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Some thirty years ago, the top 1 percent of income earners received only 12 percent of the nation's income.13
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Joseph E. Stiglitz |
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What America has been experiencing in recent years is the opposite of trickle-down economics: the riches accruing to the top have come at the expense of those down below.21
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Joseph E. Stiglitz |
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over the last three decades those with low wages (in the bottom 90 percent) have seen a growth of only around 15 percent in their wages, while those in the top 1 percent have seen an increase of almost 150 percent and the top 0.1 percent of more than 300 percent.27 Meanwhile,
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Joseph E. Stiglitz |
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the six heirs to the Wal-Mart empire command wealth of $69.7 billion, which is equivalent to the wealth of the entire bottom 30 percent of U.S. society.
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Joseph E. Stiglitz |
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recent research has shown that by far the largest fraction of personal bankruptcies involve the illness of a family member.38
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Joseph E. Stiglitz |
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We are now approaching the level of inequality that marks dysfunctional societies--it is a club that we would distinctly not want to join, including Iran, Jamaica, Uganda, and the Philippines.93
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Joseph E. Stiglitz |
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In other advanced industrial countries, families don't have to worry about how they will pay the doctor's bill, or whether they can afford to pay for their parent's health care. Access to decent health care is taken as a basic human right.
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Joseph E. Stiglitz |
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Economists have a name for these activities: they call them rent seeking, getting income not as a reward to creating wealth but by grabbing a larger share of the wealth that would otherwise have been produced without their effort.
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Joseph E. Stiglitz |
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there are two ways to become wealthy: to create wealth or to take wealth away from others.
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Joseph E. Stiglitz |
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as the "good" middle-class jobs--requiring a moderate level of skills, like autoworkers' jobs--seemed to be disappearing relative to those at the bottom, requiring few skills, and those at the top, requiring greater skill levels. Economists refer to this as the "polarization" of the labor force."
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Joseph E. Stiglitz |
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The success of an economy can be assessed only by looking at what is happening to the living standards--broadly defined--of most citizens over a sustained period of time.
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Joseph E. Stiglitz |
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University of California professor Emmanuel Saez, Thomas Piketty of the Paris School of Economics, and Stefanie Stantcheva of the MIT Department of Economics, carefully taking into account the incentive effects of higher taxation and the societal benefits of reducing inequality, have estimated that the tax rate at the top should be around 70 percent--what it was before President Reagan started his campaign for the rich.68 But
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Joseph E. Stiglitz |
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Borrowers were told not to worry about paying the ever-mounting debt, because house prices would keep rising and they could refinance, taking out some of the capital gains to buy a car or pay for a vacation.
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Joseph E. Stiglitz |
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Loose money and light regulation were a toxic mixture. It exploded.
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Joseph E. Stiglitz |
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Suppose someone were to describe a small country that provided free education through university for all of its citizens, transportation for schoolchildren, and free health care - including heart surgery - for all. You might suspect that a country is either phenomenally rich or on the fast track to fiscal crisis.
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Joseph E. Stiglitz |
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Economists have a name for these activities: they call them rent seeking, getting income not as a reward to creating wealth but by grabbing a larger share of the wealth that would otherwise have been produced without their effort. (We'll give a fuller definition of the concept of rent seeking
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Joseph E. Stiglitz |
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A lot of things went wrong in the nineties, and the footprints of the banks can be found at the scene of one suspicious deed after another. Investment banks are supposed to provide information that leads to a better allocation of resources. Instead, all too often, they trafficked in distorted or inaccurate information, and participated in schemes that helped others distort the information they provided and enriched others at shareholders' e..
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Joseph E. Stiglitz |
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To put it baldly, there are two ways to become wealthy: to create wealth or to take wealth away from others.
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Joseph E. Stiglitz |
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The magnitude of the underfunding was astronomical. One study of just the 348 companies in the S&P 500 with defined benefit pension programs concluded that this underfunding amounted to between $184 and $323 billion (if non-pension benefits, such as health benefits, are included, the deficit is in the range of $458 to $638 billion). A Merrill Lynch study showed that companies with off-balance-sheet pension liabilities that exceed their tota..
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Joseph E. Stiglitz |
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Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, "I have found a flaw." Congressman Henry Waxman pushed him, responding, "In other words, you found that your view of the world, your ideology, was not right; it wasn't working." "Absolutely, precisely," Greenspan said."
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Joseph E. Stiglitz |
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there is always a worry that voters will be attracted to populists and extremists who attack the establishment that has created this unfair system21 and who make unrealistic promises of change. Distrust,
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Joseph E. Stiglitz |
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The most important "endowment," from our perspective, is a society's learning capacities (which in turn is affected by the knowledge that it has; its knowledge about learning itself; and its knowledge about its own learning capacities),"
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Joseph E. Stiglitz |
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Already, data showed that the American dream of rags to riches, the Horatio Alger story, was largely a myth. Economic mobility was extremely limited. The abolition of the estate tax could solidify these changes, creating a new "class" society, based not on ancient nobility as in Europe, but on the bonanza of the Roaring Nineties. The"
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Joseph E. Stiglitz |
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The abolition occurred just as it became clear that much of the wealth that had been seemingly created in the Roaring Nineties was nothing more than a phantasm, that much of the wealth was "stolen" property, acquired through misleading accounting and tax scams, in an economy where corporate governance had failed, and failed badly. But for the lucky few who had cashed in, there was the basis to found a new set of dynasties. At least the rail..
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Joseph E. Stiglitz |
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Most importantly, it became clear that the name "free trade agreement" was itself a matter of deceptive advertising: it was really a managed trade agreement, managed especially for special corporate interests, particularly in the United States."
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Joseph E. Stiglitz |
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A lo largo de la historia, las economias que han florecido son aquellas en las que los acuerdos se sellan con un apreton de manos. Sin confianza, los tratos de negocios basados en el consenso de que los detalles mas complicados se aclararan mas tarde dejan de ser posibles. Sin confianza, cada participante mira a su alrededor para ver como y cuando van a traicionarle sus interlocutores.
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Joseph E. Stiglitz |
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El aumento de las desigualdades corroe la confianza; tiene un impacto economico similar al de un disolvente universal. Crea un mundo economico en el que hasta los ganadores son precavidos. Y los perdedores... En toda transaccion, en todo contacto con un jefe, una empresa o un burocrata, ven la mano de alguien que quiere aprovecharse de ellos.
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Joseph E. Stiglitz |
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Individuals say they are working so hard for the family, but as they work so hard there is less and less time for the family, and family life deteriorates. Somehow, the means prove inconsistent with the stated end. T
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Joseph E. Stiglitz |
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Individuals can often be better motivated by intrinsic rewards--by the satisfaction of doing a job well--than by extrinsic rewards (money).
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Joseph E. Stiglitz |
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Privatization, of course, is based on yet another myth: that government-run programs must be inefficient, and privatization accordingly must be better. In fact, as we noted in chapter 6, the transaction costs of Social Security and Medicare are much, much lower than those of private-sector firms providing comparable services. This should not come as a surprise. The objective of the private sector is to make profits--for private companies, t..
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Joseph E. Stiglitz |
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The powerful try to frame the discussion in a way that benefits their interests, realizing that, in a democracy, they cannot simply impose their rule on others. In one way or another, they have to "co-opt" the rest of society to advance their agenda. Here"
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Joseph E. Stiglitz |
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learning--we have learned how to increase productivity, the outputs that can be produced with any inputs. There are two aspects of learning that we can distinguish: an improvement in best practices, reflected in increases in productivity of firms that marshal all available knowledge and technology, and improvements in the productivity of firms as they catch up to best practices. In fact, the distinction may be somewhat artificial; there may..
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Joseph E. Stiglitz |
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This is an idea called trickle-down economics. It has a long pedigree--and has long been discredited. As we've seen, higher inequality has not led to more growth, and most Americans have actually seen their incomes sink or stagnate. What America has been experiencing in recent years is the opposite of trickle-down economics: the riches accruing to the top have come at the expense of those down below.21
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Joseph E. Stiglitz |
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Lack of health insurance is one factor contributing to poorer health, especially among the poor. Life expectancy in the United States is 78 years, lower than Japan's 83 years, or Australia's or Israel's 82 years. According to the World Bank, in 2009 the United States ranked fortieth overall, just below Cuba.54 Infant and maternal mortality in the United States is little better than in some developing countries; for infant mortality, it is w..
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Joseph E. Stiglitz |
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Some U.S. states spend as much on their prisons as they do on their universities.62 Such expenditures are not the hallmarks of a well-performing economy and society. Money that is spent on "security"--protecting lives and property--doesn't add to well-being; it simply prevents things from getting worse."
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Joseph E. Stiglitz |
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But unlike naive Marxians, we do not believe that economic interests alone drive change. Change is often affected by the evolution of ideas, and particularly of overarching beliefs.54 Once the Enlightenment notion that "all men are created equal" was accepted (however that idea came to be accepted, whatever the drivers), it was no surprise that it evolved in directions that brought within its ambit women and slaves. Given these beliefs, it ..
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Joseph E. Stiglitz |
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looking out for the other guy isn't just good for the soul; it's good for business. The
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Joseph E. Stiglitz |
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If one group's economic opportunities leave it much poorer than other groups, then the interactions of the first group with people from other groups will be limited, and it is likely to develop a different culture. Then ideas about intrinsic differences of the poor group are more likely to take root and to persist.
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Joseph E. Stiglitz |
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There is another way for moneyed interests to get what they want out of government: convince the 99 percent that they have shared interests. This strategy requires an impressive sleight of hand; in many respects the interests of the 1 percent and the 99 percent differ markedly. The fact that the 1 percent has so successfully shaped public perception testifies to the malleability of beliefs. When others engage in it, we call it "brainwashing..
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Joseph E. Stiglitz |
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Opponents of regulation always complain that it's bad for business. Regulations that prevent pollution, of course, are bad for businesses that would have otherwise polluted. Regulations that prevent child labor are bad for businesses that would have exploited children. Regulations that prevent American companies from engaging in bribery or abuses of human rights may be bad for businesses that engage in bribery or human rights abuses. As we'..
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Joseph E. Stiglitz |
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during the 2008 crisis, corporate welfare reached new heights. In the great bailout of the Great Recession, one corporation alone, AIG, got more than $180 billion--more than was spent on welfare to the poor from 1990 to 2006.68 As
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Joseph E. Stiglitz |
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Minimum wages have not kept up with inflation (so that the real federal minimum wage in the United States in 2011 is 15 percent lower than it was almost a third of a century ago, in 1980);
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Joseph E. Stiglitz |
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It shouldn't, of course, come as a big surprise that some of the wealthiest Americans are promoting an economic fantasy in which their further enrichment benefits everyone. It is, perhaps, a surprise that they've done such a good job of selling these fantasies to so many Americans. The
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Joseph E. Stiglitz |
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Throughout its history, America has struggled with inequality. But with the tax policies and regulations that existed in the post-World War II war period--and the heavy investments in education, like the GI Bill--matters were improving. The tax cuts at the top and deregulation that began in the Reagan years reversed that trend. There
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Joseph E. Stiglitz |