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May 8, 2013


There are books that should be read not once but over and over again in order to try not to miss a single nuance of the author’s product. One is 1984, by George Orwell, which I have read perhaps a dozen times (and get something new or a new angle on something old with each new reading). It is a scary read but I just read it anew and expect to read it once more next year. It is unfailingly instructive if fearful.

I am now reading three books, one which I last read over 50 years ago and which was first published in 1910. It is a timeless classic and involves one of the world’s greatest minds in Albert Schweitzer. The name of the book is “The Quest of the Historical Jesus.” Schweitzer held three doctorates: one in music, one in medicine and one in theology. The book is a page turner.

Another is “Blinded by the Right,” by David Brock, a conservative turned liberal after years of helping the propaganda machine of the Republican party and people such as Newt Gingrich and Grover Norquist and phony “think tanks” trash Democrats in their lust(s) to gain or regain political power. It was first published in 2002 and gives us a look at rotten right wing politicians’ antics within the cabal.

The third book on my nightstand for perusal is “The Price of Inequality,” by Joseph Stiglitz, Nobel-prize winning economist and professor of economics at Columbia. It is excellent and is as honest in its treatment of macro and micro economics and their effects on the broader society as the book written by Brock depicts a power-obsessed right wing group willing to say or do anything in order to seize the reins of political power. It was first published in 2012.

There was and is an idea foisted off on “the rest of us” by Wall Street and its handmaidens that markets would work well if only government would stay out of the way. This unbelievable view is still being marketed by the one percent even in face of a history that saw several “panics” and a few drastic downturns in the economy when such laissez faire practices became the norm. The horrid effects of under regulation can be seen as recently as 2008, when Wall Street took the world to the brink of depression. Wall Street did in fact take us into the Great Depression in the 1920s, thanks to little to no regulation. Such are good examples of what happens when “government stays out of the way.”

The fundamental question is whether big business can be self-regulating and at the same time help to fashion an economy that works fairly for all of us. The so-called “neoclassical model” Stiglitz employed in his doctoral dissertation on inequality provided some assumptions in the evolution of inequality over time, and he found that, when applied, there should be a convergence to equality among individuals. There was not and is not. It was therefore clear to him that there was something wrong with a standard model that said that the economy was efficient and that there was no unemployment or discrimination.

Economic theories which don’t work have to be set aside in a quest for those which do work. Since it is clear that the “neoclassical model” doesn’t work, economists went to work in formulating new theories which would lead to the goals of the neoclassical view but without employing that view’s assumptions. We were thereafter led down many trails, from the major trade-offs between inequality and growth, optimal redistributive taxes etc., from the hard right group of greed to the socialist left of pay without work.

What are some of the symptoms of an economy that isn’t working? Shouldn’t those who work harder be better rewarded than those who do not work hard? Of course; but that is a phantom issue. Apologists for inequality argue that giving more money to the top one percent will benefit everyone, partly because it would lead to more growth (aka trickle-down economics). The truth is that higher inequality has not led to more growth; most Americans have actually seen their incomes sink or stagnate. As Stiglitz notes: “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.” (my emphasis)

Wall Street and their handmaidens (multinational corporations and right wing Republicans, among others) who believe or pretend to believe in trickle-down call this exercise of opposition to inequality “the politics of envy.” That is propaganda. Trickle-down does not increase the size of the economic pie for distribution (which this group would hog in any event). The hard economic truth is that in this period of growth in inequality (since 1974), economic growth has been slower – and the size of the slice of economic pie available to most Americans has been tanking. This is in keeping with my often-blogged view that growth in our economy and increases in the Dow and S & P are meaningless to most Americans as new wealth created is hogged by the one percent and not shared with the rest of us (since 1974).

Fed by the insights of my reading of the three books currently vying for my attention and aware of even greater disparities within the one percent (there are even bigger differences between those of the upper one-tenth of one percent and the rest of the one percent), and stung by the continuing inequality and deprivation being handed out by Wall Street and its minions in orchestrated fashion to the poor and middle classes, I will be writing more blogs on this gross malfunction of our current economic plan (if we have one beyond continuing to enrich the already rich and impoverishing the already poor and middle class).

I will end this outing short of final comment with a direct quote from Stiglitz’s book:

“. . . . . .  For an even more striking illustration of the state of inequality in America, consider the Walton family:  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. The numbers may not be as surprising as they seem, simply because those at the bottom have so little wealth.”

Such a commentary! This economy is clearly not working for the great majority of Americans, and perhaps not even for the Waltons. When six people have more wealth than one hundred million people and the signs point to further decline of the fortunes of the one hundred million, then when taken to its dry logical extreme, some day the hundred million will represent such a tepid aggregate demand that Wal-Mart will be out of business. Thus, given time, and assuming no change, deprivation and inequality will self-destruct our economic structure (however designed).

The system clearly needs change – for the benefit of all of us – even the rich.  GERALD  E


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