Can the Super Rich Understand Self Interest Properly Understood?

link here to article

This article by Stiglitz describes what most economists know and few American's realize. That is, that Income and Wealth inequality in the US have been growing rapidly for the last 30 years. He takes that information to the next step, however. He points out that growing inequality in income and wealth reduce opportunity for most Americans and it corrupts our democratic system. Wealth and income provide power and as Lord Acton said "Power corrupts and absolute power corrupts absolutely"

He argues that the Senate and most in the House belong to the top 1% of income earners. They also develop policies that serve the interests of their income group. Economists also serve the interest of this group. Every economics student is taught that income is a function of one's marginal productivity. In fact, the CEO of Goldman Sachs made that same argument. He used it to justify the wages earned on Wall Street. What he did not mention is that sectors that are able to pay high wages are usually made possible by market distortions arranged by government for their benefit. Ironically, he forgot to explain why the behaviors employed on Wall Street ,that produced the Great Recession, were also rewarded with outsized pay packages. I guess we need to redefine productivity.

Stiglitz compares inequality in the rest of the world with that in the US and it is not a pretty picture. it is much worse than it is in Europe and will continue to get worse as long as we let the top 1% engineer the system to its advantage. They not only take 25% of the income, but they have arranged tax policy to shift the burden of government to those less fortunate. Moreover, they have promoted free trade, which is supported by almost all economists, and they watch with approval as unions are stripped of power. These things may be bad for most Americans but the top 1% do not come in contact with most Americans. In a sense they do not exist, and government programs like public education and public parks do not interest them because they can buy whatever they need.

The article ends with an appeal to the self interest of the top 1%. He argues that it is in their ultimate self interest to realize that the common welfare is a condition for their own well being. He points to the turmoil in the mid-east which is a reaction to the concentration of wealth and power to which we are moving.



Stiglitz concludes by