In theory this result of inequality of income and wealth was morally and

In theory this result of inequality of income and

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In theory, this result of inequality of income and wealth was morally and politically justifiable because American society promised equality of opportunity. In theory, it didn’t matter whether a child was in the bottom 10 percent or top 1 percent of families. American society provided ladders that would enable the meritorious from the very bottom to rise to the very top. Quite a few did. This is true. As for those who didn’t make it, the explanation given was that they were just not smart enough. In practice, sadly, money has distorted the political system and created a non-level playing field. Take the fi- nancial sector, for example. Despite the major errors com- mitted by major banks in the Global Financial Crisis in 2008–2009, no bankers were punished. Instead, the profits were privatized while the losses were socialized. The Senate and the House could not act because of regulatory capture. To make matters worse, while Wall Street benefitted immensely from massive globalization, the working classes in America lost their jobs to new glob- al competition. It is therefore not surprising that the disgruntled working classes have switched away from the main- stream figures to vote for populist politicians like Trump. They are angry. They got even angrier when a member of the elite, Hillary Clinton, called them a “basket of de- plorables.” Actually, they have legitimate concerns and fears. The good news is that their legitimate concerns and fears can be met. Several old-fashioned methods of so- cial and economic redistribution of a society’s wealth can work, without a dramatic restructuring of society. Hence, today’s elites should stop blaming the bottom half for electing populists. They should look into the mir- ror first. Then they should go back and read Adam Smith’s The Theory of Moral Sentiments to see how well they have heeded one of his key points: “The corruption of our mor- al sentiments…comes from [the] disposition to admire the rich and the great, and to despise or neglect the downtrod- den and poor.”
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WINTER 2019 THE INTERNATIONAL ECONOMY 21 Campaigning is far easier than governing. MOHAMED A. EL-ERIAN Chief Economic Advisor, Allianz; Chair, President Obama’s Global Development Council; and author, The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse (Random House, 2016) T he rise of populism is in large part a reflection of the deep economic malaise that has permeated a growing number of advanced economies around the world— that of too many years of low and insufficiently inclusive growth. The result has been a growing sense of insecurity, marginalization, and alienation on the part of segments of society. Together with the worsening of the inequal- ity trifecta (that is, of income, of wealth and, critically, of opportunity), they have fueled the politics of anger, anti- establishment waves against public and private sectors, and a deep erosion of trust in expert opinion.
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