Friday, April 08, 2011

The Rich And The Rest

Nobel Prize winning economist Joseph Stiglitz wrote about America's increasing wealth gap in the latest issue of Vanity Fair:

Of The 1%, By The 1%, For The 1%, Vanity Fair, May Issue

He says that, currently, 1% of our population controls 40% of our country's wealth. It didn't used to be that way. Just 25 years ago, 12% of the population controlled 33% of our wealth. The gap between rich and poor has widened and the gap is self-propagating ... the top 1% is on the path to control the majority of America's wealth.

For the top 1% life has gotten very good. Their incomes have risen 18% in the last decade while those in the middle have seen not just smaller rises but falling incomes.

Some ways the 1% are different from us:
  • 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.
  • The wealthiest class feels no pinch from higher taxes when the nation goes to war: borrowed money will pay for all that.
As for America being the place where hard work leads to success, Stiglitz says, "the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe."

Here's something that surprised me:
"Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office."
That makes me think the wrangling about the budget today, with the possibility of a government shutdown, is being done by people who are out of touch with most Americans. Stiglitz says so much:
"The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had.

They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good."
The common good. There was a time, Stiglitz says, when Americans cared about the common good, more out of a sense of pragmatism than idealism. At one time we appreciated that "paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being."


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jnkdaniel said...

Good post.

I find it ironic that the same folks that denounce any form of "socialism" are the same ones that want equal rights of corporations.

Steve Parker, M.D. said...

"They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good."

If the top 1% have bought and paid for the government, they own it. Why would they then fear it?

Perhaps they should fear the revolt of the hoi polloi.


anrosh said...

six families control the oil wealth of saudi arabia. plus or minus a little more control the rest of UAE. It is the same in all African countries and many countries in south east asia. Democracy is best defined only in this country. The queen of england is the richest human being in the world having land in many countries - And these lands are oil producing as in canada or are rich in some form of mineral wealth of metals or brings revenue in some form.
It is the continuous onus of the american citizens to define democracy - otherwise it will drain into the hands of the selected few - more power to the people

Bix said...

It's a tall order, Anrosh - defining democracy. We don't seem to be moving so well in that direction.

Imagine having so much money you could give almost all of it away and still live comfortably? I realize that's subjective, but still. We talk about what you would do differently if you had that kind of money. Of course, getting to that place of having requires you hold onto it in the interim.

I would establish scholarships. I would love to see people with potential and ambition but inadequate resources have the opportunity to get an education beyond high school.