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American Dream or American Nightmare?
by Dr. Emanuel Paparella
2012-06-13 10:16:03
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A book has come out recently titled The Price of Inequality. The author is Columbia University professor and Nobel Prize winner Joseph Stiglitz. It brought me back to an article I posted in Ovi only six months ago on 22 of November 2011 titled “Socialism/Capitalism: Either/Or or Both/And?” (see http://www.ovimagazine.com/art/7954). The article concerned not only the United States’ economic crisis currently going on, but the whole of Western Civilization.

The article ended thus: “…in the US for example, there are free markets based on free trade and entrepreneurship is valued, but there is also Social Security, Medicare, Medicaid and Health Care which are socialistic programs for the poor and the elderly and the sick. In every democratic country in fact, it seems to be an accepted norm that the main functions of the government are primarily twofold: defense of its citizens but also the securing of the welfare of those citizens who, for whatever reason, are unable to take care of themselves.

So the urgent question persists on the table: rather than fixing a broken humpty dumpty which so far has only benefited the rich and comfortable of our society at the expense of the poor, rather than Robin Hood in reverse, ought we not be envisioning a new social order based on a more equitable distribution of wealth (distributive justice), a more fair and just paradigm? History will eventually determine the reply to that question but for now, taking a lesson from the history of evolution, it can safely be said that those who do not adapt to change, finding the status quo more convenient to one’s interests, and refuses to mutate, will eventually succumb to change and go extinct and the process will not be pretty as any process of decay and decline is not, for indeed the Romans had it on target: corruptio optima pessima: the corruption of the best is always the worst.”

I’d like to return briefly to the issue in the light of Stiglitz’s above mentioned book which is  concerned with income inequality vis a vis distributive justice. In his book professor Stiglitz thoroughly examines the various causes of income inequality and then offers some possible remedies. He first arrives at some surprising and shocking conclusions among which the notion that, if truth be told,  America is "no longer the land of opportunity" and "the 'American dream' is by now a myth." Stiglitz says that the statistics speak for themselves: in the last 30 years the share of national income held by the top 1% of Americans has doubled; for to the top 0.1%, their share has tripled. Meanwhile, median incomes for American workers (the bulk of the middle class) have stagnated. The situation is not that much different in the EU where the bankers are now busy trying to salvage the status quo wherein the rich and the powerful (the politicians) get richer and the middle class get poorer.

But what is ominous is the fact that compared to the rest of the world, even more than income inequality, "America has the least equality of opportunity of any of the advanced industrial economies," as Stiglitz reports. In short, the status you're born into — whether rich or poor — is more likely to be the status of your adult life in America vs. any other advanced economy, including 'Old Europe'. In fact, this sounds airily as what was the situation in medieval times as described by Karl Marx, wherein the status you were born into was your destiny and even the will of God. It is no wonder that Marx branded religion as “the opium of the people.”

For example, Stiglits points out that just 8% of students at America's elite universities come from households in the bottom 50% of income, even when those universities are "needs blind"  as is the case for Yale University— meaning admission isn't predicated on your ability to pay. I suppose I can consider myself extremely lucky for having been granted admission to the Yale Graduate School in the mid-seventies. I wonder if I’d have a chance nowadays.

"There's not much mobility up and down," Stiglitz writes. "The chances of someone from the top [income bracket] who doesn't do very well in school are better than someone from the bottom who does well in school." Here I was brought back to George W. Bush who was admitted to Yale with a C record in his high school years. The sad results are that because the children of those at the top of society tend to do better than those at the bottom — thanks, in part, to better education, health care and nutrition — the income inequality that's slowly emerged over the past 30 years will only widen in the next 10 to 20 years. America and perhaps the EU too, may eventually become a two-class society and look much more like a third world economy. Stiglitz writes that "People will live in gated communities with armed guards. It's a ugly picture. There will be political, social and economic turmoil."  As the book’s subtitle makes quite clear ('How Today's Divided Society Endangers Our Future') if this bad income distribution goes unattended the future of Western civilization looks quite bleak at this point.

But Stiglitz also offers a silver lining: he believes this "nightmare we're slowly marching toward" can be avoided, citing Brazil's experience since the early 1990s as an example of a country that has reduced income inequality. Among other things, he recommends improving education and nutrition for those at the bottom of society, and eliminating "corporate welfare" and other policies which "create wealth but not economic growth." Exactly the kind of policies that “business politicians” like Mitt Romney would like to encourage and implement.

For example, he cites the provision in Medicare Part D which forbids the federal government from negotiating prices with the drug companies. Over 10 years, that rule will generate approximately $500 billion for the industry, he estimates, with no tangible benefit for taxpayers or the economy as a whole. Which is to say, the common good and inequality of wealth and opportunity are neglected at a price, that of hurting the overall economy, by limiting competition, promoting cronyism and keeping those at the bottom from reaching their full potential. What Stiglitz is saying is this: not to promote a more dynamic economy and a fairer distribution of wealth, more consonant with the principles of a free market, is ultimately detrimental to everybody including those at the top who have done very well in the last thirty years or so. Food for thought! As that wise man in Palestine used to quip some two thousand years ago: let those who have ears, let them hear.


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Lalwrence Nannery2012-06-18 15:43:10
This is a very timely essay. Only Stiglitz and Krugman offer any sanity in this money-hungry nation.

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