Morning Must-Read: Joe Stiglitz: The Myth of America’s Golden Age

Joe Stiglitz: The Myth of America’s Golden Age: “I hadn’t realized when I was growing up in Gary, Indiana…

…that I was living in the golden era…. Smokestacks poured poisons into the air. Periodic layoffs left many families living hand to mouth. Even as a kid, it seemed clear to me that the free market as we knew it was hardly a formula for sustaining a prosperous, happy and healthy society…. The standard economic texts… seemed to be unrelated to the reality I had witnessed growing up in Gary. They said that unemployment shouldn’t exist and that the market led to the best of all possible worlds…. I focused a lot of my work on why markets fail, and I devoted much of my Ph.D. thesis at MIT to understanding the causes of inequality…. Most disturbing is the realization that the American dream—the notion that we are living in the land of opportunity—is a myth…. During the period from World War II to 1980… the fortunes of the wealthy and the middle class rose together. But the evidence of the last third of a century suggests this period was an aberration…. a time of war-induced solidarity when the government kept the playing field level, and the GI Bill of Rights and subsequent civil rights advances meant that there was something to the American dream….
 
Geithner’s attempts to justify what the administration did only reinforce my belief that the system is rigged. If those who are in charge of making the critical decisions are so ‘cognitively captured’ by the 1 percent, by the bankers, that they see that the only alternative is to give those who caused the crisis hundreds of billions of dollars while leaving workers and homeowners in the lurch, the system is unfair…. Inequality commands a high price: a weaker economy, marked by lower growth and more instability. It is not very complicated. None of this is the outcome of inexorable economic forces, either; it’s the result of policies and politics—what we did and didn’t do…