From an article by Joseph E. Sitglitz in Vanity Fair (May 2011)
When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement – we started way behind the pack, but now we’re doing inequality on a world-class level.
And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth. During the savings-and-loan scandal of the 1980s – a scandal whose dimensions, by today’s standards, seem almost quaint – the banker Charles Keating was asked by a congressional committee whether the $1.5 million he had spread among a few key elected officials could actually buy influence. “I certainly hope so,” he replied.
The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office.
By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift – through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price – it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.
Eric Koch’s book, The Weimar Triangle, is available at Indigo-Chapters and in your local bookstore. 
How sad, unjust and unfair (who said the world was fair?) that the U.S. is run by people who deeply believe that the rich getting richer and the poor getting poorer is a good thing. And why don’t ordinary Americans rebel? It appears they’ve been brainwashed to believe that they are better off this way.
It’ll be a tough challenge to free them from this delusion…
Total disagreement. No American, not even the super-rich, thinks it’s a good thing. The fact that they are the beneficiaries does not mean that they approve of the system. Why don’t you ask them?
It’s important not to single out the US (which after all, unlike Canada, does have an inheritance tax). In fact, the widening gap between rich and poor has occurred very dramatically in all English-speaking countries (US, Canada, UK, Australia) and not nearly as much in most of Europe and not at all in places like Japan.
It is also very interesting to look at income (not just wealth) — and to top-slice the top 1 percent of income earners in Canada into much finer slices. When you do that, you find that all of the gains in GDP produced since 1980 have in fact trickled up to a tiny fraction of our population — just .0001 of it. That’s right folks, 3300 people in Canada made off with all the gains in GDP since 1980 — a period nicely coinciding with Maggie Thatcher in Britain, Ronald Reagan, in the US, and Brian Mulroney, in Canada. No wonder we can’t offer people a living wage for their work and how dare we ask them to be more productive, given they’ve received almost nothing for their efforts over more than 30 years, including during significant periods of high economic growth.
The policies behind this siphoning of income to the very best remunerated among us belong as much to the Liberal Party of Canada as to the Conservatives — certainly successive governments led by Chrétien and Martin did nothing to reverse the trends that began with Mr. Mulroney. A pox on both their houses, I say.
As for campaign contributions — whatever rules are put in place, there seem to be ways around them. Forbid corporate donations — no problem, individuals can stand in to make the donations using corporate money. Limits on the donations? No problem use lots of individuals to make up the grand total. The only alternative I can think of is to forbid external sources of campaign financing altogether and fund party activities using public funds. Maybe even make it impossible for the parties to afford attack ads (broadcasters wouldn’t like this but I bet the public would) — after all with social media offering a different way to publicize policies and platforms who needs TV and radio ads? Sorry I’ve headed off in a different direction. I’ll stop, only to say that this is what you get for running government like a business.
Wrong on Japan. There is something called the Gini index which measures income inequality.
And where on earth did that statistic come from that the increase in GDP in Canada went to 3,300 people?
Maybe the way out is a flat tax for everyone, no deductions.
Yes, the Anglo-Saxons are the problem. Or rather Calvinism which, according to Max Weber, appealed to them more than to anybody else. The reasons are religious and cultural and we can only create a better system if we invent new religions and new cultures. The world is waiting for you and other contributors to this blog to find the answers.
If governments should not be run like businesses, what other models should we suggest? The Vatican? The YMCA? the Couchiching Conference?
It is not meaningfully true that Canada does not have an inheritance tax. We got rid of succession duties under that name when capital gains taxes were introduced in the early 1970. Capital gains tax replaces inheritance tax because people are deemed to dispose of all their capital property at fair market value on death – and tax must be paid on it.
There are a few significant areas of relief from this tax, such as that gains on a principal residence are exempt, and some transfers to a surviving spouse defer the tax till the death of that spouse, and some kinds of gains (on farm property and small business) are exempt up to certain amounts.
But generally speaking a lot of tax becomes payable on death. It is paid by the estate of the deceased and not by his or her successors, but it’s still the same in effect as an inheritance tax.
The 3300 people figures strikes me as doubtful too.