Nobel prize-winning economist Joseph Stiglitz claims that income inequality is now so bad the American dream is nothing but a myth. He explained that hard work and determination are no longer the keys to success. Instead, being born to rich, well-educated parents is the best indicator of future earnings.
Joseph Stiglitz, who was once chief economist at the world bank and currently teaches at Columbia University, is on tour promoting his new book, The Great Divide: Unequal Societies and What We Can Do About Them. Although Stiglitz is preaching on a topic Americans have heard frequently over the past decade, his analysis and conclusions are still startling.
According to CBS News, he wrote, “America is no longer the land of opportunity that it (and others) like to think it is. To a large extent, the American Dream is a myth.”
The American dream is the idea that anyone can attain a prosperous life through their own hard work, regardless of their social status at birth. There’s plenty of anecdotal evidence supporting the American dream — think of Oprah Winfrey’s heartbreaking story of going from dresses made of potato sacks to a media mogul worth around $3 billion.
But the statistics show those stories are aberrations, and the truth is far darker for most poor Americans.
The economist claimed that median incomes have stagnated over the past 40 years, yet CEO pay has gone from 30 times the normal workers salary to 300 times. He also explained that a much higher percentage of minimum wage jobs are held by family breadwinners.
One of the most ironic parts of the American dream’s demise is the fact that other developed countries, even Old Europe, have better upward mobility than the U.S. Unless something is done, the gap between the rich and poor will only widen according to Stiglitz.
“If the root causes of income inequality go unaddressed, America will truly become a two-class society and look much more like a third world economy.”
He added, “People will live in gated communities with armed guards. It’s a ugly picture. There will be political, social and economic turmoil.”
The good news is the crisis can still be averted. Stiglitz claims that better education and nutrition for the country’s poor can help even out the playing field. Likewise, fighting monopolistic corporations and ending corporate welfare regulations would help to increase wages.
According to Yahoo News, he cited a regulation in Medicare Part D that forbids the federal government from negotiating for lower prices from pharmaceutical companies as an example. The law will generate about $500 billion for the drug industry over the next 10 years, but that redistributes wealth from taxpayers and doesn’t help the overall economy.
Joseph Stiglitz says he hopes his work will help create a fairer economy, one where the American dream might become a reality once again.
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