America, “land of the free; home of the brave;” where a little effort and effort will propel you to success, witness the Horatio Alger stories of the late 19th century where a poor boy started out with nothing and ended up with everything.
That this was more mythos than anything else as you still needed a leg up to succeed (witness, the invention of the phone by Alexander Graham Bell. His famed “Watson, come here, I need you!” is part of American lore, but what you may not know is that Bell was a scion of the Grovesnor family, one of the country’s leading families and he had powerful backing to “invent” the phone in 1879). In the dime novels of the time, Bell was portrayed as a poor inventor trying to create a new means for the deaf to hear.
That dime novel was quite a page-turner and gave Horatio another venue in which he could succeed, but it wasn’t really true. Indeed, as Joseph Stiglitz, author of book “The Price of Inequality: How Today’s Divided Society Endangers Our Future”, points out more than 40 percent of the country’s wealth is held by 1 percent of the country’s population. This is setting up a reckless situation where the super-rich, who think nothing of losing a billion or two if the market goes down and gaining the same if the market goes up and who also have the best of health care, best of education and all the other benefits that accrue to great wealth.
The situation is that the 1 percent doesn’t realize that it needs the other 99 percent who control the other 60 percent for a very simple reason: the great disparity skews the market as it stifles true capitalism because they have created a situation where the inequality has created an industrialized society that makes a mockery of the law (how many times have you heard the phrase: “He bought his way out of that situation?” If you can afford the best in representation who also knows how to “play” the system, then the chances are good anything that has happened may just disappear).
Right there you have made a mockery of the democratic ideal that “all men are created equal; endowed by… ” (as Jefferson put it). The super-rich undermine that ideal just because they control so much money. They also control the means of production and distribution so that the old Horatio Alger stories are nothing but mockeries of life. They aren’t real and the super-rich don’t really care.
This brings us to Stiglitz’s main point which is that in such a society, where democracy and the law may be little more than commodities that can be bought and sold, we have an extreme problem: a society that doesn’t care about its poorest and won’t fix the problems that are in urgent need for repair. The reason is simple enough, if it is not in the interest of the super-rich, then it’s not in society’s interest, either. They are, after all, Stiglitz points out, the real arbiters of democracy. Indeed, Stiglitz explains how the regulators become the office boys of the regulated; how the mega-rich work to create conditions where they become richer and when they are caught they expect a bailout from the government, to cover the losses they created.
Stiglitz’s solution is a gentle re-regulation of the economy so that the mega-rich contribute again to the economy they control, while the government fixes the underlying problems in the first place. It is a tough balancing act and maybe Stiglitz has it right.