Oh, its a wake up call alright...Progressives have to wake up now, and face the reality that Wisconsin- the HOME OF PROGRESSIVISM- just rejected their money, influence, and fading union power...AFSME has lost 60% of its membership...they'll lose more now that Walker won...

Published on Wednesday, June 6, 2012 by Project Syndicate

The Price of Inequality and the Myth of Opportunity

by Joseph Stiglitz

America likes to think of itself as a land of opportunity, and others view it in much the same light. But, while we can all think of examples of Americans who rose to the top on their own, what really matters are the statistics: to what extent do an individual’s life chances depend on the income and education of his or her parents?

Nowadays, these numbers show that the American dream is a myth. There is less equality of opportunity in the United States today than there is in Europe – or, indeed, in any advanced industrial country for which there are data.

This is one of the reasons that America has the highest level of inequality of any of the advanced countries – and its gap with the rest has been widening. In the “recovery” of 2009-2010, the top 1% of US income earners captured 93% of the income growth. Other inequality indicators – like wealth, health, and life expectancy – are as bad or even worse. The clear trend is one of concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.

It would be one thing if the high incomes of those at the top were the result of greater contributions to society, but the Great Recession showed otherwise: even bankers who had led the global economy, as well as their own firms, to the brink of ruin, received outsize bonuses.

A closer look at those at the top reveals a disproportionate role for rent-seeking: some have obtained their wealth by exercising monopoly power; others are CEOs who have taken advantage of deficiencies in corporate governance to extract for themselves an excessive share of corporate earnings; and still others have used political connections to benefit from government munificence – either excessively high prices for what the government buys (drugs), or excessively low prices for what the government sells (mineral rights).

Likewise, part of the wealth of those in finance comes from exploiting the poor, through predatory lending and abusive credit-card practices. Those at the top, in such cases, are enriched at the direct expense of those at the bottom.

It might not be so bad if there were even a grain of truth to trickle-down economics – the quaint notion that everyone benefits from enriching those at the top. But most Americans today are worse off – with lower real (inflation-adjusted) incomes – than they were in 1997, a decade and a half ago. All of the benefits of growth have gone to the top.

America has become a country not “with justice for all,” but rather with favoritism for the rich and justice for those who can afford it – so evident in the foreclosure crisis, in which the big banks believed that they were too big not only to fail, but also to be held accountable.

Defenders of America’s inequality argue that the poor and those in the middle shouldn’t complain. While they may be getting a smaller share of the pie than they did in the past, the pie is growing so much, thanks to the contributions of the rich and superrich, that the size of their slice is actually larger. The evidence, again, flatly contradicts this. Indeed, America grew far faster in the decades after World War II, when it was growing together, than it has since 1980, when it began growing apart.

This shouldn’t come as a surprise, once one understands the sources of inequality. Rent-seeking distorts the economy. Market forces, of course, play a role, too, but markets are shaped by politics; and, in America, with its quasi-corrupt system of campaign finance and its revolving doors between government and industry, politics is shaped by money.

For example, a bankruptcy law that privileges derivatives over all else, but does not allow the discharge of student debt, no matter how inadequate the education provided, enriches bankers and impoverishes many at the bottom. In a country where money trumps democracy, such legislation has become predictably frequent.

But growing inequality is not inevitable. There are market economies that are doing better, both in terms of both GDP growth and rising living standards for most citizens. Some are even reducing inequalities.

America is paying a high price for continuing in the opposite direction. Inequality leads to lower growth and less efficiency. Lack of opportunity means that its most valuable asset – its people – is not being fully used. Many at the bottom, or even in the middle, are not living up to their potential, because the rich, needing few public services and worried that a strong government might redistribute income, use their political influence to cut taxes and curtail government spending. This leads to underinvestment in infrastructure, education, and technology, impeding the engines of growth.

The Great Recession has exacerbated inequality, with cutbacks in basic social expenditures and with high unemployment putting downward pressure on wages. Moreover, the United Nations Commission of Experts on Reforms of the International Monetary and Financial System, investigating the causes of the Great Recession, and the International Monetary Fund have both warned that inequality leads to economic instability.

But, most importantly, America’s inequality is undermining its values and identity. With inequality reaching such extremes, it is not surprising that its effects are manifest in every public decision, from the conduct of monetary policy to budgetary allocations. America has become a country not “with justice for all,” but rather with favoritism for the rich and justice for those who can afford it – so evident in the foreclosure crisis, in which the big banks believed that they were too big not only to fail, but also to be held accountable.

America can no longer regard itself as the land of opportunity that it once was. But it does not have to be this way: it is not too late for the American dream to be restored.

© 2012 Project Syndicate

Everybody, RELAX! Walker will do just fine. After all, he's the best governor BIG $$$ can buy! =(

I have never seen so many sore losers in my life as there are on this blog!!!!!!!!

When you head is in the sand. your azz is exposed....

wow so many trolls in one place - must be a convention ;)

Scott walker winning was the appetizer

Seeing President Obama LOSE will be the main course

FDR said public sector unions were ridiculous and that he would never allow them.

Public sector employee can keep their unions if they give up the right to vote. Hold both is the merely self dealing. Here in Cal it has gone on for two generations and now the state is bankrupt even though the amount revenue they collect every year is monstrous.

Reagan did the right thing and fired all of the traffic controllers as he should have. Public employees are public servants. If you don't like being a servant then work elsewhere. Scott Walker also did and does the right thing. He is there to protect the state and ensure it is fiscally sound

How the Wis. people voted for Walker, just proves that Americans vote for the guy or gal who has good talking points. They continue to vote against their own interests. Thank God I live in Canada. I guess that money really does talk, not the the average American, but to big business(Koch Bros)! You can kiss the middle class goodbye & that is absolutely the truth.

Ed you just wont admit to facts,you say that Gov.Walker out spent Barrett by 7 1/2 to 1 but yet your site said that this election had 64 million dolars spent on it you convienietly forget that the Unions kicked in 30 million making it that the Demoicrats outspent the Republicans in this election so why not report the truth not just your propaganda

The Libs were not sleep..They just got Beat.

Libs are not use to getting beat at their own game. They are like school yard bullies, they can attack and say anything to you as long as you keep running away, but once you strike back..they go crying and complaining.

Scott Walker and the PEOPLE of WI punched back..and now all of the Libs are wee wee weeing all the way back home.

It is very telling to read the irrational rants of Ed in print. the line:

"The unions need to go back to the classroom and explain to their people that its important to vote for folks who got your best interest at heart."

This statement dfines the "Progressive Movement" for what it really is - Selfish. It is all about who can give ME free stuff. There is no thought of developing self responsibility. their platform does not offer anything but take from others to give to others, there is no self sacrifice to earn a better life. It is all about self-pity and "unfairness". Vote for YOUR best interest - not the country - perfect example from a guy who charges an extra $75 to shake his hand or sit close to him when he does a show. Very telling on his part - "You don't have $75 - stay on the otherside of the rope, please"........