If it’s a dull rainy day and you’re home alone, bored and anxious, somewhere in the far reaches of basic cable you can probably find one more screening of that 1962 movie The Music Man – standard daytime filler for those guys. And it’s quite pleasant – small town America long, long ago – and Iowa no less – with a wonderful score and lots of singing and dancing. It’s kind of the ultimate in all-American nostalgia. Yes, that Seventy-Six Trombones song can get really irritating, but the barbershop quartet stuff is handled by the amazing Buffalo Bills – their Lida Rose is stunning. And a very young Ron Howard gets to sing that song about Gary, Indiana. Howard was eight at the time, and thus not very good at it, but damn, he was cute. And it almost made you want to sit on a porch in Gary in the summertime and sip lemonade, watching the sun-dappled tree-lined street and nodding to the neighbors. This was America as it was supposed to be, and as it once had been – maybe.
But Gary is a gritty steel town next door to Chicago – more dark satanic mills than sun-dappled tree-lined streets. Think Pittsburgh in the late forties, without the charm. And now it’s one of the rustiest cities in the dead Rust Belt. It was never very nice, and now it’s pretty much a ghost town. It’s a smaller version of Detroit. Nostalgia was never very appropriate. Now it’s absurd.
But then River City, Iowa – the setting of the Music Man movie – was a set in Burbank. That’s the same town square from To Kill a Mockingbird and the Back to the Future movies, now part of the Universal lot. Studio art directors pretty quickly figured out that all-American nostalgia is surprisingly uniform. That one set of façades on the back lot will do just fine almost all the time, no matter what the production – just change the street signs. And the studio accountants were fine with that. So nothing is quite what it seems, or everything is always just what it seems. The big marching band at the end of the movie was actually the USC Marching Band – like at the football games. But there’s no irony there. It all blends together in some sort of perfect America. No part of it is really real, but then no part of it is actually all that false – in any existential way – if you squint.
But one really shouldn’t sing about the bucolic wonders of Gary, Indiana. And you might want to listen to an actual someone from the actual Gary, Indiana, talk about the real America – someone like the economist Joseph Stiglitz – who doesn’t do cute. Yes, he’s a big gun, with a Nobel Prize and all, and the former Senior Vice President and Chief Economist of the World Bank. He was Clinton’s chair of the President’s Council of Economic Advisors, and has advised Barack Obama, although he thought the Obama Administration’s financial-industry rescue plan was nonsense – he said whoever designed that bank rescue plan is “either in the pocket of the banks or they’re incompetent.”
You see, like Paul Krugman – another Nobel Prize winning economist – and like almost all economists – Stiglitz just doesn’t believe in that Invisible Hand business. Help the banks, don’t help the banks – whatever – just don’t pretend there are free markets and rational actors. Stiglitz won his Nobel Prize for his work on screening – and in this case that’s a technique used by one economic agent to extract otherwise private information from another. He said toss out the previous economic models and look at information asymmetry – and you get a theory of markets with asymmetric information. Think of insider trading on a global scale. All of economics is about who doesn’t know what, and who is kept from knowing what’s really going on. And Stiglitz also did research on efficiency wages, and we get the Shapiro-Stiglitz model to explain why there is unemployment, and why wages are not bid down sufficiently by job seekers so that everyone who wants a job finds one. It just can’t work that way. The idea is that unemployment is driven by the information structure of employment – no one really knows who is doing what well, or at all, so it’s a bit of a crap shoot, with a lot of lying. And there was Globalization and Its Discontents (2002) – Stiglitz argues that what are called “developing economies” are, in fact, not developing at all. They are being fooled, and used. That’s how things work.
This guy probably doesn’t sing about Gary, Indiana, in the good old summertime, in the good old days. He seems to have no use for nostalgia, or at least economic nostalgia. The free market, totally unregulated, will not sort everything out, as rational actors find the best of whatever at the lowest possible cost, and everyone prospers. That’s nostalgia for what never was and can never work. And the idea that the Republicans believe, deeply and without question, that helping the very rich, and only them, will bring about wonderful things, for everybody, is foolish. Yes, they’ve argued that, over and over, for generations – against all evidence, and in spite of most every economist, and Stiglitz, saying nope – just isn’t so. Maybe that’s a form of nostalgia. But there was no River City, Iowa. As a friend put it recently, Republicans argue (and maybe actually believe, for all we know) that looking out for the rich supposedly helps all of us, including the poor. They should visit Gary.
And now Stiglitz offers more in Vanity Fair – growing economic inequality in America is not so much unfair as it is economically stupid:
America’s inequality distorts our society in every conceivable way. There is, for one thing, a well-documented lifestyle effect – people outside the top one percent increasingly live beyond their means. Trickle-down economics may be a chimera, but trickle-down behaviorism is very real. Inequality massively distorts our foreign policy. The top one percent rarely serve in the military – the reality is that the “all-volunteer” army does not pay enough to attract their sons and daughters, and patriotism goes only so far. Plus, the wealthiest class feels no pinch from higher taxes when the nation goes to war: borrowed money will pay for all that. Foreign policy, by definition, is about the balancing of national interests and national resources. With the top one percent in charge, and paying no price, the notion of balance and restraint goes out the window. There is no limit to the adventures we can undertake; corporations and contractors stand only to gain. The rules of economic globalization are likewise designed to benefit the rich: they encourage competition among countries for business, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as the “core” labor rights, which include the right to collective bargaining. Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers. Governments would compete in providing economic security, low taxes on ordinary wage earners, good education, and a clean environment – things workers care about. But the top one percent don’t need to care.
Or, he says, more accurately, they think they don’t:
Of all the costs imposed on our society by the top one percent, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important. America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe. The cards are stacked against them. It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East: rising food prices and growing and persistent youth unemployment simply served as kindling. With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from “food insecurity”) – given all this, there is ample evidence that something has blocked the vaunted “trickling down” from the top one percent to everyone else. All of this is having the predictable effect of creating alienation – voter turnout among those in their twenties in the last election stood at twenty-one percent, comparable to the unemployment rate.
So those who favor a grab-what-you-can totally free economic system love that idea, but it leads to some rather bad outcomes, even for them, eventually:
In recent weeks we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies they inhabit. Governments have been toppled in Egypt and Tunisia. Protests have erupted in Libya, Yemen, and Bahrain. The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses – will they be next? They are right to worry. These are societies where a minuscule fraction of the population – less than one percent- controls the lion’s share of the wealth; where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life; and where the wealthiest often stand actively in the way of policies that would improve life for people in general.
Gee, that sounds familiar:
As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.
And he adds this perspective:
Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society – something he called “self-interest properly understood.” The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different. It means appreciating that paying attention to everyone else’s self-interest – in other words, the common welfare – is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook – in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul – it’s good for business.
But it is unlikely the idea will gain much traction:
The top one percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top one percent eventually do learn. Too late.
See Susie Madrak here:
Sounds like a bit of an implied threat there, Joe! Of course, predicting something is often confused with a recommendation…
But Stiglitz, the kid from Gary, couldn’t be clearer:
An economy in which most citizens are doing worse year after year – an economy like America’s – is not likely to do well over the long haul. There are several reasons for this.
First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets – our people – in the most productive way possible. Second, many of the distortions that lead to inequality – such as those associated with monopoly power and preferential tax treatment for special interests – undermine the efficiency of the economy. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.
Third, and perhaps most important, a modern economy requires “collective action” – it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.
Stuart Shapiro adds this:
Stiglitz goes on to discuss how the massive inequalities that have developed in this country over the past several decades are like a cancer on the American body politic. It will gradually eat away at us until we turn from a first class power into an also-ran. Much like Speaker Boehner, I am nearly moved to tears thinking about what has been lost over the past fifty years. However, I’m not sure he understands exactly what it is that has been lost.
That’s the problem with America’s imaginary nostalgia. That’s fine for Hollywood – sing all you want about Gary, Indiana. But there is the real Gary, Indiana, quietly rusting away in the snow. And there’s the real economist from the real Gary, Indiana, suggesting that the Perfect America some imagine, where looking out for the rich, and only the rich, supposedly helps all of us, including the poor, never was and never will be. It’s a movie set on the Universal back lot.
Of course there’s Paul Farrell, at of all places, MarketWatch, on the new Civil War:
Wake up America. You are under attack. Stop kidding yourself. We are at war. In fact, we have been fighting this Civil War for a generation, since Ronald Reagan was elected in 1981. Recently Warren Buffett renewed the battle cry: The “rich class” is winning this war. Except most Americans still don’t realize they’re losing, don’t see the prize at stake.
Nope, they’re watching old movies on basic cable. Damn, and the Republicans think Hollywood is their enemy.