Quote:
Originally Posted by Hawk66
It is true that some people lack motivation and thus invest not in themselves.
Stiglitz does not claim in his book that equality shall be reached...quite to the contrary...he also agrees to the fact that some inequality is necessary to motivate people to improve their life.
But the major problem is that the economy and a lot of laws, tax rules etc. are built for the top. So what he claims is that there is socialism on the top(my own words to describe this). Look how CEOs are paid...what they are paid for....what happens if they perform bad and so on. And this is just an example of many issues.
I've studied business, national economics and computer science and what I've learned in my studies from the beginning is that there are some key requirements necessary to make markets work. What Stiglitz just claims is not socialism but that in major economic sectors there are no functioning markets anymore due to the lack of competition, lobby-ism and so on. This is just a provable fact.
Even stock markets, in former times the major example for 100% functioning markets, does not meet anymore the requirements, defined by classic national economics definitions...since more and more only a fraction of people/organizations have the understanding how it works, due to the fact that is it is just complete in-transparent (in parts) and designed so by purpose. As an example: who knows the algorithms , used in stock market auto-transaction handling?
It is also a provable fact that the wealth in most Western countries is more and more concentrated. And very often this is not the case due to performance of individuals. Regardless of someones political affiliation, every person who is capable to do simple math cannot deny that this model will not work in the long run or we have not only a 'Arab Spring' but also a 'Western Spring' in the future...
Concerning the 'American Dream': I think it still works for very talented people - or people, which have sth to offer attracting the mass market (I do not judge this negatively ) like Justin Bieber. I also acknowledge that the vast majority of those people put a very high effort to make their dream reality, so it is a combination of luck + their own (big) investment.
But my point and the point of Stiglitz is that we cannot design a model for our economy to make 10% people very rich at the expense of the majority. That's it. Not everybody has the skills to study and have a good graduation and since in Western countries we have more and more the transformation from production to service-oriented economy, we have to find a answer for those people - now and not in some decades. The answer cannot be that those people are the looser or we have a ghettoization in our cities with all the consequences.
I can only everybody recommend to read this book. You do not have to agree on every argument, presented by him (nor do I) but reading his book gives you a broader and - in most parts- a provable understanding how current economic works.
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Well said. Very well said.
To further your point about stock markets:
http://en.wikipedia.org/wiki/Dark_liquidity
The markets aren't even pretending to be transparent anymore.