“The American Dream is a myth,” said Nobel Prize-winning economist and Columbia University professor Joseph Stiglitz during a book publicity tour, according to CNN, echoing his earlier statements from Davos.
“The median income of a full-time, male worker,” Stiglitz continued, “is lower than it was 40 years ago. So we’ve had a generation of stagnation.”
That may be news to some, yet another oft-repeated, yet depressing reality for others. The reality is that inequality is a problem in America, and the world’s economic heavyweights — like Stiglitz — are throwing in their two cents as well. The fact that nearly all of the gains made since the end of the Great Recession have gone to the wealthiest Americans, Stiglitz says, should be viewed as “unacceptable,” and one of the major reasons why we’re still seeing economic hardship and slow growth.
While what Stiglitz is saying essentially echoes what many others have brought up in the discussion of America’s economic woes over the past several years, he also adds that politics has played a key part in creating the situation we’re seeing today. That makes a lot of sense, as the U.S. employs a limited-free market system, in which the government does impose regulations and has some pull through policy measures. But what makes his statements important is that it contradicts a prevailing line of thinking in America, namely the belief in meritocracy.
Americans are usually on board with the idea that if you work hard and play by the rules, you’ll be rewarded by the market system with prosperity in some form or another. Stiglitz is basically adding to that conversation by saying that it’s not necessarily true. Politics has, and will likely continue to be, one of the driving forces behind inequality.
As for who’s to blame, Stiglitz did single out the Republicans and Ronald Reagan, as we’ve really seen inequality and the economic divide grow since he took control of the White House in 1980. While we can easily look at some common indicators to see that that has been the case in many respects, it’s also clear that stagnation started in the 1970s — before Reagan took office.
That’s not to say that Republican policies haven’t exacerbated the situation, but simply laying it at the feet of one party may be taking too narrow or simple of an analysis.
Either way, while who we should blame has been argued back and forth for years now, a good deal of the American public would rather have leaders working on strategies to get us out of the current climate. Obama’s presidency has had some success in correcting the course, as evidenced by the uptick in employment and Wall Street’s rebound. But what’s been lacking is central to the whole inequality problem, in that the success of the recovery isn’t ‘trickling down.’
The question is whether those calling the shots can come up with a cohesive strategy to effectively close the gap, or at least help even things out a bit. The Obama presidency has been marred by high-level confrontations with Republican lawmakers from the Senate and House, which led to gridlock in passing bills for much of the last six years. That’s not to say that either side was right or wrong but the inaction, or possible bad legislation that has been passed in the name of partisan politics, could have made things worse.
But what Stiglitz and others are bringing to light is the fact that business and politics are as interconnected as they’ve ever been. That connectivity could be leading to some decisions that don’t have the public’s best interest in mind, leading only to worsening levels of inequality. Again, what his recent comments have done is bring attention to the fact that our entrenched belief in America’s meritocracy is not as foolhardy as we once thought.
Inequality is a monstrous issue that will take years, if not decades, to be resolved. But looking at its roots, we need to be mindful that policy can not only be the solution, but the source of the problem as well.
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