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Monday, October 24, 2016

Weekend Reader: The Price Of Inequality: How Today’s Divided Society Endangers Our Future

Weekend Reader: The Price Of Inequality: How Today’s Divided Society Endangers Our Future

This week, Weekend Reader brings you an excerpt from The Price of Inequality: How Today’s Divided Society Endangers Our Future by former World Bank Chief Economist Joseph E. Stiglitz. Stiglitz details the disparity between the top 1 percent who hold 40 percent of the country’s wealth and the remaining 99 percent of Americans, as well as the damaging policies put in place by elected officials that have and will continue to stunt growth and increase inequality. 

You can purchase the book here.

The Rising Tide That Didn’t Lift All Boats

Although the United States has always been a capitalist country, our inequality—or at least its current high level—is new. Some thirty years ago, the top 1 percent of income earners received only 12 percent of the nation’s income. That level of inequality should itself have been unacceptable; but since then the disparity has grown dramatically, so that by 2007 the average after-tax income of the top 1 percent had reached $1.3 million, but that of the bottom 20 percent amounted to only $17,800. The top 1 percent get in one week 40 percent more than the bottom fifth receive in a year; the top 0.1 percent received in a day and a half about what the bottom 90 percent received in a year; and the richest 20 percent of income earners earn in total after tax more than the bottom 80 percent combined.

For thirty years after World War II, America grew together—with growth in income in every segment, but with those at the bottom growing faster than those at the top. The country’s fight for survival brought a new sense of unity, and that led to policies, like the GI Bill, that helped bring the country even closer together.

But for the past thirty years, we’ve become increasingly a nation divided; not only has the top been growing the fastest, but the bottom has actually been declining. (It hasn’t been a relentless pattern—in the 1990s, for a while, those at the bottom and in the middle did better. But then, as we’ve seen, beginning around 2000, inequality grew at an even more rapid pace.)

The last time inequality approached the alarming level we see today was in the years before the Great Depression. The economic instability we saw then and the instability we have seen more recently are closely related to this growing inequality, as I’ll explain in chapter 4.

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How we explain these patterns, the ebb and flow of inequality, is the subject of chapters 2 and 3. For now, we simply note that the marked reduction in inequality in the period between 1950 and 1970, was due partly to developments in the markets but even more to government policies, such as the increased access to higher education provided by the GI Bill and the highly progressive tax system enacted during World War II. In the years after the “Reagan revolution,” by contrast, the divide in market incomes increased and, ironically, at the same time government initiatives designed to temper the inequities of the marketplace were dismantled, taxes at the top were lowered and social programs were cut back.

Market forces—the laws of supply and demand—of course inevitably play some role in determining the extent of economic inequality. But those forces are at play in other advanced industrial countries as well. Even before the burst in inequality that marked the first decade of this century, the United States already had more inequality and less income mobility than practically every country in Europe, as well as Australia and Canada.

The trends in inequality can be reversed. A few other countries have managed to do so. Brazil has had one of the highest levels of inequality in the world—but in the 1990s, it realized the perils, in terms both of social and political divisiveness and of long-term economic growth. The result was a political consensus across society that something had to be done. Under President Fernando Henrique Cardoso, there were massive increases in education expenditures, including for the poor. Under President Luiz Inácio Lula da Silva, there were social expenditures to reduce hunger and poverty. Inequality was reduced, growth increased, and society became more stable. Brazil still has more inequality than the United States, but while Brazil has been striving, rather successfully, to improve the plight of the poor and reduce gaps in income between rich and poor, America has allowed inequality to grow and poverty to increase.

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  • Mike l

    President Obama speaks for all from his heart and he will unite the people to move forward and our prayers are with the victims and people of Boston. You will run again

  • Hopefully, the second terrorist will be caught soon. While details are not yet known, it seems clear, judging by their attire and physiognomy, that they are Mediterranean. They may be European or from countries such as Lebanon, Syria, Turkey or Libya. They were, most likely, students and one of the famous universities in the area.

    • Wrong, Russian and US citizens!

      • larry

        not citizens, green card holders

        • idamag

          They were citizens. They came here with their uncle as political refugees. They were naturalized.

    • Sorry but you were jumpimg to conclusions and that is so not like your posts.

    • howa4x

      They were from southern Russia, either Kazakhstan or Chechnya. Both were Muslims

      • idamag

        They were naturalized American citizens. Both of them came to this country as children. They were 14 and 9. The older one returned to Russia for 6 months and people who knew him said he came back a rabid fanatic. The younger one followed his lead. They joined the Muslim religion after the older one returned fro Chechen. With the break up of the USSR, Chechen became an independent entity.

  • stcroixcarp

    These senators who voted no and the NRA support and condone providing guns to murderers, robbers, rapists, gang bangers, drug dealers, spouse and child abusers, neo nazis, terrorists and the insane. Shame on you.

    • Lovefacts

      They’re the puppets of the gun/weapon manufacturers.

  • JDavidS

    This is in no way an infringement on anyones’ 2nd amendment rights. If you’re bat-shit crazy, a convicted felon, have threatened physical harm toward anyone or have a proclivity toward violence, there isn’t a sane person anywhere that would think you should own a gun. LaPierre and his fellow NRA loons simply don’t want any restrictions on gun sales, and therefore, profits for the manufacturers and kick-backs for themselves.

  • howa4x

    Republican Senators: Best that NRA money can buy

  • Independent1

    The Gun Lobby is really hoodwinking the public. Here are some actual crime and gun usage statistics that show the Gun Lobby is greatly exaggerating the need and effectiveness of owning a gun:

    The gun lobby claims that people must carry guns to protect themselves from being killed by criminals; but facts show that most homicides occur between people who know each other and don’t occur in situations where someone is expecting to have to protect themself. So, for example, of the homicides that occurred in America during 2010, less than 3% were justifiable homicides for the cause of self- defense.

    The gun lobby also would like Americans to believe that guns are used about 2.5 million times a year for self-defense; but according to the Department of Justice’s National Crime Victimization Survey, the actual number is just a fraction of that; being again less than 3% of the gun lobby’s grossly inflated number (actually less than 75,000 times – nowhere near 2.5 million).

    Also, of about 30 million crime victims recorded for the years 2007-2011, less than 1% of the victims were actually able to find and use a gun for self-defense purposes: that means out of 30,000,000 crime victims, less than 300,000 were actually able to protect themselves with a gun; even though Americans own around 300 million guns.

    And finally, in any given year, far more Americans have their guns stolen, about 230,000, than are ever able to use their gun to defend themselves, less than 75,000 out of about 75 million crime victims. Pretty sad isn’t it for all the hype the NRA puts out; and especially considering all the mass killings America has suffered the past decade that were committed by killers who couldn’t have purchased the guns they used and therefore were only able to use a gun to kill a lot of people because they stole the gun from a

  • charleo1

    Re: Price of inequality. President Obama says, he believes the Country
    is better off, more prosperous, and has more opportunities for education,
    and advancement, when the economy grows from the middle out, and
    not the top down. And, I think most people agree with that. For one
    reason, many Americans need not look back very far into our past, to
    have witnessed, and taken part in building the Middle Class. Which in
    turn, by that general, broad based, prosperity, created an economic
    engine that not only fueled the expansion of our own economy, but lifted
    other economies around the world. And to the extent that we have
    gotten away from that over the past 30 years, rank, and file labor,
    along with the U.S. economy in general, has suffered the consequences.
    Globalization, investment, one billion, and a dollar, twenty-five cents.
    This is one equation America had better get right. One billion is the number
    of people on this planet that survive on $1.25 a day. And, cheap labor is
    the reason an investment made there, returned 3X as much profit as an
    investment made here. Between the years 2000, and 2010, Americans
    suffered the loss of more than 10 million jobs in manufacturing. Jobs with
    healthcare. Jobs that bought cars, and homes. And sent kids to college.
    Jobs, that helped create, and support other jobs for other families. That’s
    the way it worked at one time. Today, incomes at the high end are soaring.
    Corporate profits have never been higher. But, most Americans are not the
    beneficiaries of these unprecedented gains. GM sold more cars in China,
    in 2011, than here, in the land of the stagnant wages. It was the first year
    since automobiles were invented, another Country had bought more cars
    than the U.S. I have no summation, because I believe there is much history
    yet to be written about America. The richest, freest, and most dynamic
    Country, the world has ever seen. But, we do need to start making better
    decisions. Especially as it pertains to jobs, wages, and trade policy.

  • Not to call this post idiotic, but it is. The pressure cooker bombs needed only something as simple as gun powder, which is charcoal salt peter some potassium, which is found pretty much in everyday environments (not necessarily suburbia). The point is, you cannot TAG that stuff, the chemical makeup is too basic. Science is fun isn’t it?

    • idamag

      I don’t know, I heard one FBI person say that gunpowder can be marked as to where it was manufactured and sold. Everything we can give law enforcement to solve crimes is a plus.

  • where is our dollar now? is it worth a dollar now that we print money. china is going about buying up gold and silver. is our dollar going to be worth anything or are they going to come up with another type global dollar? we have bought everything from them for so long they are now rich more so than us. what can we suspect out of them. are they going to pay us back what we did for them?

  • idamag

    Despite the ugly rhetoric, from Sarah “pit bull, mama grizzly, Sarah Palin; If there are only have a lots, and have nones, it sparks civic unrest. That very disparity caused Germany to follow a nut into perdition. We not only need producers, we need consumers. When one faction has it all, another faction is going to have nothing. This is what started the French Revolution and the Chinese Revolution. China turned to Communism.

  • tax payer

    Any person can buy a weapon and than say it was stolen, so it defeats the purpose of having to check someone before they buy a weapon.