Tuesday, January 22, 2013

Inequality Is Bad For Us

In scientific tests animals reject inequality. So do children. Why do adults keep silent on it?

Maybe because the beneficiaries of inequality punish criticism. In grade school, teachers reward fairness. In the real world the controllers of income and markets reject fairness because they can get away with it, and they suppress dissent (as shown in this National Journal piece). They get away with it because they hold power. They hold us hostage because they have the money.

Joseph Stiglitz, one of our great Nobel Prize winning economists, says inequality is holding back our economic recovery. (Here's his piece in the NYTimes.)

Paul Krugman, our other Nobel economist, also liberal, doesn't disagree exactly but he doesn't see how Stiglitz's argument works out.

This is how liberal economists are different than conservative ones: they are skeptics. They demand you show them the math, which is not true of the economists who gave us the economic collapse.

Just ask Glenn Hubbard. (This Rolling Stone article does a good job dissecting his conflicts of interest.) He was one of the midwives of the economic crisis. He built the car that drove us over the cliff. He was a Bush economist while he was also earning money rationalizing what the large financial institutions were doing that caused the crisis. (Watch the documentary Inside Job if you want to see Hubbard talk himself into a corner.)

Closed systems that self-justify tend to make the same mistakes over and over again, and they do this because no matter what mistakes they make the people who run them find ways to keep their money and their power.

Krugman has a neat seven minute tutorial on inequality that's worth watching.

Inequality is not natural, it is not common sense, it is not good for us. It is, however, good for the people who keep telling us it's natural, sensible and good. Ask yourself this, what kind of a businessman works to impoverish his customers? That is what Reaganomics has done over the past three decades. The engine of any strong economy turns out to be workers who earn a good living. See Krugman's video above.

But now even conservative economic journals like the Economist are beginning to see the damage inequality does. For one thing it insulates the rich from negative consequences and healthy skepticism. It also is just bad economics on a fundamental level, never mind what economic yes-men say to their wealthy clients.

Inequality, I'm speaking of vast inequality like we have today, isn't fair, isn't inevitable, isn't natural, isn't sensible, and isn't a good thing. It's holding us back. It's even holding back the rich who think it benefits them. What would happen if our politicians understood this?

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