Joe Stiglitz Wants Your Money

Are there any progressives out there who understand money? In the recent flap over House Majority Leader Eric Cantor's sensible desire to find pay-as-you-go offsets to fund hurricane relief, one progressive TV commentator commented that if the feds can't find the money, then just print it.

For May's Vanity Fair, progressive economist Joseph Stiglitz wrote a 2,270-word article on the state of inequality in America. Mr. Stiglitz has issues with America's wealthy, as the headline read: "Of the 1%, by the 1%, for the 1%." That would be the same 1 percent that provides America with jobs and which pays an inordinate share of the income tax. Nevertheless, Stiglitz thinks inequality is such a problem in America that he compares America to oligarchies and even the repressive regimes of the Middle East:

In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. ... None of this should come as a surprise -- it is simply what happens when a society's wealth distribution becomes lopsided. ... [The rich] worry about strong government -- one that could use its powers to adjust the balance, take some of their wealth ... 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 ... one big part of the reason we have so much inequality is that the top 1 percent want it that way. ... 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.

One would hope that Stiglitz understands that for America to have a vibrant economy we must accept inequality. How do we encourage and reward entrepreneurial risk-taking without inequality? (Perhaps Stiglitz has a problem with capitalism.)

Rather than equality, what should most concern Americans is sufficiency, whether folks have enough, enough to keep life and limb going. But sufficiency isn't much of a problem in today's America; we're in little danger of becoming Somalia.

Americans, however, want a larger life beyond mere existence. So beyond sufficiency, we should be concerned about whether folks have the means to better themselves: the possibility to rise -- opportunity.  But opportunity seems to be drying up in America.

Mr. Stiglitz does address this real problem of "shrinking opportunity," but he can't get a good grip on it because of his need to frame everything under the rubric of equality and drone on with his narrative on that evil 1 percent. Rather than creating new opportunity and new wealth, Stiglitz is obsessed with divvying up the old wealth, i.e., redistribution.

Right after his Vanity Fair article, Democracy Now interviewed Stiglitz. The first part of the interview dealt with the Vanity Fair material, and Stiglitz again bewailed growing inequality, contending that top earners need to be taxed more. But in the second half they got into interesting issues, as when interviewer Juan Gonzalez asked Stiglitz about his "dissent" from signing a letter urging deficit reduction:

JOSEPH STIGLITZ: Well, the letter said all economists agree that you need to get deficit reduction, we ought to show that there's something called economic science. And then they came out in support of working off the Bowles-Simpson proposal, which is the bipartisan deficit reduction. I had looked at that very carefully, and I come to the view that that is not going to make America stronger, it's not going to not make our economy stronger.

The dissent was titled: "Why I didn't sign the deficit letter." Like other progressive economists, Stiglitz doesn't think the feds should adopt austerity measures -- the feds must continue their spending spree; deficit reduction can wait. Stiglitz does, however, recommend reductions in military spending. But Congress could eliminate the entire Defense Department and it wouldn't balance the budget.

Recently, Charles Krauthammer deftly demonstrated that Social Security is indeed a Ponzi scheme. But in this age of trillion-dollar deficits, the entire federal government is a Ponzi scheme -- future generations will pay for current spending. Progressives like Stiglitz seem oblivious to the moral dimensions of this scheme for repaying debt.

Dr. Krauthammer quickly added that although it is a Ponzi scheme, Social Security is "also the most vital, humane, and fixable of all social programs." But other progressive programs, like Medicaid, aren't so easily fixable, and they're wrecking the budget.

Joe Stiglitz wants your money -- for the federal government. He wants the feds to grab your money so that they can keep all their social programs going, just as they are, so that they won't appear like some unsustainable -- scheme.

The crisis facing America isn't growing inequality. Nor is it even shrinking opportunity (although that is a real problem). The crisis facing America, and Europe, is debt. Nations on the brink of bankruptcy are being bailed out by other nations. There's talk of the euro currency collapsing and even the breakup of the EU. At The Telegraph on Sep. 26, Jeff Randall wrote that "when Greece repudiates all, or even part, of its 370 billion euros of debt, the foundations of the single currency will crack."

Despite the sovereign debt crisis having been headline news for a couple of years now, progressives like Stiglitz caterwaul about inequality and urge yet more government spending. Only by the feds continuing to spend more (of your money) can progressive ideas have any chance of being vindicated. And if the feds spend trillions more and the economy doesn't improve, it'll only be because the feds didn't spend enough, according to progressive orthodoxy.

When the ship is going down, one doesn't accost the harried crew franticly deploying lifeboats to inform them that a toilet in steerage is stopped up and overflowing and can you please fix it at your earliest convenience.

Debt is the problem, not inequality.

Jon N. Hall is a programmer/analyst from Kansas City.