Joseph Stiglitz is a Nobel Prize winning economist, a past chair of the US Council of Economic Advisors and a past chief economist of the World Bank. I may be going with my gut here but I’m thinking he has the credentials to be a credible commentator on how economic policy affects our life.
I first became aware of Stiglitz when he predicted that George Bush’s invasion of Iraq in 2002 would cost Americans a trillion dollars. At the time, the neo-cons around Bush scoffed – a few hundred million max, and Iraqi oil would pay for it. Guess who was right – the tally has passed a trillion dollars and is still mounting. The real cost in deaths, shattered lives and permanently disabled veterans is even more horrific.
So, when I saw an anthology of his columns called The Great Divide, I had to buy it.
It is a chilling read. Stiglitz provides a litany of cautionary advice about the growing concentration of wealth in America. He is the intellectual godfather of the 99% movement in the US.
He is a clear, concise and engaging writer. Most of the pieces in this book are short, forcing him to communicate clearly, to use startling examples, to make his points easily understandable to those of use whose grasp of economics is tenuous. He succeeds.
Stiglitz believes that the growing concentration of wealth and income in the top 1% of Americans, the greed that propels this continuing aggregation of wealth and the complicity of policy makers and elected officials to make the rich richer is the biggest challenge Americans face.
He’s amassed some pretty powerful evidence.
- The top 1% now owns some 40% of America’s wealth and about 25% of America’s income.
- The incomes of the top 1% have doubled over the past 25 years; over the last decade, their incomes have risen almost 20%. The rest of us are not so blessed. Incomes remain stubbornly flat; in fact, median incomes have been flat for 40 years.
- The six members of the Walton family, the owners of Walmart, now own more American wealth – some $130 billion – than the bottom 30% of the US population. That’s more than 100 million people!
- Almost all – 95% actually – of the increases in income after the recovery from that cataclysmic events of 2007-08 went to the top 1% of Americans.
- More than a trillion dollars was spent bailing out US banks in the aftermath of the economic meltdown that almost destroyed the world’s economy; little was spent helping millions (yes millions) of ordinary Americans keep their homes or fight illegal foreclosures.
- The bankers kept their bonuses, investors kept their dividends, bondholders got their interest; the 99% lost their homes, their cars, their jobs, their future. No one went to jail; no one was punished.
It is my personal view that the current turmoil sweeping across America is directly related to the economic disparities that are cleaving American society. People are coming to understand that the American dream is available only to the 1%.
Stiglitz shows that this concentration of wealth is the result of policies that were designed to deliver benefits to the wealthy. Tax cuts and public policy were designed to benefit the rich.
The American tax system feeds the concentration of wealth. Tax deductions for capital gains are generous compared to those for wage earner’s income; other tax deductions reward the rich and burden the 99%. Higher education has been made too expensive for any but the wealthy, health care is beyond the reach of many and the relentless dismantling of the Affordable Care Act is destroying health care plans for millions.
America is falling in rankings of many indices which measure quality of life, mobility and well-being. Child poverty, poverty, food insecurity, growing unemployment in specific demographics, lower social and economic mobility – all indications of the dramatic impacts of the inequities – are growing.
Stiglitz quotes Warren Buffett; “there’s been class warfare going on for the last 20 years and my class has won.”
Buffett does not say that proudly; he has been quick to point out that he pays less tax on a percentage basis than his secretary and he has pledged to give his accumulated wealth to charity. His enlightenment is not emulated by the rest of the American 1%.
Leonard Cohen saw the game, way back in 1988.
Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
An engaging melody and Cohen’s incredible voice could not hide the cynicism of the lyrics.
Stiglitz is clear; inequality is a choice that American policy makers have made and continue to make. In the US Supreme Court’s decision in Citizen’s United, they have ensured that money rules the US political process. It almost guarantees that policy will ensure the rich get richer; everybody – even Leonard Cohen – knows.
Stiglitz knows that the dry world of economics cannot capture the importance of trust and fairness as bedrocks of society, of myriads of financial transaction, of the hope that one can advance through hard work and playing by the rules, of the belief that there is justice for all. Without these beliefs and a strong set of rules and regulations that govern the excesses of capitalism, society itself fails.
As Canadians, we should not be too smug; our levels of inequality are almost as drastic as those in America. Many of our public policies help the rich stay rich and force the poor to remain poor.
We cannot be too sanctimonious, nor can we rest. Our unique Canadian successes are more fragile than we might expect. The disparity of income and wealth is not inexorable or inevitable, but pressure from powerful interests is relentless.
And, here is the point dear friends. As we celebrate Canada Day, we cannot take anything for granted.
Our challenge as Canadians as we celebrate our 151st year as a nation is to constantly make the right choices.
When we pay our taxes, we make the choice to sustain our unique Canadian way of life.
We live in one of the safest countries in the world, we are supporting one of the best health care systems in the world, we have access to a whole range of public services that are the envy of the rest of world.
We live in an open society where social mobility is possible, where equality and egalitarianism exist, where the fight is not fixed.
We have a remarkably good public education system and a post-secondary education that is still accessible to all.
These social norms do not come cheaply; they require vigilance, an engaged thoughtful electorate, a fair tax system and a smart well educated public service.
We must consciously choose to support an equality of opportunity for all Canadians, an equality of access to basic public services, an openness in our society, a willingness to include everyone in the public discourse and a shared responsibility for each other’s wellness.
When we participate in the public discourse we need to be ever mindful of the importance of trust in others, of reasonableness and civility, of the necessity to respect others, of the need to not fall prey to a sense of grievance or of the easy path to demonize the other.
We cannot inoculate ourselves from the current malaise working its way through America, but with vigilance, conviction, faith and trust in each other, we can avoid the inevitability of their choices.
That is my hope for Canada Day.