Who doesn’t love a clash of Titans? Not Hollywood certainly. But in the world of economics, something in that vein is going on as Nobel laureate, Joseph Stiglitz, takes on Thomas Piketty and his recent best seller, Capital in the Twenty-First Century. Piketty’s tome is 700 page; Stiglitz’s rebuttal is 18 and includes pragmatic suggestions for how to return the country to financial health.
Stiglitz doesn’t quarrel with Piketty’s assessment of the problem — that inequality is a natural outcome of capitalism. (“Phony Capitalism,” by Joseph Stiglitz, excerpted from a white paper published in May by Roosevelt Institute in Harper’s Magazine, September 2014, pgs. 14-16.) But, capitalism as we practice it in the United States isn’t at fault. Stiglitz argues the growing inequality between the rich and the poor in this country lies in our corrupted tax system. If it were administered correctly, the economy would improve and inequality would be reduced. (Ibid. pg. 15.)
Stiglitz proposes that we change the way we tax. “It is better to tax bad things than good things,” is his mantra and a tax on pollution is one example.” (Ibid pg. 15.) Levying sizeable fees on natural resources like timber, land and oil is another of his suggestions. Unlike factories, these industries can’t be dismantled and shipped to other countries. Creating incentives wouldn’t hurt, either. We could lower taxes on companies that increase employment and wealth for the country while lowering the boom on those that don’t. New taxes are needed to reign in the activities of the financial sector, as well. Under the current set of rules, corporations strive to reduce competition and are rewarded for doing so by concentrating enormous profits in the hands of these few. Stiglitz says change the laws to increase competition and the country will do better.
Regarding the growing disparity between the rich and the poor, the economists scoffs at those who argue that raising taxes on the wealthy wouldn’t do much to help the economy. That may have been true in the past, he admits, but no longer: “we can raise enormous amounts of money while increasing the tax burden only at the very top of the scale.” (Ibid, pg.16)
Stiglitz’s plan is so simple, it’s scary. To implement it all we need is political will. But such will doesn’t lie with the Congress. It lies with us, the average citizens who are feeling the impact of so much inequality. Our power lies with the ballot box. Unfortunately, a political malaise lies like a fog across the land more menacing than any threat of terrorism. Voter turnout is so low in parts of the country, water couldn’t trickle under it. Cynicism of that sort favors the status quo. To right the ship of state, the least we can do is vote in the upcoming elections. Demand that candidates support tax reform. Citizens who don’t voice their interests lose them and weaken the country. The enemy lies within.