Unstructured Finance

Becoming comfortably numb to income inequality

October 26, 2012

By Matthew Goldstein and Jennifer Ablan

About a year ago, Nobel Prize-winning liberal economist Joseph Stiglitz made a surprise appearance at the Occupy Wall Street camp site in Zuccotti Park, giving a speech to rally the protestors and support their causes of bringing attention to the economic divide between the 1 percent and everyone else in the U.S.

Today, the protestors in lower Manhattan have all but disappeared with the attention on Occupy Wall Street gone along with it.

Stiglitz said the effort wasn’t for nothing, however.

“I think Occupy Wall Street served a function in that it brought to the attention of the American public two things…the distortion of our economy and inequality,” Stiglitz told Reuters TV this week in a wide ranging interview (led by Jenn) at Columbia University, where his a professor. Stiglitz said the protests helped serve notice that while a small group of Americans are doing far better than the other 99 percent, “we all have to get together” for the country to truly prosper.

The thing is, it makes you wonder if one reason OWS couldn’t keep up the momentum is that people know what the problem is but just aren’t sure much can be done about it. In other words, it’s hard to keep protesting something—in this case, inequality—if you’ve come to accept it as the way things are just going to be.

And if it is the case that a growing number of Americans simply see income inequality as part of the New Normal, that could have long-term ramifications for how we all see each other as a nation, says Stiglitz.

“We are paying a very high price for this inequality,” said Stiglitz. “The U.S. has become the advanced industrial country with the least equality of opportunity and that is very different from our self-image—the American Dream.”

Noting that success in the U.S. is more dependent on income than in many other industrialized countries, he said: “We are not using one of our most important assets–our human capital … and that means we are weakening our economy.”

For Jenn’s full interview with Stiglitz click here.

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The root cause of income inequality is unequal distribution of ability; i.e. the bell curve of human intelligence, athletic ability, etc…etc… We’re stuck with it at birth…for life. I will never be able to play basketball as well as Labron James…I was born at my height, weight, and athletic ability. It is pointless for me to demand equality in pay for Labron and I in the basketball arena. Same applies in professions which require high intellect where the top 1% make millions. It’s why the world’s best have always come to our shores…to play basketball…to teach in our universities…to work in our companies. Another possible explanation for this “sudden”, and “unacceptable” inequality in pay: the US is no longer attracting the world’s best and brightest, but a large number of the world’s lowest in ability; i.e. the lower left side of the bell curve. That’s a problem of immigration strategy that can be fixed with creativity.

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