Wednesday, April 6, 2011

The Almighty One Percent

I come across an interesting article today on "Truthout" blog. It points to a piece in the current issue of Vogue magazine, which, wonder to behold, I actually have a copy of. But, I don't even need a copy of the magazine because the Vogue article is available on the Web. Here's what it says, and I might point out, this subject is one of my constant themes. The article is entitled "Of the 1%, by the 1%, by the 1%" and it's subject is income inequality in the U.S. Here are the salient facts. You have heard them before, here and elsewhere, if you're paying attention.
  • The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. 
  • In terms of income equality, America lags behind any country in the old, ossified Europe. The closest analogs to us are Russia and Iran.
So why is this inequality a bad thing? Isn't the size of the pie what matters and not the size of slices? Nope, this argument is fundamentally wrong. Why?
  1. 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.
  2. 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. 
  3. A modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. . . . 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.
The more inequality there is in society, the less willing the richest are to pay for things for the common good: infrastructure, medical care, education, you name it. They don't need these things. They can easily afford to meet whatever needs or wants they have. So screw the rest of us. Naturally these people don't want a strong government. One that's too deadlocked to regulate them or tax them, well, that's just what the doctor ordered. The rest of this article is very interesting. You should read it.
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