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Stiglitz on American Inequality: 'Of the 1%, by the 1%, for the 1%'

Thursday, March 31, 2011

Banksy Boston In 2008, one million more children were living in households in poverty than were in 2000. (flickr: Chris Devers)

Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on the Brian Lehrer Show, Joseph Stiglitz, winner of the Nobel Prize in Economics and author of Freefall: America, Free Markets, and the Sinking of the World Economy, discussed his article, Of the 1%, by the 1%, for the 1%, in the new issue of Vanity Fair in which he asks why there aren't mass protests here in the United States, given that the top 1 percent of Americans control 40% of the wealth.

The numbers plainly show that our society has a starkly unequal distribution of wealth.

One percent of the U.S. population takes home almost a quarter of all the nation's income in any given year and controls forty percent of the country's wealth. If you believe in "trickle down economics" this doesn't matter. But Stiglitz says it ain't trickle down, it's trickle up.

Most Americans are worse off than they were ten years ago, a dozen years ago, so it's actually trickle up economics. All the gains in our economic growth have gone to those at the top.

The level of inequality in the U.S. has been increasing very rapidly, and "we've been getting more unequal while other countries have been becoming less unequal," said Stiglitz.

Of one percent, by one percent, for one percent.

Irresponsible behavior by Wall Street bankers may have spawned the financial crisis, but "a lot of the inequality is a result of the government failing to do what it should do," Stiglitz said. (The social contract is generally understood to be that government protect its citizens.) Stiglitz said it's understandable that many American citizens are completely disillusioned with the government.

They looked at what happened in the financial crisis and there was no sense of accountability. They've said we can't trust government because government is part of the problem--because government is run by that one percent. We had a crisis and who got bailed out? The big banks. Who got left in the lurch? The millions of Americans who are losing their homes. Seven million have already lost their homes.

Why trickle down economics is a sham

It comes down to the difference between saving and investing--one does not equal the other.

If those who are having all the money took that money and invested it productively in the U.S. creating jobs, that would be one thing. They're saving, but that saving isn't being translated into productive investments in America that would lead to the strengthening of our country.

Is that money being used to create jobs, create jobs in America, create jobs where the country needs it? The answer is 'no.' You can try to analyze why our economic system is not working the way its supposed to--it has a lot to do with the way our financial system didn't use its scarce savings in a way that was socially productive.

How do we rectify the inequality?

Number one, Stiglitz said, is to make that top one percent pay their taxes. (An expose in the New York Times revealed that General Electric didn't pay any American taxes last year.)

If we just made them pay fair taxes--they escape taxes through capital gains taxes, through a whole set of special provisions, corporate welfare kinds of programs...if we just made that upper one percent pay their fair share that would make a very big difference.

Number two, according to Stiglitz, would be to educate the American population.

If we spend money to increase the productivity of our labor force then the wages will go up and that will reduce some of the inequality of our society.

Why aren't there mass protests in America?

Stiglitz thinks many Americans misunderstand what's in their best self-interest.

There's been an amazing job of successful propaganda, the belief that if you give enough money to the people at the top it will trickle down, that's a widespread view of trickle down economics, there's a widespread view that if you give money to the top that will lead them to save more and that automatically gets translated into productive jobs in America--something that's clearly not true. So there's in a sense that our system is working well in spite of the fact that the data are suggesting otherwise.

What do you think? Here are a few questions we'd like It's A Free Country readers to answer:

Is inequality is a natural outcome of democracy? 

Is the system rigged?

 Do rising tides lift all boats?  

Is America a fair society? Should it be? 

Let us know in the comments below

Guests:

Joseph Stiglitz

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Comments [67]

Judith Eda from Ithaca, NY

Our country is about as "free" as the so-called free market. I wonder what Professor Stiglitz would say about this (prescient) quote:
"There cannot simultaneously and successfully exist in the same nation a political democracy and an economic oligarchy." -- Joseph P. Kennedy Sr., first chairman of the SEC

Apr. 05 2011 07:08 PM
Harrison Bergeron from Fair Lawn NJ

Democracy is a great social system. To work well, it requires that its citizens be informed, clear-thinking, patient and generous in their behaviors. Especially at the voting booth.

Capitalism is an economic system that rewards greed and selfishness.

Terrible combination.

Apr. 04 2011 11:45 PM
Tim from Manhattan

I heard Brian mention today tickets to a panel discussion on Freedom next Thursday evening but cannot find the link.
Can you help?
Tim
PS-I came into the Hubbard interview late. I am hoping that the conflict of interest issue that was posed to Hubbard in "Inside Job" was addressed. It challenges belief that one can simultaneously be a reliable source of objectivity about banking, finance and the economy at the same time that you are paid for that opinion by banking and financial institutions. This is the same inherent conflict that caused the ratings organizations-Moody's, Fitch et al to rate Lehman, Merrill and others as investment grade the day before they became insolvent. They were incented to provide favorable opinions in the face of should have been mounting alarm.It is a question of integrity.

Apr. 01 2011 12:55 PM
Bernie from New Jersey

Globalization is naturally favoring those with capital to invest. The shipping container made a global market for manufacturing labor, and the internet is making a global market for white collar "knowledge worker" labor. This lowered cost of labor due to globalization is good for the owners of companies, but bad for workers, at least in countries like the United States where the historical cost of labor is relatively high. Wealth therefore concentrates in the hands of the already wealthy investor, at the expense of the U.S. worker.

Apr. 01 2011 11:52 AM
SS from Morristown

The wrong economic policies since it have gained acceleration after Regan era has caused this to happen. (a) Free market without controls or (b) government by the Market (free capital flow in campaign and selection of leaders - politicians) and for the market, (c) missing of People power, this is going to keep happening.
Constant fall of standards in education, and policies to support consumption without real production will lead to disaster.

Apr. 01 2011 11:39 AM
Chris from Yorkville (NYC)

Must correct Chip's assertion that the US has the highest tax rates. Our corporate tax rate of 35% IS high (though most don't end up paying it), but our individual tax rate is rather low. He cites Ireland, which does have very low corporate tax rates, but their general rate for individuals is 20% and it goes up to 40%. Our individual tax rates are low for those with high incomes which seems crazy when obviously we need the money. When 'W' first cut the tax rate, my family received a big fat check from the government (having had taxes taken out at the former higher rate). We didn't need it, whereas the country certainly did. Many interesting issues are covered here, but the point I want to make is that it doesn't make sense to keep the income tax rates on high-incomes so low - much lower than they were when my husband and I first started making money and paid around 70% at some level. We - the U.S. - needs the money, especially in weak economic times, and the richer people have it to give - no one else does. People need to remember that as you pay more on additional income, above $250,000 or $500,000 or whatever, no matter how high a rate you pay, you are still left with more money than you had before you made that much in salary. We are quite happy when we make a lot of money and pay a lot of taxes!
Finally, people (like Martin C.) repeat the point that our low marginal rates are fine because the taxes from those in the highest 1% make up a very large portion (40%) of all taxes paid. That just makes the point that the top 1% have it all - so very much that the percentage that pay, say 23%, of their income is a vast amount of money compared to what the rest of the people pay. So, you make %1 billion and are left with over $3/4 billion in annual income. Sure, you've paid a lot of taxes, but you could so easily pay more and I think it makes no sense for people at super-high incomes to pay only the percentage that middle class types pay. Things seemed to work just fine when we had higher marginal rates, pre-Reagan.

Apr. 01 2011 11:14 AM
Amy from Manhattan

Oh, now I get it! "Progressive austerity" means it keeps getting worse bit by bit!

Apr. 01 2011 12:52 AM
Jeffrey Hildt from Upper West Side


The unequal distribution of wealth

It is particularly disturbing to me that our society has such a short memory of its own recent economic past. And that, of course, means we don’t learn a thing from our own recent history.

Just compare the period that began with the Reagan years in the 1980s up until today with the decades before that, say the 1940s through the 1970s. We see that the richest segment of our society held a far smaller portion of the overall wealth of this country in the pre-Reagan years, and paid a far greater share of their wealth in taxes compared to the great majority of the population. Not incidentally it was a period of great economic growth for everyone, our economy boomed and everyone’s standard of living improved along with it.

Then, under Ronald Reagan, the Republican economic view began to take hold: cut taxes on the rich and favor big business with deregulation and changes in the tax code. Remember “trickle down” economics? The rich began to get richer at the expense of everyone else, and in spite of lip service to fiscal responsibility, under Reagan we actually began to run up a large national deficit. And, if you recall, in those Reagan years the country went into a prolonged recession. Under Clinton we actually eliminated the deficit, came out of the recession and ran in the black. Unfortunately he also continued to deregulate big business (including banking). Bush-2 again cut taxes disproportionally for the rich, championed more deregulation and began running up the huge deficit we have today, in part by waging two wars off the books.

Here is how the tax code has changed in less than one lifetime (mine), and with it the distribution of wealth in this country [from The Nation, June 30, 2008 issue: Plutocracy Reborn].

In 1944 the marginal tax rate — the rate on income in the highest tax bracket — hit 94 percent. In that year, taxpayers making more than $1 million, in 2005 inflation adjusted dollars, paid Uncle Sam 65 percent of their total income in tax.

In 2005 taxpayers making more than $1 million faced a top marginal rate of 35 percent. These deep pockets paid just 23 percent of their income in federal tax.

America’s 400 highest-earning taxpayers in 2005 collected, after adjusting for inflation, 18 times more income than their counterparts in 1955, a half-century ago.

This recent economic history is right under our collective nose, yet we seem to have learned nothing. The answer to our economic woes is simple. Tax the rich more, like we used to. Cut taxes for everyone else. Then sit back and watch everyone, from top to bottom, rise with the tide of an expanding economy once again.

But I fear that’s far too simple, far too obvious, to ever stand a chance.

Jeffrey Hildt
New York, NY

Mar. 31 2011 10:58 PM
NYVoter

I never knew the Government was responsible for the " distribution of wealth " --I always thought you'd have to work for a living ..and the harder you WORKED , the MORE WEALTH you EARNED.

Mar. 31 2011 08:32 PM
Louis from Bayside

The caller who asserted that we are better off with the top 1% having the money because they invest their money whereas the vast majority of us just spend it had a powerful point. Unfortunately the top 1% are a reflection of a general trend of increasing selfishness that seems to be sweeping our world. They are not investing with an eye to the public good (which would be required for trickle down theory to work) but they are investing in financial products at the expense of the public good. Plus you can't argue that the wealthiest 1% don't consume, there is definitely out of control consumption amongst that segment of the population (i.e. Hank Paulson's multi-million dollar castle in Germany).

Mar. 31 2011 07:16 PM
Dw Dunphy from Red Bank, New Jersey

There is a solution and it's going on as we speak. In a thoroughly Randian vein, the conversation has shifted from "Why the 10%" to "Why the 90%," and you'll see the tenor of the argument has flipped (evidenced by the caller who cited the 10% with all the wealth is not just justified, but absolutely correct). Knowing the trickle-down has failed, the situation remains reliant on its core principles, leading one to believe many feel the best way to balance this is with the death of the 90%.

If the 90% die, due to diseases of the poor and the inability to treat them, the ignorance of the old and infirmed and the consistently poor diet of the remaining, eating only what they can afford, then it is no longer about 90/10. It could be the 10% becoming 80% through attrition, if only the "weak links" would just drop dead already.

Sounds horrid, but the tenets of "John Galt self-actualization" practically demand it, and yet the Randians continue to kneel before the altar of a piece of fiction.

Meanwhile, those who are feeling oppressed aren't likely to start street protests, such as in Egypt, Syria or Libya. Rather, I see more the example that happens so often in South America, where the rich are casually kidnapped and held for ransom, that I can see happening eventually.

It all sounds very paranoid and cynical, but these things started somewhere, and if our 10% haven't the foresight to see it could wind up at their doorstep, it will start here too.

Who is John Galt? He's the blindfolded guy in the video, that's who.

Mar. 31 2011 02:10 PM
superf88

Weird assertion being mistaken for fact. "The" Rich? "The" Poor?

Thanks to immigration/emigration and changing fortunes the "membership" of these populations change every day.

There are whole industries focused specifically on this fluid border.

Mar. 31 2011 01:17 PM
tom from New York City

A lot of folks are saying how much the poor rich pay in tax of their income and the large relative amount of all tax paid that is. Well for one the tax they pay is on the amount they couldn't shelter (yet) they have a great deal left. There have been many stories like the GE one and others that point out the hedge fund managers pay cap gain rates (15%) on multi-million pay — way lower than someone making 100K (25-30%). The wealthy pay a lot for tax avoidance.

The wealthy, since Ragan, have been very successful in getting tax breaks for themselves effectively under-funding government generally. They have, especially during Republican administrations, controlled government oversight departments like FCC and ran them ineffectively, allowing things like the financial crisis we are in now to develop. I don't think that's what they were aiming at but making government ineffective seems to be a goal along with taking advantage of that to gain greater wealth and power. That gain necessarily at the expense of the greater public community.

Look at who the US is paired with in terms of wealth disparity: Russia and Iran. We may be in at tipping point when the great democracy will slide into oligarch and eventual look more like old aristocratic Europe with computers (serfs up?).

Mar. 31 2011 12:48 PM
Rachel from Ohio

The real wealth redistribution that has been going on is the middle class has for 30 years been spending their wealth on goods and services and the profit from that has been redistributed to the wealthy. Executive salaries have gone up 256% since 1980 while the middle class salaries have not gone up and gotten squeezed more. We pay more in our own retirement and more in our healthcare too. The executives pay out all of the profit to themselves and their wealthy shareholders and continue to squeeze more and more productivity out of the workers for no pay increases. Americans do not realize this problem because the rich said let them eat credit. The rich made credit easy so although we have seen no salary increases, we can bury ourselves in credit to buy things.

Mar. 31 2011 12:25 PM

This was a wonderful segment and it is great to hear all sorts of opinions and beliefs about the failure and successes of our economic system. I don't think we'll ever get a million folks to do anything anymore except twitter about Britany Spears or some such.
Just recently, I had to cull our Indian team because pay for skilled workers there went up. The CEO here once parroted Henry Ford. He said, "if I could just pay for their programming skills and not their bodies I would be happy." And this leads me to one of the two issues. Global Financial markets for labor and goods are unequal, unfair and dangerous. Global Financial System as it is now constituted will cause systemic failures because there are no meaningful redress for labor and capital gets misallocated. The "if you don't like it go somewhere else" principal cripples an economy.

We need regs both for the capital side and for labor. Second, Leonore has it right. Here at home one of the most important things is to reduce and make totally transparent the influence peddling that corporations and other lobbying groups engage in with our Government. Although I support Unions, I think this should apply equally to them. The senate and house must do this or suffer the pain of being replaced by extremists on both sides.

Mar. 31 2011 12:01 PM
RBC from FiDi

The post from "richardlewis" stole my thunder. The reason why the rich keep getting richer is because the poor and middle class continue to hand over their hard earned money to the rich.

You vote with your wallet. I stopped banking at Chase and other big banks years ago because all they did was take my money. I drastically cut my department store spending drastically because everything is made in China yet the prices keep increasing.

Want to increase your share of the "pie"? Start investing in your communities! Shop at small businesses, do business with community banks (in fact many community banks are more solvent than big banks!!). Before you head to WalMart or Target or Macys see what goods and services are available in your neighborhood. You'll save time AND money.

Mar. 31 2011 11:34 AM

These 1% who control such a large proportion of wealth are spending and investing it. They are expanding their businesses overseas, where labor costs and tax rates are cheaper, and providing jobs and economic stimulus in those countries rather than in America, where their wealth originated. They are also investing in media manipulation to keep the public ignorant and/or misinformed and in political movements and candidates that will further enhance their opportunities to increase their control over even more wealth. The callous self-interest that fueled the Wall Street and bank maneuvers that so damaged our economy is really staggering. The same lack of concern for a larger picture also fuels the attacks on public education. Where will an intelligent work force come from once the schools have been pushed into less efficacy by the constant cutting of budgets and stifling of teachers' voices in creating education policy?

Mar. 31 2011 11:14 AM
chip


The income inequality cited by Prof. Stieglitz is due to a number of causes, mostly due to liberal programs desgned to help the poorer off. For instance, the top 1% have the choice to send their kids to any school they want to. The poor must send their kids to the local public school, regardless of its quality. Yet who opposes school choice and vouchers? The Democrats.

Of course the wealthy invest overseas. According to 60 minutes this past week, the US now has the highest income taxes in the world--35%. When one is only taxed at 12% in Ireland and other European countries, no wonder wealthy individuals and companies invest overseas, sending US jobs and wealth to other countries. Yet who opposes cuts in corporate income taxes? The democrats.

The top 1% of income earners earn 20% of the nations income and pay 38% of the nation's income taxes. They actually pay more taxes than the bottom 90% of taxpayers. I would like to know what other people think is fair? The higher we make their taxes, the more likely they are to move income and investment overseas. Yet who favors increasing taxes on the wealthy? The democrats. And does anyone ask themselves what kind of government we are getting when so many people have so little financial stake in the programs they vote for?

There are a number of workers who cannot produce more $7.25 of goods and services, and these folks are largely unemployed. Instead of coming up with a system to subsidize these workers, these jobs simply get sent overseas. An American worker, simply cannot get paid more for the same work that Asian worker gets paid (making certain allowances for productivity). But who favors minimum wage laws? Again the democrats.

Finally, I am always reminded of the story in which a worker gets a dollar every time he presses a button, but when he does, his boss get $100. Some people will never push the button knowing this while others will make themselves rich and their bosses much richer. The fact is that real income for the bottom 10% of wage earners has increased, though very slightly over the past 30 years, while that of the upper 5% has increased much more dramatically, increasing income inequality, but still increasing real income for those at the bottom.

Mar. 31 2011 11:03 AM
gary from queens

More counterpoint to Stiglitzes' nonsense:

What Social Science Does—and Doesn’t—Know
Our scientific ignorance of the human condition remains profound.
http://www.city-journal.org/2010/20_3_social-science.html

Economics Still Doesn’t Lie
Whatever its predictive powers, the dismal science remains a science.
25 September 2009
http://www.city-journal.org/2009/eon0925gs.html

A Critique of Pure Financial Reason
Did Efficient Market Hypothesis destroy the economy?
25 September 2009
http://www.city-journal.org/2009/bc0925ds.html

The Road to Freedom
A flawed essay collection charts the early history of the Mont Pelerin Society.
23 July 2010
http://www.city-journal.org/2010/bc0723gs.html

Mar. 31 2011 11:03 AM
cfredc from New York, NY

Dear amalgam from Manhattan,

No, your interpretation of my post is much too rosy.

I’m saying that the wages of American workers are doomed - fated to be swept away by the tides of history.

Unwilling to face this bleak reality, leftists blame greedy capitalists and income inequality.

Similarly, President Obama, Tom Friedman and damn near every economist feel compelled to peddle “the acceptable narrative” about innovation and education forestalling this. Yet it’s quite obvious that the jobs to implement American innovation aren’t somehow predestined to be American jobs; nor can education, even superior education, overcome six-to-one wage incentives.

Sorry folks, it’s a tsunami and we’ve no high ground to flee to.

Mar. 31 2011 11:00 AM
gary from queens

And now, the counterpoint to Stiglitzes' nonsense:

The Two Joseph Stiglitzes
One is a serious economist. The other isn’t.
22 July 2009
http://www.city-journal.org/2009/eon0722gs.html

The Invention of Pop Economics
Joseph Stiglitz should win a second Nobel Prize, this time for fiction.
Freefall: America, Free Markets, and the Sinking of the World Economy,
26 March 2010
http://www.city-journal.org/2010/bc0326gs.html

The Free-Marketeers Strike Back
A counter-narrative of the financial crisis
http://www.city-journal.org/2010/20_3_free-marketeers.html

Mar. 31 2011 10:57 AM
gary from queens


AGAIN, WHY DOES THIS BLOG CENSOR MY CRITICISM OF STIGLITZ?!!

Mar. 31 2011 10:54 AM
Calls'em As I Sees'em from Here, there & everywhere.

I was waiting to hear that Joseph Stiglitz, who is a millionaire himself and in that top 1%, was going to donate all his money to the US Treasury, but I guess he ran out of time, given these shorter segments that Laura Walker imposed on Brian & Lenny a few years ago. Oh, well. I look forward to future millionaire socialist guests (actors, writers, politicians, professors, etc.) on both shows to renounce their own wealth and success and tell the public how they are giving their money to the US Treasury and their plans to apply for public housing. Perhaps a few dollars will flow to WNYC. We can only hope. PS - Libs don't hold your breath.

Mar. 31 2011 10:52 AM
Edward from NJ

The reason people don't "rise up" is that people are either comfortable with their income and don't want to risk messing that up or too busy trying to make ends meet to worry about it.

Mar. 31 2011 10:49 AM

americans have no reason to protest. if we want to start a revolution we just need to make an effort to buy much much less from the upper 1%. support small businesses, trade with friends, grow a garden, make your own food, teach your kids at home, etc. sounds backwards but you can really use your low income status as a tool and a motivation to live creatively; or you can waste your life complaining about the 1% while secretly dreaming about yourself as part of that 1% while giving all of your money to that 1% that has chosen you to be its consumer.

Mar. 31 2011 10:48 AM
tom from New York

The upper 1% have more political power then the rest of us.
With their wealth they can, in a sustained way, spend the time and effort to influence situations, from getting on boards, lawsuits, lobbying, etc. They can contribute to candidates and then advise how laws are made and implemented. They also, as owners, directors and board members of corporations, can use the assets of the corp. to magnify their voice. They have their own voice plus the voice of the corp.; so much for one man one vote.

Mar. 31 2011 10:44 AM
gary from QUEENS

WHY DOES THIS BLOG CENSOR MY CRITICISM OF STIGLITZ?!!

Mar. 31 2011 10:41 AM
Elsie from Brooklyn

To second and third the several comments with regards to Brian's handling of Prof. Stieglitz, I would say that Brian is a typical American liberal: his desire to be liked by everyone precludes his ability to actually take a stand for anything.

I would also like to point out that in a previous discussion with a European economist, Brian believed that socialism was the same thing as communism; a confusion that the economist, at first stunned by Brian's ignorance, corrected by reminding Brian that there was quite a bit of difference between the Soviet Union and Sweden in terms of their economic policies. Imagine having to explain that to someone who people generally consider to be well-informed.

Mar. 31 2011 10:40 AM
EVC from B'klyn

Amen... and kudos to the BLS. Thanks for the clip at the beginning of the segment; I thought about the same stats. I believe Joseph Stiglitz and the other progressive economists have identified a key political fact which gets almost no attention. It seems to me that this issue is global... when the Crash of 08 occurred I thought we may now take a clearer look at 'free market' capitalism; how can an economic system be said to be working when 25% of the people worldwide live on less than $1 a day; and another billion live on $2 a day. This current system is working for about 15-20% of the global population, hardly exemplar; we could do better if we wanted to.

Mar. 31 2011 10:40 AM
jgarbuz from Queens

The old question of progressive taxation versus flat taxation, and which is more "fair" is a question that goes back well over a century in this country, and has not been resolved to this date to anyone's satisfaction. I say, do whatever works. Whatever produces the most good for the most people is the most "fair" solution at any given time.

Mar. 31 2011 10:38 AM
Lenore from Upper West Side

Publicly financed elections!!

That is the ONLY thing that will get us out of this situation. It's true that government has encouraged-enabled-produced this inequality. The Tea Partiers aren't wrong about that.

The solution: publicly financed elections. I know, the Supreme Court seems to have made that impossible. But maybe there is a way...

Mar. 31 2011 10:36 AM
Viktor Angurov from Brooklyn

I keep hearing that the rich should pay their "fair share". For me there are two fundamental questions: One. How much is "fair share" and Two. Who determines number One.

Mar. 31 2011 10:35 AM
Amy from Manhattan

Also, I'm still trying to get an answer to the question, why is enacting policies that benefit the rich over the poor & the middle class *not* called "class warfare," while pointing out that those policies benefit the rich over the poor & the middle class *is* called "class warfare"?

Mar. 31 2011 10:33 AM
jgarbuz from Queens

Tell the old bolshevik follower of Rabbi Karl Marx to go back and restudy his economics.

Mar. 31 2011 10:32 AM
Eli from Cleveland OH

What's the point?
The rioters in Egypt had a goal in mind, what would our goal be in having one million people march in Times Square? The 1% should distribute some of their money?

Mar. 31 2011 10:32 AM
April from Manhattan

There is a movement on the left. it's just highly disorganized. And clueless as to how to proceed, and doesn't get covered when it does act. For example USUNCUT, derived from UKUNCUT, has demonstrated twice outside Bank of America. B of A pays 1% in taxes. How much do you pay? Bill Moyers and Now used to cover them on PBS. Gone. Why? Why doesn't the Times cover them? WNYC interview them or Katerina Van den Heuvel of The Nation? The US media is mostly right wing. The NY Times didn't see fit to cover one of their ex? war correspondents chained to the WH fence with more than a hundred others. No coverage anywhere. I get Truthout, JFP: Just Foreign Policy, Moveon.org, usuncut. I wasn't listening closely at first, has anyone mentioned the demonstrations by unions, which went nowhere. Why did they go nowhere? The only remotely (disorganized) leftish march on Washington was Stewart and Colbert's. The five or six leftist groups I hear from can't get their act together. Just vent their anger. Email Obama at the WH. A deluge of emails would help. I did so yesterday. whitehouse.gov, click on contact. But presidents pay attention to huge marches outside their windows. We got it together in the 60's. What are young people doing? Trying to find jobs? Lots of luck, sadly, until you learn to be activists.

Mar. 31 2011 10:31 AM
amalgam from Manhattan by day, NJ by night

@ Elsie -

I second your statement that Americans are inured and passive because they believe the current status quo of the American economic system is the best that it can be and that our "American Exceptionalism" makes it so.

Of course this mythology that we inculcate in US citizenry as a patriotic trope that unifies us ("Americanizes"), forgoing any closer inspection and looking outside one's own situation and agency in a democracy.

Mar. 31 2011 10:31 AM
Ben from Park Slope

I'm as appalled as anyone that GE is paying no taxes. But I wish people would forget the symbolism of Immelt leaving gov't and instead ask the President and Congress to pass a Corporate Alternative Minimum Tax pronto.

I would love to know what Joseph Stiglitz might think of a CAMT.

If I am paying the AMT, GE should be paying an AMT as well.

Mar. 31 2011 10:30 AM
Bob from Queens

To Mo in the Bronx:
Yes, poor people spend money rather than invest when they have it because:

a. They need stuff
b. The life experience of lower class people offers them no sense that any gain they make will be anything other than temporary. Consequently, they have no sense of entitlement.

Mar. 31 2011 10:29 AM
Amy from Manhattan

The fundamental problem w/"trickle-down economics" is that poor/working-class people need & deserve more than a trickle! And by these numbers, it really has been only a trickle.

Mar. 31 2011 10:29 AM
Amanda from Williamsburg

Thank you for having this discussion! Finally we're getting to the fundamentals.

Mar. 31 2011 10:29 AM
Mike Leung

All fortunes were built because of the *availability* of spenders. When spenders become unavailable, we get in trouble. That's what went on.

The caller's assertion that wealth should be denied to the poor because they will spend it sounds ridiculous. Giving wealth to the poor for them to pass beck into the economy is better than letting the wealthy hoard it becomes unavailable to spending.

Mar. 31 2011 10:28 AM
joed5

Just curious -- what doesn't Brian constantly interrupt his so-called conservative guests, the way he's interrupting Mr. Stiglitz?

Here we have a nobel-prize, internationally respected economist, and he can't finish a single point.

Mar. 31 2011 10:28 AM
Daniel from Manhattan

I assume Mr. Stieglitz has read "The sprit Level" by Picket and Wilkinson. The basic idea they show, based on statistics is that societies that has the most inequality have the highest level of inequality of social problems including more law enforcement and incarceration, all very expensive endeavors. Doesn't this suggest a way to lower Government spending in the long run?

Mar. 31 2011 10:27 AM
Geo from NYC

I would have asked Tea Party and Libertarians if they even believe in those numbers (1%) etc. Seems to me a big part of the problem is people working with different conflicting information -- or (my own opinion), believing misinformation that the one percent is telling us.

Mar. 31 2011 10:26 AM
Jack Jackson from Central New Jersey

Wow...that was a moronic comment from the last caller.

1978 - 1,000 of min. wage labor paid my tuition to Rutgers, my rent, my books, my food, my car insurance. Not a lot left after that but I was in school after all.

2010 - 2,000 of min. wage labor does not cover even the tuition for Rutgers.

Volcker and Reagan de-coupled wages from the inflationary spiral. The rest of us have been going slowly broke ever since.

Excellent segment!

Mar. 31 2011 10:25 AM
Helen E. Moss from NYC

When I first heard of the unrest in Egypt, I didn't hear the name of the place, and automatically assumed it was somewhere in the U.S.

We also live in a "THEFTMOCRACY" where it is OK -- and even a point of pride -- to make money by by using devious means.

Let's finally bury trickle down. It never trickled down and it still doesn't. When that 1% get their hands on a greenback, they KEEP it!

Mar. 31 2011 10:24 AM
jgarbuz from Queens

The problem is that too many people hearken back to the unusual post war period of 1950 to 1973 (when the oil shock stopped thiings), and when we were indeed a growing, truly prosporous economy. At that time, we had no competition. Europe and Japan were still digging out of the rubble of WWII. Russia, China, India and Eastern Europe were still under communist or socialist yoke and no competition.
Today were in a totally different era. The economy is truly global; competition is from everywhere. And we use too much energy, which is no longer cheap. We are in different position completey.
The capitalist can send his money anywhere to find cheaper AND better labor. He no longer has to invest in the US alone.
So we have to forget the '50s through the 90s, because that era is dead and buried., We are in a different century and a very different world, and we MUST compete very hard or continue sink.

Mar. 31 2011 10:23 AM
savitra from manhattan

I can't call in, but we seem to be in a downward cycle:

to compete in the world market and provide jobs here, companies have to be able to hire children, pay no one more then $1.50/day, house employees in barracks away from their families and not have to be responsible for their health or safety.

at the same time, wal-mart needs to move into nyc, because we have a right in this depressed economy to be able to shop for the cheapest possible goods, which can only be provided by companies operating under the above conditions. so we need to remove all the unions and their prohibitive restrictions, so the $1.50 a day can go to americans, the lowest possible wages can provide employment to locals so they can shop in the wal-marts only, and the profits can all stay in the USA, being sucked right out of our communities and sent to the great American families that make all this possible!

how do we get out of this? we can't bring the rest of the world up to our standards, can we?

Mar. 31 2011 10:23 AM
Leah from Brooklyn

Wow. A Nobel Prize economist has to argue with a guy named Mo who thinks rich people should have all the money.

Mar. 31 2011 10:23 AM
Rick from connecticut coast

first gilded age 1865-1900
second gilded age 1998-?????
when will reform come????

Mar. 31 2011 10:23 AM
amalgam from Manhattan by day, NJ by night

The first two comments below act as if inequality in the US as it currently exists have always been. Clearly business has ALWAYS been the fabric of America and has been out of whack particularly over the last 10+ years, but really over the past 35+ since Friedman and Neoliberal economics laid claim to the political class just as globalization was kicking into high gear.

So the question is not whether there should be a business-minded environment fostered, which is inarguable, but it can't be at the expense of the rest of society. This doesn't even have to do with the right-wing/libertarians/Neoliberal bugaboo, "redistribution of wealth," but creating a new social contract between workers and business owners (capitalists), which I think _cfredc_ is referring to.

To wit; things do not have to be as they are now, we can create our own new policies and relationships by working through contentious but smart debate and genuine use of politics to better society. While no outcome is assured, we have that opportunity in our democracy.

Mar. 31 2011 10:20 AM
karl2

For lord's sake, would Brian let Joe Stiglitz actually make his case, before launching into yet another "some people say" screed, to restate the "conservative" or supply-side disinformation we're already flooded with. and which we've been hearing for 30 years?

Mar. 31 2011 10:20 AM
carolita from manhattan

People here in america are brainwashed into thinking they have no power, and that they'll lose the little they have if they object. I wonder why? Could it be that there's no one to protect them? No unions to defend their right to strike? Could it be that we've all gone "freelance" against our wills, and have no recourse? Duh. The only way people will ever have power again is if they unite again, but we've been taught all our lives to be individuals, to fight only for what we need, to not let anyone "take our stuff." Well, this is what you get from embracing your irrational fear of socialism.

Mar. 31 2011 10:19 AM
Juli from Skillman, NJ

Quite frankly Brian, most of the populous just doesn't know of the inequity of the economy. They just feel that this is their lot in life and there is nothing that they can do about it.

The problem is lack of information and understanding of how basic economics work.

Mar. 31 2011 10:18 AM

Where was Dr. Stiglitz during the last 40m years. My first assistants were in one worker families. 10 years later 1980 my assistants were in two worker families. etc etc. This has been going on for 40 years. Luckily earlier there were additional jobs available

Mar. 31 2011 10:18 AM
Eli from Cleveland OH

What's the point?
The rioters in Egypt had a goal in mind, what would our goal be in having one million people march in Times Square? The 1% should distribute some of their money?

Mar. 31 2011 10:18 AM
Elsie from Brooklyn

I think the reason why Americans aren't protesting is because, unlike the countries in the Middle East, many Americans believe that we are the best country in the world and that anyone can "make it" here. This American Dream mythology (and it is absolutely a mythology, not a reality )is deeply entrenched in our country (it's why the Tea Party is making such strides - they appeal directly to this emotional nostalgia), and our belief in our own greatness blinds us to the less than great reality. Also, Americans' need for optimism, while charming at times, has pushed out a lot of less optimistic voices that have tried to point out certain realities that do not make us feel terribly good about ourselves, and it's going to be hard to change our need to feel good about ourselves. Few other countries live under this mythological haze which does little more than allow us to live in utter denial.

Mar. 31 2011 10:17 AM
Laura from Brooklyn

I'm not sure why both of you kept saying "We" don't see the inequality. The inequality is on the street. Open your eyes. Minimum wage is legal slave labor. If you make $7.25/hour at 40 hours a week, you're only making maybe $800/month. Who can live on that in New York City?

Mar. 31 2011 10:16 AM
Anthony from nyc 10003

Yes, I've been saying since Egypt, that it will be happening here.

right now, in my building there is construction on ten units of 32. It was a rent stabilized apt building. long time people are being forced out..... their rents doubled, tripled...... only wealthy parents of NYU students can pay 2300 a month for a tiny tiny studio... which is what these are going for.

It took me 2 years to find a job.... the job I found is part time, without benefits and half the pay i used to get..... I'm a new yorker, and soon i won't be able to live here.

there are hundreds of new bank branches going up everywhere.....

Yes, I've been saying since Egypt, that it will be happening here.

thank you for your segment and show.... always,

Mar. 31 2011 10:16 AM
Smokey from LES

When I was growing up, it was called the "progressive income tax" or the "graduated income tax." And we all knew what it meant: If you make more, you pay more in taxes.

Now we have the pejorative "Millionaire's Tax." Who gave it that name? The same person who coined "Death Panels?" Naming rights are very important!

Mar. 31 2011 10:15 AM
Jo Ann Vincent from 07704

Where is our FDR & ER when we need them? (No I don't WW3) But I want leadership that tells USA Business to think of the common good of the USA first - not profits, CEO salaries & bonuses. I think our Democracy is in danger because of the growing economic inequality.

Mar. 31 2011 10:15 AM
Mark

In 2006 25% of all MIT grads went to Wall St. Is that really the most productive place for our top engineers to work?

Mar. 31 2011 10:15 AM
cfredc from New York, NY

The problem is not income inequality.

How do I say this without sounding like Karl Marx? The alliance between America’s capitalists and wage-earners is breaking up.

We often hear that we are the world’s wealthiest nation - capitalists and workers alike. Until now the plain fact that a few of us own most of the permanent wealth, while the rest of us earn and spend our incomes year-to-year didn’t much matter.

That’s because we needed each other. Capitalists only earn money by using their cash to produce real goods or services. You can’t do that without workers. For a long time just about everything that American capitalists invested in had to be produced by American workers. So supply and demand arranged for those workers to share in the fruits of productivity.

Recently however, China and India became viable labor markets. It’s going to be a long, long time until their labor will be priced close to ours.

Of course, they are no longer far away. By fiber-optic, by jet plane, by containership - these workers are immigrating into our labor markets - no visas required. American jobs are being auctioned, and, competing against today’s American standard of living, 2.3 billion hungry Chinese and Indians want them. But why worry?

If you think that your education separates you from this competition, talk to the thousands of engineers and scientists whose jobs are already being shipped overseas. If you think that your non-exportable job as a waitress, or doctor, or lawyer, or entrepreneur is protected, you misunderstand markets. Consider what happens to your income if those who pay you or those who might compete with you are faced with third-world incomes.

These foreign folks are just gearing up. The generation learning English as a matter of course is still in school - often fine universities. Their contract law is scary, but evolving. Their physical infrastructure is in its infancy. Even so, their labor supply already weighs heavily upon our labor demand and our wages are depressed even as productivity rises. They are not to blame, nor are you.

What about the greedy capitalists? Well the markets for their products are as unforgiving as your labor markets. If their companies fail to optimize labor costs, price competition will grind them to dust. It is the wheel of history that threatens to align American incomes with those of poor countries. Protectionism or attempts to imprison American capital will probably make this even worse.

Our economists, cosseted in tenured security, love to remind us that “our economy” benefits from free trade - as if wage-earners and capitalists still ascend together on the rising tide. But will foreign labor competition become so penetrating that our $20 per hour jobs will be driven down to $5 per hour?

These dominant forces promise an America of richer capitalists and poorer wage-earners - two economic classes with conflicting political interests.

Mar. 31 2011 10:14 AM
Randall from Queens

So what do we do?

Even with my 25k/ year that I make, I've got it too good to risk it all and revolt.

Politicians aren't going to change things. They are either part of the top 1% or elected by those very people.

Mar. 31 2011 10:14 AM
Martin Chuzzlewit from Manhattan

......yeah, and that 1% pays 40% of the taxes as well. This is just more self-righteous left wing drivel.

Is Professor Scold trying to incite civil unrest with this nonsense?

Here are 3 (of many reasons) why there won't be-
1) Unlike the fires in the Mideast ...the absence of Islam in this country.... whose effect on culture is to handcuff women and crush freedom.
2) The redistribution of wealth AFTER earnings through taxation and massive entitlement programs.....and the promise to "the people" of more with this current president.
3) The handing out of spoils through affirmative action programs and public unions....and the wrecking of the meritocracy...is giving everyone a sense that they are part of the game.

Mar. 31 2011 10:03 AM
jgarbuz from Queens

There are nearly 24 million businesses in the United States, and a population of 310 million persons. That's one business for about every 14 persons. Or, to put it another way, an average 14 people rely, directly or indirectly, for their incomes on one business. For every business that collapses, 14 people lose their income. The government relies on taxes to provide income for people on welfare or social security. To say that 1% of the population "controls 40% of the wealth," what does that mean? It means that 40% of the wealth has been created by the 1% that created those businesses. Without business, people create no wealth. They just subsist, if they are lucky, on whatever flora, fauna or animal life they can forage. WHich is what man did for hundreds of thousands of years before organized "business" came into existence.

Mar. 31 2011 09:24 AM

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