Nobel Prize winning economist Joseph Stiglitz has an interesting article in Vanity Fair that is summarized below. It suggests that we are no longer in a democracy but a plutocracy in which the wealthiest 1% of Americans call the shots. I think this is a fairly compelling case that current Democrat/Republican debates simply blow by, and which is totally ignored by the Tea Party pseudo-insurgents who rage against Liberal Elites while the systemic workings of the real elite eludes them. Indeed they are doing the 1%’s work for them.
from Edward Fullbrook in Real World Economics, an excellent site that counters economic orthodoxy at: http://rwer.wordpress.com/2011/04/13/%E2%80%9Cof-the-1-by-the-1-for-the-1%E2%80%9D-joseph-e-stiglitz/
The meaning behind the title, “Of the 1%, by the 1%, for the 1%”, of Joseph Stiglitz’s article in the May issue of Vanity Fair may be lost on non-Americans. It is a play on Abraham Lincoln’s “government of the people, by the people, for the people” which, along with Patrick Henry’s “Give me Liberty, or give me Death”, was once upon a time the most revered set of words in American culture.
Stiglitz begins by noting that 25 years ago the richest 1% of Americans had 33% of the nation’s wealth and took 12% of its yearly income, whereas the corresponding figures today are 40% and almost 25%. He then offers reasons to believe that not only will the results of this program of massive upwards redistribution of income and wealth be retained but will also be augmented.
The article’s gist, as its title suggests, is that American democracy has become a sham. It still maintains the trappings of democracy, but in reality it is a system of government controlled by the richest 1% of its citizens. The USA today is shaped by “changes in the rules that have been bought and paid for by the financial industry” and by the 1%’s ownership of elected and unelected officials. Stiglitz elaborates as follows:
The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.
Stiglitz obviously believes that the worst is yet to come.
An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul.
He calls attention to the pro-democracy uprisings in Egypt, Tunisia, Libya, Yemen and Bahrain “where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life” and where the good of the many is routinely sacrificed for the good of a tiny few. Then Stiglitz poses a big question.
As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.
Stiglitz’s article may be read here.
This is Joe: