During the last couple of days, we’ve been pondering the career and views of big-government economist Joseph Stiglitz, who, among much else, is a fierce critic of American-style capitalism, an ardent fan of the U.N., a proponent of an international tax system (!), and a “point man” for George Soros, the gazillionaire bag man for the American far left.
One of Stiglitz’s fixations, as we’ve mentioned, is income inequality. He sees it as the root of virtually all economic problems. Last April, Mark Hendrickson did a good job of putting Stiglitz in his place when it comes to this topic. Writing in Forbes, Hendrickson pointed out that Stiglitz is so down on income equality that “he looks more favorably upon the Great Depression, with its greater poverty but lower measures of inequality, than the 1980s, with its significant improvements in standards of living for the non-rich accompanied by higher measures of inequality.”
We’re reminded of Margaret Thatcher’s famous November 1990 retort in the House of Commons to a Liberal Democrat MP who complained about the rise in income inequality during her years as prime minister: “What the honorable member is saying is that he would rather that the poor were poorer, provided that the rich were less rich….So long as the gap is smaller, they would rather have the poor poorer. You do not create wealth and opportunity that way. You do not create a property-owning democracy that way.”
Stiglitz’s preoccupation with income inequality leads to some bizarre pronouncements. For instance, he attributes post-World War II prosperity to that era’s highly progressive tax code; Hendrickson replies, quite sensibly, that “I know of no accepted economic theory that high taxes create prosperity,” and ascribes postwar prosperity, more logically, to the “huge decline in federal spending after the war” that sparked “a flood of pent-up demand.” Similarly, while Stiglitz blames today’s greater economic inequality on the less progressive tax codes that were introduced during the Reagan era, Hendrickson retorts that “there is a much more obvious cause” for this inequality, namely government growth. Hendrickson sums up his differences with Stiglitz as follows:
Joseph Stiglitz’s diagnosis is flat-out wrong when he argues that the middle class is declining because the rich are getting richer. That zero-sum view is atavistic mercantilist nonsense….for him to blame the rich instead of government for today’s problems reflects a partisan and ideological bias rather than objective economic analysis.
Indeed. In the next couple of days, we’ll take a closer look at Stiglitz’s partisan and ideological biases. Hold on to your hats.