Inequality Is Bad
To put it more accurately, some inequality is fine but the massive inequality that we currently have in the United States is a bad thing. This is, to many of us, self evident. Nobel laureate Joseph Stiglitz (pictured) explains why inequality is bad not just for moral reasons but for economic ones.
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. There are several reasons for this.
First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible. Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.
Third, and perhaps most important, a modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.
Stiglitz goes on to discuss how the massive inequalities that have developed in this country over the past several decades are like a cancer on the American body politic. It will gradually eat away at us until we turn from a first class power into an also-ran. Much like Speaker Boehner, I am nearly moved to tears thinking about what has been lost over the past 50 years. However, I’m not sure he understands exactly what it is that has been lost.