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Stiglitz writes: "Despite what the debt and deficit hawks would have you believe, we can't cut our way back to prosperity. No large economy has ever recovered from serious recession through austerity. But there is another factor holding our economy back: inequality."

Economist Joseph Stiglitz. (photo: Roosevelt Institute)
Economist Joseph Stiglitz. (photo: Roosevelt Institute)


Inequality Undermines Prosperity

By Joseph Stiglitz, Los Angeles Times

28 July 2012

 

To fix the economy, we must boost demand. To do that, we have to address inequality.

 

espite what the debt and deficit hawks would have you believe, we can't cut our way back to prosperity. No large economy has ever recovered from serious recession through austerity. But there is another factor holding our economy back: inequality.

Any solution to today's problems requires addressing the economy's underlying weakness: a deficiency in aggregate demand. Firms won't invest if there is no demand for their products. And one of the key reasons for lack of demand is America's level of inequality - the highest in the advanced countries.

Because those at the top spend a much smaller portion of their income than those in the bottom and middle, when money moves from the bottom and middle to the top (as has been happening in America in the last dozen years), demand drops. The best way to promote employment today and sustained economic growth for the future, therefore, is to focus on the underlying problem of inequality. And this better economic performance in turn will generate more tax revenue, improving the country's fiscal position.

Even supply-side economists, who emphasize the importance of increasing productivity, should understand the benefits of attacking inequality. America's inequality does not come solely from market forces; those are at play in all advanced countries. Rather, much of the growth of income and wealth at the top in recent decades has come from what economists call rent-seeking - activities directed more at increasing the share of the pie they get rather than increasing the size of the pie itself.

Some examples: Corporate executives in the U.S. take advantage of deficiencies in our corporate governance laws to seize an increasing share of corporate revenue, enriching themselves at the expense of other stakeholders. Pharmaceutical companies successfully lobbied to prohibit the federal government - the largest buyer of drugs - from bargaining over drug prices, resulting in taxpayers overpaying by an estimated half a trillion dollars in about a decade. Mineral companies get resources at below competitive prices. Oil companies and other corporations get "gifts" in the hundreds of billions of dollars a year in corporate welfare, through special benefits hidden in the tax code. Some of this rent-seeking is very subtle - our bankruptcy laws give derivatives (such as those risky products that led to the $150-billion AIG bailout) priority but say that student debt can't be discharged, even in bankruptcy.

Rent-seeking distorts the economy and makes it less efficient. When, for instance, speculation gains get taxed at a lower rate than true innovation, resources that could support productivity-enhancing activities get diverted to gambling in the stock market and other financial markets. So too, much of the income in the financial sector, including that derived from predatory lending and abusive credit card practices, derives not from making our economy more efficient but from rent-seeking.

If we curbed these abuses by the financial sector, more resources (especially the scarce talent of some of our brightest young people) might be devoted to making a stronger economy rather than to exploiting the financially unsophisticated. And the banks might actually go back to the boring business of lending rather than high-risk and often opaque speculation.

Curbing rent-seeking is not that complicated (aside from the politics). It would take better financial regulations, fairer and better-designed bankruptcy laws, stronger and better-enforced antitrust laws, corporate governance laws that limit the power of CEOs to effectively set their own pay, and, in all of these areas, more transparency. Because so much of the income at the top is from rent-seeking, more progressive taxation (and in particular, taxation of capital gains) is necessary to discourage it. And if the additional revenue is used by the government for high-return public investments, there are double benefits.

Countries with high inequality tend to underinvest in their collective well-being, spending too little on such things as education, technology and infrastructure. The wealthy don't need public schools and parks. That's another reason economies with high inequality grow more slowly. Indeed, the United States has grown much more slowly since the 1980s, while inequality has been growing more rapidly than it did in the decades after World War II, when the country grew together.

Public investments are of particular importance today; they increase demand in the short run and productivity in the medium to long term. Increasing public investment would help make up for continued weakness in the private sector. Investments in training for new jobs could facilitate the economy's structural transformation, helping it move from sectors with declining employment (like manufacturing) to more dynamic sectors. Strengthening education would help restore the American dream and help make the country once again a land of opportunity where the talents of our young people are fully utilized.

The right says that we can achieve greater equality only by belt-tightening. But that vision would result in a slowdown of the economy from which all would suffer. Because so much of America's inequality arises from rent-seeking and other activities that distort the economy, curtailing inequality would actually strengthen the economy. Investing public money in the collective good rather than allowing it to be captured by rent-seekers would enhance growth at the same time it reduced inequality.

By giving priority to the austerity/deficit cutting agenda, we'll fail to achieve any of our goals. But by putting the equality agenda first, we can achieve all of them: We can have both more equality and more growth. And if we get better growth, our deficit will be reduced - it was weak growth that caused the deficit, not the other way around. We can achieve the kind of shared prosperity that was the hallmark of the country in the decades after World War II.

Joseph E. Stiglitz, recipient of the Nobel Prize in economics, chaired President Clinton's Council of Economic Advisers and was chief economist of the World Bank. His latest book is "The Price of Inequality: How Today's Divided Society Endangers Our Future."


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+16 # fliteshare 2012-07-28 13:19
It's not the inequality stupid !
It is the deception that created the inequalities !
 
 
+21 # ericsongs 2012-07-28 14:39
All is going according to plan and we are being pushed Beyond the Pale.
If we do not find a method of outlawing all corporations of every size, there will come a point of reckoning; beyond that point - There Be Dragons.
 
 
+55 # AndreM5 2012-07-28 16:18
We outnumber them 99.999 to 1. So let's vote like it for once.
 
 
+4 # JSRaleigh 2012-07-29 11:47
Quoting AndreM5:
We outnumber them 99.999 to 1. So let's vote like it for once.


That assumes that your vote actually counts for something. How does voting matter when you're only to choose between two oligarchs?
 
 
+17 # wrknight 2012-07-29 12:23
Bear in mind that it's not the President who makes the rules. It's your congressman and senators who make the rules. You may have only two choices on election day, but you can always vote against the incumbent and let him/her know why you did. You can also participate in the nomination process and let candidates know that you want reform in Congress and if they don't promise it, let them know they lost your vote.
 
 
+4 # Vardoz 2012-07-29 13:07
It's way past our votes now.
 
 
+4 # mdhome 2012-07-29 17:55
OH, please, let it not be so.
 
 
-6 # RLF 2012-07-30 05:20
They can pay people enough to kill you and then the justice dept will not even indite. You've got to have someone to vote for and the rich have taken care of that. Even if a person is voted in and are not rich...they write a book, 5 million copies are bought and shredded and, wah lah!, the person is rich...like Obama!
 
 
+7 # acomfort 2012-07-28 18:24
Quoting ericsongs:

If we do not find a method of outlawing all corporations of every size, there will come a point of reckoning; beyond that point - There Be Dragons.


Where would we be without the corporation, that Supreme Being? The corporate hospital gives birth, the corporate school educates, the corporate farm feeds, the corporate utility provides energy, the corporate health industry will repair and cure, the corporate security apparatus provides safety and, at the end of the life cycle, a corporate recycling operation will make good use of our spare parts with the waste (parts not needed by corporations) taken care of by corporate mortuaries.
And the supreme of the supreme beings the corporate banks that creates the bread of life, money, for all the other corporations.
These are just some of the reasons we should honor these supreme beings. :=)
 
 
+3 # ericsongs 2012-07-28 20:32
Well said, my friend, well said.
I immediately balanced the single thumbs down you had received with my own thumbs up.
 
 
+7 # BeaDeeBunker 2012-07-28 22:34
Arlen,
Please, please tell you are being sarcastic.
If you are, nice job, but a bit too subtle, therefore warranting this reply.

If you really believe what you said, and I'm missing the meaning of :=), then I can only say, get thee back to school. Simply put, you do not understand what a cooperation was meant to be, or its history,you just don't.

I so hope it's the former rather than the later.
 
 
0 # acomfort 2012-07-30 21:55
[quote name="BeaDeeBunker"]Arlen,
Please, please tell you are being sarcastic.

Yes . . . complete sarcasm here is some more:

Consider the following:
Do you believe corporations are happy with being called "persons"?
No way, corporations are the supreme beings that all other persons depend on for their survival. Yes, there will some "persons" more equal than others, but none come even close to the supreme beings, the corporations that give life and make life possible.
 
 
+45 # maddave 2012-07-28 15:24
The problem is NOT capitalism. It is the benighted notion held by self-anointed capitalists that they are an economic law unto themselves ... that it is their divine right to scoop all of the cream off of the top - along with most of the milk.

Just as with the words "Democracy", "Socialism", "Freedom". "Fascism", "Economics", etc, few of us on the bottom (and, apparently, nobody at "the top") understands exactly what "Capitalism" is and what it takes to make it successful.

Modern capitalism is comprised of innumerable, interlocking economic economic units that, in order just to survive MUST have a product, capital (financing), alert management, efficient workers and paying consumers. Each of these major building blocks is absolutely essential for the "unit's" long OR short term viability.

Also in the equation are "hygiene" items provided from with-out & which are taken for granted - i.e., electricity, water, roads, rails, raw materials, waste disposal, education, etc. My point is that CAPITALISM IS A TEAM EFFORT, and when so played FAIRLY, it serves us ALL, not just the top few.

However, Corporate America forgot that- if they ever knew it at all - and they traded our jobs and America's middle-class purchasing power abroad ... for a few more bucks in their own pockets!

We'll see how long it takes before this dichotomy up-ends the whole apple cart.
 
 
+13 # wrknight 2012-07-29 13:15
The problem is unfettered capitalism. Unfettered capitalism is deregulation carried to the extreme. Too much regulation is harmful to any economy, but without restraints, capitalism is just dog eat dog and the strongest dog rules the pack.
 
 
+6 # engelbach 2012-07-29 14:06
Capitalism places profits first -- the unearned income sloughed off the top of the value created by labor.

The only way to have better capitalism is to have less of it: better regulation, limits on profits and CEO compensation, penalties for offshoring, more realistic taxation ...

But why not go the whole hog and embrace socialism, a system for the working class rather than for the profit-taking class.
 
 
+7 # Duster 2012-07-28 18:15
It really is the inequality. It is also the self deception that a lot of folks practice, the "with a little luck, I would be as rich as Romney, or the Wlamart clan." One really effective means of leveling the field would be levey fines, such as for traffic violations, commensurate with means of the offender. A $200 fine for running a red light hurts somebody in the middle an lower class, but it is pocket change to a Romney or a Bieber. A fine based on socioeconomic class would insure that a violation would actually hurt evenly throughout the socioeconmic spectrum.
 
 
-13 # Activista 2012-07-28 13:30
America is bankrupted by militarism - AIPAC money. Depression and war on Iran starts after election REGARDLESS of who is elected - only Ron Paul makes sense ...
www.youtube.com/watch?v=CvA_sQHqIzE
 
 
+43 # maddave 2012-07-28 16:02
Since you changed the subject, Activista, let me chime in too:

Regardless of Administrations , a war with Iran will devastate both Iran and the USA!

1. The use of nukes by the USA or Israel will open Pandora's box and all of its drawers forever.
2. We will need 1,000,000 combat troops on the ground continuously for 20 years .... or until, like Viet Nam,. Iraq & now Afghanistan, we simply pull out.
3. We'll have to reinstate the draft.
4. A new war with out massive new taxes? Get serious! We tried that once an look what it bought us.
5. In any event, such a war will cost tens-of-trillions-of-dollars.
6. We are no longer the most popular country on Earth - only the strongest. Do you have any idea what our unannounced enemies will be doing behind our back while we are mired down in Persia?
6. Iran is NEITHER a hollowed out, pre-softened Iraq nor a backward Afghanistan. If we do take the big irreversible step, (at Israel's behest) there WILL be serious, deadly, repercussions against us here in the USA and worldwide,

In this life, the rule is: "You can have anything you can afford!" and if we can afford such a war, hey! ---like the man said and lived to regret---"Bring it on!"
 
 
+7 # Activista 2012-07-28 21:02
Agree with you and Stiglitz - who predicted $3 trillion Iraq war cost when 80% Americans were cheering and claiming benefit of the war as Alan Greenspan etc.
How anybody can do any serious economic analysis without devastating cost of wars? Obama LOST war in Afghanistan COSTS $100 BILLION per year .. and recently Clintonians signed the perpetual treaty with Karzai??
 
 
+35 # jlohman 2012-07-28 13:46
Absolutely 100% of what is said about the "effect", is accurate. But it sidesteps the "cause". Political bribes given by the Fat Cats to our esteemed politicians have destroyed our economy. our trusted servants pocket a portion of the booty. Only public funding of campaigns will give us back our country. I care not what they do, as long cash bribes do not change hands.
 
 
+4 # Vardoz 2012-07-29 13:02
I think it's over. I hate to say that. But now with the recent TPP agreement and Citizens United our govt, laws and protections will be circumvented which is what the bankers and the corporate world has wanted to do all along. Even if people rise up in very big numbers for on going periods of time it still may not make a difference. Corporations are hell bent on doing whatever they want and the People will just be background noise. A sad fact but if anyone here thinks anything is different, let me know.
 
 
0 # Michael Lee Bugg 2012-07-30 14:43
Vardoz, I'm glad you mentioned TPP, the untrade pact, because most people are totally unaware! Check out a recent issue of The Nation magazine.
 
 
+22 # mary atx 2012-07-28 14:05
Although you can spend your way to poverty,
You cannot save your way to success.
 
 
-62 # phantomww 2012-07-28 14:07
How does taking money from one person by the govt by raising taxes increase the amount of money another person has? If the govt takes an extra 1 million from some billionaire how does that help me? Do I get any of that money? I don't think so. In the "war on poverty" we have "redistributed" over 1 trillion dollars and the poverty rate is still about the same. I am not seeing how this all is working.

As pointed out in the article, the US has the highest level of inequality among advanced nations yet I seem to see that many countries in Europe have economic issues worse than us. Not seeing the connection.
 
 
+35 # AndreM5 2012-07-28 16:22
"Not seeing the connection."

You make that rather obvious. Where did you get this ridiculous notion of "taking money from one person?" We formed a govt of the people to make a more perfect union, provide for the common defense, promote the general welfare and more. Paying your fair share of taxes is a privilege in the USA.

The only rational analysis of the "redistribution of wealth" that has occured in the past 60 years clearly shows it was shifted from the majority to the tiny influential wealthy minority. You seem to recognize the "inequality" so how do you fail to see the facts?
 
 
-23 # phantomww 2012-07-28 19:47
I got ridiculous notion of "taking money from one person" from a person named James Madison who said that he could not find anywhere in the constitution where it gave the federal govt the power to take the property of one individual and give it to another. Money is property. Now I do realize that we did amend the constitution to make income tax legal but I still don't see how taking money from one person and giving it to another has improved our poverty rate. As I see it the war on poverty has been a failure. also, I don't mind paying my fair share but I also think that everyone should also pay their fair share and it is obvious that many are not paying that. although I would like for you to please define what "fair share" is.
We also provided for the common defense and made a more perfect union and promoted the general welfare before we had the income tax so I think that you point is incorrect. And since when is paying a tax a privilege? It is something you have to do or you go to jail or have your property seized by the govt. That does not sound like a privilege to me.
 
 
+7 # engelbach 2012-07-29 14:10
The War on Poverty has not been a failure. The entire economy has failed, creating more poverty that the War on Poverty was never designed to address.

You can't lift people off of welfare and into well paying jobs when there are no jobs. Getting that high school diploma is no guarantee that there will be work available when you graduate.
 
 
+6 # mdhome 2012-07-29 18:16
IF and I dint) had 10 trillion dollars and was taxed at 405%, That leaves me with 6 trillion. Certainly more than I need to live on. The government then takes that 4 trillion and repairs the roads, fixes the bridges, hires police and fire personnel, making the roads safer and everyone safer, the construction fellows end up with money to feed and house their family, maybe even getting them off government aid. so the gov saves paying aid the families and collects taxes on the construction fellow, the mechanic down the road gets money to fix his car, has to pay taxes on his added income. He buys more stuff from the stores, they have to hire more people, who all end up paying taxes, instead of maybe selling crack or living on food stamps, except if they work for Wallyworld. There is no way we will austerity ourselves to prosperity.EVER !
 
 
-7 # Activista 2012-07-28 21:06
"many countries in Europe have economic issues worse than us" take it any time with free healthcare and education.
80% of bankruptcies in USA are caused by greedy doctors
 
 
+10 # mdhome 2012-07-29 18:19
I doubt it is all greedy doctors, but health issues certainly cause 80% of bankruptcies.
 
 
+14 # Bodiotoo 2012-07-28 21:22
The transfer of money needs to be done by paying better wages, adding employees and producing product that the large, better paid work force can then afford...that is the current problem to address. That would grow the economy...
Governments role needs to fair and reasonable regulation so that the playing field is as level as possible. Government needs to provide what we can not do and/or regulate those that provide the services we all need, clean water, roads in good condition etc...
 
 
+22 # BeaDeeBunker 2012-07-28 22:14
Gary, you are not much of a phantom, and your logic misses the point.
A couple of questions for you.
1. Do you consider the "War" on poverty the same as the "War" on drugs? Does the way $$$ is used in either case make it easier for to 'make the connection,' and can you define the difference if there is one?

2. If you shop at a Cosco or Sam's Club you expect to pay a lot less when you buy in bulk then when you buy a single item, correct? In true 'capitalism' this is called buying wholesale, and selling retail. The difference is called profit.

3. If you as an individual need a single hammer, and you go to the finest hardware store and buy the finest hammer available, you pay, let's say $50.00. If you want to buy 10,000 hammers the cost should come down a bit, don't you think? But, when the buyer is the US government, and the hammers are for the Army, and the seller is a corporation that is beholding to its shareholders and profits only, pray tell how the cost of that same hammer goes from $50.00 to $700.00!? Doesn't that strike you as unequal?

3. Medicare is the biggest buyer of brand name drugs, but is not allowed to buy wholesale, by law. If you or I went into Canada to buy that same exact drug made in the USA, we pay 1/5 the cost. Is this fair or even logical?

The field of play IS NOT EQUAL!!
In other words, inequality is the problem.

Do you see the connection now?
 
 
+2 # dkonstruction 2012-07-30 09:26
Phantomww,

In some ways you are absolutely correct and it is unfortunate that so many on this board simply give you a mindless thumbs down or talk about the redistribution upwards that has been taking place since that mid-1970s.

That 1 trillion dollars have been spent on the war on poverty (just trusting your numbers here) without much effect on the poverty level says alot about how the US state chose to redistribute and the fact that the vast majority of this trillion did not in fact go to poor people but instead went to things like "urban renewal" that was more of a war on poor people than a war on poverty in which poor neighborhoods were often destroyed (literally torn down) with the promise of something better for those that lived there but in fact was never for them in the first place; it was about disbursing poor people (that had become dangerous due to their geographic concentration) and then profiting from new real estate development that was never intended for the poor being displaced.

On the other hand, there have been other forms of "redistribution " that have been highly successful, the GI bill for example that gave a whole generation of americans a college education (often the first in their families) not to mention access to affordable loans to purchase their first home.

so, i think you are right to point out the failures of the war on poverty but this is not an indictment of redistrution programs in general.
 
 
+15 # dick 2012-07-28 14:31
Some people WANT-NEED privileges-for- the-very-few inequality MUCH MORE than they want prosperity for the many, even if it bites them on the butt. They're dying to feel superior, to have more Power, more CONTROL, to exploit, to make others grovel.
These should be shown no mercy, no quarter. They are a disease that MUST BE expunged. Watching them lose it should be fun. We really are at war. Hopefully with utterly minimal violence, but rulers & the hideously privileged don't give up without a FIGHT.
 
 
+30 # Kathymoi 2012-07-28 14:38
Greed is greedy. When the profit-increasi ng tactics of the richest have decreased the wealth of the majority to the point that the majority can't afford to spend much, the profit seekers' greed continues to want more and more at the same pace as before. Taking a bigger slice of a smaller pie is greed's next step. It is in the nature of greed to always want more and never feel that it has enough. That's the way greed is.
 
 
-17 # charsjcca 2012-07-28 14:46
The story some tell is that inequity created the "greatest generation." Just a little red lining, restrictive covenants, nepotism or outright segregation is what is needed.
 
 
+35 # Vern Radul 2012-07-28 14:51
Stiglitz is right. And I see people everyday try to cut their way back to prosperity.

I sell advertising space in a small paper I publish, and one of the things I hear from small business owners repeatedly - multiple times every day - is "I'm not making any money - barely surviving - so I've cut way back on advertising to lower my expenses - as soon as my sales pick up and I'm making money I'll start investing in advertising."

I hear this over and over and over from the same people, until they go out of business.

Then they complain that they didn't invest in marketing enough.
 
 
+15 # Smiley 2012-07-28 15:24
Ron Paul certainly makes sense when it comes to militarism, the costs of which are certainly adding to our economic woes.

It is true that the only way back to a healthy economy is the re-creation of the middle class..more jobs, higher wages.

Fair trade instead of free trade can also help with this.
 
 
+39 # Vardoz 2012-07-28 15:40
Corporations and banks are not interested in the overall prosperity of the nation or the world. They are very destructive entities that are destroying the entire planet, nations economues and tens of millions of lives all for their own profit. They have not regard or consideration for anything. But as they impoverish nations more and more there will be less abulity to consume and this will create a huge ripple affect. Not only will a wide variety of businesses suffer, corporations are destroying rain forests around the world at alarming rates. These rainforests are important for creating the world's oxygen,contolin g CO2 and has offered us thousands of medicinal substances that can for example cure some forms of Cancer. Corporations rape and pillage without any consideration for the consequences of their actions. We cannot survive as a species if we continue on this path.
 
 
+16 # angelfish 2012-07-28 15:47
America has NO products to sell to it's citizens! If looking to where MOST products are currently made available for purchase, EVERYTHING is made in China! or the Phillipines, or India or Thailand! We don't MAKE anything anymore! Try to talk to any American, English speaking person on any help line and you get someone from India or other third world Gulag who doesn't understand you or you can't understand them! Go to QVC and order something, ANYTHING! I doubt very much if it will be American Made. THAT'S the shame of this Country. Even our FOOD is shipped in from overseas! It's bound to get worst once the effects of this drought are in full force a few months from now. Why isn't anyone in Washington concerned? Beats me.
 
 
0 # mdhome 2012-07-29 18:27
Why isn't anyone in Washington concerned? Beats me.
THAT is the scariest thing I have seen in 66 years, most of the corn and soybeans around here are dead or dying, it going to really suck to be a farmer this fall.
 
 
+12 # luvdoc 2012-07-28 16:26
In the musical 'Stop the World, I want To Get Off" The character Little Chap sang about becoming filthy rich, declaring "I know what I want, I want MORE."

More, there's the story, more. With unbridled greed, and with no thought of emaciated, starving children with distended bellies, the ultimate sinners, the greedy party on.

A pox on them I say and may they rot in their gated prisons without a can opener. luvdoc
 
 
+22 # bingers 2012-07-28 16:33
"The problem is NOT capitalism. It is the benighted notion held by self-anointed capitalists that they are an economic law unto themselves ... that it is their divine right to scoop all of the cream off of the top - along with most of the milk."

True to an extent, but without strict regulation capitalism always self destructs. As it has always been, so is it now. Capitalism is a great system as long as it's strictly regulated. What we're seeing now is the natural result of deregulation.
 
 
+27 # Working Class 2012-07-28 18:58
Quoting bingers:
"The problem is NOT capitalism. It is the benighted notion held by self-anointed capitalists that they are an economic law unto themselves ... that it is their divine right to scoop all of the cream off of the top - along with most of the milk."

True to an extent, but without strict regulation capitalism always self destructs. As it has always been, so is it now. Capitalism is a great system as long as it's strictly regulated. What we're seeing now is the natural result of deregulation.


The problem is unregulated capitalism. The system must have strong checks and balances or it will destroy itself. The markets are structured to demand greater and greater profits, regardless whether those profits provide any positive outcomes for society in general. If a company does not improve/increas e its profits each quarter investment dollars go elsewhere. So in unregulated capitalism we are left with growth for the sake of growth. The philosophy of the cancer cell. We all know what happens when a cancer cell is allowed to grow unchecked.
 
 
+7 # maddave 2012-07-28 23:02
Absolutely, bingers! Bravo.

I ran out of characters otherwise I'd have made that point. Perhaps not as well as you, but nevertheless, if ANY economic system---commun ism, socialism or capitalism---is to survive and prosper, labor and management must have limits and boundaries regarding their working relationships. It's better when the regulations ensuring respect and fair play were voluntary, but experience tells us that, over time, voluntary restraints do not deter gamesmanship and greed.
 
 
+38 # bingers 2012-07-28 16:43
phantomww, your comment may feel rational, but it isn't. When the top marginal rates are at their highest the country does the best. With top rates over 70% it pays off better to reinvest in your company with innovation and more hiring which decreases unemployment and gives people more money to spend which in turn increases the economic health of the entire country. Our current economic problems are not Obama's fault but rather the ignorance of Reagan and Bush giving tax cuts to those who have absolutely no need of them.

Granted Clinton bears some blame for going along with Republican ideas like NAFTA, CAFTA, repealing Glass Steagall and signing into law Gramm Leach Bliley.

As to "redistribution " of wealth, since Reagan's administration the rich have had a 370% increase in wealth while the bottom 98% has had no increase at all. The redistribution has already been done and it's the Republicans who have done it.
 
 
+2 # mdhome 2012-07-29 18:33
Our current economic problems are not Obama's fault but rather the ignorance of Reagan and Bush giving tax cuts to those who have absolutely no need of them.

Granted Clinton bears some blame for going along with Republican ideas like NAFTA, CAFTA, repealing Glass Steagall and signing into law Gramm Leach Bliley.

As to "redistribution " of wealth, since Reagan's administration the rich have had a 370% increase in wealth while the bottom 98% has had no increase at all. The redistribution has already been done and it's the Republicans who have done it.

And look where it got us! Almost caused the shutdown of the government and a drop in credit rating, and college kids in debt till they die.
 
 
+14 # walt 2012-07-28 18:05
America's problem is that we all bought into the 401K mentality of making our retirements on stocks. Companies are more concerned with profits for stockholders than they are to paying decent salaries to workers. Look at where that went.

What we need are jobs paying living wages for workers who produce for the company and not massive profits for CEO's and stockholders. Anything less continues to drive us into deeper debt and poverty.
 
 
+10 # Interested Observer 2012-07-28 21:36
That shift was mainly to shift the burden and risk from the corporation with a pension plan (defined benefit) to the worker (defined contribution). It is obvious who benefits most from this and its not the worker.
 
 
+11 # mitchell donian 2012-07-28 19:46
The purpose of a good education is to prepare you to negotiate life with a modicum of success. In an agriculture you are taught agricultural skills. In a hunting society you are taught to hunt. We live in a money society whose skills require a thorough knowledge of all matters economic. Yet this matter is neglected with a thoroughness that should lead any thinking person to suspect skillful planning. Thus children and adults put their money into Christmas Clubs, receiving no interest for their deposits. Further matters concerning money are left to chance. I think the point need not be belabored. If you wish to change the future I urge every thinking parent and adult DEMAND the inclusion of education material that will correct this outrageous omission. This demand should be immediate, forcefully. This simple act will in the long run disarm rent-seekers and those who would take advantage of those ignorant of financial matters...which judging from the state of affairs would encompass most people. Even Prof. Stiglitz failed to site this obvious and simple remedy.
 
 
-2 # mdhome 2012-07-29 18:37
TOO LATE
 
 
+19 # lexy677 2012-07-28 20:28
A country deserves the politicians it elects and the ensuing consequences. When white males voted republican in droves in 1980; in response to Ronald Reagan's racial dog whistles they thought they were doing the "right thing" for themselves. Well, now the chickens are coming to roost. Until white males get rid of their fear and insecurity and their desire to return to pre-1968 America where they had it "all their way", we will keep getting politicians like Boehner, McConell Rick Perry, George bush etc., etc. A veritable gallery of rogues who will continue plundering the country and feeding white supremacy to the poor ill-informed white citizens of this country. If people would just remember: You cannot hurt(economical ly and socially)a demographic within the country without ultimately hurting yourself, because in wishing to do so you attract the "ghouls", the unscrupulous,th e charlatans,the con men who will use your evil wishes against you; who will exploit your hatreds for financial gain. This has been happening since Ronald Reagan and yet white males haven't figured it out yet.
 
 
+8 # The Voice of Reason 2012-07-28 20:41
Actually, Capitalism IS the problem, along with Communism, Islam-ism, Fascism, and every other divisive and cheating -ism and economic system in the world today.

We are people of the earth, all abiding in the same place at the same time. The divisions and hatreds of bygone centuries must give way to the unifying forces behind our common human purpose. To continue with the greed and blood lust of modern economics and politics will only secure our doom.

And the sooner the better, but only because the longer it takes to collapse, the harsher will be the methods employed to bring it about.

My unofficial guess is that it will take as long as possible, because the greed-lust factor simply cannot be squelched and will never be abandoned voluntarily, or because it is a good idea.

The following depiction of the pending demise of the present day order was written almost 100 years ago by the Guardian of the Baha'i Faith. It is and still remains the only hope for a 'hapless humanity' hell bent on its own destruction through greed and division:

http://www.bahai-library.com/writings/shoghieffendi/wob/woball.html#190
 
 
+13 # Rick Levy 2012-07-28 20:51
In the 1950's and 1960's when the U.S. was a prosperous country, it was this very thriving economy that sparked the hope of a better tomorrow, especially the chance for equality, for all Americans. In turn, this optimism fueled the civil rights , the student, and feminist movements.

Then came the Reagan Bush eras that undid the policies that led to the reforms. The Republicans crashed the Economy. Then Obama stood by and basically just stood and watched the aftermath. What a sad 30 years this has degenerated into for the middle and working classes.
 
 
+7 # Robert Cohen 2012-07-29 00:28
Reversing the flow of income and wealth from upward to downward is being stymied by money-in-politi cs. To enable resolving those issues, we ought to unite behind my proposal to urgently get the money-givers out of politics.

The proposed first step to achieve that objective is to file multiple class-action lawsuits seeking to reverse two absurd Supreme Court decisions: Santa Clara ("corporations are persons"), and Buckley ("money is speech"). Success will require one of the five conservative Justices to again step forward and go down in history as a true American patriot, as did Chief Justice Roberts recently in upholding Obamneycare.

As the cases advance toward the Supreme Court, widening public awareness of them will propel a tsunami of public pressure, outcry, and support from the over 80% of American citizenry who are disgusted with the legalized corruption of our politicians by the obscene amounts of money-in-politi cs. Past Supreme Courts have been responsive to public opinion.

Once those decisions are reversed, the liberated Congress would be enabled to enact legislation in the public interest, such as to provide for public financing of elections, free airtime for candidates, universal health care, raising needed revenue from those who can best afford to provide it, and exerting world leadership in preventing and mitigating global warming.

You can e-mail me via the Web site shown on my RSN Profile Page.
 
 
+1 # ganymede 2012-07-29 19:19
I really don't understand why more people don't get the utter simplicity and practicality of what our three economic giants, Stiglitz, Krugman and Reich are saying. We must summon up the collective will to force our leaders to act on this. Unfortunately, we don't have any leaders, but there is Obama, a would-be leader if ever there was one. His re-election is probably our last chance - he could very well become one of our greatest presidents if the majority of Americans keep pushing him forward. Fortunately, it does look like the Republicans are finally imploding, and, who know, Romney, the non-leader, might not even be the Republican presidential candidate!
 
 
-2 # nirmalandhas 2012-07-29 23:26
Increasing demand will increase pollution and deplete already rapidly reducing resources...is Stiglitz unaware of this...and if so how come he is unaware of this? If he is not aware of this then is he merely singing for his supper...and if that is what he is doing what kind of ethical framework does he operate from?
 
 
+1 # dkonstruction 2012-07-30 08:06
What's all of this talk about how the problem is "unfettered" capitalism and that if only we regulated it properly we could return to the good old days (some have mentioned teh 1959s-1960s) when this was a "prosperous" nation.

Enough of the mythological romanticism.

Capitalism has always been both "fettered" i.e., it has always been regulated but for the most part it has been regulated to benefit capital. This is the nature of the system folks. I don't care how you regulate it, capital will always find ways around the regulations. It's the nature of the beast. Capital has only one mission: to grow (this was Marx's notion of capital as "self-expanding value). As for "the good old days" -- sure, if you were white...but, what about if you were not? These were still the days of Jim Crow, of Bull Connor and fire hoses being turned on peaceful African American protesters (many of them children). And, what about white poverty? Does no one remember Robert Kennedy's trip to see what real poverty in America looked like?

The post-world war II boom period was not the norm for capitalism it was the anomaly; the result of a mass movement in the 1930s that scared the S*&t out of the advanced wing of capital to the point that they believed that without massive "reform" they could lose it all. by the end of the 1960s/1970s when "the falling rate of profit" led to the next crisis that was it and capital launched its counteroffensiv e.
 
 
0 # John Steinsvold 2012-08-16 19:58
An Alternative to Capitalism (if the people knew about it, they would demand it)

Several decades ago, Margaret Thatcher claimed: "There is no alternative". She was referring to capitalism. Today, this negative attitude still persists.

I would like to offer an alternative to capitalism for the American people to consider. Please click on the following link. It will take you to an essay titled: "Home of the Brave?" which was published by the Athenaeum Library of Philosophy:

http://evans-experientialism.freewebspace.com/steinsvold.htm

John Steinsvold

“Insanity is doing the same thing over and over and expecting a different result."~ Albert Einstein
 

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