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Tue October 18, 2011
Income Disparity And The 'Price Of Civilization'
The Occupy Wall Street movement has been criticized for lacking focus — but its main slogan seems to be resonating. That slogan, "We are the 99 percent," highlights the issue of income disparity. It's something economist Jeffrey Sachs has been tracking for a long time.
The top 1 percent of U.S. households now take about a quarter of all income, according to Sachs. And wages for the average American male peaked in 1973, he says.
"It means that for the typical young person right now who is a high school graduate — but on average will not get a bachelor's degree — life is extremely challenging to find a foothold," Sachs tells NPR's Steve Inskeep, "with a stable job, with an opportunity to have a reliable income, health and other benefits and a chance to have the kind of middle-class life that we once took for granted."
Sachs explores the result of the widening income gap in his new book, The Price of Civilization: Reawakening American Virtue and Prosperity. The book's title was inspired by Supreme Court Justice Oliver Wendell Holmes, who once said, "Taxes are what we pay for civilized society."
Sachs says middle-class growth suffered in the 1980s when taxes were reduced and programs like energy research were scaled back — programs that he says would have made the United States more competitive in the face of globalization.
And he says current government policies, including President Obama's jobs plan, are short-term fixes that still leave the country vulnerable.
On "The Price Of Civilization"
"If we're going to have a society that is fair between rich and poor, we can't leave vast parts of our society to suffer in a poverty trap, where young people grow up poor, and then don't have the means to make it into the middle class because they can't meet college tuition, for example.
"Yet, we have become tighter and tighter in the help for higher education, while more competitive and successful economies have helped to ensure a rising proportion of young people actually complete college education. And we're still stuck below 40 percent."
On criticism from Rep. Paul Ryan, R-Wis. — who says Sachs believes that "for people to be happy, their government must increasingly shield them from the challenges of life"
"My view of government is that government helps to empower us as productive individuals; as healthy people; as well-educated people; as businesses that can be competitive internationally — and it helps to do it in a way that's fair and inclusive, and environmentally sound.
"Mr. Ryan is an extremist, in my view. He professes Libertarianism, which I think is a philosophy that is contrary to Americans' compassion and sense of an inclusive society — but it's also very bad economics. Because from the early days of our republic — whether it was building the canals, or the land-grant universities, or the federal highway system, or the National Institutes of Health — we've understood that government is part of the process of making us productive, fair and sustainable."
On emerging from the economic crisis, and "civic virtue"
"The precise point is that money and wealth is accumulated so much at the top that it's time for the wealthiest, richest and most powerful people in this country to play their proper role, to have the civic virtues to support America's recovery — to stop saying that everything is theirs, and the rest of society has to suffer.
"I want the people at the top to have responsibility once again. First, to follow the law, because this has been an era of corporate recklessness, and scandal, and illegality.
"So, part of civic virtue is being lawful once again. But another part... is sharing in the responsibility in our society. And I believe that the richest and most powerful people have done very well over the last 30 years — but they have not done right for the American people. And it's time that they do."
On the success of Northern Europe
"[Germany, the Netherlands, Denmark, Norway, Sweden and Finland] have invested significantly in the skills of young people. They've created apprenticeship systems and vocational systems to help make the transition of young people from school to good jobs. They have promoted high technology... so that champions like Ericsson have been enormously successful worldwide in very tough global competition.
"I think we have a lot to learn from those countries... through being competitive on global markets, but having the strong, constructive role of government, to make sure that the labor force is well-trained, and that science and technology is continuing with rapid progress."
On developing nations
"Being a country catching up, like China or Brazil, is a different phenomenon from being a country in the lead.... Both China and Brazil have done remarkable things in the last 20 years to promote rapid catching up.
"China has dramatically slashed poverty rates, and developed, of course, what is now the world's second-largest economy. Brazil, similarly, has made a huge effort from a society even more unequal than the United States... and very unstable politically... to become a much, much more inclusive society, with major investments in helping poor people to surmount hunger and under-nutrition, and especially to help poor families and poor regions of the country to achieve solid educational outcomes.
On America's challenge
"Our challenge in the United States is, in the face of competition [from developing countries], to ensure that we don't lose the bottom half of society into instability and poverty — that we continue to have a broad middle-class society. And that requires that we have the public investments alongside and helping to enable the private investments to keep us productive and competitive — with good jobs, and not with very low-paying jobs."