18 October 2018   Leave a comment

Joseph Stiglitz is a Nobel Prize-winning economist who has written extensively on economic inequality in the US and the world.  He has just published a very succinct essay in Scientific American which explains the growing inequality in the world as a result of a system that has been shaped by the confluence of political and economic power to favor the rich. 

“Since the mid-1970s the rules of the economic game have been rewritten, both globally and nationally, in ways that advantage the rich and disadvantage the rest. And they have been rewritten further in this perverse direction in the U.S. than in other developed countries—even though the rules in the U.S. were already less favorable to workers. From this perspective, increasing inequality is a matter of choice: a consequence of our policies, laws and regulations.

“In the U.S., the market power of large corporations, which was greater than in most other advanced countries to begin with, has increased even more than elsewhere. On the other hand, the market power of workers, which started out less than in most other advanced countries, has fallen further than elsewhere. This is not only because of the shift to a service-sector economy—it is because of the rigged rules of the game, rules set in a political system that is itself rigged through gerrymandering, voter suppression and the influence of money. A vicious spiral has formed: economic inequality translates into political inequality, which leads to rules that favor the wealthy, which in turn reinforces economic inequality.”

The critical question is whether this inequality will lead to underconsumption, a condition in which there is insufficient demand in an economy to sustain economic activity.  We do not know where that tipping point is, but we have passed the tipping point for the Great Depression of the 1930s.

Hurriyet, a major Turkish newspaper is reporting that Mashal Saad al-Bostani, a 31-year-old lieutenant of the Saudi Royal Air Forces and one of the 15 Saudi Arabians who entered and left the Saudi Consulate in Istanbul on the day of Jamal Khoshoggi disappearance, has died in a “suspicious car accident” in Riyadh.    US Secretary of State Pompeo said in a statement today that he had advised US President Trump to give the Saudi Arabians a few more days to conduct their investigation.   It seems highly likely that the US and Saudi Arabia will come up with a plausible, but not credible, story about rogue agents botching an interrogation in hopes that the news cycle will simply move on in time.  US Treasury Secretary Mnuchin has announced that he will not attend the financial conference being sponsored by the Saudi Arabians next week.  We will see how the Saudis respond to this decision.  

Posted October 18, 2018 by vferraro1971 in World Politics

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