‘Scandinavian Dream’ is true fix for America’s income inequality
Nobel Prize winning economist Joseph Stiglitz explains exactly what ails America in terms that are easily understood. Stiglitz points out that America has the highest level of income inequality of any of the advanced countries in the world. He points out that after World War II America was a much more economically cohesive country. The economic growth of the country was much more robust up and until 1980. In other words, the policies of Ronald Reagan started the decline of the middle-class and was the genesis of the growing income and wealth disparity we see today.
What were those policies? According to Joseph Stiglitz they were,
- Strip away regulations
- Lower the top tax rates
The proponents claimed this would lead to faster economic growth. While those at the bottom would get a smaller share, the size of the pie would be so much greater that they would be better off, trickle-down economics. A rising tide lifts all boats. Stiglitz says we know that that experiment failed after living through it for a third of a century. “The big ships, yachts have done very well,” said Stiglitz. “The smaller boats have not. The rising tide has lifted only the one percent. Those in the middle and those in the bottom have been left behind.”
Stiglitz points out that the same economic forces in America are occurring in other industrialized nations. The fact that they are not suffering from the same income disparity proves that it is all about policy and not economic change. Policies have made it more difficult to unionize and thus shifted power away from the workers and towards the corporations. The tax structure reinforces income inequality as those at the top pay a much smaller percentage of their income in taxes than those that are poor or middle-class.
America does not have good job training programs. The public transportation system that provides workers mobility is terrible. As such America has become a more economically segregated society. Rich people live with rich people. Poor people live with poor people.
If America invested in Pre-K, job programs, and other programs to enhance the nation’s skill set, it would create a more productive economy. Less would be spent on prisons.
“If I knew I was going to be born in the top 10% of the country, America is the country you want to be born in. Absolutely, no doubt about it,” said Stiglitz. “But if you were going to be born in the bottom third, it is not the place that you would choose. There are many other countries where you would be much better off. Your health would be better. Your exposure to environmental hazard would be lower. Your income, even your income would be higher. Your prospect of going from the bottom third to the top third would be much higher. So maybe we should be calling the ‘American Dream’ the ‘Scandinavian Dream’ or so many other countries that realized sixty, seventy years ago, they looked across the Atlantic and saw America as a land of opportunity and they changed. They changed their education system. They changed their social policies. They changed their legal frameworks. Meanwhile we changed. And we changed ourselves in ways that made us into less of a land of opportunity.”
So says a Nobel Prize winning economist. One of the best comedians expresses the the state of the ‘American Dream’ in a much more graphic manner. It is worth listening to here.