RICH HAVE OUTSIZED SHARE OF THE REWARDS

“All this rent-seeking, [Joseph] Stiglitz argues, leaves certain industries, like finance and pharmaceuticals, and certain companies within those industries, with an outsized share of the rewards. And within those companies, the rewards tend to be concentrated as well, thanks to what Stiglitz calls ‘abuses of corporate governance that lead CEOs to take a disproportionate share of corporate profits’ (another form of rent-seeking). In Stiglitz’s view of the economy, then, the people at the top are making so much because they’re in effect collecting a huge stack of rents.

“This isn’t just bad in some abstract sense, Stiglitz suggests. It also hurts society and the economy. It erodes America’s ‘sense of identity, in which fair play, equality of opportunity, and a sense of community are so important.’ It alienates people from the system. And it makes the rich, who are obviously politically influential, less likely to support government investment in public goods (like education and infrastructure) because those goods have little impact on their lives. (The one percent are, in fact, more likely than the general public to support cutting spending on things like schools and highways.)

James Surowiecki, “Why the Rich Are So Much Richer,” in the New York Review, September 24, 2015, pp: 32-36.