Krugman: Growing Inequality Is Becoming Extremely Destructive

Friday, 13 Sep 2013 10:40 AM

By Michael Kling

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Our society is being undermined by extreme and growing inequality, writes New York Times columnist Paul Krugman.

"Year by year, we’re diverging from our ideals. Inherited privilege is crowding out equality of opportunity; the power of money is crowding out effective democracy," Krugman notes.

The Nobel Prize-winning economist points to a New York Times article describing the wealth divide at the Harvard Business School. Class differences are a huge issue, say former students, who told The Times they are expected to participate in social events and trips costing hundreds or thousands of dollars each. One former student borrowed tens of thousands of dollars to keep up socially.

Editor’s Note:
Retirees Slammed with 85% Pay Cut (New Video)

The gap between the school's egalitarian ideals and its oligarchic reality is clear, Krugman says.

The school claims to reward the smartest regardless of their background. Yet those from wealthy families benefit more from connections gained through expensive networking events.

The real problem is that the school represents a microcosm of America, Krugman argues.

IRS figures compiled by economists indicate that 95 percent of the gains from economic recovery since 2009 have gone to the top 1 percent. Plus, more than 60 percent of the gains went to the top 0.1 percent, people with annual incomes of more than $1.9 million.

Some claim that inequality is increasing because workers with more education and training are earning more than the less educated are. But few college graduates reach the 1 percent. Many, if not most college graduates are mired in debt and unemployed or underemployed. Others find their expensive education fails to lead to well-paying jobs, Krugman states.

"The college graduate serving lattes at Starbucks is a cliché, but he reflects a very real situation."

Krugman backs an idea put forth by democratic New York City mayoral candidate Bill de Blasio that calls for providing universal pre-kindergarten education, paid for with a small tax surcharge on those with incomes over $500,000.

"The usual suspects are, of course, screaming and talking about their hurt feelings; they’ve been doing a lot of that these past few years, even while making out like bandits."

Many studies have warned about the growing inequality.

For instance, a new report from Ohio State University titled "Divergent Paths of American Families" found that American families are becoming more polarized based on race, class and education.

"The state of American families has become increasingly polarized. Race and ethnicity, education, economics and immigration status are increasingly linked to how well families fare," said Zhenchao Qian, author of the new study and professor of sociology at Ohio State University.

"There is no doubt that the gap between America’s haves and have-nots grew larger than ever during the 2000s."

Editor’s Note: Retirees Slammed with 85% Pay Cut (New Video)

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