A new report by the Congressional Budget Office shows that over the past 30 years, the top 1 percent of income earners more than doubled their share of the national income pie. According to the Nobel-winning economist Joseph Stiglitz, that’s a recipe for disaster—not just for the other 99 percent, but for the economy as a whole.
Writing in Vanity Fair this spring, Stiglitz explained the folly of advocating, as many right-wing pundits do, that it’s not the share of the pie but the size of the pie that matters:
That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul.
Stiglitz argued that the resulting stifling of economic opportunity, the waste of talent put a drag on economic recovery. Moreover, he argued:
[M]any 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….perhaps most important, a modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology.
In his preface to the report, Stiglitz wrote:
Any economic system has to be graded on its ability to provide sustainable increases in well-being to the vast majority of its citizens.
Among the key proposals suggested by the experts who came together to craft “Exiting from the Crisis”:
- Measuring economic growth in terms of how well it serves the needs of citizens.
- Building sustainable, responsible corporations that recognize their duties to the workers they employ and the communities in which they operate.
- Using fiscal and monetary policy to achieve full employment and raise living standards and making sure workers’ income keeps pace with increases in productivity.
Download “Exiting from the Crisis” here, in PDF format.