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Columbia Professor Joseph Stiglitz: The ‘American Dream’ Is a Myth

Income inequality has become the subject of much debate in this country, in large part because of the Occupy Wall Street movement.

In his latest book, The Price of Inequality, Columbia Professor and Nobel laureate Joseph Stiglitz examines the causes of income inequality and offers some remedies. In between, he reaches some startling conclusions, including that America is “no longer the land of opportunity” and “the ‘American dream’ is a myth.”

While we all know stories of people who’ve moved up the social stratosphere, Stiglitz says the statistics tell a very different story. In the last 30 years the share of national income held by the top 1% of Americans has doubled; for to the top 0.1%, their share has tripled, he reports. Meanwhile, median incomes for American workers have stagnated.

Even more than income inequality, “America has the least equality of opportunity of any of the advanced industrial economies,” Stiglitz says. In short, the status you’re born into — whether rich or poor — is more likely to be the status of your adult life in America vs. any other advanced economy, including ‘Old Europe’.

For example, just 8% of students at America’s elite universities come from households in the bottom 50% of income, Stiglitz says, even as those universities are “needs blind” — meaning admission isn’t predicated on your ability to pay.

“There’s not much mobility up and down,” he says. “The chances of someone from the top [income bracket] who doesn’t do very well in school are better than someone from the bottom who does well in school.”

Because the children of those at the top of society tend to do better than those at the bottom — thanks, in part, to better education, health care and nutrition — the income inequality that’s slowly emerged over the past 30 years will only widen in the next 10 to 20 years.

If the root causes of income inequality go unaddressed, America will truly become a two-class society and look much more like a third world economy, Stiglitz warns. “People will live in gated communities with armed guards. It’s a ugly picture. There will be political, social and economic turmoil.” (Hence the book’s subtitle: ‘How Today’s Divided Society Endangers Our Future’)

The good news is Stiglitz believes this “nightmare we’re slowly marching toward” can be avoided, citing Brazil’s experience since the early 1990s as an example of a country that has reduced income inequality. Among other things, he recommends improving education and nutrition for those at the bottom of society, and eliminating “corporate welfare” and other policies which “create wealth but not economic growth.”

For example, he cites the provision in Medicare Part D which forbids the federal government from negotiating prices with the drug companies. Over 10 years, that rule will generate approximately $500 billion for the industry, he estimates, but no tangible benefit for taxpayers or the economy as a whole.

Importantly, Stiglitz believes inequality of wealth and opportunity are hurting the overall economy, by limiting competition, promoting cronyism and keeping those at the bottom from reaching their potential.

“What I want is a more dynamic economy and a fairer society,” he says, suggesting income inequality is ultimately detrimental to those at the top, too. “My point is we’ve created an economy that is not in accord with the principles of the free market.”

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2 thoughts on “Columbia Professor Joseph Stiglitz: The ‘American Dream’ Is a Myth

  1. The guy I quoted the other day. It's worth an honest look.

  2. Looking at our societal crisis from the standpoint of economists is a futile, and actually distractive, error.

    As much as Mishel, Stiglitz, Krugman, Jamie Galbraith, and even Marxist economist, Richard Wolff, have made some progress recently in critiquing predatory capitalism (which has 'captured' government), all of these attempted diagnoses are wrong and distractive of a truly “adequate diagnosis”.

    As Zygmunt Bauman hauntingly puts it, “In the case of an ailing social order, the absence of an adequate diagnosis…is a crucial, perhaps decisive, part of the disease.”13.

    [Quoted by Berman, Morris (2011-02-07). Dark Ages America: The Final Phase of Empire (p. 22). Norton. Kindle Edition. ]

    We face a vast and multifaceted "ailing social order" to be sure.

    Politicians and the media talk and make us think in terms of "issues" and problems — which are all only 'symptom problems' and 'identity issues', like; increasing foreign wars, vast economic inequality, austerity/debt, environmental destruction, spying and torture, "fiscal cliffs" [a Frank Luntz scare term], increasing tyranny and police-state, et al.

    However, nobody, no diagnostic doctor of our entire "ailing social order" ever talks about the CAUSE of all these "issues", 'symptom problems', and superficial effects of the hidden and underlying disease that is the causal cancer.

    Only one economist, who I can quote, seems to have touched at all at this hidden and underlying causation, and that was George Akerlof in 2001 when he stated correctly, but not completely, "This is not normal government economic policy, but rather a form of looting".

    [By this Akerlof did not mean direct looting by the government itself, as right-wing deceivers and anti-tax shills like Grover Norquist would rant, but indirect "looting" which the captured government orchestrates and allows by law for private elite, wealthy, and corporate interests.]

    However, even Akerlof's partial accuracy about crony economics does not provide, as Dr. Bauman requires, "an adequate diagnosis" of the hidden and causal pathology that is actually the core tumor of the disease of our woefully "ailing social order".

    Both Joseph Stiglitz, in his fabulous new "The Price of Inequality; How Today's Divided Society Endangers Our Future", and Richard Wolff, in his equally fabulous new book and lecture, "Occupy the Economy; Challenging Capitalism", extensively address the problems of a dysfunctional capitalism — which the existing Occupy Movement also addresses.

    But even “capitalism” is only a tool of the real disease in our "ailing social order", and like all tools, capitalism, can be used for good or evil — just like the other tools across all of history of; military prowess, technology, science, law, religion, politics, etc. etc.

    Certainly the more modern 'tool' of capitalism is a very powerful tool, which can be used for good or evil, and which recently has turned from being used for social good to increasingly being used for evil, as the data in this article demonstrate.

    But all the tools of; military prowess, law, organizational skills, religion, nationhood/nationalism, advanced technology, et al have throughout history been often employed for good or evil.

    Our seminal need in doing "an adequate diagnosis" of our near existential "ailing social order" today is to answer the question, "what is the causal agency that actually employs all such 'tools', and which is using the 'tool' of capitalism today for the evil purpose of increasing our overall social ills?"

    We can readily see the "issues" and 'symptom problems', and some good economists are partially diagnosing that the 'tool' of capitalism is being misused into being one visible and proximate cause of some of our "ailing social order", but the real key is to clearly understand and fully diagnose at a deeper level what is the hidden but core pathology of the disease itself that is actually employing disguise, guile, camouflage as the "crucial, perhaps decisive, part of the disease", and which by disguising itself has so perverted the 'tools' of; "capitalism", politics, law, wealth, technology, and now particularly ideology to cause all those 'tools' to be misused for evil, predatory, and parasitic purposes in our death-spiraling "social order".

    If we look not exclusively at the 'tools' of; economic capitalism, nor modern technology, nor religious beliefs, nor nationalism, nor deceitful politics, nor any one 'tool', but rather at the entire history of what element/agency has always turned tools from being used for good to being misused for evil we will finally have found our "adequate diagnosis" of the real underlying CAUSE of this evil —- and that is EMPIRE.

    Best luck and love to the “Occupy Empire” educational and revolutionary movement.

    Liberty, democracy, and justice.
    Over
    Violent/Vichy
    Empire,

    Alan MacDonald
    Sanford, Maine

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