Stiglitz explains why “The American Economy is Rigged” and why Trump doesn’t want to talk about it

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Gage Skidmore / Flickr Donald Trump...
Gage Skidmore / Flickr

Trump is not talking economy much in these last days before the midterm.  Could it be because he read this Scientific American article, The American Economy Is Rigged?

By most accounts, the U.S. has the highest level of economic inequality among developed countries. It has the world’s greatest per capita health expenditures yet the lowest life expectancy among comparable countries. It is also one of a few developed countries jostling for the dubious distinction of having the lowest measures of equality of opportunity.

It is not the laws of nature that have led to this dire situation: it is the laws of humankind. Markets do not exist in a vacuum: they are shaped by rules and regulations, which can be designed to favor one group over another. President Donald Trump was right in saying that the system is rigged—by those in the inherited plutocracy of which he himself is a member. And he is making it much, much worse.

Is it that he knows his base gets it even though they can’t express it?

Wealth is even less equally distributed, with just three Americans having as much as the bottom 50 percent—testimony to how much money there is at the top and how little there is at the bottom. Families in the bottom 50 percent hardly have the cash reserves to meet an emergency. Newspapers are replete with stories of those for whom the breakdown of a car or an illness starts a downward spiral from which they never recover.

Inequality trend
Inequality trends

At the time of the Civil War, the market value of the slaves in the South was approximately half of the region’s total wealth, including the value of the land and the physical capital—the factories and equipment. The wealth of at least this part of this nation was not based on industry, innovation and commerce but rather on exploitation. Today we have replaced this open exploitation with more insidious forms, which have intensified since the Reagan-Thatcher revolution of the 1980s. This exploitation, I will argue, is largely to blame for the escalating inequality in the U.S.

Political scientists have documented the ways in which money influences politics in certain political systems, converting higher economic inequality into greater political inequality. Political inequality, in its turn, gives rise to more economic inequality as the rich use their political power to shape the rules of the game in ways that favor them—for instance, by softening antitrust laws and weakening unions. Using mathematical models, economists such as myself have shown that this two-way feedback loop between money and regulations leads to at least two stable points. If an economy starts out with lower inequality, the political system generates rules that sustain it, leading to one equilibrium situation. The American system is the other equilibrium—and will continue to be unless there is a democratic political awakening.

Over time I have posted this image and Stiglitz highlights it;

Productivity_and_wages.png

Let’s recognize that the trend started during the Reagan era (I call it the Ayn Rand contamination) also continued under Clinton and Obama.

Stiglitz concludes;

As more of our citizens come to understand why the fruits of economic progress have been so unequally shared, there is a real danger that they will become open to a demagogue blaming the country’s problems on others and making false promises of rectifying “a rigged system.” We are already experiencing a foretaste of what might happen. It could get much worse.

It was Occupy Wall Street that 1st made this meme go viral under Obama but for some reason it has not been digested by the Democratic Party either.

Bottom line, the GNP is increasing, unemployment is low but the average American lives paycheck to paycheck. This is unsustainable in a democracy.  Trump is not talking about the economy because his base is “not happy” with it. But traditional Democrats do not directly address this inequality dynamics.  They should, people would understand it as well as they understand why healthcare is so messed up.

The blue wave is impulsed by new progressive candidates in the Democratic Party who get what Stiglitz explains and OWS brought to the front, as well as by a reaction to Trump’s racism, misogyny, treason, etc.

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David Bishop
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David Bishop

Many people are happy if there ‘heroes’ are doing well. They continue day-to-day if their proxies in the movies, TV, the Web, and music are killing it while they suffer on the edge of bankruptcy performing full-time menial, low wage work. So, the facts of life are blissfully mitigated by surrogate dreams.