Is class warfare destroying the American Dream? It’s tempting to blame Trumpism for the divisiveness and alienation rampant in America today, but let’s look back a few years to put the widening gap between haves and have-nots in perspective. In 2015, Nobel-winning economist Joseph Stiglitz wrote that Income inequality had gotten so bad in America that it's now easier to get ahead in many other countries. He called America “the land of shrinking opportunity.” In this Meetup we will explore some of Stiglitz’s ideas about the causes of income disparity in America, how it compares to other countries, its causes, effects and possible cures.
From 1950 to 1980, if you worked hard and played by the rules, you could reasonably expect to earn more than your parents and your children would be better educated and better off than you. Most middle-class and poor families were optimistic that a growing economy would lead to personal prosperity. What went wrong?
In the last 40 years, productivity of the American worker has doubled but wages have hardly increased at all. As the wealthiest individuals and corporations increasingly funded political campaigns, government has abandoned its duty to protect ordinary citizens from exploitation. Deregulation of industries and banking have allowed the wealthiest to keep all the gains. Too little capital is being investing in infrastructure and business expansion that would create jobs. Some would say It is being squandered on the lifestyles of the rich, creating a new gilded age for the greedy and powerful. Stiglitz says that it’s not a failure of capitalism; capitalists have changed the rules of the game to disadvantage ordinary people. He wants to fix capitalism, not destroy it.
In his book “The Great Divide,” Stiglitz points out that the greatest inequality in many countries is not economic but political or social inequality. Does the denial of human rights or discrimination by race, religion or ethnicity create poverty? Does poverty create alienation, driving poor and rich further apart? We have the widest gap between the rich and poor among developed countries. But the worst income inequality is in South Africa, according to a recent report from the World Bank. We’ll talk about how suppression of the underclasses restricts economic growth in ways that ultimately harm the upper classes. China expects to grow a consumer economy by expanding education and providing jobs for rural young people and bringing them into the cities. Will it work?
Here’s a short video of Stiglitz on CNN Money: http://pmd.cdn.turner.com/money/big/news/economy/2015/06/03/joseph-stiglitz-land-of-opportunity-america-inequality-op-ed.cnnmoney_1024x576.mp4 (4 minutes). Is it the "Scandinavian dream"?
We will discuss some of the issues raised by Stiglitz in a 2015 video interview at the Institute for New Economic Thinking: https://www.ineteconomics.org/perspectives/videos/its-time-to-get-radical-on-inequality . He says it's time to get radical. “Mild tweaking won’t work… we must take on the underlying and power structures if we hope to tackle this enormous challenge.” Stiglitz asserts that capital gains on land and rents associated with monopoly power, discrimination, and exploitation are causes of growing inequality. He also faults deregulation in the banking industry. But Stiglitz is not telling us to dismantle capitalism. He has described himself as a “progressive capitalist.”
Some of Stiglitz’s specific ideas for reducing income inequality and expanding the middle class:
• Require asset managers to disclose their holdings, returns and fees.
• Enact a transaction tax to reduce short-term trading
• Require companies to disclose CEO's pay relative to performance
• Raise taxes on capital gains and dividends
• Tax corporations on global income
• Strengthen workers' bargaining rights
• Raise the minimum wage
• Invest in infrastructure
• Require universal paid sick and family leave
If you RSVP and cannot attend, please cancel.