America is falling, from the top 1 percent down

The 1 Percent’s Problem

Why won’t America’s 1 percent—such as the six Walmart heirs, whose wealth equals that of the entire bottom 30 percent—be a bit more . . . selfish? As the widening financial divide cripples the U.S. economy, even those at the top will pay a steep price

"In a society in which inequality is widening, fairness is not just about wages and income, or wealth. It’s a far more generalized perception. Do I seem to have a stake in the direction society is going, or not? Do I share in the benefits of collective action, or not? If the answer is a loud “no,” then brace for a decline in motivation whose repercussions will be felt economically and in all aspects of civic life."

Note: Closer to home – are we seeing similar declines in Hays County as those the author believes are taking root across the country? Perhaps one sign of a "decline in motivation" locally is the growing apathy among voters – the sense that voting will make not a dime's worth of difference in the way things are run. (97,000 voters registered in Hays County yet turnout averages for elections remain stubbornly low and dropping, especially in off-year and primary elections.) What about the "redistribution of wealth" in Hays County, is everyone getting a fair share? Redistribution of our tax dollars is being decided each day by a handful of public officials. Huge sums are being redistributed directly to very few people through contracts and grants. The usual pitch is that the rest of Hays Countians – the 99-percent – should be satisfied they are benefiting from transportation improvements, new roads, jobs and such. (To answer, please check your bank account for your last million-dollar engineering contract deposit or your last multimillion dollar home improvement grant.)

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Vanity Fair May 31, 2012

By Joseph E. Stiglitz | Read the complete article

Adapted from The Price of Inequality, by Joseph Stiglitz, to be published in June by W.W. Norton & Company, Inc. (U.S.), and in July by Allen Lane (U.K.); © 2012 by the author.

Let’s start by laying down the baseline premise: inequality in America has been widening for dec­ades. We’re all aware of the fact. Yes, there are some on the right who deny this reality, but serious analysts across the political spectrum take it for granted. I won’t run through all the evidence here, except to say that the gap between the 1 percent and the 99 percent is vast when looked at in terms of annual income, and even vaster when looked at in terms of wealth—that is, in terms of accumulated capital and other assets. Consider the Walton family: the six heirs to the Walmart empire possess a combined wealth of some $90 billion, which is equivalent to the wealth of the entire bottom 30 percent of U.S. society. (Many at the bottom have zero or negative net worth, especially after the housing debacle.) Warren Buffett put the matter correctly when he said, “There’s been class warfare going on for the last 20 years and my class has won.”

So, no: there’s little debate over the basic fact of widening inequality. The debate is over its meaning. From the right, you sometimes hear the argument made that inequality is basically a good thing: as the rich increasingly benefit, so does everyone else. This argument is false: while the rich have been growing richer, most Americans (and not just those at the bottom) have been unable to maintain their standard of living, let alone to keep pace. A typical full-time male worker receives the same income today he did a third of a century ago.

From the left, meanwhile, the widening inequality often elicits an appeal for simple justice: why should so few have so much when so many have so little? It’s not hard to see why, in a market-driven age where justice itself is a commodity to be bought and sold, some would dismiss that argument as the stuff of pious sentiment.

Put sentiment aside. There are good reasons why plutocrats should care about inequality anyway—even if they’re thinking only about themselves. The rich do not exist in a vacuum. They need a functioning society around them to sustain their position. Widely unequal societies do not function efficiently and their economies are neither stable nor sustainable. The evidence from history and from around the modern world is unequivocal: there comes a point when inequality spirals into economic dysfunction for the whole society, and when it does, even the rich pay a steep price.

* Joseph Eugene Stiglitz, ForMemRS, FBA, is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences and the John Bates Clark Medal. (Source: Wikipedia)