Tuesday, June 26, 2012

Joseph Stiglitz: "America Is No Longer A Land of Opportunity"

How could you not like a face like that?

I love Joseph Stiglitz - he's a brilliant economist who cares deeply about both poor and average folks. He has made some big contributions to economics (mostly earlier in his career), and as of late, he has been decrying the growing inequality in the U.S. and pointing out with hard data the extent to which this harms everyone, even the 1%. He's written a series of insightful articles in Vanity Fair discussing how inequality hurts everyone, even the 1%; the need for government support as the U.S. transitions to a service economy; and how extreme inequality undermines societal stability.

Stiglitz is at it again, this time in the Financial Times, detailing how U.S. economic mobility is at an all-time low, even as inequality approaches its highest level in almost a century:
US inequality is at its highest point for nearly a century. ... One might feel better about inequality if there were a grain of truth in trickle-down economics. But the median income of Americans today is lower than it was a decade and a half ago... Meanwhile, those at the top have never had it so good. ...
Markets are shaped by the rules of the game. Our political system has written rules that benefit the rich at the expense of others. ... There is good news in this: by reducing rent-seeking ... and the distortions that give rise to so much of America’s inequality we can achieve a fairer society and a better-performing economy. ...
America used to be thought of as the land of opportunity. Today, a child’s life chances are more dependent on the income of his or her parents than in Europe, or any other of the advanced industrial countries for which there are data. ...
We can once again become a land of opportunity but it will not happen on its own... The country will have to make a choice: if it continues as it has in recent decades, the lack of opportunity will mean a more divided society, marked by lower growth and higher social, political and economic instability. Or it can recognize that the economy has lost its balance. The gilded age led to the progressive era, the excesses of the Roaring Twenties led to the Depression, which in turn led to the New Deal. Each time, the country saw the extremes to which it was going and pulled back. The question is, will it do so once again?
I've written about this topic on this blog before - in particular, about how intergenerational economic mobility in the United States is lower than in the Old Country (France, Germany, Sweden, Canada, Finland, Norway and Denmark) and about how Americans are woefully (but blissfully?) ignorant of this. But this is just a little side-project blog; perhaps people will actually listen to Stiglitz. Though if one judges by many of the comments on the FT article, perhaps I am the blissfully ignorant one.

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