Sunday, June 29, 2014

Joseph Stiglitz: Inequality Is Not Inevitable

In the closing article to the NY Times series on The Great Divide, Stiglitz summarizes the causes of America's horrendous economic inequalities and their remedies.

An insidious trend has developed over this past third of a century. A country that experienced shared growth after World War II began to tear apart, so much so that when the Great Recession hit in late 2007, one could no longer ignore the fissures that had come to define the American economic landscape. How did this “shining city on a hill” become the advanced country with the greatest level of inequality?

Stiglitz argues that  "... it is not the inexorable laws of economics that have led to America’s great divide", rather it is "our policies and our politics."

The American political system is overrun by money. Economic inequality translates into political inequality, and political inequality yields increasing economic inequality. 

Our national policies have contributed to the great divide.

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.

Both policies and politics are correctable - if we have the will to do it.

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.

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