The Great Divide

Joseph Stiglitz is ending his The Great Divide series on the Times and in doing so notes that extreme economic inequality under capitalism is not inevitable, but rather a series of policy choices:

So why has America chosen these inequality-enhancing policies? Part of the answer is that as World War II faded into memory, so too did the solidarity it had engendered. As America triumphed in the Cold War, there didn’t seem to be a viable competitor to our economic model. Without this international competition, we no longer had to show that our system could deliver for most of our citizens.

Ideology and interests combined nefariously. Some drew the wrong lesson from the collapse of the Soviet system. The pendulum swung from much too much government there to much too little here. Corporate interests argued for getting rid of regulations, even when those regulations had done so much to protect and improve our environment, our safety, our health and the economy itself.

But this ideology was hypocritical. The bankers, among the strongest advocates of laissez-faire economics, were only too willing to accept hundreds of billions of dollars from the government in the bailouts that have been a recurring feature of the global economy since the beginning of the Thatcher-Reagan era of “free” markets and deregulation.

My only critique here is that Stiglitz doesn’t talk about racism as part of the choice structure. After all, a lot of Americans chose against their own economic self-interest by committing to racial self-interest and voting for politicians promising to cut welfare so those big black bucks would stop driving up to the store in their Cadillac and buying t-bone steaks on food stamps. Of course, these same politicians were cutting jobs and government programs for whites too, but so long as it was played as a race thing, millions of Americans were OK with it.