The American dream has turned into a myth («Der Spiegel», Germany)

Joseph Stiglitz

In the area where the Columbia University, located just a few blocks from Harlem, the contrast between the rich and poor expressed much more clearly than in other places in New York. The school operates Professor Joseph Stiglitz, a Nobel Prize. Born in Gary, Indiana, he is studying the problem of social inequality for many years. He first showed an interest in the subject, even as a child, when asked his nurse why she was not taking care of their children. Later, becoming the chief economist of the World Bank, the professor has studied this phenomenon on a global scale. In June of this year, a scientist has published a book "The Cost of Inequality: how divided society threatens our future» (The Price of Inequality: How Today's Divided Society Endangers Our Future), which has been translated into German. In an interview with SPIEGEL Stiglitz shared his views on the subject of how income inequality divides America today and what should be done for Europeans to overcome the crisis in the eurozone.

SPIEGEL: Professor Stiglitz, like from your point of view, the future president of the United States should solve the problem of uneven distribution of income?

Stiglitz: First, it must be acknowledged that such a problem exists. Watch for the deepening of inequality — it's like watching grass growth process. Everyday you do not notice the changes, but after some time they are striking.

SPIEGEL: What is the extent of inequality?

Stiglitz: In recent decades, the material conditions of inequality in our country has grown very rapidly. Let me give you an example — in 2011 the six Walmart heirs disposed of the empire state is almost $ 70 billion, equivalent to 30% of the total revenue of the U.S. population who belong to the poorest strata of American society.

SPIEGEL: The Americans have always considered the United States a land of opportunity, where a person can very quickly rise from poverty to wealth. What happened to the so-called "American dream"?

Stiglitz: Such faith is very strong in the minds of people, but it must be stated that the American dream has turned into a myth. In the U.S., the life chances of the young citizen today depend on the level of income and education of his or her parents is much higher than in other industrialized countries. Belief in the American dream fueled by anecdotes and stories about people who were able to escape from rags to riches, but in fact have value only starting points, and evidence is not in favor of the American dream.

SPIEGEL: What do the figures tell us?

Stiglitz: Over the past 20 years in the welfare of ordinary American family no improvement was observed. On the other hand, the weekly income of the upper classes of society, constituting 1% of the population, 40% higher than that of the poorest 20% of the country's citizens earn in a year. In short, our society has become divided. America's economy resembles a well-tuned machine, but most of it manufactured goods goes up.

SPIEGEL: By the end of the presidential campaign remains five weeks, and the problem of inequality has not played a major role.

Stiglitz: This issue was raised, however, as a rule, only indirectly. You can hardly expect a scientific debates on the Gini coefficient, a statistical indicator of inequality. However, when the Democrats say that they support the middle class, they actually raise the issue of inequality. In this they emphasize the contrast between their position and views the Republican candidate Mitt Romney, who represents the interests of the 1% of the population. Romney attacks by 47% of Americans who do not pay income tax, caused such a strong reaction in part because the show how far the upper classes from the people of the country.

SPIEGEL: The movement "Occupy Wall Street" raised the slogan: "We — that's 99% of the population." Who is in the proverbial 1%?

Stiglitz: It is a group of citizens who receive 20 to 25% of all income in the country. Over the past 30 years, their share has doubled. Today, they account for nearly 35% of the national wealth. These people live in the best homes, get the best education to enjoy the highest standard of living.

SPIEGEL: But the rich still give something in return, right? In Germany, for example, the share of 1% of the population accounts for almost a quarter of total tax revenue, while the poorest 10% — almost half. Is not that enough?

Stiglitz: I will not say anything about Germany, because they do not know the numbers. However, I can say that the U.S. tax rate to 1% of the population is on average less than 30% of their declared income, while those who get most of their income from capital gains, pay less. In addition, we know that these people do not declare all their income.

SPIEGEL: We thought that the Americans, as a rule, do not envy the prosperity of the rich.

Stiglitz: There's nothing wrong with a person who, say, invented the transistor, or made any breakthrough in technology that is useful for everyone, gets a big income. He earned that money. However, many of the dealers of the financial sector have become rich, engaging in economic fraud, fraud, predatory lending, or taking advantage of their monopoly rights in some areas. They took advantage of the poor, the ill-informed people who robbed them. They were given these citizens mortgages ruinous conditions, concealed from them the true size of payments by typing numbers in small print.

SPIEGEL: Why did the government not stop this practice?

Stiglitz: The reason for this is obvious. Financial Elite supports politicians during the election campaign, highlighting the huge amounts of money on it. In other words, it buys the rules to allow it to make money. After all, the inequality that we see today is due, for the most part, the policy of the government.

SPIEGEL: Can you give an example?

Stiglitz: In 2008, President George W. Bush argued that the state has no money for health insurance for children from poor families, the cost of which amounted to several billion dollars a year. However, the $ 150 billion for the financial assistance of the insurance company AIG were found immediately. This shows that our political system is not all right. The rule of "one person — one vote" seems to be understood as "one dollar — one vote".

SPIEGEL: So we have a 99% to 1%. Do not you think that this situation resembles a revolutionary situation? Why in the U.S. is quietly?

Stiglitz: Revolutionary sentiments are not strong in the United States. In fact, I care about what the people lost interest in politics. In past elections, voter turnout among young people was only 20%. Imagine the future depends on the choices of young people, while 80% of them believe that the vote is not worth it, because the results are still rigged, and, ultimately, will be at the helm again banks.

SPIEGEL: The movement "Occupy Wall Street" has failed to become a powerful political factor. What is the cause of his failure?

Stiglitz: It has not become formalized as a movement, as an organization. Every movement must be organized. Be that as it may, the frustration and anger have not gone away. I recently saw a play by Bertolt Brecht's "Threepenny Opera." So, when one of the characters asked the question, "What is robbing a bank compared with control bank?", The audience burst into applause.

SPIEGEL: Four years ago, we put up with this phrase on the cover of the magazine SPIEGEL, placing it as the title for the material on the banking crisis.

Stiglitz: Really? That evening, sitting in the theater is not a mob, so this episode demonstrates the extent to which these ideas took root in the minds of Americans.

SPIEGEL: What do they have in mind?

Stiglitz: People are afraid of losing their job. Even if they have a job, they are not confident that they can keep it. They are one thing — if you lose your job, you will find another very difficult. Each of them knows at least one person who has become unemployed …

SPIEGEL: … and lost the house.

Stiglitz: This is another reason for concern. More than a quarter of all homeowners have debts that exceed the value of their homes. We need a strategy of growth that can stimulate the economy. Over the past 30 years, we have not invested enough in infrastructure, technology, and education.

SPIEGEL: Public debt is $ 16 trillion. Significantly narrows the space for maneuver.

Stiglitz: The United States can borrow at interest rates close to zero. It would be foolish not to take advantage of such a situation, allowing more funds to invest in the economy and create new jobs. The government also could make the super-rich to give a fair share of their income. The state has many ways of getting money. Take mining companies — the government gives them the right to develop mineral resources, for which they are paid much less than they should. Auctions could force them to pay a lot more.

SPIEGEL: So, your recipe for dealing with the problem of inequality is to put the money down?

Stiglitz: First, the transfer of money from the top down — it's just one of the proposals. Much more important to help the economy and ensure its growth in ways that would be beneficial for both the upper and lower layers of society. It's time to end the "rent-seeking", which resulted in the money of ordinary citizens go to the rich.

SPIEGEL: Let's talk about what is happening in Europe, the crisis gripping the eurozone. Will the strategy is income redistribution, moving money from north to south?

Stiglitz: The main problem in Europe today is to austerity measures, because they depress demand and slow economic growth. For growth and greater equality requires the opposite policy. Spain, for example, is weakening in his eyes, funneling money out of the country, its economy falls in a spiral.

SPIEGEL: And maybe the reason is the lack of competitiveness? Spain and other countries in distress living beyond their means and that's why were in trouble.

Stiglitz: No, the European crisis is not due to excessive long-term debt and budget deficits, and reduced government spending. That recession was the cause of the deficit, and not vice versa. Before the crisis, Spain and Ireland could boast a surplus budget. They can not be blamed for carrying out profligate fiscal policy. Measures of fiscal discipline can only make the situation worse. No economy has not been able to overcome the recession by austerity.

SPIEGEL: Do you really think so? What about Estonia and Latvia? Dramatically reducing wages, the Baltic states increased productivity and recovered from the crisis.

Stiglitz: You cited the example of a small country, the size of their economies are small. They can offset the decline in government spending increase exports. However, these methods do not work under a fixed exchange rate, or in a situation where your trading partners are not in great shape. Crisis-ridden country does not suffer from excessive spending. Problem is not supply, and demand. Monetary and fiscal policy and the need to stimulate the economy, to ensure full employment.

SPIEGEL: At any cost? Not a single household can not continually live beyond their means. Why did the government is no exception to the rule?

Stiglitz: The State is different from the household. If a citizen is reducing its costs, it has no effect on the economy, does not lead to an increase in unemployment. If the government reduces spending, such a move has serious consequences. Increasing costs, we can stimulate the production, creating new jobs, they will take people who would otherwise be unemployed.

SPIEGEL: Do you think that the government knows exactly where it is necessary to create jobs. Do not overestimate his abilities do you?

Stiglitz: We need roads, bridges and airports. It's obvious. The return on public investment in technology tends to be high. Take the Internet, a project to decipher the human genome, or telegraph.

SPIEGEL: On the other hand, one can think of many instances where public money thrown to the wind. The U.S. space program, for example, cost a fortune, and the results so far are questionable.

Stiglitz, however, these costs are still lower than the amounts that throws to the wind the private financial sector, and billions spent to rescue financial companies. Only one corporation AIG has received more than $ 150 billion, or more than the government spent on welfare to needy families between 1990 and 2006.

SPIEGEL: But the government has become the owner of these companies, and even managed to sell packages of their shares at a profit. Are not you afraid that the strategy associated with the introduction of an additional package of measures to stimulate the economy will lead to higher inflation?

Stiglitz: It's not necessarily going to happen. The central bank has the ability to withdraw liquidity from the system.

SPIEGEL: But withdraw liquidity is much more difficult than injecting them into the economy.

Stiglitz: The central bank with a good management there are a lot of tools. He may raise interest rates or reserve requirements for private banks. So I do not see a big risk here. The weakness of the European economy is a much more serious threat than the risk of a modest increase in inflation. It is better to have a job with a salary, whose purchasing power has declined by a few percent, than not to have such.

SPIEGEL: What, in your opinion, the prospects of a united Europe?

Stiglitz: Europe reached a critical level. There are only two choices — "more Europe" and "the lack of a united Europe." All intermediate configurations are unstable.

SPIEGEL: Which option is best for Germany?

Stiglitz: Both strategies mean for the German charges, however, the concept of "more Europe" will cost less. Europe needs a unified banking system and the overall program of financial development. If Europe is to act as a unit, it will be able to borrow even on better terms than the U.S.. Therefore, the implementation of the concept of "more Europe" in the hand, not only in Italy or Spain, but also in Germany.

SPIEGEL: Thank you for this interview, Professor Stiglitz.

See also The level of social inequality in the United States is the highest among developed countries

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