Economics

Porquê Trump?

Oct 14, 2016 Joseph E. Stiglitz

NOVA IORQUE – À medida que ando a viajar pelo mundo nas últimas semanas, tenho feito duas perguntas repetidamente: é concebível que Donald Trump pudesse ganhar a presidência dos Estados Unidos? E em primeiro lugar, como é que a sua candidatura conseguiu chegar tão longe?

Quanto à primeira questão, embora a previsão política seja ainda mais difícil do que as previsões económicas, as probabilidades estão fortemente a favor de Hillary Clinton. No entanto, a proximidade na corrida (pelo menos até muito recentemente) tem sido um mistério: Clinton faz parte dos candidatos presidenciais mais qualificados e bem preparados que os Estados Unidos já teve, enquanto Trump é um dos menos qualificados e pior preparados. Além disso, a campanha de Trump tem sobrevivido a um comportamento que, no passado, teria acabado com as hipóteses de um candidato.

Então por que iriam os americanos jogar à roleta russa (o que significa uma hipótese em seis para uma vitória de Trump)? Os que vivem fora dos Estados Unidos querem saber a resposta, porque o resultado também os afeta, embora não tenham nenhuma influência nele.

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Joseph E. Stiglitz

Writing for PS since 2001
318 Commentaries

Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, is a former chief economist of the World Bank (1997-2000), chair of the US President’s Council of Economic Advisers, and co-chair of the High-Level Commission on Carbon Prices. He is a member of the Independent Commission for the Reform of International Corporate Taxation and was lead author of the 1995 IPCC Climate Assessment.

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0 Comments on this paragraph, 114 Comments on this article

Rui Pedroto Nov 11, 2016

The worst fears have been confirmed about Trump's election. Let us hope he will not walk is talk
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B Wilds Oct 29, 2016

Over the last several years the "stop globalization" movement has gained support in developed countries across the world. Globalization seems to be a magnet pulling blame for many of the problems we see across the planet. In the same way, our views on where the economy is headed and monetary policy have divided us into two very separate camps it seems globalization has done the same.

This all folds back into a larger discussion where people have rushed in with claims that much of this has to do with factors such as racism, religious intolerance, and more "phobias" than you can count. In recognition of this backlash the article below delves into whether the stop globalization movement is justified.

http://brucewilds.blogspot.com/2016/07/is-stop-globalization-movement-justified.html
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Per Kurowski Oct 22, 2016

“Long-standing assumptions – that America is a land of opportunity and that each generation will be better off than the last – have been called into question.”

And rightly so; the risk weighted capital requirements for banks that deny “the risky” access to bank credit changed all that.

http://subprimeregulations.blogspot.se/2013/11/america-more-bank-capital-equity.html
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G. A. Pakela Oct 18, 2016

Inequality is consistent with a free society and a market-based economy where individuals are compensated by the value that they produce. Do consumers care that so many 20 to 30 year olds are multi-billionaires because they could create software that ends up being used by tens of millions of consumers? Tax their wealth away, and will that provide any meaningful equalization other than to eliminate the insanely rich tail at the top of the wealth distribution? In fact, market fundamentalism is the only answer to improving the lot of the millions throughout the world. The alternative is bureaucracy that sucks the resources of society without any corresponding improvements in outcomes.
- yw yap Oct 20, 2016
  
  the "bureaucracy" part: it just cannot be allowed to be so huge that it becomes unproductive and weighs on the economy. The problem is probably the "leaders" prioritize their own position; sad!
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Rokon Zaman Oct 18, 2016

Will the USA be better off ending up in human worker free monopoly?
Globalisation offers the opportunity to benefit from disruptive innovation and higher scale advantage to avert the threat of human worker free factories and monopoly. http://techpolicyviews.blogspot.com/2016/10/is-globalization-only-option-for-west.html
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mary Grady Oct 18, 2016

I've prepared US income tax returns since the early 1970s. Back then, the top rate on UNEARNED income = 70%. The rich did not complain; they were rich. Also, in the 70s, the top rate on EARNED income was 50%. Rich folks tried hard to get income into that 'favored' 50% rate. There were recessions, of course, & good times, too, but EVERYTHING went out of balance with the Reagan tax cuts. Look at any graph of the Nat'l Debt. It rockets upward when the nation's income was cut in half. Since Reagan, there have been ONLY more tax cuts. We have also seen the rise of (unregulated) derivatives & options. And we've seen the effect of corporate lobbying money. I'm amazed no one talks about the profits corporations 'cannot' bring back into the US. They won't bring the profits in because they are DEMANDING a "Tax Amnesty" on those (US) TAXABLE PROFITS--they figure since they got one in the past, they deserve another one! We really are governed by global corporations at this point. It is hideous. One place to start tightening the screws is with the tax code.
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Alisdair Hamilton-Wilkes Oct 18, 2016

Could it be that American politics has simply become dysfunctional because of Byzantine party structures and a polarized shouty media has resulted in great social divisiveness?

I am simply unconvinced by Mr Stiglitz’s reasoning that only he has the answers and it’s to largely abandon capitalism.

Trump would never have got this far if Hillary was only “one of the most qualified and well prepared presidential candidates that the United States has had” – she is an awful, hated, untrustworthy candidate.

It seems the 2016 election is to find out who the 2nd most hated American is. I think Douglas Adams had it about right.
--
"It is a well-known fact that those people who must want to rule people are, ipso facto, those least suited to do it... anyone who is capable of getting themselves made President should on no account be allowed to do the job."
Douglas Adams
- B Wilds Oct 29, 2016
  
  I agree, what is happening within both parties puts the spotlight on how flawed and incredibly stupid our system is. Our election process often results in not putting the best qualified choice in a position to move on and the decision is placed in the hands of a few voters in early primaries that cast their ballots months before polls are even opened in a majority of states.
  
  Sadly, the people who will most likely have the least say are voters like you and me. The sad bottom-line is that with our current system we will most likely find the election teetering on a few hundred votes in states such as Ohio or Florida.
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Mr Econotarian Oct 17, 2016

"we need to rewrite the rules of the economy once again, this time to ensure that ordinary citizens benefit." What does that actually mean?

The US already has plenty of redistribution. Through legislation, tax policy, and outright government spending, social expenditure in the US amounts to 28 percent of GDP, second only to France, with 31 percent.

The bottom quintile of US households received $6.82 in benefits and services for each $1.00 in taxes paid. By contrast the top quintile received 31 cents in benefits and services for every $1.00 in taxes paid. Overall, there was a transfer of roughly one trillion dollars in economic resources from the most affluent 40 percent of households to the bottom 60 percent.

Now the US might want to reduce the "redistribution" to the non-poor aged (i.e. Social Security & Medicare means-tests) and actually target the poorest people better. But that seems to get people upset.
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Mr Econotarian Oct 17, 2016

Regarding "The Thatcher-Reagan “revolution,”...utterly failed in its mission to increase growth." Can you please tell me which country has ignored the Thatcher-Reagan revolution, yet has actually increased growth? Last time I check, the US leads GDP growth of almost all advanced western countries. None appears to be doing much better, and others which did ignore the Thatcher-Reagan revolution such as France, Spain, Italy, and Greece are doing much worse.
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Matthew Kilburn Oct 17, 2016

"If economic injustice is the reason for Trump, why on earth didn't those voters go for Sanders?"

Because "those voters" have no interest in waging a war against people based on their success. Unlike the air-head socialist youth movememt, we don't actually hate the rich.

Specifically targeting the rich guy who parks his bmw next to my chevy isn't and trying to make him poorer isn't actually going to do much to allow me to earn more money.
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Alan Hawkes Oct 17, 2016

Democracy is seen as a panacea. After decades of life becoming better, suddenly it isn't. So people cry, 'Foul!' This is understandable when not everyone suffers equally, but in reality it's as realistic as complaining that not everyone catches influenza. There are adjustments that cry out to be made, producing simpler tax codes in both the US and the UK would be a good start. But at the end of the day voters need to stop believing in fairy godmothers devoted to the the supremacy of the West.
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Matthew Kilburn Oct 17, 2016

How do you define terms like "qualified" and "prepared"? Clinton has certainly been in Washington a long time, but how many real accomplishments can she boast? Trump has very little *political* experience, but has decades of predominantly-successful business operations that have made him extrodinarily wealthy and one of the most recognizable personal brands on the planet.

Faced with someone who has been around much and accomplished little, and someone who has been around little and accomplished much, a great many people are choosing the latter. Enough to carry him to the White House? Perhaps, and perhaps not. But probably, hopefully, enough to where we're never going back to early 2000s and 2010s politics.
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Stock Soup Oct 17, 2016

"This leads to the second message: we need to rewrite the rules of the economy once again, this time to ensure that ordinary citizens benefit."

I'm looking froward to part 2 of this article, where Stiglitz offers solutions to the problem of growth and inequality, and all the while keeping the globe cool.
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John Smith Oct 17, 2016

"while Trump is one of the least qualified and worst prepared"

I don't understand this sentence, Trump graduated from Wharton (one of the best Colleges in USA) with a Bachelor of Science in Economics, and everybody knows that he had run a very succesfull business empire for decades. I would understand this kind of lie from CNN but not for Nobel Laureate Joseph Stiglitz.
- Hugo Hammel Dec 30, 2016
  
  A degree in economics and experience in leading a business is not enough to govern a country. Firstly, I can easily guess Trump has mostly studied micro economics. Secondly, leading a business has once again nothing to do with understanding either the mechanics of macro economics or the rules that one has to go by when reaching for the public good. To add to that last point, Trump can't really be credited for his business' success, actually he owes a lot to his first companion for managing it and leading it to its current success .
  
  Finally, let's stop presuming a person's ability to lead a government based on their history of leading a business. When taking care of a company one has to care for its unique private interest, and that leader owes little to the actual workers and managers unless they decide otherwise. When governing you have to care for the public interest, that of the very components of the organism you manage. You can't "fire" participants or look away from them without risking your nation's demise. That is democracy, a part of governance that was never truly alienated.
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- Mark St. Angelo Oct 18, 2016
  
  Being President of the United States requires far more, and different, preparation than simply attending a decent college and operating a business that would have gone broke but for loans from his rich father.
  
  The United States is not a business, it is a nation. While some of the skills necessary to operate a business in a changing economic environment are useful when working for the government, there are other skills that also are necessary and Trump lacks those skills.
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Janos Nagy Oct 17, 2016

First I'm apologizing for any spelling mistakes

I'm not going to comment that Hilary is the most qualified person to be the president. It is purely political without any merits. Actually neither of them really a clear choice.
But of course economic is not about right of left political idiologie.
First.
The most important role of a government in any democratic country that it's upholding the economic rights and economic democracy its own citizens.
The number one economic right is that evryone has the same oportunity without any economic discrimination by any policies to sell his hers economic output or basically his hers labor for a fair market value that is not distorted by government's policies.
Of course the concept of borderless economic system the so called globalist economic system between countries with economic borders created by their own respective regulations (just to list a few like taxes ,minimum wage, imigration policies and their own printed curency) is just laughable.
It can be only advocated by those who have no clue how the economic functions or they know but getting rich from the globalist system.
So economies" markets " actually do functioning in a kind of vacuum because of the policies of the governments.
By Mr Stiglitz trade policies didn't influenced the economic inequalities but taxes.
But of course the labor market was distorted by these trade policies.
It is against the basic economic right of a person who clould not have his hers labor sold for a fare market value because of these policies.
Trade is nothing else but exchanging labor, taxes and profit the basic economic elements of any product.
The government itself setting minimum wages so how can it force anyone to compete with wages in other countries lot lower.That is a direct discrimination against one's labor value.
Yes trade policies effecting the labor market suply and demand balance.
Never mind the trade deficit between the Usa and China in terms of dollar amount.
The real deficit is in the job deficit and that is the number one reason for wage stagnation.
The Usa economic employs trough trade (outsourcing ) about 30 to 50 millions more workers than the Chinese economic employs workers from the usa.
Of course this creates a huge labor surplus that of course lowers the value that he or she can sell his hers economic output or simply called his hers labor.
It is not about protectionism but equal economic rights.
And of course if the government policies lowering the labor value of the one's who happens to be making something tradable why don't the government simply lowering the labor values of others like a truck driver or a brick layer or the government employees by changing policies and forced them to compete with lower waged imported labor force.
Taxes are important in the way that a domestic product has about between 35 40 percent tax components that must be sold to the costumer.
So why shouldn't an imported product have the same amount in dollar terms of tax components.
It is basically subsidizing the imported products.
One last word.
Inequality can only be reduced if demand for labor is not distorted by government's policies and companies needs to raise wages to compete for the labor offered by the people in the labor force.
- Janos Nagy Oct 18, 2016
  
  To: José
  Can you please push the blue read more and than I'm willing to debate economic facts.
  I can't argue with opinions!
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- Janos Nagy Oct 18, 2016
  
  What politics has to do with economics?
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- Jose araujo Oct 17, 2016
  
  Well, Hilary is running for president, when she wins she will not only be qualified to be president but also have the higher political merit, which is winning the election.
  
  Problem solved, unless you are a GOP supporter..
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Raphael Benabou Oct 17, 2016

Joseph Stiglitz and Paul Krugman for big roles in my admnistration or Hillary's.

As a Sciences major with a minor in Economics, I wrote a paper on the collapse of the Soviet system 45 yrs ago.
A mall risk management company ( Predyct.com) predicted the collapse of AIG blong before 2008.
In the past 30 years of working in Technology Wall Street I have always marvelled at the blind belief at "the market can do no wrong". Let it work its wonder and damn morality and unemployment for millions.
A nation dominated by money with little respect for its poorer citizens cannot not be a great one.

Trump may well be an unhinged racist, a mysogynist and a sexual predator, but his followers should indeed be angry, but at the real culprits, not the minorities or the immigrants, but at the political institutions which have deliberately sacrificed them (Republican Congress, many politicians in the major parties, the right wing Supreme Court, big business) who have been bought by big money.
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Luke Lea Oct 17, 2016

Whether due to trade, immigration, or new labor-saving technologies, without a fair and efficient way to transfer income from capital to labor our middle-class democracy will not survive. https://docs.google.com/document/d/1WIdVnQEWdYgYYly9iKkesWCVhfINvbtwuVq2GMOxMbw/edit?usp=sharing
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Maurice Simpson Oct 17, 2016

Excellent summary of the political economy that the US finds itself in! Well done Prof. Stiglitz. Your messages are spot on.

The most important message in his article is the failure of "trickle down economics" since the Reagan and Thatcher eras. Why do so many people still don't "get it" is seriously inexplicable. Why continue "pushing on a rope" and pretend a miracle must be around the corner ?

One aspect we also need to include in the new economic thinking is that overreliance on monetary policy is detrimental to growth. Over the last 40 years of trickle-down insanity, we have also ended up thinking that monetary policy is the antidote to gubernatorial apathy. What a blunder !
Time to put the Fed and all central bankers where they were in the past: in the background and away from media infatuation.
- yw yap Oct 17, 2016
  
  "Like"
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Enrique Woll Battistini Oct 16, 2016

Trump is a bump in the road, a mere distraction. Get back to work. But you can't do it alone. As Professor Joseph Stiglitz states, markets don't exist in a vacuum. U.S. markets don't exist in a vacuum; all markets are linked by trade and investment, and it is obvious that any major country's economic policy for socioeconomic development must consider that of its neighbors, all of its neighbors, indeed the globe itself. In the context of today's global crises , this takes daring thinking out-of-the-box and significant risk taking:

Thinking out-of-the-box about Global Crises and solutions:

https://www.academia.edu/28686601/TRUTHOUT_The_solid_wall_between_the_1_and_the_working_poor_in_the_USA_The_minimum_wage_2016041802
https://www.academia.edu/23094646/OFA_At_the_Brink_of_Recovery_or_Conflagration_The_World_at_a_Tipping_Point_2011111506
https://www.academia.edu/26966465/An_idea_set_forth_in_1992_written_up_in_1993_and_upgraded_in_1997_A_Partnership_for_Development_with_the_United_States_of_America_-_1997030103.doc
https://www.academia.edu/12823841/Mathematical_Model_and_Simulation_for_A_Partnership_for_Development_with_the_United_States_of_America_-_December_1999
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edward goldberg Oct 16, 2016

i looked at the same subject in my piece - Trump And The Failure Of The Reagan Revolution http://www.huffingtonpost.com/edward-goldberg/trump--the-failure-of-the_b_12083584.html but looked more at the political ramifications of Reagan's policy of the government that governs the least is the governement that governs best to people who were being harmed by globalization
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Skip Mendler Oct 16, 2016

GOP leaders rejected Trump? I'm not so sure. I think a polarizing figurehead is exactly what they were looking for - someone who in Grover Norquist's words would just "sign stuff" and spend the rest of his time having parties and keeping the base riled up. I think a lot of the so-called "opposition" was, as the pro wrestlers say, "kayfabe" - theatre designed to "put Trump over" by making him see anti-Establishment.
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Carlos Rodrigo Zapata C. Oct 16, 2016

"We need to rewrite the rules of the economy once again, this time to ensure that ordinary citizens benefit"

Fine, but what do you think: market failure or too many interventions (through market power and bureaucratic administrative dispositions) are responsible for these disasters?

And: do you think, there is any chance to make this with a President Hilary Clinton?
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Thomas Kane Oct 16, 2016

Stiglitz's views are riddled with observation bias. For example, Stig states, "And that brings us to the second question: why did the US Republican Party nominate a candidate that even its leaders rejected?" The Rs did not support Trump until there was no choice. Many of the establishment Rs responsible for the mess in which we find ourselves remain absent in their support, despite the abominable record of Hillary and Obama.

Stig then goes on to point out all the issues affecting we the victims and concludes that, " But Trump is wrong both about the diagnosis." because we have six decades of growth. He blames tax cuts for the problems. No mention of overspending, over promising, and the failure of socialism either here or the EU. Stig's socialistic utopian dream is threatened by the biggest socialist failure in history (EU)?
Stiglitz then speak of the banker bail out and the citizen abandonment from the financial crisis. He also claims that support for Trump is anger based from a loss of trust in government and then criticizes Trumps policies as the recipe for making the future worse. Excuse me, Mr. Stig supports many of those policies that have made things worse and now expects his assessment of Trump to be valid. Stated more clearly, if the facts don't meet the theory the facts are wrong and then so is Trump.

One can go on and on in regard to the lack of objective content presented by this Nobel recipient. Further proof that the folks at Nobel are not what they once were, as in Barrack Obama's award for doing Nothing and Gore's award for propagation of manicured data to support global warming. There is one thing in common amoung these three Nobel winners: a lot of hot air.
- Jose araujo Oct 17, 2016
  
  "...despite the abominable record of Hillary and Obama...."
  Abominable when compared to whom? The Bush administration or another country in the world?
  
  And you accuse Stiglitz of bias... LOL
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- Curtis Carpenter Oct 16, 2016
  
  The notion that "The Rs did not support Trump until there was no choice" incorporates its own observational error I think. It wants to imagine Trump as a singular event, rather than the product of over half a century of Republican devolution. A devolution that was loudly supported and in every way sustained over a long period of time by "the Rs."
  
  Trump is South Carolina's Joe "You Lie!" Wilson elevated to national significance, his campaign not much more than TEA party rhetoric unbound. No Republican since the Barry Goldwater campaign has any grounds to claim surprise at Trump -- he is their creation.
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Edward Campbell Oct 16, 2016

Joe Stiglitz is spot on.

I'd only add a larger focus on how the GOP went directly to where it now lies. Nixon decided his party could grow and profit in power from the disaffected Confederacy, Dixiecrats offended by a nation rededicated to equal rights, equal opportunity - after decades of collaboration in Jim Crow law.

The Tea Party has only carried the process further along. We now have a conservative political party ruled by racism, misogyny, xenophobia. Whimpering self-destructive voters are welcome from every anti-democratic cul-de-sac.
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Ian Kiddle Oct 16, 2016

A good article. Mr Stiglitz could also have mentioned why the corporates have all the say in politics and the middle class down, very little. This is because of the unfettered influence of big money in the US political system. Change that and everything else would follow.
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Tom W Oct 16, 2016

Oh, the beautiful irony of leading with "As I have traveled around the world in recent weeks..."

Then we're on to the use of deliberately misleading information, which is sadly common. Take the comparison of real wages of "at the bottom of the income distribution" with aggregate GDP. Relating wages to GDP demands that one use PER CAPITA GDP (*). Somehow a Nobel Prize winner "missed" that. Of course he didn't "miss" that. It is part of a pattern of blatantly arguing in bad faith. Very sad indeed.

* Indeed, the real GDP per capita is readily available: https://fred.stlouisfed.org/series/A939RX0Q048SBEA
Whereas real GDP has increased by 6x in the past six decades, per capita real GDP has increased 3x.

Why should an honest person who is interested in the truth read any further? If the author makes such deliberately misleading comparisons, I would feel the need to fact check everything he writes.
- Jose araujo Oct 17, 2016
  
  Tom, I think you missread the piece, since Stiglitz used the GDP to llustrate that America has done well, and wages to show how american workers haven't.
  
  Now, I don't see the need to use GDP per capita nor on how the reading of the GDP per capita would change the conclusion.
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Douglas Leyendecker Oct 16, 2016

"we need to rewrite the rules of the economy once again, this time to ensure that ordinary citizens benefit. "

And why haven't you elite economists been able to do this yet?
- Robbie Jena Oct 16, 2016
  
  I like JOSEPH E. STIGLITZ, because he is smarter than other Economists. So, he knows...and may be someday, connect the dots ...thank you.
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- Tom Shillock Oct 16, 2016
  
  Or to put this point slightly differently: Who does this "we" denote? Surely, not the average disadvantaged Americans. As a recent NBER article pointed out, when the interests of the upper class conflict with the rest of us the rest of us lose.
  
  Trump supporters largely discount political policy statements or promises, which they relate to Trump's expressions of anger and contempt because that is how they feel. But it's not as if they seek some kind of social revolution, justice or fairness for all. Rather, I suspect many of the older supporters want to re-establish social / cultural hierarchies of the 1950s and 1960s, and secondarily the far more equitable distribution of wealth and income of that era.
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Robbie Jena Oct 16, 2016

"political forecasting is even more difficult than economic forecasting". Just my comment that may have some interesting thoughts;
Bad Politics happen because Economy is down. There are very simple ways to manage great Economics for each country. Hence the Politics. But the Governments do not have a department to handle that. China had CCPIT long ago (that I was involved). Normally their Foreign Ministers do not do these simple initial process. Hence, it does not happen. I tried with many African countries that did not work. Tried with India, did not work. Tried with GREECE, still not working. We are trying though. Will know in about a year as to who jumps in. Then Politics will be happy to forecast,
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Louis Stouch Oct 16, 2016

"Still, the closeness of the race (at least until very recently) has been a mystery: Clinton is one of the most qualified and well prepared presidential candidates that the United States has had..........."

Are you that out of touch Joseph? Clinton is a liars liar. She lies so easily and so well that it is now a necessary bodily function like breathing. And when she walks on the email server deal, you don't even bat an eye, laws being for the little people. INTENT Joseph. Why the private server? To avoid scrutiny of course. And she walks.

"But the Trump phenomenon – and more than a few similar political developments in Europe – has revealed the far greater risks entailed by failing to heed this message: societies divided, democracies undermined, and economies weakened............"

If you elect Hillary Joseph, YOU FAIL TO HEED THE MESSAGE! Hillary is the status quo. Do you actually get paid to write this gibberish? Because you sure aren't doing any heavy lifting in the analysis and comprehension category.
- Jose araujo Oct 17, 2016
  
  So you support a biggot, crook orange alien, that lived his life in a lavish lifestyle, one that trully is an illustration of the establishment and you say its a protest vote?
  
  What are you protesting about? Not having more sociopaths in government positions?
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- Robert REYNOLDS Oct 16, 2016
  
  Louis, yes Hilary does represent the status quo unfortunately. And there probably has been some bending of the truth by her. That is why I strongly supported Bernie Sanders.
  
  However if you think that by supporting Donald Trump that "you're gonna show 'em a thing or two, Yeah!", then let me suggest to you that all you are going to do is to shoot yourself in the foot. Big time! And you complain about liars!!
  
  You have a choice between 'bad' and 'much worse' on November 8. Do not vote for the latter.
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Ben Leet Oct 16, 2016

The labor share of national income going to the lower-earning 90% of households has fallen by about $2 trillion since 1980, according to Olivier Giovannoni at the Univ. of Texas' Inequality Project (paper 66, page 34). That is a drop of over $18,000 per family since 1980. Most families in the middle-earning 60% would have about $20,000 more income if the distribution were at 1979 ratios. A $40,000 income would bring in $61,360, says an EPI.org website. Between 1973 and 2015 the GDP per capita has grown by 100% (see Measuring Worth), but middle class (the middle income for 60% of America) has grown by 30%. Stiglitz says the full-time male worker has lower income than 40 years ago! "Middle class incomes . . . as of 2013, were still 5% below their 2001 levels", states the Center for American Progress report "Raising Wages and Rebuilding Wealth". And middle class wealth is 40% below the 2000 level. Professor Card at UCBerkeley seems to have it right -- the Obama policies have only marginally improved matters. "Income Inequality in the U.S.", a report from the Economic Policy Institute says, "The average inflation-adjusted income of the bottom 99 percent of families grew by 18.9 percent between 1979 and 2007. Over the same period, the average income of the top 1 percent of families grew by 200.5 percent." The top 1% captured 54% of all growth. Really, if we can't stop this trend, through better bargaining rights for workers, the economy is never going to improve. My blog: Economics Without Greed, http://benL8.blogspot.com
- Mr Econotarian Oct 17, 2016
  
  However in 1980, only 13 percent of Americans owned stock. Now 55% do. So the gains to capital are being more widely distributed.
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Inge Bakke Oct 16, 2016

If economic injustice is the reason for Trump, why on earth didn't those voters go for Sanders? There must be more than economy behind this. I think the two party system which couple a lot of issues together in two different parcels obscure the real political challenges of the American society making the people political blind.
- Jose araujo Oct 17, 2016
  
  The only way I can understand the support for trump is by making comparisons to the gun support in the US.
  
  They want to garantee their freedoms, namelly the freedom to elect an idiot sociopat orange alien for president.
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Colin Doyle Oct 16, 2016

Everyone knows the world economic system needs radical reform. Time then for a hero, man/woman of action ? The failure of academic economists, like Professor Stiglitz, to create a satisfactory model of prosperity, is the real reason for demagogues like Trump and the dismal chauvinism of the brexiteers.
- Colin Doyle Oct 18, 2016
  
  Robert, The problem is that economics is more like anthropology than science. There is description and analysis but no model than can consistently produce growth and prosperity. What we need are economic engineers and a profession based on observed reality. It is not a personal criticism of Professor Stiglitz to say that, at best, academic economists, left and right, simply provide a diversity of opinions. This is 15th century stuff. If it were the laws of physics, you would have plenty of adepts in major universities declaring from experience and study that the sun goes round the earth. Then there would be those who disagree....
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- Robert REYNOLDS Oct 16, 2016
  
  Colin I think that it is very unfair of you to suggest that Professor Stiglitz is part of the group responsible for the current state of affairs in the world economy. As far as I am aware Professor Stiglitz has consistently argued against what is occurring in the world economy. His comments have been a 'breath of fresh air' in the debate. If you are looking for someone to blame then look more closely at what the likes of Ronald Reagan, Margaret Thatcher and Milton Friedman from the Chicago School of Economics preached. Their appalling legacy lives on.
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Peter Lotto Oct 16, 2016

I continue to be amazed that the Republican Party manages to avoid blame not only for Trump, but for the conditions that led to Trump's rise. The Professor is 100% correct, wages have stagnated, people are worse off economically than they were 25 years ago. But the responsibility for that lies squarely in the lap of the GOP. First there was Reaganomics, a failed economic experiment that simply transferred wealth to the top earners. Then there was Bush, who put Reaganomics on steroids and caused the worst economic crash since the Depression. And finally, there is the Congressional GOP who have consistently blocked any meaningful legislation to create jobs, rebuild infrastructure, reduce student debt, reform health insurance further, and generally t improve the lives of the majority of Americans. And once again, we have a Republican campaigning on the terrible economy and promising the world....knowing that his election means that the cruel Ryan economic plan will be put into effect, destroying what's left of the Middle Class. Will we ever learn that the economy does better under Democrats than Republicans, or will the entire nation have to be turned into the economic wasteland that is Kansas and Wisconsin before the people wake up?
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Ajay Gupta Oct 16, 2016

Thanks Prof for this cogent analysis. It would be nice to hear some concrete suggestions to address the inequality in a significant way. Since the East India Company, corporations, and hence capital, has more had influence on the policies than the individuals. Citizens United needs to be repealed.
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Miro Alibasic Oct 16, 2016

Thanks Prof. Stiglitch, read with great interest.
What we are now witnessing is the Elites' response to the post-industrial world of Artificial Intelligence, computer run algorithms (flash trades!) and robotics.

No longer are large numbers of Subjects required to run complex but not fully automated machinery. Now it is small numbers of very highly trained technicians required to manage the robotic workforce. Small in number, they can easily be bought off, or better still reduced to the status of indentured workers through the weapon of crippling student debt.

As for the rest of humanity, they are now redundant or soon will be. Their rulers no longer need them. The earlier concessions are - as the saying goes - "inoperative".

To be sure, the masses may get employment of a kind, especially in providing personal services. But it will be employment in the "Uber Economy" of savage competition between workers with all economic rent flowing to the owners of the monopolistic market platforms.

And the Elite are responding precisely as one would expect an aggressively narcissistic, self-serving Elite to respond. They are relentlessly winding back any concessions hitherto made, while their economic theologians are busy trying to justify it as being for the “Greater Good”.

Inequality is quickly returning to its historical norm, as Piketty has documented. We are returning to a feudal state in which property is owned by the magnates and almost everyone else is reduced to the status of dependent serf.

As for democratization, in most countries it never developed beyond "elective" government dominated by Elite parties. Moneyed interests and pressure groups have found it a trivial exercise to subvert that.

To entrench their gains, they are taking ever more critical decisions out of the hands even of elective government: the privatization of strategic monopolies and essential services means that elected politicians are forced negotiate with private magnates on terms dictated by the private magnates.

And finally, self-determination has been eroded by the growth of opaque and unaccountable supranational organisations (like the EU) and so-called “trade” agreements (which actually have little to do with trade and everything to do with taking decisions out of the hands of national governments and giving them to unaccountable panels of the Elite).

Elitist theologians may talk superciliously about the "end of borders" but do not be deceived. They do not intend to abolish ALL borders. They simply want to replace "national borders" (over which the Stinking Masses might have had some control) with "private borders": Elite private property enforced by a government whose role has been streamlined to nothing more than . . . . well, nothing more than defending the Elite's private property!!
Mr. Trump got into game as one of the parties in Prisoners' Dilemma.
The Elite do not intend to rub shoulders with the Stinking Masses. Not at all! THEY will retreat to their private mansions and their private country estates from where they will sermonize piously on the shortcomings of those they regard as their inferiors.
At some point, the Elite may even decide that the continued existence of masses of redundant human beings is a threat to their own security.
The current institutions of elective government are simply not robust enough to contain such people once the cost of pacification falls as a result of robotics.
One don’t need to be Einstein to see how this game will play out.
Regards.
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Roger McNair Oct 16, 2016

You wrote the preface; now, write the book.

I'm getting tired of reading "what went wrong" with no concrete suggestions for change.
- Robert Billyard Oct 16, 2016
  
  We know what went wrong, we know what has to be done, so bloody well get on with it.
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- Kaimu Biz Oct 16, 2016
  
  Aloha! Kenneth you're boring, but that is what I expected! No honesty here! No real desire to change anything at all! Corruption du jour! Wash, rinse, repeat!! I have to admit Mr Stiglitz you are right about the predictive powers of politics and economics, but one thing you can always predict human nature always wins!!! Nothing can defeat our innate desire of selfish egocentric self destruction! But lets pretend anyway!
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Bernard Berlin Oct 16, 2016

Prof. Stieglitz's logic is spot on, to quote the British. To make this a pro Trump or anti Trump issue is a distraction. The article lays bare the real consequences of unrestrained capitalism, where there are only winners and losers and not much else left in the middle. The fiscal policies of the E.U. is more concerned with protecting its bond holders than it is with the welfare of its citizens. Just look at the unemployment rate and poverty levels of Greece to understand the cruelty of the E.U.'s fiscal mandates to its member States.
My country, the U.S. foolishly idealizes capitalism to the extent that it has allowed the poverty levels to rise while the wealth in our nation is controlled by the few.
Growing economic inequality and racism is a very dangerous cocktail.
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Kaimu Biz Oct 16, 2016

Aloha! Can we be honest here? AT least have one blog on the internet that shows some sort of common sense honesty! The reason Trump is where he is has more to do with why Hillary is where she is! OMG ... where do I start? First off everyone here know that if the Clintons did not hold the reigns of power in the 1990s Bill would be locked up in jail and on the sex offenders list. Hillary literally has a self-admitted sex predator campaigning for her! The US taxpayers spent millions to force a Clinton to tell the truth ... on time! He got impeached for lying and he was disbarred. Mr Stiglitz if Bill Clinton were not Bill Clinton would you hire a sex offender and a disbarred lawyer to defend you in court? I will go out on a limb and say NO! Now, would you hire an airline pilot or a doctor or a lawyer who had been under investigation by the FBI? NO! In short nobody in the real world would hire the Clintons to wash their car much less babysit their kids! How in the world is it possible for them to get as far as they have then? What does that say about the state of government in America? It says quite a lot about corruption levels though! No matter who becomes President I would say either way it ends badly mainly because the core of the system with tentacles out to the media are corrupt beyond reform. You cannot in-corrupt the system by voting into office the same corruption that made the system corrupt! It is like having a central bank police it's own member banks! WHAT COULD POSSIBLY GO WRONG??
- Kenneth Gallaher Oct 16, 2016
  
  You knew there would be trUMP trolls
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John Ranta Oct 16, 2016

I know Stiglitz is an economist, and hence focuses on economic issues. And he makes a great point about the failure of trickle down policies. One made many times before, one that seems to fall on deaf ears. But, the reason Trump happened to the GOP is racism. Going back to Lee Atwater, continuing through Karl Rove, and up to today, the GOP has assiduously courted racist voters, and made them a significant part of their base. Trump just exploited them more openly than candidates have in the past. Stiglitz is right that we have to fix economic inequality. But the GOP has a bigger challenge in rejecting racism, and rebuilding their base.
- Kaimu Biz Oct 16, 2016
  
  Aloha! I always know when racism is an issue it is an issue when it has never been an issue in prior elections. Nearly 60years in business and Trump has how many "race" related violations on projects and in his business? The core issue here needs to be put out on the examination table and dissected down to the smallest blood cell! The core issue is decades of Rep and Dem corruption run by the Bush/Obama/Clinton Dynasty! We now have Cold War V2.0 on our doorstep with Russia saying this week they will move to global warfare. You have war in Syria and Libya two countries set on fire by Nation Builders who are still using the same CIA playbook since Vietnam! Infiltrate arm the rebels disrupt the leadership and topple a sovereign nation for the name of Democracy. Now we see the Obama/Hillary regime and their Aleppo kids and Europe overrun with the Obama/Hillary refugees. Now add up the death toll of that US CIA backed Obama/Hillary intervention! Hundreds of thousands are dead many of them innocent women and children. At least with Bush we only had Iraq and Afghanistan. Now we have a huge expanded middle east firestorm on our hands. Let me guess ... thanks to Obama and Hillary's vast experience lets hire them to resolve the middle east issues they set caused. That is like hiring the CEO of Wells Fargo to fix the same fake account problems he started! At what point do we admit the problems we all face now are the problems that were created by these same career politicians voted into office year after year! Examine that! Hmmm ... career lawyers convert to career politicians and what is the common denominator in that equation? Both lawyers and politicians get paid well whether they fail or succeed! That is the legal mentality in government! Guess what? It is a lot easier to fail than succeed so why try? None of the above has the least bit to do with "racism" but if you want to go there then I have a good case as to why Obama and Hillary hate Muslims! They've both killed more Muslims than police have killed blacks! What do all those dead Muslims make Hillary? You can say out of sight and I am sure Obama and Hillary do rationalize their failed foreign policy, but whatever they are selling as "experience" ... I'm not buying! Sell "crazy" some other place I'm all stocked up here!!!
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M0ntague Brown Oct 16, 2016

The headline here is misleading. It isn't about the people who support trump, but an attack on Trump, and even if correct, it doesn't do justice to the complaints I hear. One is the use of governement rules and insider experience to enrich and gain personal power and money. That stems in part from regulatory capture and then the movement of people from business to government and back again. The Clintons now have many, many millions and total control over a "foundation" which has billions and houses their political machine. Rahm Emanuel took a couple of years out of politics, made over 20 million and went back to politics. The counties surrounding Washington are the among the richest in the Country. The IRS scandals, the FBI treatment of Hillary, etc. sour the mood of all. If the article were titled, why Trump should fail, it would be a normal read. If it were just, I prefer those of my political persuasion that too would be ok. As titled, it fails to satisfy.
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William Pu Oct 16, 2016

We don't like the maids we hired and yet we keep hiring them back - election after election!

So, don't complain about the politicians WE put them in office - year after year.

This problem can easily be solved - choose wisely, if not...

Darwin can be cruel.
- Jose araujo Oct 17, 2016
  
  Failed to see your point honestly.
  
  You complain about the presidents which don't dress your collors, that it. When did the trump supporters not vote GOP?
  
  How in the hell you complain about the elites and support the most perfecct reflection of a member of the elite? Someone who never had an honest day of work, and stomps on the common man with lines like YOUR FIRED?
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Roger Rouse Oct 16, 2016

"the closeness of the race (at least until very recently) has been a mystery"

A significant portion of Trump voters are an anti-Hillary bloc. It isn't that they love him so much as it is that they simply loathe her and would support almost anyone else.
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Odyssios Redux Oct 16, 2016

'Politicians in the US and elsewhere who ignore this lesson will be held accountable.'

How, if both parties (in the US case) have identikit candidates? Sanders at least tried to permit some choice within the Democratic (ironic name, here) candidates. Much good it did him or us; the party machine triumphed to give Hillary her Prize, at last. SecState was a door prize, so far as her ambitions were concerned.

One also has to look at the kind of people going into politics. Int his country, they're almost all lawyers, with no technical or scientific knowledge at all . Yet they're called on to originate and monitor huge expenditures whose worth cannot be assessed by (mere?) lawyers.

Tell me how you plan to entice technically competent people into Congress. Until that is done, we'll have the same tune played over, and over, and ...
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Jeff Rutledge Oct 16, 2016

According to the IRS, 8 out of the top 10 counties in the US for numbers of 1%ers surround the Washington DC area. What valuable product do they produce? Can it be exported? This skimming of America has to stop. There are wasteful expensive people directly or indirectly living off tax dollars collected by a government from people who earn far less, or people who have yet to be born of any class. This can no longer be justified by any argument, and is unsustainable. The longer it waits while the problem grows, the more shocked the establishment will be at how the citizens change it.
- David Roden Oct 16, 2016
  
  We are now ruled, not governed
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ABDELKADER HAMDAOUI Oct 16, 2016

It is indeed dangerous to be right when all others, especially politicians, are self-righteously wrong, and especially when we have Saudi bribed Congressmen (such as John McCain who is as thick as two short planks) around. Trump is honest, disruptively straight forward and upfront. A quality hypocritical and politically correct Americans with their perverted sense of morality can’t come to terms with. Obama is a dead loss, the other ones are beating around the bush. Hillary (a Saudi Arabian puppet) is the danger; she is duplicitous, iniquitous and treacherous, and will drag Americans into harm's way of major military quagmire. Whereas, (Sanders and) Trump will spend Americans' time, energy and taxpayers' money on education and creating jobs rebuilding America'a nationwide crumbling infrastructure, will get Western Powers (NATO) to abandon their Cold War thinking and stop buggering about with China, Korea and Russia and stoking conflicts in Eastern Europe, will not look for trouble with heavy military presence around the world and will mind our own business; which is to look after the health of American people, creating real wealth and financial security for generations to come by getting well out of the weapons industry and into a prosperous and peaceful Air and Space industry.
- David Roden Oct 16, 2016
  
  Very insightful opinion. Love him or hate him, there is a rigged aspect to the political system. William F. Buckley once famously said he would rather be governed by the first 1,000 names in the Boston telephone directory (do those exist anymore) than the Harvard faculty. The parties today RULE they do not GOVERN. That is the rub.
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ezra abrams Oct 15, 2016

contrary view tht sounds a lot smarter
http://www.vox.com/policy-and-politics/2016/10/15/13286498/donald-trump-voters-race-economic-anxiety
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George H Blackford Oct 15, 2016

You don’t have to be an economist to know the ”neo-liberal market-fundamentalist theories that have shaped so much economic policy during the last four decades are badly misleading.” All you have to do is look around the world to see that the most prosperous countries all contain significant and essential elements of what right-wing ideologues call socialism, and the vast majority of people who live in non-‘socialist’ countries live in abject poverty. The difference between the prosperous and free and the impoverished and enslaved is the quality of government. Not only do the prosperous have government provided infrastructure (roads, highways, ports, airports & public health, sanitation, education, regulatory, legal & criminal justice systems) they have extensive social-insurance programs such as Social Security, healthcare, unemployment compensation, and welfare assistance for the less fortunate as well.

These FACTS are not coincidental to prosperity: http://www.rweconomics.com/IVR.htm

They are ESSENTIAL to prosperity: http://www.rweconomics.com/LTLGAD.htm
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Charles Estes Oct 15, 2016

First and foremost, we need a true full-employment economy. Only when labor markets are tight can workers demand a fairer share of rising GDP. That means we need more deficit spending in America, Europe and Japan. But how to do that politically, since people assume that rising national debts are part of the problem? Answer: stimulus without debt, that is, helicopter money. We can stimulate our economies by having central banks create the necessary money and transfer it to their governments to spend. There is no reason for countries or the EU to go deeper into public debt. Coming to understand how this could work is one of the best concrete steps we could take to avoid Trumps in the future. Experts like Prof. Stiglitz need to lead the way in educating the public about this promising approach to a vibrant world economy.
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