Interesante reportaje del Chronicle of Higher Education sobre las protestas en Wall St. y a nivel global y respecto del clima intelectual que las rodea.
Más abajo, un artrículo de Hardt y Negri sobre la lucha por la ‘democracia real’ y uno de Stigliz sobre desigualdades económicas y de poder en los EEUU.
Intellectual Roots of Wall St. Protest Lie in Academe
Movement’s principles arise from scholarship on anarchy
Yunghi Kim for The Chronicle of Higher Education, Octobre 16, 2011
Occupy Wall Street protesters have been demonstrating in Zuccotti Park since mid-September. The movement has an academic heritage that spans political science, economics, and literature, but its organizing principles owe a debt to an ethnography of Madagascar.
By Dan Berrett
Academics have become frequent visitors to Zuccotti Park, the 33,000-square-foot pedestrian plaza in the heart of New York City’s financial district that is now the site of a nearly monthlong protest, Occupy Wall Street.
Famous scholars like Cornel West, Slavoj Zizek, and Frances Fox Piven have spoken to the crowd, with their remarks dispersed, word-for-word, from one cluster of people to the next through a “human megaphone.” Many others, such as Lawrence Lessig, have lent their support from farther away, as the demonstrations have spread to cities and college campuses nationwide.
The movement has repeatedly been described as too diffuse and decentralized to accomplish real change, and some observers have seen the appearances by academic luminaries as an attempt to lend the protest intellectual heft and direction. Certainly, its intellectual underpinnings and signature method of operating are easier to identify than its goals.
Economists whose recent works have decried income inequality have informed the movement’s critiques of capitalism. Critical theorists like Michael Hardt, professor of literature at Duke University, and Antonio Negri, former professor of political science at the University of Padua, have anticipated some of the central issues raised by the protests. Most recently, they linked the actions in New York and other American cities to previous demonstrations in Spain, Cairo’s Tahrir Square, and in Athens, among other places.
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Enlarge Image Intellectual Roots of ‘Occupy Wall Street’ Lie in Academe 2
Scott Brauer
Cornel West of the Center for African American Studies at Princeton U. addressed protesters at Occupy Boston, an offshoot of the Wall Street demonstration.
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Scott Brauer
Cornel West of the Center for African American Studies at Princeton U. addressed protesters at Occupy Boston, an offshoot of the Wall Street demonstration.
Enlarge Image Intellectual Roots of ‘Occupy Wall Street’ Lie in Academe 3
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Jeffrey D. Sachs, director of the Earth Institute at Columbia U., met protesters at Zuccotti Park in Manhattan.
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Jeffrey D. Sachs, director of the Earth Institute at Columbia U., met protesters at Zuccotti Park in Manhattan.
But Occupy Wall Street’s most defining characteristics—its decentralized nature and its intensive process of participatory, consensus-based decision-making—are rooted in other precincts of academe and activism: in the scholarship of anarchism and, specifically, in an ethnography of central Madagascar.
It was on this island nation off the coast of Africa that David Graeber, one of the movement’s early organizers, who has been called one of its main intellectual sources, spent 20 months between 1989 and 1991. He studied the people of Betafo, a community of descendants of nobles and of slaves, for his 2007 book, Lost People.
Betafo was “a place where the state picked up stakes and left,” says Mr. Graeber, an ethnographer, anarchist, and reader in anthropology at the University of London’s Goldsmiths campus.
In Betafo he observed what he called “consensus decision-making,” where residents made choices in a direct, decentralized way, not through the apparatus of the state. “Basically, people were managing their own affairs autonomously,” he says.
The process is what scholars of anarchism call “direct action.” For example, instead of petitioning the government to build a well, members of a community might simply build it themselves. It is an example of anarchism’s philosophy, or what Mr. Graeber describes as “democracy without a government.”
He transplanted the lessons he learned in Madagascar to the globalism protests in the late 1990s in which he participated, and which some scholars say are the clearest antecedent, in spirit, to Occupy Wall Street.
Soon after the magazine Adbusters published an appeal to set up a “peaceful barricade” on Wall Street, Mr. Graeber spent six weeks in New York helping to plan the demonstrations before an initial march by protesters on September 17, which culminated in the occupation.
It is far from clear, of course, how attuned the protesters are to the scholarship of Mr. Graeber, other critical theorists, or academics who study anarchism. A growing collection of fiction and nonfiction books, however, has a post-office box to which supporters are invited to send books. “The People’s Library” in New York City, which has been copied at other Occupy protest sites, houses nearly 1,200 books in cardboard boxes that are protected against the elements by clear plastic sheeting.
“I really am amazed for the respect they have for the word,” Eric Seligson, the librarian at the protest site on Wall Street, told Esquire. “There’s a real reverence for what has been written that has surprised me, since they eschew whatever came before, all the thought that came before.”
The defining aspect of Occupy Wall Street, its emphasis on direct action and leaderless, consensus-based decision-making, is most clearly embodied by its General Assembly, in which participants in the protest make group decisions both large and small, like adopting principles of solidarity and deciding how best to stay warm at night.
This intensive and egalitarian process is important both procedurally and substantively, Mr. Graeber says. “One of the things that revolutionaries have learned over the course of the 20th century is that the idea of the ends justifying the means is deeply problematic,” he says. “You can’t create a just society through violence, or freedom through a tight revolutionary cadre. You can’t establish a big state and hope it will go away. The means and ends have to be the same.”
When 2,000 people make a decision jointly, it is an example of direct action, or direct democracy, Mr. Graeber says. “It makes you feel different to go to a meeting where your opinions are really respected.” Or, as an editorial in the protest’s house publication, Occupied Wall Street Journal, put it, “This occupation is first about participation.”
Three days after the protests began, Mr. Graeber left. Since then, he has kept a low profile because he wants to avoid what he calls an “intellectual vanguard model” of leadership. “We don’t want to create a leadership structure,” he says. “The fact I was being promoted as a celebrity is a danger. It’s the kids who made this happen.”
Animated by Anger
Those kids include college students, who have been animated by anger over mounting student-loan debt and declining job prospects, and have become visible participants in the protests. Several Occupy Colleges demonstrations took place last week.
The concerns of the protesters are primarily economic, and scholars of that discipline have had much to say about economic fairness that has resonated with the demonstrations.
In a Vanity Fair article in May, Joseph E. Stiglitz, the Nobel laureate and professor at Columbia University framed income inequality as a matter of a wealthy 1 percent versus the remaining 99 percent—a trope that the movement has championed.
Critics of the movement, including David Brooks, have faulted this line of thinking because “almost no problem can be productively conceived in this way.”
Mr. Stiglitz visited the protests this month, where he said the financial markets, which are supposed to allocate capital and manage risks, have instead misallocated capital and created risk. “We are bearing the cost of their misdeeds,” he told the demonstrators.
Jeffrey D. Sachs, director of the Earth Institute at Columbia, also visited the demonstrations and spoke to them this month. He says his primary goal in attending was to show his support for the demonstrators’ efforts. He also wanted to share ideas, many of which he stakes out in a recent book, The Price of Civilization, which one commentator has urged the protesters to read, though it is not yet in the collection of the People’s Library.
As a macroeconomist and fiscal expert, Mr. Sachs says he sees the nation’s priorities most clearly expressed in the budget of the federal government, and he has come to believe that the market and government must both play a large role in assuring fairness, productivity, and environmental sustainability. “I was trying to explain that we arrived at a fiscal crisis in the country,” he says of his remarks to the demonstrators. “Either our government is going to become completely shrunken and dysfunctional, or we’re going to start paying for civilization again.”
Other scholars have embraced the movement, either in person or from afar. The American Association of University Professors issued a position statement this month, and more than 200 faculty members at Columbia signed a petition pledging support. The presumption that academics favor the aims of the occupation has become so widespread that Paul Krugman recently felt compelled to explain that the ethical guidelines of The New York Times forbade him from visiting Zuccotti Park.
But visits like these are little more than a celebrity academic “walk by,” says Todd Gitlin, professor of journalism and sociology at Columbia University, who has written about the protests for The Chronicle. And other observers have pointed out that the student-loan burden imparted by universities makes these institutions an ambiguous force, at best, in the demonstrations.
Of greater influence than any particular thinker or group of thinkers are the recent demonstrations in other countries, and the knowledge that protesters have been gaining there, says Evan Calder Williams, a doctoral candidate in literature at the University of California at Santa Cruz and a Fulbright fellow at the University of Naples-L’Orientale. Protesters in Egypt, Greece, and Spain, among other sites, have been creating a growing record of their experiences, through blogs and social media, which other protesters are reading and commenting upon.
“This isn’t anti-intellectualism: It is simply to say that the relevant theory is that which will be developed from struggling to grasp the obscure shape of the past few years,” Mr. Williams said in an e-mail. “It’s safe to say that Syntagma Square, the many-month occupation of a Chilean girls’ school by its students, and Occupy the Hood are—and deserve to be—of far greater intellectual import than any contemporary theorist will be.”
The idea that intellectual ferment is coming from the streets rather than academe is evidence that anarchism is witnessing something of a resurgence of interest among both activists and academics, says Nathan J. Jun, assistant professor of philosophy at Midwestern State University, in Texas, and author of the forthcoming Anarchism and Political Modernity.
While some students in the movement might be passingly familiar with anarchist studies, Mr. Jun says, they have probably not read much of the scholarship. It is much more likely that anarchism itself has had the greater influence on Occupy Wall Street because, he says, many activists there “regard anarchy as an ideal to be realized.”
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Scholars Visit Occupy Wall Street
David Graeber, of the U. of London’s Goldsmiths campus: “You can’t create a just society through violence, or freedom through a tight revolutionary cadre. You can’t establish a big state and hope it will go away. The means and ends have to be the same.”
Michael Hardt, of Duke U. (writing with Antonio Negri): “Indignation against corporate greed and economic inequality is real and deep. But at least equally important is the protest against the lack, or failure, of political representation.”
Jeffrey D. Sachs, of Columbia U.: “Either our government is going to become completely shrunken and dysfunctional, or we’re going to start paying for civilization again.”
Slavoj Zizek, of the European Graduate School: “Don’t fall in love with yourselves, with the nice time we are having here. Carnivals come cheap—the true test of their worth is what remains the day after, how our normal daily life will be changed.”
Cornel West, of Prince­ton U.: “It’s impossible to translate the issue of the greed of Wall Street into one demand or two demands. We’re talking about a democratic awakening.”
Joseph E. Stiglitz, of Columbia U.: “We are bearing the cost of their misdeeds. There’s a system where we’ve socialized losses and privatized gains. That’s not capitalism; that’s not a market economy. That’s a distorted economy.”
Lawrence Lessig, of Harvard U.: “The arrest of hundreds of tired and unwashed kids, denied the freedom of a bullhorn and the right to protest on public streets, may well be the first real green-shoots of this, the American spring. And if nurtured right, it could well begin real change.”

The Fight for ‘Real Democracy’ at the Heart of Occupy Wall Street
The Encampment in Lower Manhattan Speaks to a Failure of Representation
Michael Hardt and Antonio Negri
MICHAEL HARDT is Professor of Literature at Duke University. ANTONIO NEGRI is former Professor of Political Science at the University of Padua and the University of Paris 8. They are the authors of Empire, Multitude, and Commonwealth.
Foreign Affairs, October 11, 2011
Demonstrations under the banner of Occupy Wall Street resonate with so many people not only because they give voice to a widespread sense of economic injustice but also, and perhaps more important, because they express political grievances and aspirations. As protests have spread from Lower Manhattan to cities and towns across the country, they have made clear that indignation against corporate greed and economic inequality is real and deep. But at least equally important is the protest against the lack — or failure — of political representation. It is not so much a question of whether this or that politician, or this or that party, is ineffective or corrupt (although that, too, is true) but whether the representational political system more generally is inadequate. This protest movement could, and perhaps must, transform into a genuine, democratic constituent process.
The political face of the Occupy Wall Street protests comes into view when we situate it alongside the other “encampments” of the past year. Together, they form an emerging cycle of struggles. In many cases, the lines of influence are explicit. Occupy Wall Street takes inspiration from the encampments of central squares in Spain, which began on May 15 and followed the occupation of Cairo’s Tahrir Square earlier last spring. To this succession of demonstrations, one should add a series of parallel events, such as the extended protests at the Wisconsin statehouse, the occupation of Syntagma Square in Athens, and the Israeli tent encampments for economic justice. The context of these various protests are very different, of course, and they are not simply iterations of what happened elsewhere. Rather each of these movements has managed to translate a few common elements into their own situation.
In Tahrir Square, the political nature of the encampment and the fact that the protesters could not be represented in any sense by the current regime was obvious. The demand that “Mubarak must go” proved powerful enough to encompass all other issues. In the subsequent encampments of Madrid’s Puerta del Sol and Barcelona’s Plaça Catalunya, the critique of political representation was more complex. The Spanish protests brought together a wide array of social and economic complaints — regarding debt, housing, and education, among others — but their “indignation,” which the Spanish press early on identified as their defining affect, was clearly directed at a political system incapable of addressing these issues. Against the pretense of democracy offered by the current representational system, the protesters posed as one of their central slogans, “Democracia real ya,” or “Real democracy now.”
Occupy Wall Street should be understood, then, as a further development or permutation of these political demands. One obvious and clear message of the protests, of course, is that the bankers and finance industries in no way represent us: What is good for Wall Street is certainly not good for the country (or the world). A more significant failure of representation, though, must be attributed to the politicians and political parties charged with representing the people’s interests but in fact more clearly represent the banks and the creditors. Such a recognition leads to a seemingly naive, basic question: Is democracy not supposed to be the rule of the people over the polis — that is, the entirety of social and economic life? Instead, it seems that politics has become subservient to economic and financial interests.
By insisting on the political nature of the Occupy Wall Street protests we do not mean to cast them merely in terms of the quarrels between Republicans and Democrats, or the fortunes of the Obama administration. If the movement does continue and grow, of course, it may force the White House or Congress to take new action, and it may even become a significant point of contention during the next presidential election cycle. But the Obama and the George W. Bush administrations are both authors of the bank bailouts; the lack of representation highlighted by the protests applies to both parties. In this context, the Spanish call for “real democracy now” sounds both urgent and challenging.
If together these different protest encampments — from Cairo and Tel Aviv to Athens, Madison, Madrid, and now New York — express a dissatisfaction with the existing structures of political representation, then what do they offer as an alternative? What is the “real democracy” they propose?
The clearest clues lie in the internal organization of the movements themselves — specifically, the way the encampments experiment with new democratic practices. These movements have all developed according to what we call a “multitude form” and are characterized by frequent assemblies and participatory decision-making structures. (And it is worth recognizing in this regard that Occupy Wall Street and many of these other demonstrations also have deep roots in the globalization protest movements that stretched at least from Seattle in 1999 to Genoa in 2001.)
Much has been made of the way social media such as Facebook and Twitter have been employed in these encampments. Such network instruments do not create the movements, of course, but they are convenient tools, because they correspond in some sense to the horizontal network structure and democratic experiments of the movements themselves. Twitter, in other words, is useful not only for announcing an event but for polling the views of a large assembly on a specific decision in real time.
Do not wait for the encampments, then, to develop leaders or political representatives. No Martin Luther King, Jr. will emerge from the occupations of Wall Street and beyond. For better or worse — and we are certainly among those who find this a promising development — this emerging cycle of movements will express itself through horizontal participatory structures, without representatives. Such small-scale experiments in democratic organizing would have to be developed much further, of course, before they could articulate effective models for a social alternative, but they are already powerfully expressing the aspiration for a “real democracy.”
Confronting the crisis and seeing clearly the way it is being managed by the current political system, young people populating the various encampments are, with an unexpected maturity, beginning to pose a challenging question: If democracy — that is, the democracy we have been given — is staggering under the blows of the economic crisis and is powerless to assert the will and interests of the multitude, then is now perhaps the moment to consider that form of democracy obsolete?
If the forces of wealth and finance have come to dominate supposedly democratic constitutions, including the U.S. Constitution, is it not possible and even necessary today to propose and construct new constitutional figures that can open avenues to again take up the project of the pursuit of collective happiness? With such reasoning and such demands, which were already very alive in the Mediterranean and European encampments, the protests spreading from Wall Street across the United States pose the need for a new democratic constituent process.
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Inequality
Of the 1%, by the 1%, for the 1%
Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.
By Joseph E. Stiglitz, Vanity Fair, May 2011
THE FAT AND THE FURIOUS The top 1 percent may have the best houses, educations, and lifestyles, says the author, but “their fate is bound up with how the other 99 percent live.”
It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.
Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.
Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. 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. There are several reasons for this.
First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible. Second, many 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. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.
Third, and perhaps most important, a modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.
None of this should come as a surprise—it is simply what happens when a society’s wealth distribution becomes lopsided. The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.
Economists are not sure how to fully explain the growing inequality in America. The ordinary dynamics of supply and demand have certainly played a role: laborsaving technologies have reduced the demand for many “good” middle-class, blue-collar jobs. Globalization has created a worldwide marketplace, pitting expensive unskilled workers in America against cheap unskilled workers overseas. Social changes have also played a role—for instance, the decline of unions, which once represented a third of American workers and now represent about 12 percent.
But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.
When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we’re doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth. During the savings-and-loan scandal of the 1980s—a scandal whose dimensions, by today’s standards, seem almost quaint—the banker Charles Keating was asked by a congressional committee whether the $1.5 million he had spread among a few key elected officials could actually buy influence. “I certainly hope so,” he replied. The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.
America’s inequality distorts our society in every conceivable way. There is, for one thing, a well-documented lifestyle effect—people outside the top 1 percent increasingly live beyond their means. Trickle-down economics may be a chimera, but trickle-down behaviorism is very real. Inequality massively distorts our foreign policy. The top 1 percent rarely serve in the military—the reality is that the “all-volunteer” army does not pay enough to attract their sons and daughters, and patriotism goes only so far. Plus, the wealthiest class feels no pinch from higher taxes when the nation goes to war: borrowed money will pay for all that. Foreign policy, by definition, is about the balancing of national interests and national resources. With the top 1 percent in charge, and paying no price, the notion of balance and restraint goes out the window. There is no limit to the adventures we can undertake; corporations and contractors stand only to gain. The rules of economic globalization are likewise designed to benefit the rich: they encourage competition among countries for business, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as the “core” labor rights, which include the right to collective bargaining. Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers. Governments would compete in providing economic security, low taxes on ordinary wage earners, good education, and a clean environment—things workers care about. But the top 1 percent don’t need to care.
Or, more accurately, they think they don’t. Of all the costs imposed on our society by the top 1 percent, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important. America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe. The cards are stacked against them. It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East: rising food prices and growing and persistent youth unemployment simply served as kindling. With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from “food insecurity”)—given all this, there is ample evidence that something has blocked the vaunted “trickling down” from the top 1 percent to everyone else. All of this is having the predictable effect of creating alienation—voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.
In recent weeks we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies they inhabit. Governments have been toppled in Egypt and Tunisia. Protests have erupted in Libya, Yemen, and Bahrain. The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses—will they be next? They are right to worry. These are societies where a minuscule fraction of the population—less than 1 percent—controls the lion’s share of the wealth; where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life; and where the wealthiest often stand actively in the way of policies that would improve life for people in general.
As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.
Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called “self-interest properly understood.” The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.
The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.
Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.
By Joseph E. Stiglitz Illustration by Stephen Doyle
THE FAT AND THE FURIOUS The top 1 percent may have the best houses, educations, and lifestyles, says the author, but “their fate is bound up with how the other 99 percent live.”
I t’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.
Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.
S ome people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. 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. There are several reasons for this.
First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible. Second, many 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. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.
Third, and perhaps most important, a modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.
None of this should come as a surprise—it is simply what happens when a society’s wealth distribution becomes lopsided. The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.
E conomists are not sure how to fully explain the growing inequality in America. The ordinary dynamics of supply and demand have certainly played a role: laborsaving technologies have reduced the demand for many “good” middle-class, blue-collar jobs. Globalization has created a worldwide marketplace, pitting expensive unskilled workers in America against cheap unskilled workers overseas. Social changes have also played a role—for instance, the decline of unions, which once represented a third of American workers and now represent about 12 percent.
But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.
When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we’re doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth. During the savings-and-loan scandal of the 1980s—a scandal whose dimensions, by today’s standards, seem almost quaint—the banker Charles Keating was asked by a congressional committee whether the $1.5 million he had spread among a few key elected officials could actually buy influence. “I certainly hope so,” he replied. The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.