Obama & Stiglitz on inequality and the power of the state

11 Feb

I first saw clips of Obama’s second inaugural speech (see http://goo.gl/S62Wi) on newsroom reports – and was so encouraged by the clips that I thought I should listen to the whole twenty minutes. It doesn’t disappoint.

In parallel with this I’ve been reading Stiglitz’ book on Inequality. He documents clearly the rising levels of inequality in income & wealth in the US since the Reagan years. While not all of this increase has been driven by policy (globalisation has played a major part), there is no doubt that the favourable treatment of non-labour income is a a major culprit.

How do these inequalities stand up against the Declaration of Independence’ “self evident” truth that all men are created equal?  Obama is clear: “..while these truths may be self-evident, they have never been self-executing; .. the patriots of 1776 did not fight to replace the tyranny of a king with the privileges of a few or the rule of a mob. They gave to us a Republic, a government of, and by, and for the people, entrusting each generation to keep safe our founding creed.”

He goes on “ But we have always understood that when times change, so must we; that fidelity to our founding principles requires new responses to new challenges; that preserving our individual freedoms ultimately requires collective action.”

The collective action he envisages turns on using the power of the state to provide (cost effective) safety nets, education and opportunity – “we must harness new ideas and technology to remake our government, revamp our tax code, reform our schools, and empower our citizens with the skills they need to work harder, learn more, and reach higher”.

And it isn’t all “socialism” – there are references to initiative and enterprise, hard work and personal responsibility, and America’s prosperity “resting upon the broad shoulders of a rising middle class”.

Stiglitz may have done the analysis – but it will take all of Obama’s campaigning skills to do something about it.

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