Stiglitz - 1% Controls 40% of US Wealth

April 10, 2011

stig2.jpg
Joseph Stiglitz, left,  is a professor at Columbia University. He was fired as chief economist of the World Bank in 2000 for criticizing its policies.


"As we gaze out at the popular fervor in the [Middle East], one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places."



by Joseph Stiglitz
(abridged/edited by Henry Makow )
from Vanity Fair May 2011


It's no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation's income every year.

In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably.

Twenty-five years ago, the corresponding figures were 12 percent [earned 1/4 of the income] and [top 1 % controlled] 33 percent.

One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats.

That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall.

For men with only high-school degrees, the decline has been precipitous--12 percent in the last quarter-century alone.

All the growth in recent decades--and more--has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride.

Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

REASONS FOR INEQUALITY

Economists are not sure how to fully explain the growing inequality in America. The ordinary dynamics of supply and demand have certainly played a role: laborsaving technologies have reduced the demand for many "good" middle-class, blue-collar jobs.

Globalization has created a worldwide marketplace, pitting expensive unskilled workers in America against cheap unskilled workers overseas.

Social changes have also played a role--for instance, the decline of unions, which once represented a third of American workers and now represent about 12 percent.

But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy.

Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride.

Monopolies and near monopolies have always been a source of economic power--from John D. Rockefeller at the beginning of the last century to Bill Gates at the end.

Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent.

Much of today's inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself--one of its best investments ever.

The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.

Wealth begets power, which begets more wealth.... The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending.

The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office.

By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent.

When pharmaceutical companies receive a trillion-dollar gift--through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price--it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.

America's inequality distorts our society in every conceivable way. There is, for one thing, a well-documented lifestyle effect--people outside the top 1 percent increasingly live beyond their means.


DEMORALIZATION

Of all the costs imposed on our society by the top 1 percent, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important.

America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe.

The cards are stacked against them. It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East: rising food prices and growing and persistent youth unemployment simply served as kindling.

With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one-out-of-six Americans desiring a full-time job not able to get one; with one-out-of-seven Americans on food stamps (and about the same number suffering from "food insecurity")--given all this, there is ample evidence that something has blocked the vaunted "trickling down" from the top 1 percent to everyone else.

All of this is having the predictable effect of creating alienation--voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.

In recent weeks, we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies they inhabit. Governments have been toppled in Egypt and Tunisia. Protests have erupted in Libya, Yemen, and Bahrain. The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses--will they be next?

They are right to worry. These are societies where a minuscule fraction of the population--less than 1 percent--controls the lion's share of the wealth; where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life; and where the wealthiest often stand actively in the way of policies that would improve life for people in general.

As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.

CONCLUSION

Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society--something he called "self-interest properly understood." The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what's good for me right now! Self-interest "properly understood" is different. It means appreciating that paying attention to everyone else's self-interest--in other words, the common welfare--is in fact a precondition for one's own ultimate well-being.

Tocqueville was not suggesting that there was anything noble or idealistic about this outlook--in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn't just good for the soul--it's good for business.

The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn't seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.

---
Thanks to Irish Dan for sending this article.


Related   Stiglitz - Federal Reserve System is Corrupt






Comments for "Stiglitz - 1% Controls 40% of US Wealth "

Stephen said (April 13, 2011):

Stiglitz's comments on the economy are right on the point. Anybody that has been reading the various articles on Jeff Rense will find nothing here to be surprising except that it comes from a bankster insider.

The economist Lyndon LaRouche has been warning of this current economic melt down for 2 decades now. He saw the erosion step by step. For his efforts he has been denigrated and smeared, imprisoned and several attempts on his life. Even the genius Paul Drockton misunderstands him. What Stigliz is saying now, LaRouche was saying 15 years ago.

What is happening in the Middle East is caused by increased food prices to the point of unaffordablity. Stiglitz wonders if this will come to the USA. It already has, look to Wisconsin, Indiana or Ohio. Look at the 45 million on food stamps, those Middle Eastern nations don't have food stamp programs. If it were not for public aid, court houses, police stations and city halls would already be burning.

The current economic policies will further collapse the dollar, which will cause a total collapse of the world wide economy. We will see massive food shortages and starvation on scales beyond that of the Russian famines of the 1920's and 1930's if these policies are not stopped immediately.

Unfortunately I don't foresee these policies being scrapped. Therefore all you readers out there get enough food for you and your families for at least a year's supply.

No investment, bank account or precious metals will do any good if you have no food.


Joel said (April 12, 2011):

I want to thank you for posting this important article. Unfortunately, it will probably be read by only the few, who already know the situation - sort of preaching to the choir. But it does give us some additional factual information.

One of the things that really gets me irritated is the ranting by some of the commentators about the "sheeple" -- that wonderful cliche, which stigmatizes the user of the term as one who can only parrot worn out phrases.

Let's look at the situation - What options do the "sheeple" really have?

The media is controlled, the banks are controlled, the Congress is controlled, the administration is controlled, and the political parties are controlled. So, please tell me what are the options within the democratic context? Specifically?

Vote for Ron Paul? He did not even get on the ballot in most places. Vote for whom?

The "sheeple" do not like or want the current situation. However, they have been brainwashed over the years to be good citizens, pay taxes, and abide by the law. Remember the seat belts campaign? "It's the law!"

Again, I ask, what are the options? Peaceful protests? Viiolent uprisings? An Orange or Rose revolution backed by George Soros and his controllers? How about a Red, White, and Blue Revolution backed by Nicolas Sarkozy and David Cameron and their controllers? Maybe a Pink Revolution backed by Sir Elton John and his husband, er wife, er whatever? Who will enforce the "no-fly zone" over Peoria, and who will supply the tanks, trucks, and ammo?

It is easy to criticize the "sheeple" for doing nothing, until the critic is forced to spell out the options in detail. We hear just too much blather from these complainers with no realistic solutions being proposed.

The "sheeple" did not get themselves into this situation by doing nothing. The people in control got us all into this mess by the usual techniques of bribery and blackmail, which they have been practicing for 2,500 years or more. Noting new there, but what can you do? Throw the bums out or Congress? And then we will just get a new set of put-up bums, who promise "change" and respect for human dignity - all controlled by the same parasitic group that make the laws behind the scenes to control the population.


Rog said (April 11, 2011):

Reply to Dick (Below)

I don't know what article you read or what country you've been living in. To claim that we have been living under the ideology of free markets and the idea that every individual has a right to "his money" is utter, complete nonsense, a lie, in fact. Government has insured just the opposite. I have never been entitled to "my money" according to the "system." And no, I can't accept "the necessity of some restraints and interventions so the system can function" because I have no interest in perpetuating a system that lies, steals and murders in order to insure the continued wealth of 1% of the population at my expense. It is "my money" and no man or institution has a right to it, for any reason. No man or institution has the authority to rule me without my consent. You sir, are a tyrant.


Dan said (April 11, 2011):

So Fozdyke [below] says war with Iran is coming up. That has seemed possible with this 'rolling revolutions' scenario.
I wager that it won't start with American, British, and/or Israeli attack. It will be started surreptitiously as a civil war internally first - covertly backed by US/UK controlled opposition. Current events were designed to exacerbate discord between Arabs and Iran.

"TEHRAN — A large explosion at Iran’s main energy pipeline hub Friday was caused by sabotage, an influential member of Parliament said Sunday. The blast, which sent balls of fire into the air outside the Shiite religious center of Qom, targeted three major gas pipelines. The explosion comes amid an increase in mysterious blasts, assassinations and other incidents in the Islamic Republic, including a similar blast Feb. 11 "

The incidents come amid increasing tensions between Iran and the Persian Gulf states over the March military intervention of Saudi Arabia in Bahrain and the busting of an alleged Iranian spy ring in Kuwait.

On Sunday, Iran expelled three Kuwaiti diplomats after that country said it would expel three Iranian diplomats who have been accused by Kuwait of being part of an alleged Revolutionary Guards spy ring. Iran denies the allegations. http://www.washingtonpost.com/world/iran-pipeline-blast-caused-by-sabotage/2011/04/10/AFiswYFD_story.html


Mike said (April 11, 2011):

Absolutely great article Henry.
Thanks for posting it.


I really enjoy your website. I've learned so much and read it daily.


Dick said (April 11, 2011):

A great article by Joseph Stiglitz – thanks for reprinting. I thought the conclusion was a good wrap-up – the America described by de Tocqueville was the one created by the US Constitution and
especially by Alexander Hamilton's national banking and infrastructure policies, at the very moment they were being shredded by Andrew Jackson, lighting the fuse for the civil war.

It seems like there's a cyclical pattern in American history – when things get really tough, Americans are glad to work together for
"the general welfare." When that approach rebuilds a working society and things get easy again, they call the prior mode "socialism" and allow the super-rich to loot and pillage their way
to the next crisis.

I'm done arguing online with every fool who can see the facts Stiglitz laid out, and still wants to tell me about Ludwig von Mises, the wonders of the free market, and the natural right of
every individual to "his money." Bullshit. That ideology has reigned supreme for decades, and look where it got us. If you can't accept the necessity of some restraints and interventions so the system can function, you're the opposite of a socialist - a sociopath.

As my "socialist" pal FDR said, "while they prate of economic laws, men and women are starving. We must lay hold of the fact that economic laws are not made by nature. They are made by human
beings."


A.J. Fozdyke said (April 11, 2011):

"As we gaze out at the popular fervor in the [Middle East], one question to ask ourselves is this: When will it come to America?”


Soon, I hope. We have our plans set in place. Bring on the sacrifices. When you kill a human being they release a lot of energy. When you massacre a lot they provide a lot of energy. This energy, properly directed, we can and will use.


Americans now have an economy in which five banks control over 50 percent of the entire banking industry, four or five corporations own most of the mainstream media, and the top one percent of families hold a greater share of their nation's wealth than any time since 1930! This is the way the sheeple want it. We give the sheeple what they want!

Seriously, do you imagine society could possibly be where it is now if the masses didn't want what we offer? As Petor used to say with a laugh, 'Great minds think alike – fools seldom differ.'


“Economists are not sure how to fully explain the growing inequality in America.”

Let me explain. You work in the background and buy off politicians. Satan is a wonderful systems' man! You get your people government jobs. Look at the legacy of Our Handler, Bob Byrd. We corrupt them by degrees. Most of Our politicians like children. 'The Bird Man' did.


“The most obvious example involves tax policy.”

Sheeple love paying tax. We're realists! That's just the way it is! Remember Churchill's 'Blood, sweat and tears'? The masses love that sort of thing. 'Think not what your country can do for you...' Soon there'll be a war against Iran. Who can't see that coming? We'll wave the flag, beat the drum and the flower of American and British youth will throw themselves headlong into the abyss. Works like a charm, every time!


“The cards are stacked against them.”

I couldn't agree more.


Henry Makow received his Ph.D. in English Literature from the University of Toronto in 1982. He welcomes your comments at