your day, your week, your life. If we do not do this, the banks will resort to “bail – in” policies they have used elsewhere. Your cash will be gone. Your pension will be gone. There is not enough money in the world to make good on all of the speculative deals that have been allowed since Glass Steagall was repealed in 1999. The banks are pretending that austerity for the people, privatization of everything, and a further loosening of regulations will make them solvent. That is a lie and they know it. They are making their last big grab right now while stocks are up and then it will all crash. The big banks have played the biggest Ponzi scheme ever. It is almost over. We cannot allow the future of our country to be controlled by people with no integrity like Jamie Dimon.
Glass Steagall will never be reinstated as long as Obama is in the White House. He must be impeached and removed. There is no way forward for our country without that.
Step One: Impeach Obama
Step Two: Reinstate Glass Steagall, cancelling all speculative debt, honoring real debt
Step Three: End “free trade” by cancelling NAFTA, CAFTA and the TPP
Step Four: Place large tariffs on imported goods as a protection for our own
manufacturing industry
Step Five: Put people back to work rebuilding this nation
Would you recommend that the commerce clause of the constitution.be amended so that each state can protect their own manufacturing industry? That would seem to be the logic of step 4.
Dawn,
I agree with you that U. S. interests demand refinement of the commerce laws.
Each state competes for business by offering tax abatements and other inducements. It’s called corporate welfare and it harms our communities.
Laws related to interstate commerce prohibit communities from rejecting out-of-state refuse and hazardous by-products, which lessens the incentive to develop better methods of disposal.
Between 40 and 60% of U.S. jobs have a link to exports so, tailoring the right fix is important. Starting with the right motivation, as you suggest, is important.
What was not mentioned in this article was the lost opportunity to make real change in our economy at the beginning of Obama’s first term in office. The country was ripe for change and expected as much from him. The disaster brought the country together (except for Tea Party types) with an extraordinary approval rate of 80% or so. Change was hoped for and promised but not delivered. I fear it will be a long time before such an opportunity presents itself again which may result in social unrest and/or another financial calamity.
Michael, Obama was elected by people who thought he was a progressive and would curb the greed of Wall Street and the banks. Wrong. The banks were “too big to fail,” but he soon turned to demonizing public schools and teachers. He called meetings of corporate heads to decide on education policy. He is as strong a foe of public education and teachers as Ronald Reagan.
I hope you get a chance to see the PBS News Hour show on the Common Core backlash broadcast July 3rd. It is available for viewing on the web site. It comes across to me as giving the appearance of balanced reporting by having two guests from opposing sides. One was Jeffrey Brown of American Enterprise Institute and the other was Carmel Martin of the Center for American Progress. Ms. Martin was an assistant to Arne Duncan. Neither really presented any facts on what is really happening to public education. I hope you can view and comment.
Michael Brocoun,
There is nothing balanced about a “debate” between AIR and CAP. Both support Common Core. Who represented the critics?
Diane, I see I made a major error in my message to you. I somehow stated Jeffrey Brown (moderator) instead of Rick Hess as the representative from the American Enterprise Institute. So Rick Hess would’ve been the critic. Sorry for the error.
I would call attention to the books: on Capitalism by Pikkety which has garnered so much attention and also, Why Nations Fail: Origins of Power and Prosperity:
Daron Acemoglu & James Robinson. Both address with GREAT scholarship the problems incurred when wealth accumulates to the detriment of the general public.
Economic and/or social equality is far too simple a state of affairs to be the probable outcome of the workings of complex societies.
May the economically and IQ strong always win!!!!