“half a century of stagnation”

In an interview found here, economist Joseph Stiglitz makes an amazing claim:

“When you look at America, you have to concede that we have failed. Most Americans today are worse off than they were fifteen years ago. A full-time worker in the US is worse off today than he or she was 44 years ago. That is astounding – half a century of stagnation. The economic system is not delivering. It does not matter whether a few people at the top benefitted tremendously – when the majority of citizens are not better off, the economic system is not working.”

I think “half a century of stagnation” is hyperbolic, and, anyway, that the word “stagnation” is misleading: far from stagnant, the American economy has been quite dynamic the past few decades, with structural changes, bubbles, crises, and major technological advances; and, in fact, many of these advancements have been shared by the working classes.

Stiglitz’s larger point, however, cannot be ignored: the US has third-world levels of inequality, and this inequality has steadily risen the past 40 years. Stagnation is the wrong word because US society is stuck going in two directions, not none: forward and backward, advancement and retrenchment. The US combines an ascendant global elite (increasingly intertwined with the rising consumer classes in China and elsewhere) and a downtrodden domestically-anchored middle class (with its terrible labor market, crumbling infra- and social structures, and ever-higher prices on means of mobility). Education, health, infrastructure, energy, etc: US society has many problems in need of investment. The power of the global elite to set the domestic agenda, and to prevent the US from investing in areas beneficial to the middle class, because they no longer think they need an American middle class, is at or near the top of the list.

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