The bulk of capital gains income goes to the very rich, who had their tax rate on capital gains dropped to 15 percent under Bush. In this case it is your “capital” that you have rented out. Every law, every regulation, every institutional arrangement has distributive consequences—and the way we have been shaping America’s market economy works to the advantage of those at the top and to the disadvantage of the rest. Control can happen in several ways. . So the riches of the wealthy increase at a faster rate than do those of persons of average means. In 1887 England’s Lord Acton wrote: “power tends to corrupt, and absolute power corrupts absolutely.” Leopold Kohr, in his 1957 book The Breakdown of Nations, demonstrated that history has repeatedly confirmed the psychological, the commercial, and the political truth of Lord Acton’s dictum. Historic tax policy has also had a huge impact on inequality in America. He sees modern assessment measures like GDP or gross corporate revenues as chimeras, for figures like national growth and corporate profits do not account for the substantial deleterious impacts on the environment that they inflict. Unfortunately, Greenspan’s supposedly moderating policy prescriptions (lower taxes, frothing asset bubbles, and persistent deficits) had foreseeable consequences, and reached their logical culmination in the Great Recession of 2008. 230] He spends the rest of chapter 8 carefully rebutting these beliefs with data drawn from recent economic history. Military and defense spending by the American government is the source of more rent-seeking corporate income than any other single type. The “work” is being done by the renter, not by the owner of the pond. Creditors dictate the terms, economic and political, for the future of the country. 138]. Visit BN.com to buy new and used textbooks, and check out our award-winning NOOK tablets and eReaders. And yet the real income and wealth of the top 1 percent increased dramatically. April 2013. They offer as well an improved democracy that may be far more effective in making American society fair and sustainable. The current economic landscape bears little semblance to any positive normative standards, however, and one can safely argue that prospects appear grim under Stiglitz’s learned gaze. He notes the similarity to today’s energy companies that argue global warming is not a threat and is only based upon flawed “science” and flawed data. Recent political responses to crises like these have attempted to restore demand by putting more money, at lower borrowing costs, into the economy. Income from “rent-seeking” currently tends to be taxed very differently than does income from wages and services. Stiglitz responds directly to this argument, pointing out that in many countries of the world very different market rules and behaviour work well, yet inequality is much lower. [pp.52-53]. But from where, and what, does excessive power arise? Increasing government expenditures were the product of (a) new wars being waged in the middle east, (b) new costs occasioned by the after-effects of those wars, (c) increased military spending for future war materiel, (d) increasing Medicare drug benefits (which cost the government high amounts of “rent” paid to pharmaceutical monopolies), and (e) other efforts to “stimulate” the economy by offering special “rents” to selective other segments of the economy. Deregulation of corporate and commercial activity was a further major contributor, both to increasing inequality and to market instability. Additional political and cultural factors that increase inequality are those that degrade or limit equality of opportunity. 28], Governments shape markets and profits and income distribution in many ways. Equality of opportunity appears to be one important criterion defining social fairness. Yet in the financial and corporate culture of America there has been almost no such guilt, nor any evidence of remorse. Yet Stiglitz points out that it is still sometimes argued that attempting other economic policies, policies that would help to reduce extremes of inequality, …will simply ‘kill the golden goose,’ and so weaken America’s economy that even the poor will suffer. [pg. [Pg. All these factors add to the disenfranchisement of the poor and the middle class. Philosophical Themes, Ideas and Arguments. © J. Barnard Gilmore Kaslo, British Columbia March, 2015, Joseph Stiglitz (2012) The Price of Inequality. …What matters (for an individual’s sense of well-being for instance) is not just an individual’s absolute income, but his income relative to that of others. Another social force affecting inequality is discrimination in who becomes employed. In the same vein, he claims that government-backed research and development remains integral to cultivating long-term industry supremacy, even though preliminary evidence suggests that top-down innovation can sometimes have sub-optimal outcomes (see Wallsten, 2000). Education has become economically more segregated, with less diversity among students and their backgrounds, than was true prior to 1980. For those who have read Joseph Stiglitz’ previous popular works, The Price of Inequality is similar in that there is much to love and much to dislike. Seeking new models in uncertain times | USAPP, Can we Solve Both the Economic Crisis and the Environmental One? 71]. As in all texts, there are some distinctly controversial points. Government gerrymandering of electoral districts further erodes the voting power of those who might oppose the wishes of the wealthy. Financial inequality has recently grown to near-record levels in almost every corner of the world, including many of the world’s most industrialized nations. After an interlude the idea of economic inequality is back on the agenda. Union jobs were increasingly lost to cheap labour markets abroad. 146]. Joel Krupa encounters passionately argued points with a scattering of controversy. Other forms of corporate damage are never acknowledged, nor compensated, in such a lax regulatory and legal system. Stiglitz writes: …Imagine, for a moment, what the world would be like if there was free mobility of labour, but no mobility of capital. In America this growth has been particularly clear, and particularly disruptive. He notes that America is among those countries with the highest inequality metrics in the world, countries that include South Africa and much of Latin America. When private companies sell goods or services to governments at inflated prices (e.g. . Stiglitz notes that individual contributions to the development of profitable new products and services all depend greatly on contributions previously made by many others, and on infrastructure that must be maintained by governments and by the society supporting those governments.
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