By The Top One Percent, For The Top One Percent

top-one-percentIn a fantastic piece for Vanity Fair, acclaimed economist Joseph Stiglitz discusses what America’s vast income inequality means for our future — in short, how it will corrode and distort every aspect of society:

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. An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul. There are several reasons for this.

First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible. Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.

Third, and perhaps most important, a modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.

America’s inequality distorts our society in every conceivable way. There is, for one thing, a well-documented lifestyle effect—people outside the top 1 percent increasingly live beyond their means. Trickle-down economics may be a chimera, but trickle-down behaviorism is very real. Inequality massively distorts our foreign policy. The top 1 percent rarely serve in the military—the reality is that the “all-volunteer” army does not pay enough to attract their sons and daughters, and patriotism goes only so far. Plus, the wealthiest class feels no pinch from higher taxes when the nation goes to war: borrowed money will pay for all that. Foreign policy, by definition, is about the balancing of national interests and national resources. With the top 1 percent in charge, and paying no price, the notion of balance and restraint goes out the window.

The rules of economic globalization are likewise designed to benefit the rich: they encourage competition among countries for business, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as the “core” labor rights, which include the right to collective bargaining. Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers. Governments would compete in providing economic security, low taxes on ordinary wage earners, good education, and a clean environment—things workers care about. But the top 1 percent don’t need to care.

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  • Mamagriff50

    Everyone should read this befor they vote. Than the Republicans [the top 1%] wouldn’t be put back in power. All they are doing is taking from the poor and middle class. And our country suffers. To bad most people don’t read.

  • Mamagriff50

    Everyone should read this befor they vote. Than the Republicans [the top 1%] wouldn’t be put back in power. All they are doing is taking from the poor and middle class. And our country suffers. To bad most people don’t read.

    • MoralDrift

      (pssssst) The democrats are for the capitalists too

      • OnceAndForAll

        Sadly, it’s true: Dems and Repubs are two different sides of the same bent and broken coin…about time we changed currency (or – gods forbid – start thinking of a way to completely eliminate said currency once and for all…)

    • razzlebathbone

      I used to think the Democrats would be different.

      Sadly, they are not.

      The wealthy and powerful now completely control every aspect of government and corporate policy.

      They will never relinquish it peacefully.

      We live, as the Chinese would say, in interesting times.

  • ArgosyJones

    Sorry, I only read economists who are Hoover-Institution approved.

    /sarc

  • ArgosyJones

    Sorry, I only read economists who are Hoover-Institution approved.

    /sarc

  • ArgosyJones

    Sorry, I only read economists who are Hoover-Institution approved.

    /sarc

  • BizMan

    Since the wealthy pay the majority of the taxes in this country I don’t understand how one could say that they are “stealing” from the middle and lower classes. The sad reality is you are either a taker or a maker in this economy.

  • BizMan

    Since the wealthy pay the majority of the taxes in this country I don’t understand how one could say that they are “stealing” from the middle and lower classes. The sad reality is you are either a taker or a maker in this economy.

    • Matt

      What about GE’s tax rate?

    • smooth_operator

      I accidentally “liked” your comment. I feel rather dirty.

    • MoralDrift

      Most of the wealthy don’t “make” anything. Here’s a warm glass of STFU BizMan

    • razzlebathbone

      I’m sure your belief that you’re morally in the clear will be of great comfort to you as the mobs beat down your door with burning torches and drag you to the guillotine.

      Remember: you did this.

    • youcantdresslikeme

      @bizman drink it – Treasure Islands: Tax Havens and the Men who Stole the World [Paperback]
      Nicholas Shaxson

    • Lbtical

      your an idiot. read some books. in wwII top income paid 90 % taxes. Now they pay 36. Hardly, the middle and lower classes are takers… it is the rich who always are looking to maximize profits with cheap labor. from slavery to modern illegal immigration. The 1% have always focused on power and profit, not people.

      kicks.

      • Andrew

        I agree with most of your reply, but please use “you’re” with an apostrophe before calling someone an idiot.

    • http://www.facebook.com/profile.php?id=580380351 Potter Dee

      The original idea of tax breaks for buisness or the wealthy, was that they would take that money and invest it back into their business, not write themselves fat bonuses and buy more yachts.

    • Luke

      You obviously are disconnected from the sad reality, keep thinking that the ”elite” 1% of the population really contributes at building a stable and equal society by paying an equivalent percentage of taxes on the money they make (which they make by playing with numbers, therefore not by doing anything helpful to this society)…..you’re obviously planning on becoming a banker, if so follow the ”wise” teachings of fascists like Milton Friedman, and soon you’ll be part of the top 1%…..

  • Matt

    What about GE’s tax rate?

  • Anonymous

    I accidentally “liked” your comment. I feel rather dirty.

  • Anonymous

    Most of the wealthy don’t “make” anything. Here’s a warm glass of STFU BizMan

  • Anonymous

    (pssssst) The democrats are for the capitalists too

  • Anonymous

    I used to think the Democrats would be different.

    Sadly, they are not.

    The wealthy and powerful now completely control every aspect of government and corporate policy.

    They will never relinquish it peacefully.

    We live, as the Chinese would say, in interesting times.

  • Anonymous

    I’m sure your belief that you’re morally in the clear will be of great comfort to you as the mobs beat down your door with burning torches and drag you to the guillotine.

    Remember: you did this.

  • Prose Stylist

    One of the largest contributing factors for causing disparity of wealth in markets is due to the overwhelming malinvestment into finance and banking caused by monetary policies and stimulus packages.

    The Cantillon Effect has benefited those who are well connected while causing the lower and middle class wage earners to suffer via asset prices and living expenses increasing well ahead of wages.

    Ironically, Keynesian economists such as Joesph Stiglitz have been in support of such policies.

  • Prose Stylist

    One of the largest contributing factors for causing disparity of wealth in markets is due to the overwhelming malinvestment into finance and banking caused by monetary policies and stimulus packages.

    The Cantillon Effect has benefited those who are well connected while causing the lower and middle class wage earners to suffer via asset prices and living expenses increasing well ahead of wages.

    Ironically, Keynesian economists such as Joesph Stiglitz have been in support of such policies.

  • youcantdresslikeme

    @bizman drink it – Treasure Islands: Tax Havens and the Men who Stole the World [Paperback]
    Nicholas Shaxson

  • Lbtical

    your an idiot. read some books. in wwII top income paid 90 % taxes. Now they pay 36. Hardly, the middle and lower classes are takers… it is the rich who always are looking to maximize profits with cheap labor. from slavery to modern illegal immigration. The 1% have always focused on power and profit, not people.

    kicks.

  • OnceAndForAll

    Sadly, it’s true: Dems and Repubs are two different sides of the same bent and broken coin…about time we changed currency (or – gods forbid – start thinking of a way to completely eliminate said currency once and for all…)

  • Andrew

    I agree with most of your reply, but please use “you’re” with an apostrophe before calling someone an idiot.

  • http://www.facebook.com/profile.php?id=580380351 Potter Dee

    The original idea of tax breaks for buisness or the wealthy, was that they would take that money and invest it back into their business, not write themselves fat bonuses and buy more yachts.

  • http://www.facebook.com/profile.php?id=580380351 Potter Dee

    The original idea of tax breaks for buisness or the wealthy, was that they would take that money and invest it back into their business, not write themselves fat bonuses and buy more yachts.

  • http://www.facebook.com/profile.php?id=580380351 Potter Dee

    The original idea of tax breaks for buisness or the wealthy, was that they would take that money and invest it back into their business, not write themselves fat bonuses and buy more yachts.

  • No

    shut up.

  • Me

    “Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers.”

    You REALLY had my attention until the last few sentences. Competition among countries for workers? You’re thinking is totally opposite of mine in that regard…we already have debt slavery…and competing for jobs that ruin our sociology and pit us against each other to meet our needs within countries….not to mention most jobs don’t even pay enough to meet a quality life standard. Full globalization under our current system will have the set up to have the 1% elitist multi-nationals pitting us against each other internationally for work-the very nightmare I blog about everyday trying to get people to see that it will come to this in our current unsustainable, wasteful corporacratic system. I sure hope you don’t get your wish…and furthermore…I hope you see what a horrendous differential advantage of even more exploitation of labor that would be.

  • Me

    “Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers.”

    You REALLY had my attention until the last few sentences. Competition among countries for workers? You’re thinking is totally opposite of mine in that regard…we already have debt slavery…and competing for jobs that ruin our sociology and pit us against each other to meet our needs within countries….not to mention most jobs don’t even pay enough to meet a quality life standard. Full globalization under our current system will have the set up to have the 1% elitist multi-nationals pitting us against each other internationally for work-the very nightmare I blog about everyday trying to get people to see that it will come to this in our current unsustainable, wasteful corporacratic system. I sure hope you don’t get your wish…and furthermore…I hope you see what a horrendous differential advantage of even more exploitation of labor that would be.

  • Gasface

    The next time I vote, it will involve lots of fertilizer, diesel fuel and a cube van.

  • Luke

    You obviously are disconnected from the sad reality, keep thinking that the ”elite” 1% of the population really contributes at building a stable and equal society by paying an equivalent percentage of taxes on the money they make (which they make by playing with numbers, therefore not by doing anything helpful to this society)…..you’re obviously planning on becoming a banker, if so follow the ”wise” teachings of fascists like Milton Friedman, and soon you’ll be part of the top 1%…..

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