Will It Take A President Romney To Ultimately Fix America?

One might feel better about inequality if there were a grain of truth in trickle-down economics.”

—Joseph Stiglitz

 recent poll found that about 60% of all Americans think (falsely) that no matter who sits in the White’s House next January 21st, it won’t matter a whit to the economy or unemployment.

While it clearly will matter whether Romney-Ryan budget thinking prevails in November, perhaps there is at least a partially rational explanation for such public despair. Economist Joseph Stiglitz wrote, in a piece disturbingly titled, “America is no longer a land of opportunity,” the following:

US inequality is at its highest point for nearly a century. Those at the top – no matter how you slice it – are enjoying a larger share of the national pie; the number below the poverty level is growing. The gap between those with the median income and those at the top is growing, too. The US used to think of itself as a middle-class country – but this is no longer true.

Now, admittedly, I have been saying such things for years, but I don’t have a Nobel Prize in Economics. Stiglitz does and he adds:

…the median income of Americans today is lower than it was a decade and a half ago; and the median income of a full-time male worker is lower than it was more than four decades ago. Meanwhile, those at the top have never had it so good.

Here’s how it all happened:

Markets are shaped by the rules of the game. Our political system has written rules that benefit the rich at the expense of others. Financial regulations allow predatory lending and abusive credit-card practices that transfer money from the bottom to the top. So do bankruptcy laws that provide priority for derivatives. The rules of globalisation – where capital is freely mobile but workers are not – enhance an already large asymmetry of bargaining: businesses threaten to leave the country unless workers make strong concessions.

Stiglitz points out that the conservative argument that “increased inequality is an inevitable byproduct of the market” is demonstrably false:

Textbooks teach us that we can have a more egalitarian society only if we give up growth or efficiency. However, closer analysis shows that we are paying a high price for inequality: it contributes to social, economic and political instability, and to lower growth. Western countries with the healthiest economies (for example those in Scandinavia) are also the countries with the highest degree of equality.

The US grew far faster in the decades after the second world war, when inequality was lower, than it did after 1980, since when the gains have gone disproportionately to the top. There is growing evidence looking across countries over time that suggests a link between equality, growth and stability.

Mentioning that there is a real difference between Obama and Romney, in terms of whether America will “once again become a land of opportunity,” Stiglitz ends with a theme I find fascinating and have thought about frequently these days:

The country will have to make a choice: if it continues as it has in recent decades, the lack of opportunity will mean a more divided society, marked by lower growth and higher social, political and economic instability. Or it can recognise that the economy has lost its balance. The gilded age led to the progressive era, the excesses of the Roaring Twenties led to the Depression, which in turn led to the New Deal. Each time, the country saw the extremes to which it was going and pulled back. The question is, will it do so once again?

Are we yet to the point where a “new progressive” era or a “new New Deal era” can be born? Or will it be a President Mitt Romney—a genuine Gilded Ager— who finally impregnates America with enough despair and disgust and determination to produce one?

2 Comments

  1. ansonburlingame

     /  June 26, 2012

    First, Duane, enough (in my view) of your polemics. You wrote, “..it won’t matter a whit to the economy or unemployment.” as American opinion. That is not what the poll relflected. Americans thought the “neither candidate” could do much to fix the economy, particularly the long term and maybe even not the short term.

    Said another way, Americans are pessimistic about our long term economic future by and large. And all your party is doing is to try hard to fix the short, very short term economic issues using more government spending of borrowed money.

    Spain now “only” needs about $125 Billion to “fix” their present concerns. We “only” need a few $ Trillion to do the same, right now, right?

    Even I agree that more massive government spending, a few $Trillion could resolve immediate unemployment concerns, provide for the already too high “safety net” and send carrier battle groups damn near anywhere we liked today.

    If debt makes no difference right now just go (try to) borrow say $4 Trillion and prop up the whole house of cards for another few years.

    However some folks, me included worry a lot about the “house of cards”. You promote policies for short term political gain with no concerns about the future. Actually we as a country have been doing so, along with Europe for decades now.

    Your supporters love your recent graph showing skyrocketing unemployment and support your call for massive additional government spending to fix the curve along with income distribution.

    Now go put the debt curve beside that one for unemployment and tell me which spells greater doom for our way of life, in the long haul. But don’t bother as I already know your answer.

    I sure hope your son and my grandkids are ready for the consequences if your side gets their way!! As for the short term, I suspect you and I will continue to collect our federal pensions, regardless of who is elected in Nov.

    So the question, at a personal level” would seem to be, are “we” you and me willing to give up part of our current benefits to ensure lesser and overwhelming burdens on your son and my grandkids? My answer to that question is Yes at least to some degree and I would START with a pledge limiting my ability to increase the deficit during my coming (someday) EOL care from government. I will also probably vote for FOR an increase in our cigarette tax even though I smoke!!

    Anson

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  2. Jane Reaction

     /  June 27, 2012

    There is no reason to respond to Corporal Burlingame except to again point out the obvious: 85% of college grads last year went back home because there are NO JOBS.

    That you will still get your undeserved pension is all you really give a ship rats ass about.

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