Joseph Stiglitz, winner of the Nobel Prize for Economics (2001), chief economist of Bill Clinton’s Council of Economic Advisers (1995-1997), chief economist at the World Bank (1997-2000) and now professor at Columbia University, developed a social conscience when he was a student at Amherst College. He still remembers the day he attended Martin Luther King’s “I Have a Dream” speech at the Lincoln Memorial in 1963. “We didn’t realize how many people would show up and no one realized what a moving speech that would be. That moment has always stayed with me,” he said.
He decided to change his major from physics to economics because he wanted to understand inequality as well as discrimination and also hoped to do something about these problems plaguing the country.
The Great Divide is based on the author’s long history of academic research on the subject of inequality, which began when he was a graduate student at the Massachusetts Institute of Technology (MIT) and a Fulbright scholar at Cambridge. “No one today can deny that there is a great divide in America, separating the very richest. Sometimes described as the 1 percent and the rest. Their lives are the different, they have different worries, different aspirations and different lifestyles,” Stiglitz writes.
Stiglitz was always aware of the lack of interest among the general public and even economists on the subject of inequality, and always wondered how he could make his ideas accessible to a wider public. Cullen Murphy, editor at The Atlantic Monthly and then at Vanity Fair, provided him with the opportunity to reach a more popular audience. Stiglitz went on to write articles for The Atlantic Monthly, Vanity Fair and The Great Divide Series (which provided the title of this book) for the New York Times. Under the tutelage of Cullen, he not only improved his writing skills, but also one of his articles, “Capitals Fools,” (included in this book) won the prestigious Gerald Loeb Award for outstanding journalism.
This book is a collection of articles and essays published in newspapers and magazines on the subject of inequality. The emergence of the “great divide” is deeply connected to the crisis that surfaced in the United States in 2008 and spread to the rest of the world. The seeds that eventually grew into the Great Recession were sown under Reagan. He championed deregulation policies that caused the disappearance of regulatory walls between investment and commercial banks. Stiglitz singles out the Ronald Reagan era, as a turning point:
“If somebody had said, I have a deal for you: we are going to lower the tax rates at the top and deregulate, and the outcome a third of a century later is that 90 percent of you are going to go to the top 10 percent. It is inconceivable that any democratic society would have voted for that package. But it was not sold that way,” he told Justin Sutcliffe in an interview.
Under President Clinton the deficits turned into surpluses but Bush operated the “largest turnaround (in the wrong direction ) in the nation’s history.” The ill-prepared war in Iraq would cost trillions of dollars. Bush also offered tax cuts for the rich and money was not used to strengthen the economy but to fill up the bank accounts of the 1 percent.
Subsequently, the Obama administration claimed that it prevented the economy from falling into another crisis. However, the growth is still very weak, standard of life for the middle-class has almost reaching the level of 1992. “The recovery was designed by the 1 percent, for the 1 percent,” Stiglitz said.
The emergence of the 1 percent and the growth of inequality are linked to the increasing financialization of the world’s economy. The article on the 1 percent is one of the most interesting in the book, and originally published in Vanity Fair. It went viral and eventually led to the publication of “The Price of Inequality.”
In an interview with Sutcliffe, Stiglitz, speaking about inequality, said that, “what is depressing is that we have become so slow to recognize it and to begin to put in place policies that might address it even as evidence has accumulated.” In the United States, the top 1 percent owns nearly a quarter of the nation’s income and the average wages of male high-school leavers have dropped by 12 percent in 25 years.
Today’s inequality is caused essentially by the financial industry, which implemented new regulations to manipulate the financial system. The government loaned money to financial institutions close to zero percent interest while regulators ignored the lack of transparency and conflicts of interest. Wealth begets power, which in turn begets more wealth. Most of the US senators and the representatives in the House are part of the 1 percent.
Wealthy people are mostly not subjected to higher taxes, and furthermore, the rules of economic globalization are designed to give the rich an advantage. With the emergence of the 1 percent, America no longer offers equality of opportunity. Youth unemployment has reached around 20 percent and one out of seven Americans is on food stamps.
The argument that inequality is a good thing because if the rich benefit, so does everyone else, is not true. Most Americans have been unable to maintain their standard of living. An average male worker is paid today the same income he received 35 years ago.
When there is too much money at the top of society, spending by the average American is automatically reduced. Most of us do not seem to understand this because we associate the wealthy with excessive spending.
“But the phenomenon makes sense when you do the math,” explains Stiglitz. “Consider someone like Mitt Romney, whose income in 2010 was $21.7 million. Even if Romney chose to live a much more indulgent lifestyle, he would spend only a fraction of that sum in a typical year to support himself and his wife in their several homes. But take the same amount of money and divide it among 500 people, say, in the form of jobs paying $43,400 apiece, and you’ll find that almost all of the money gets spent,” writes Stiglitz.
America is a country that respects money, but Americans no longer trust Wall Street leaders and the world of finance. Banks played with people’s money allocating huge amounts into housing. They lied and misled their clients, giving them false hopes based on gross miscalculations, which turned out to be unaffordable. In the end thousands of people lost their life’s savings and their homes.
On the other hand, international companies like Apple Inc., Google Inc., and General Electric Co., whose products are the envy of the rest of the world, are using too much of their inventiveness to avoid paying their share of taxes. They hire the best lawyers who know how to avoid taxes staying within the law. Apple and Google represent the opportunities granted by globalization, but their attitudes regarding tax evasion have clearly shown what is going wrong with that unregulated system.
“The Mauritius Miracle” is another excellent article; it has been downloaded a million times! Stiglitz visited this small island situated off the east coast of Africa to understand why it was called the “Mauritius Miracle.” This country has advanced from a sugar-based monoculture 50 years ago to a diversified economy that includes tourism, finance, textiles, and Mauritius is now investing in advanced technology. Most Mauritians own their own homes (87 percent) without causing a housing bubble. Politicians implemented the right policies for their Island. They chose to increase social cohesion, welfare and economic growth. They also decided that military spending was unnecessary and, finally, they realized that without natural resources, Mauritians were their only asset. Mauritius is also characterized by “a strong commitment to democratic institutions and cooperation between workers, government and employers, precisely the opposite of the kind of dissension and division being engendered by conservatives in the US today, ” Stiglitz writes.
In this collection of writings, Stiglitz dwells extensively on the increasing financialization of the world’s economy, a major cause of the growth of inequality. He discusses his proposals for establishing a well-functioning market economy that not only creates jobs but also creates increases in income that are shared. With his usual charisma and passion he claims that political and economic inequality is essentially due to unjust policies and it is more than ever a choice that we must not make.
• life.style@arabnews.com
0 التعليقات:
إرسال تعليق