Of the 1%, by the 1%, for the 1%

Joseph E. Stiglitz writes:

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 and 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.

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.

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2 thoughts on “Of the 1%, by the 1%, for the 1%

  1. Steve

    Yes well I’ve noticed most economic theory is so much waste paper. They might all work in a vaccuum but humans don’t.

    In Australia, its amazingly strong dollar that has appreciated 35% in the last year against the green back. However there has been NO corresponding drop in the cost of imported goods to the consumer, it has all been pocketed by the importers and retailers and not passed on as most economists say should’ve happened.

  2. Christopher Hoare

    One of many articles succinctly defining the nature of America’s so-called democracy. The intellectuals are good at defining, and useless at outlining a remedy.

    Clearly, voting in a so-called democratic election is worse than useless. As those who don’t vote instinctively realize — voting without power merely reinforces the supposed legitimacy of an illegitimate situation. One can see from the article that this ‘top 1%’ can no longer be considered equal members of the polity. If their wealth and privilege marks them as different than the rest of the population; it also defines them as aliens. They plot to maintain themselves as a class apart and that is how society should define them.

    Why should society grant them anything? They are aliens. Why should they enjoy any of the advantages of society? They are aliens. Why should they enjoy the security that being members of a society grants? They are aliens. What happens to aliens that exist parasitically on a living organism? You know as well as I do.

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