From The Project Syndicate: http://www.project-syndicate.org/commentary/the-price-of-inequality
Joseph E. Stiglitz
Jun. 5, 2012
Jun. 5, 2012
NEW
YORK – America likes to think of itself as a land of opportunity, and
others view it in much the same light. But, while we can all think of
examples of Americans who rose to the top on their own, what really
matters are the statistics: to what extent do an individual’s life
chances depend on the income and education of his or her parents?
Nowadays,
these numbers show that the American dream is a myth. There is less
equality of opportunity in the United States today than there is in
Europe – or, indeed, in any advanced industrial country for which there
are data.
This is one of the reasons that America has the highest
level of inequality of any of the advanced countries – and its gap with
the rest has been widening. In the “recovery” of 2009-2010, the top 1%
of US income earners captured 93% of the income growth. Other inequality
indicators – like wealth, health, and life expectancy – are as bad or
even worse. The clear trend is one of concentration of income and wealth
at the top, the hollowing out of the middle, and increasing poverty at
the bottom.
It would be one thing if the high incomes of those at
the top were the result of greater contributions to society, but the
Great Recession showed otherwise: even bankers who had led the global
economy, as well as their own firms, to the brink of ruin, received
outsize bonuses.
A closer look at those at the top reveals a
disproportionate role for rent-seeking: some have obtained their wealth
by exercising monopoly power; others are CEOs who have taken advantage
of deficiencies in corporate governance to extract for themselves an
excessive share of corporate earnings; and still others have used
political connections to benefit from government munificence – either
excessively high prices for what the government buys (drugs), or
excessively low prices for what the government sells (mineral rights).
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