The Self-Destruction of the 1 Percent – NYTimes.com

Is American society becoming economically top-heavy, is the middle hollowing out morally and economically, or is it a combination of both?  This longer essay explores the limits of economic models:

The story of Venice’s rise and fall is told by the scholars Daron Acemoglu and James A. Robinson, in their book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty,” as an illustration of their thesis that what separates successful states from failed ones is whether their governing institutions are inclusive or extractive. Extractive states are controlled by ruling elites whose objective is to extract as much wealth as they can from the rest of society. Inclusive states give everyone access to economic opportunity; often, greater inclusiveness creates more prosperity, which creates an incentive for ever greater inclusiveness.

The history of the United States can be read as one such virtuous circle. But as the story of Venice shows, virtuous circles can be broken. Elites that have prospered from inclusive systems can be tempted to pull up the ladder they climbed to the top. Eventually, their societies become extractive and their economies languish.

That was the future predicted by Karl Marx, who wrote that capitalism contained the seeds of its own destruction. And it is the danger America faces today, as the 1 percent pulls away from everyone else and pursues an economic, political and social agenda that will increase that gap even further — ultimately destroying the open system that made America rich and allowed its 1 percent to thrive in the first place.

You can see America’s creeping Serrata in the growing social and, especially, educational chasm between those at the top and everyone else. At the bottom and in the middle, American society is fraying, and the children of these struggling families are lagging the rest of the world at school.

via The Self-Destruction of the 1 Percent – NYTimes.com.

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3 thoughts on “The Self-Destruction of the 1 Percent – NYTimes.com

  1. claytonconley says:

    I don’t necessarily agree with this article. I do acknowledge with regret, the growing gap between the economically elite and the 99%. I still believe that the United States is a meritocracy that rewards innovative ideas and “good ol’ fashioned” hard work. The United States has done a decent job in preventing dynastic wealth and American nobility with the enforcement of inheritance taxes (more than 50% of inherited money is taxed.) Our public education system provides opportunities for any motivated individual; inspiring teachers help to encourage students to pursue their dreams. Pell Grants and various scholarships have helped to bring countless individuals out of poverty. The 1% may wield political power with money, but there is no substitute of influential ideas. Money comes and goes from person to person but an idea is eternal, wielding an infinitely great influence on the human mind. I believe in the American Dream.
    http://www.todayonline.com/Voices/EDC120925-0000030/Family-values,-meritocratic-nation-the-way-to-go

  2. It is hard for me not to agree with the article. I think that the author makes her points clearly and with supporting evidence – including these statistics:

    “The economists Emmanuel Saez and Thomas Piketty found that 93 percent of the income gains from the 2009-10 recovery went to the top 1 percent of taxpayers. The top 0.01 percent captured 37 percent of these additional earnings, gaining an average of $4.2 million per household.”

    It’s hard to argue with that. Now, I believe in capitalism. I think we’ve seen enough times what happens to a country that makes people’s decisions for them. But as the author points out, the businessmen who promote capitalism so readily are also the ones most fiercely lobbying for pro-business causes. That isn’t capitalism. Thus, one thing that I take away from reading this article is that the “Serrata” problem is due in part to our distancing ourselves from capitalism.

    Overall, I find the connection to the rise and fall of Venice pretty intriguing. There is a lot we can learn from how things played out in earlier situations, although we shouldn’t apply everything rigidly to the present because we do have some different circumstances.

    Here’s some more interesting facts:

    http://www.fas.org/sgp/crs/misc/RL33433.pdf

  3. katiaroque says:

    The gap between rich, middle-class and poor will only widen as recession goes on, not only in the US but everywere in the world. It is not up to government and society groups to come together and work towards a solution. However, if the American middle class and the poor wait for the government to act, the gap will became even wider. http://www.pbs.org/wnet/need-to-know/video/in-perspective-tricia-rose-on-americas-growing-inequality/10786/

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