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    Stiglitz Pse - The American Economy Is Rigged

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    ‘The American Economy Is Rigged| hnups://www.scientificamerican.com/article/the-american-economy-is. Where the essay was published wWhe veads Chek last pane Be dow tak Seid Haart arian? Who” is the target audiente? The American Economy Is Rigged. IN BRIEF Y P11 canal nt ar ain hs, | Mimmrnmatnam cessnreraimaigancenentont nak? L | pots! intuence te changelaws to beneftthemsehes father exacerbating nezuaiy ° Lof 12 3/9/2020, 10:08 AM ‘The American Economy Is Rigged - Scientific American eyo 20f 12 on g 5 (overview The Probie bttps:/;wwo.scientificamerican.com/article/the-american-economy:, ‘Breaking this feedback lop by cursing the power of mane In pelts is exzentialto reducing Inequality and estcinghope Americans are used to thinking that their nation fs special. In many ways, itis: the US. has by fr the most Nobel Prize winners, the largest defense expenditures (alist ual tothe nex 0 or so counties put together) and the most billionaires (vice as ‘many as China, the closest competitor). But some examples of American Exceptional should not make us proud. By mast accounts, the U.S has the highest Jove of economic inequality among developed countries. It has the works greatest per ‘capita heath expenditures yet the lowest fe expectany among comparable counties. This also fine ff developed coutresotling forthe dubious distnetion ofhaingh Tees eas oppor ‘The notion ofthe American Drean}-that unlike old Europele areal GE] | opportuni-is part of our essence. Yetfthe numbers say otherwise. The life prospects] (ofa young American depend miore on the income and education of his or her parents than in almost any other advanced eountry{ When poor-boy-makes-good anecdotes get ‘passed around in the media, that is precisely because such stories are so rare, Things appear to be geting worse, partly as.a result of forces, such as technology and tlobalization, that seem beyond our contol, but most disturbingly because of those ‘within our command. It isnot the laws of nature that haye led to this de situation: it {s the laws of humankind /Markets do not exist in a vacuum: they are shaped by rules) ‘and regulations, which canbe designed to favor one group over another President Donald Trump was right in saying thatthe system is rigged—by those inthe inherited plutocracy of which be himself is a member. And he fs making it much, much worse America has long outdone others in its level of inequality, but inthe past 4o years it ‘than quadrupled and that ofthe top 1 percent has almost doubled, that ofthe bottom) ‘90 percent has declined, Wages atthe bottom, adjusted for inflation, are about the same as they were some 60 years agol in fact, for less, incomes have fallen over recent decades. Males have boen particularly hard hit as the U.S. has moved away from manufacturing industries into an economy based on sarees ese morrartnsei ert “The Science of Inequality es DEATHS OF DESPAIR B.qeegt cn His Sarna aac in ‘Wealth is even les equally distributed, with just three Americans havingasmuchas of 46 As icine 9 perth kar oe Rees) eee eee a ile there int the bottom. Faisin the botiom sopewenthardvhavethecas 1105, 000, OOO reer ioneet nenerg, Npesareepcewisoresottne hrvton people - atari its phat ep 3/9/2020, 10:08 AM ‘The American Economy Is Rigged - Scientific American ‘http://w ww.scientficamerican.com/articlethe-american-economy- ota wok ae one ss oe fe vt” yout oy oe ge pat Hoes wen oho yo? ed 30f 12 1 ts 7 > Hi ‘tn significant part because of high inequality, U.S. life expectancy, exceptionally low to begin with, is experiencing sustained declines, This in spite of the marvels of medical science, many advances of which ocour right here in Ameria and which are made readily availabe to the rich, Economist Ann Case and 2015 Nobel laureate in economics Angus Deaton deseribe one of the main causes of rising morbidity—the ‘reas in lah, dru overdoses and uicies~as eat of despa” by those ‘who have given up hope. ag sO his Pas Fading of the American Dream why =— wr ‘Contrary to popular bel, equaty of opportunity inthe US. slower than in most, steading acer, A207 pry crema Cty wt ‘thers ixicates that an Anarcan bom in 1940 was anos ean to ‘reapers than i : ar gare Soeone ban E60 os hay be wea however Deciningequelty of opportuni stems in large part rom te high cost of hgher ‘cation, could wth spreting economic nequaliy Statistics rom he Wer nequalty Database show tat since out 1870 the nome of he to 1 percent, corrected for inftion, as quacrupied, whereas that of he bole 90 percent hs stagnaied. Men wih ‘ny tigh school degrees have seen the incomes crop. “The Amarican Creme Fadng or Many ss thelncome Gap Wider in the US. sree moo tom wm pimome B relent eT hae 1° SS Sai eek con 20 snot em comara Woden ae Sone 7 Patti ons nin tenting, PAH a, seat stoped erie ly ee and even interest rates—a mechanical system, much like that deseribing the physical “ universe, Those with scarce assets or skills are amply rewarded, they argue, because of eo the larger contributions they make tothe economy. What they get merely represents ‘what they have contributed. Often they takeout less than they contributed, so what is left over forthe rest isthat much more, ‘Bi tn mre ays neste bee een te lof ote atietop and else to aceept this sorry state of affairs, Perhaps the defining ‘peel epg wv oc ul atl vss is ecw dit the global economy tothe brink of rain with predatory lending, market manipulation and various other antisocial practies walked away with millions of dollars in bonuses Just as millions of Americans lost ther jobs and homes and tens of millions mare + account Virtually none ofthese bankers were ever held to 3/9/2020, 10:08 AM ‘The American Economy Is Rigged - Scientific American bttpsi//vww.scientificamerican.com/article/the-american-economy:i.. account for their misdeeds, 3 eo UY eweamesarct te nae nate ft nae as aston, wen Slee but kn yet tahoe wate ptonomen. tonnes ine (19° it SE pS. < sttechtWantte mare ale oftheslvesntheSoutwasepprosimaeyhaitot ‘4 CFP. in oo gO i ) thereion's total wath ncodngthevalveftheland mthephysialcapital-ine |AYOC Vs stS ate” | Siento easiness (6 pet. ‘i onindustry, innovation andemmere bt ratheren exotation, Today weave / yi " Wet e Teplaed his open elation wth mor lasdou ome, which av tna 4 ake ah sesh Rag Tarrant oe Tsexpetiontwitamanis, ROM oe fer us [nrg to lame forthe esaltng inequality inthe US, a or Wig} Relrothmtrtioenitn ty net do ab inequality had reeeded to such an extent that anther Nobel laureate in economies, al Sinon Kut, formulate what caneto be ale Kemet: ntheeayatagesat Y 4 po welt development, as some parts ofa country seize new opportunities, inequalities grow, he <> eu Postulated; in the later stages, they shrink. The theory long fit the data—but then, around the early 1980s, the trend abruptly reversed. dust ME aia ots aes ue a ccileanes Sneath le en _After the New Deal of the 19908, American inequality detine Bytherssos ( FON" owl ee) EXPLAINING INEQUALITY Demonia attra geen bry ey inser 3 teen nreasing in many developed countries, Some anguethat advance in technology“ Ty SSS have spurred the demand fr skied abr rte tounalledabor terety a LE ering tgs oft re hat eloecamat epinwy eens ior py rt” O. ima aie endian doe and why matters are so much worse in the s OF ay. Other economists blame glbaliation self which hs weakened the power of VAS |g yh ‘workers. Firms can and do move abroad unless demands for higher wages are S04? “ he urate Buen iP Gee Deel il treme eeecinde.W ae Its Impact so much worse in the US? how 2 A of 12 3/9/2020, 10:08 AM https:/vww scientificamerican.com/article/the-american-economy: cetreme—a fim of one peron—the ence economy sa winnenakeraleyste A i mniesarmaker milo espe whee mo acemaleapitans Owl, yy. OWES Tg ‘wage ar ky tobe far more widely dispersed ina sence exonoms tha none met be based on manufeuring sot tration contributes o preter inequaliy. This at 27°4) ’ daha Veuneaimaiicteneisie = fae Aerawtnsitiotasnineersiemiginestaiates ye als? SM pio oon: Why renter so och wore in he US Sissi = concede> ; ! ‘Again, because serves are often provided local fim have more market powersthe git [ete Swvonbepiedoerstvadgealinssmyatiemata Await pq COMES jin rural America may have only one authorized Toyota repair shop, which virtually every Toyota owner i freed to patronize, The providers of these lea services can, os apie ver cov, inerentingter pois andthe thar of name going to owners and managers. This, too, inereases inequality. But again, why is U.S. inequality praca gue? tz In his celebrated 2013 treatise Capital in the Twenty-First Century, French economist ECC» Shi flax g ‘Thomas Petty shits the are to capitalists, He pests thatthe (ew whoown much, 9 a £5 n ‘of. country’s capital save ao much that, given the stable and high retur to capital (rihetothegonthntet econ hdr saretematalimaneine jp, ANOME pyas 8 i ‘been increasing. His theory has, however, been questioned on many grounds, For farms {nstance, th savings rate of even the rch i the US. i solow, compared with the rich : inc oot that ha css titi ee inlet na patgeeee, OT rules of the economic game have been rewritten, bth globally and nationally, inways an that advantage the rich and disadvantage the ret. And they have been rewritten or Ws Tuy further inthis perverse direction in the U.S. than in other developed countries—even though the rules in the U.S. were already less favorable to workers. From this WO pack ka perspective, increasing inequality is a matter of choice: a consequence of our policies, ee of pus laws and regulations. Ss itn itt ibe ‘ H i i gemitedabetiete site pe _, (Ante US. the market power of large comporations which was greater than in most + other advanced countries to bein wih, has increased even more than elsewhere, On iN ) ester apertura ex oe advanced countries, has flin further than elsewhere. This isnot only beeause ofthe shift toa service sector economy is because of the rigged rules ofthe game, rules. pii@sa0_[ stinapolital stem hat isis re tong geramancrng, ote suppression (| andthe infuene of mony. A vicious spiral as formed: eronomieinequaly, fol (08 | translates into political inequality, which leads to rules that favor the wealthy, which in oO” \ pee ere FEEDBACK LOOP in, 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 tum, gives rise to more economic inequality as the “A? i | ren we thei polticl owerto shape th rls ofthe ame in vata favor then— e foristance, by softening antitst avs and weskennguions. Using mathematical 2 How? example IF, exannple 25 Sof 12 3/9/2020, 10:08 AM ‘The American Economy Is Rigged - Scientific American https:/www.scientificamerican.comiariclethe-american-economy-i use The US. Started oKy Ws ‘models, economists such as myself have shown that this two-way feedback loop with vase oe between mone nd eqns tot east vo stables an eromy Sa neg yall CAEN ¢_ ) outwith ower inequality, the political ssstem generates rules that sustanitleadingto "€4 _ Os 2 te (_onceauiiorium situation. The American este isthe other equibrium—and will 5 1aWe¥), igre p05 on™ S cominue tobe unis there isa demorate pltcal awakening. werkes — and thot sysiom has o ‘An account of how the rules have been shaped must begin wit antitrust laws, first Syst nate 128 year ago inthe U.S. to prevent the agglomeration ofmatket power Ther YENI - yeas go remnant enforcement has weskenedat time when i anything, the law themseies should ee Se eee Now, the ol iol players part beac of socal networkefetsyousre Loe J, in AUS $ SoS ere a saeco umtaeeney co fr 95) swpmneyoutnon ese ang One eablshed.atim suchas Faeiookor 1S dominatcd oni tn di Nowe nk oh he ee by me Lies ? blest vnc cere wi man cate GEST ra Cy tint oeiteaeisaee mamta eaterar attire vi Should ft a the rich incumbent can respond by lowering prices drastically. The cost of making an 5 atin? Sealcoating rena be illegal ln sot ent is ard and sy, which gives exablbied ims wth deep warchess Joy) ech usually esroraous pore to eas competitors nd ultimately raise prices. Making matter worse, US. fins have bom inovatvenotontyinthe products theymakebutin carte compete fist [hing ova toogd and amply el mare over. The Burepean Se cae toe Canmision has imposed fies ofbilions of dollars on MleesoR and Googleana 661% mons x4 Google and_ devtlof’ ordered them to stop their anticompetitive practices (such as Google privilegingits PAAS€, ne own comparison shopyngsenie). nthe 'S, wehavedonetoolisetocontol = ¢ 56 @X sive - concentrations of market power, sot isnot a surprise that it has nereased in many 4 makes Hus elie What mae is of ere 5 cg tO Global Inequality Trends that 64 ‘lat eae arn nh omaiORbl iH acai nr vane: re mich ere cle oer nie molt (Fombdusa fe U3, towers xorg ote Wowsregaity Demme nes fh pete ‘because rules nave been rewritten to make them more favorable for the nch, while Deing iAH sissoeniagousio everyone ese Large conzanes have been alowed oacruemare, | OU" Tes $9 ove othe eta vhomas a utes Genes fas Sut Tans get pri iiss han sornoey tered a wi, own ers only cm! . Stared con's iooore ‘ama Tp | Peet Gof 12 3/9/2020, 10:08 AM ‘The American Economy Is Rigged - Scientific American baps://www scientificamerican.com/article/the-american-econom) rt en cht: Sar: eno apr te Ph iy 917 Ma esnecace ht gis Why is it as Rigged rules also explain why the impact of globalization may have been worse in the 4 ore lM 527 (ia npc devin lg er tam ing ia tiaticonatiorney PORE OP AS phic 7D 11,4} inthe nation, to about perent, (In eandinnia, tis roughly 70 perent) Weaker | an hts ene ceeeneene Us. 3 i i (jid25, Sorvorsen veringcondtons Mower, US invent eat sichastheNonn 1D SUL AnotKEC Pea iM Mani teetindeAreement—etis tha wee sldaavay ef reine foden 0 4oc re Loe 07” cours tom driinating grin American Sra rte isos gn oh eats pA “40 tghesing of environmental and health regulations abroad Forinstanes,heyenable, PASSiNS 14 a she -YrL corporations to sue nations in privat intemational arbitration panels for passing avs Protect itS vy) ott? se that protect zene and the environment bt threaten the multinational eompany’s A be in “ insole Finns He these prorisiong, which enkanee thereby of companys XAT TERS and pale yon | ec ermaee es SSeS | nia meet ime cen U.S. workers’ bargaining power even, z yer ollution or harsh es LIBERATED FINANCE on conditions ? 4e ; i salt? fg (vam ce as id ins g Aya inqualiy Weak corporat goverzance las have alowedchieexeeatiesinthe US. Chralite, uses tre, fo compensate themselves 361 times more than the average worker, far more than in 4 distri buh : phrase, ire distri budiv gpd to prevent the facial sector om impesingharmssuchasthe2008 of weatth™ in a WA the ee oth’ ors ob A : trot surprises Ws oh * ceonomie crisis on the se enabled the finance industry to row in size ptt OF ya)l4)” stony on tert fst eld he fomncinds oon row yt and rota holaowed ts appt ne eyo lo Sls, é ra pie Toe nisin acon tarsal shud athe suchestinpsng a ATERCL + 24 vsuiousintret at on rower orexrbitant feesonmercantsererdtand 4.6 ciaense is usec (i eek cade totter at arene Spey fs things tha aeflegal nhing market manipulation ndinsder trang inallot to weqackivel.y desea UA an 29 aM | stig tein sector has moved money avay rom onary Amercanstorich s A th 28 fae Sti irs Ten er Socioks ores ee (0 | cae Funder boy : nil Here, Sh'glitz rt see iter mans carci taon-te vital income fonthentinl te Ghar he “0 petielSiemmearsevthsacedcnrbuior send ream sian AES 56? 6 \ nisin ntti 2009 robe th goverment rom negtting dg pres toe WEA ue howe, oP) Melee fone bine ormonoiiepimactilincey. powertul api 0 uch as exracive Industrie obtaining pull resources suchas oh a WH | Special vor such as extractive industries obminngpublenscuresauchesallt C1 money fron Ait gt ‘below fair-market value or banks’ getting funds from the Federal Reserve at near-2er0 ee ace, Os? interest rates (which they relend at high interest rates), also amount torent extraction. AWETAAC People it AC ie rt cena fobs a i ne, Hrak socio ; a the top pay a smaller ration of thei income in taxes than those who are stl igi ch pores for ores ta teTrumpadninsinonkasstvonened programs Put the nit with the 2017 tax bill, money back where Some conomiss have argu tht we canlesten noua ony by ping upon wetong? a srovth and efleny, But recet research, sch s work dane by Jonathan Osty and pe ints ort! ‘others at the Intemational Monetary Fund, sugtets that economies withgreater = S41 ‘ 07h, equality perform bts, with higher growth, beter average standards of ving and olusy on. pee OO, Geary incgate ntaariae ametiete Uk aoktadarmee, ORO - 2 ae Gs! mentioning “Legad WH py of and “ith ot" Linaneal ep s es. Toft PAM s6r.070, 10:08 AM ‘The American Economy Is Rigged - Scientific American hps:/www.scienificamerican.comvarticleAhe-american-economy-is. pos A maniputatve marker Saat ya Senetd thr aul demas the omy. Teton of mare er 2d can overvalug arity of ater distortions Ihave deserbe, for instance, makes mart ess 2 jouw’ | Sivuigceammsindammesmimmmmee Sets Wicks, put rr +h ‘overproduction of others, such as exploitative financial products. and “business fa : os st as usuak,” cus as 9D col Uneven Distribution of Global Growth Aisemraging at Ue acta comsoms joateamiaim aca,» WeReATth afte {ana a cote yer ds Mla olde Yee innovahion, and . 18 gamers, howe, at toe 16th slopes cai ue Stewidipijentnamementesewwstepamnmaen — MEW 4rowth. ‘rt ee Ltn 80 pret pa arava comet sos, Exope have benetad te eet fom goa wth, a have he words pores. R aoa aarti re and i qu 4, » B® © & m © w mms mms Sk Hae iat 2" na = wort » P «push (fo coves cares 3 Wee a sham die oraread Vy, have yd ye 6 fm bap LTE: oy _— of the total 4 § Hy at at UG a the expense of Het x ad i we cr co: hy ee ingly miniomme A Hier, masse deh piety eta sulle sie tnirescen,

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