What I liked from this interview is about a little discussion on economic & financial inequality among the public. Politicians & economists of the world are trying to increase demand, & hence, GDP, but they are not trying to resolve the root problems of the recession & slow recovery, & keep trying to put in place harsh austerity measures for the poor public & tax cuts for the rich. These measures are counter-intuitive & decrease the national demand & hurt the national & international economies even further.
The tax cuts for the rich doesn't entice the rich to take that extra cash & increase the minimum wages or provide more benefits to their workers, & instead, they invest in their private yachts, sports arenas, sports clubs, racing animals, real estate, stock portfolios, or simply horde it all away in tax havens. The harsh austerity measures, coupled with more taxes in some cases, for the poor public reduce the free cash available to them, for discretionary purchases, & in many cases, even for needy purchases, which in turn, reduces aggregate demand in the country.
These measures create economic, financial, & social inequality. People cannot move up the social ladder, since they don't have enough money, but they can definitely move down, which is happening all over the world. The young populations of the world are seeing their dreams crush after spending a fortune on their education & building that dream where they would be owning their own homes, have families, build up their wealth, & finally, retire to a relaxing future. Instead, they are seeing their degrees pretty much worthless & jobs that pay so little that owning homes & building up wealth is becoming a very far-fetched dream. All the while, these same poor youths are also seeing people with no discernible talent making a lot of money, for instance, celebs like the Kardashian family or the rich billionaire kids of new billionaires in Europe, China, India, & Russia.
That inequality starts to breed hatred in these young minds. That hatred then tries to find an outlet in terms of violence; be it gun violence in America or Canada or gang warfare in Latin America or refugee crisis of Europe or ranks of terrorist groups like ISIS & Al-Qaeda in Middle East & Africa swelling up with young Westerners.
So, the root problem of violence in Middle East, Latin America, Europe, & in North America are all due to inequality all over the world. If only politicians & economists try to resolve this one major problem, we won't be having these fears of recessions hounding us all the time, & violence would definitely be down all over the world, which in turn, would save billions in arms & weaponry purchases, safety & security apparatus, & of course, millions of lives around the world. Those billions of money can then be used towards helping students in post-secondary institutions with their tuitions, improving infrastructure, creating more companies with subsidies, for instance, for green economies, which in turn, create more well-paying jobs, which in turn, would increase aggregate demand & reduce inequality. If only ... !!!
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Nobel laureate Joseph Stiglitz, a professor of economics at Columbia University, has written extensively about inequality in America, including his latest book, The Great Divide: Unequal Societies and What We Can Do About Them. He’ll be a visiting scholar in the new Lind Initiative U.S. Studies at the University of British Columbia this fall.
...
Q: You’ll be lecturing at UBC on global inequality. Why should people be worried about inequality?
A: Inequality is very related to the problems we’re talking about. People at the top spend less money than those at the bottom so when you have redistribution toward the top, aggregate demand goes down. Unless you intervene, you’re going to have a weak economy unless something else happens. That something else could be a bubble. The US tried a tech bubble & a housing bubble, but those were not sustainable answers. So I view inequality as a fundamental part of our macroeconomic weakness. There have always been two theories about inequality. One is that it reflects just deserts. The other is that there are large elements of exploitation & inequality of opportunities. The evidence is overwhelmingly that the increase in inequality is associated with those negative factors. If it were all social contribution, then when the top did better, they would be contributing to everybody’s well-being. That trickle-down hasn’t happened. We’ve seen median income, people in the middle, actually worse off than they were 25 years ago.
Q: You’ve said that inequality is fraying the bonds that hold the US together. That sounds scary. Is it that bad?
A: Oh, I think it is. [It’s behind] a lot of what you see as dysfunctional behaviour & extremism. Particularly, young men are angry. You know, how can people like Donald Trump be so politically successful, running ahead in the Republican primary with no policy other than a sense of anger? What he’s been doing is pointing out the corruption in our system. I mean, Jeb Bush has Florida put $250 million of pension funds into Lehman Brothers & then when he leaves as governor he gets a job at Lehman at a salary of $1.3 million—those things resonate with Americans. The system looks broken.
What I argued in The Great Divide is that societies can’t function without trust, both politically & economically. And in the context of politics, what you see increasingly is young people not voting. The voter turnout in the last election was the lowest it’s been since the Second World War, when a lot of people were off fighting. In 2010, voter turnout among young people was 20%. Americans like to say we’re fighting for democracy, & yet young Americans have come to the view that democracy doesn’t deliver.
Q: It’s been 4 years since you wrote, “Of the one per cent, by the one per cent, for the one per cent,” which gave the Occupy movement its slogan “We are the 99 per cent.” Is inequality getting more attention now?
A: Very much so. You see Hillary Clinton has emphasized it in her campaign, but even the Republicans have said inequality is the major issue. To me that’s one of the optimistic things, that it’s finally moved to the top of a political agenda. The other optimistic note is that you see, across the country, 70% support for increasing the minimum wage. Congress can’t get it through because it’s dysfunctional & so we’re having strong grassroots movements to raise it, in Seattle, Los Angeles, New York. The grassroots people are saying our national government is broken; we have to do something about it.
...
Q: What about Canada? Do you think we have an inequality problem?
A: Oh, yes, clearly. But it’s in the middle of the OECD pack. It’s not as good as the Scandinavian countries. It’s not been doing as good a job as it did in the past in taking inequality of market income & reducing it. Also, you are a natural resource economy, & natural resource economies, with a couple of exceptions, tend to be very unequal. You can, in principle, tax the natural resource rents at very high rates & use that to create a more equal society. The country that’s been most successful at that is Norway. The more typical countries are those in the Middle East where a small group seizes those resources, uses it to buy arms to make sure that they can oppress the remainder, & you get these great inequalities. So Canada is among the better performing of the natural resource economies, but it’s still not up to the best performing.
Q: In Canada the share of income going to the rich has been falling for several years. We have better social mobility than in the US. Why is Canada better on inequality?
A: You have a more egalitarian education system, & I think your health care system is so much better than ours. A third aspect that clearly is part of American history is our racial issue. But the problems of inequality are even within the white group. 20% of American children grow up in poverty, & that means they get inadequate nutrition, inadequate health care, & because we have a very local education system, they get inadequate access to education. With those as a starting base, you perpetuate inequality. That’s why, here in New York, Mayor de Blasio has made a big deal of trying to focus on preschool education, because by 5 years old, there are already huge differences. We’ve finally begun to recognize it.
...
The tax cuts for the rich doesn't entice the rich to take that extra cash & increase the minimum wages or provide more benefits to their workers, & instead, they invest in their private yachts, sports arenas, sports clubs, racing animals, real estate, stock portfolios, or simply horde it all away in tax havens. The harsh austerity measures, coupled with more taxes in some cases, for the poor public reduce the free cash available to them, for discretionary purchases, & in many cases, even for needy purchases, which in turn, reduces aggregate demand in the country.
These measures create economic, financial, & social inequality. People cannot move up the social ladder, since they don't have enough money, but they can definitely move down, which is happening all over the world. The young populations of the world are seeing their dreams crush after spending a fortune on their education & building that dream where they would be owning their own homes, have families, build up their wealth, & finally, retire to a relaxing future. Instead, they are seeing their degrees pretty much worthless & jobs that pay so little that owning homes & building up wealth is becoming a very far-fetched dream. All the while, these same poor youths are also seeing people with no discernible talent making a lot of money, for instance, celebs like the Kardashian family or the rich billionaire kids of new billionaires in Europe, China, India, & Russia.
That inequality starts to breed hatred in these young minds. That hatred then tries to find an outlet in terms of violence; be it gun violence in America or Canada or gang warfare in Latin America or refugee crisis of Europe or ranks of terrorist groups like ISIS & Al-Qaeda in Middle East & Africa swelling up with young Westerners.
So, the root problem of violence in Middle East, Latin America, Europe, & in North America are all due to inequality all over the world. If only politicians & economists try to resolve this one major problem, we won't be having these fears of recessions hounding us all the time, & violence would definitely be down all over the world, which in turn, would save billions in arms & weaponry purchases, safety & security apparatus, & of course, millions of lives around the world. Those billions of money can then be used towards helping students in post-secondary institutions with their tuitions, improving infrastructure, creating more companies with subsidies, for instance, for green economies, which in turn, create more well-paying jobs, which in turn, would increase aggregate demand & reduce inequality. If only ... !!!
---------------------------------------------------------------------------------
Nobel laureate Joseph Stiglitz, a professor of economics at Columbia University, has written extensively about inequality in America, including his latest book, The Great Divide: Unequal Societies and What We Can Do About Them. He’ll be a visiting scholar in the new Lind Initiative U.S. Studies at the University of British Columbia this fall.
...
Q: You’ll be lecturing at UBC on global inequality. Why should people be worried about inequality?
A: Inequality is very related to the problems we’re talking about. People at the top spend less money than those at the bottom so when you have redistribution toward the top, aggregate demand goes down. Unless you intervene, you’re going to have a weak economy unless something else happens. That something else could be a bubble. The US tried a tech bubble & a housing bubble, but those were not sustainable answers. So I view inequality as a fundamental part of our macroeconomic weakness. There have always been two theories about inequality. One is that it reflects just deserts. The other is that there are large elements of exploitation & inequality of opportunities. The evidence is overwhelmingly that the increase in inequality is associated with those negative factors. If it were all social contribution, then when the top did better, they would be contributing to everybody’s well-being. That trickle-down hasn’t happened. We’ve seen median income, people in the middle, actually worse off than they were 25 years ago.
Q: You’ve said that inequality is fraying the bonds that hold the US together. That sounds scary. Is it that bad?
A: Oh, I think it is. [It’s behind] a lot of what you see as dysfunctional behaviour & extremism. Particularly, young men are angry. You know, how can people like Donald Trump be so politically successful, running ahead in the Republican primary with no policy other than a sense of anger? What he’s been doing is pointing out the corruption in our system. I mean, Jeb Bush has Florida put $250 million of pension funds into Lehman Brothers & then when he leaves as governor he gets a job at Lehman at a salary of $1.3 million—those things resonate with Americans. The system looks broken.
What I argued in The Great Divide is that societies can’t function without trust, both politically & economically. And in the context of politics, what you see increasingly is young people not voting. The voter turnout in the last election was the lowest it’s been since the Second World War, when a lot of people were off fighting. In 2010, voter turnout among young people was 20%. Americans like to say we’re fighting for democracy, & yet young Americans have come to the view that democracy doesn’t deliver.
Q: It’s been 4 years since you wrote, “Of the one per cent, by the one per cent, for the one per cent,” which gave the Occupy movement its slogan “We are the 99 per cent.” Is inequality getting more attention now?
A: Very much so. You see Hillary Clinton has emphasized it in her campaign, but even the Republicans have said inequality is the major issue. To me that’s one of the optimistic things, that it’s finally moved to the top of a political agenda. The other optimistic note is that you see, across the country, 70% support for increasing the minimum wage. Congress can’t get it through because it’s dysfunctional & so we’re having strong grassroots movements to raise it, in Seattle, Los Angeles, New York. The grassroots people are saying our national government is broken; we have to do something about it.
...
Q: What about Canada? Do you think we have an inequality problem?
A: Oh, yes, clearly. But it’s in the middle of the OECD pack. It’s not as good as the Scandinavian countries. It’s not been doing as good a job as it did in the past in taking inequality of market income & reducing it. Also, you are a natural resource economy, & natural resource economies, with a couple of exceptions, tend to be very unequal. You can, in principle, tax the natural resource rents at very high rates & use that to create a more equal society. The country that’s been most successful at that is Norway. The more typical countries are those in the Middle East where a small group seizes those resources, uses it to buy arms to make sure that they can oppress the remainder, & you get these great inequalities. So Canada is among the better performing of the natural resource economies, but it’s still not up to the best performing.
Q: In Canada the share of income going to the rich has been falling for several years. We have better social mobility than in the US. Why is Canada better on inequality?
A: You have a more egalitarian education system, & I think your health care system is so much better than ours. A third aspect that clearly is part of American history is our racial issue. But the problems of inequality are even within the white group. 20% of American children grow up in poverty, & that means they get inadequate nutrition, inadequate health care, & because we have a very local education system, they get inadequate access to education. With those as a starting base, you perpetuate inequality. That’s why, here in New York, Mayor de Blasio has made a big deal of trying to focus on preschool education, because by 5 years old, there are already huge differences. We’ve finally begun to recognize it.
...
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