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Knoxville, TN 37902
How many readers of Metro Pulse or of the Knoxville News Sentinel are really aware of the growing disparity between the incomes and wealth of society’s top earners and those of the middle- and lower-class ones? The October 17 issue of The New York Times has an article entitled “Costs seen in Income Inequality,” which observes not only “the yawning gap between the haves and have-nots” but also that the trend is ongoing. Now “the top 1 percent earns about one-sixth of all income [in the nation] and the top 10 per cent about half.”
This “news” is like much of the reportage in the popular press—scanty and late in coming. There has been a growing awareness of the trend among economists for some time, for example, in The Organization for Economic Cooperation and Development, the World Bank, and the International Monetary Fund. Moreover, these groups and agencies have expressed a growing awareness of the weakening effect of income inequality on social cohesion and that it also might “mean less stable economic expansions and sluggish growth”—two studies conclude “that in rich countries and poor, inequality is strongly correlated with shorter spells of economic expansion and thus less growth over time.”
In developing countries the scenario is relatively clear: The underclasses become increasingly discontented and can eventually revolt in either violent or nonviolent ways. In the United States the process is more complex. In the ’70s earnings were squeezed for low- and middle-income households, often according to Thomas Friedman (also NYT Oct. 17), because low investment in education led to undereducated, undertrained workers. These borrowed to improve their standard of living—buying bigger houses than they could afford and using those houses as “piggy banks.” Betting that housing prices would steadily rise, these buyers were caught in the bursting of the housing bubble; and the collapse of housing prices and the rickety, unregulated financing which supported that bubble sank the economy into desperate recession.
While it may seem that the wealthy, especially the investors who purchased Wall Street’s shoddy mortgage-backed securities, suffered along with the poor home buyers who have suffered massive foreclosures and loss of equity, it turns out that the Recession “seems to have cemented the country’s income and wealth inequality, not reversed it,” in part because of favorable tax treatment of the rich as well as deregulation.
Now the political consequences of this inequality have at last been made increasingly clear in this NYT article, for example, and in great detail in the study by the Nobel Prize-winning economist Joseph Stiglitz in The Price of Inequality: How Today’s Divided Society Endangers Our Future (Norton, 2012). Stiglitz argues that “well-heeled interests have compounded their wealth by stifling true dynamic capitalism, ” by “innovative” (i.e. sleazy) financial practices and instruments, by distorting key policy debates, and by fomenting a divided society. The result has been that big money has been able, in the name of free speech and of monetary policy and globalization, to pervert our justice system, our politics, our budgetary policy, and the structure of corporate policy through huge payouts to corporate officers and the attendant enormous financing of politicians and of political parties.
So much for the lag between research and genuine analysis on the one hand and vague, slanted, or inaccurate reportage in the local popular press on the other.
When will local newspapers catch up and level with their readers?