Robert Shiller warned years ago of the dangers of economic bubbles, such as the housing bubble that swept the nation little more than five years ago, contributing overwhelmingly to the financial crash in 2008 from which a majority of Americans have yet to recover. Considering the line of work the Yale professor recently received a Nobel Prize in Economics for, it may be sensible to take note that the most important problem facing the United States (and one would easily argue, the world), according to Shiller, is inequality.
Shiller was awarded the Nobel Prize along with Eugene Fama and Lars Peter Hansen (associated with the University of Chicago) for developing a popular measure of home prices that takes into account the psychology of consumers. Clearly his warnings regarding the housing bubble should have held a good deal of merit. But alas, greed tends to get the best of any empire in the end and stops up its ears, pokes out its eyes. America constantly insists on the cookie being slapped from its mouth rather than listening to the reason that it is simply unhealthy. Having focused his career a good deal on the intersection between financial markets, economic bubbles, the housing market, human psychology and inequality makes Shiller uniquely apropos for commenting on the current economic stalemate in Washington, but will anyone choose to listen?
According to Shiller, inequality has been growing rapidly for decades. “The most important problem that we are facing now today, I think, is rising inequality in the United States and elsewhere in the world,” Shiller was quoted as saying in a recent Huffington Post article. However, the same article went on to say that Shiller “supports having a contingency plan in place now to raise taxes on the rich if inequality gets worse.”
“If inequality gets worse”? Such a statement can certainly come across as suspect to the many Americans who have had to learn how to live hand to mouth in the last five years. That is a loaded statement for the nearly 1,000,000 workers who have lost their jobs this year alone, 800,000 of which lost them in the last two weeks, right before the holiday season. If after Occupy Wall St. and the many acts of civil disobedience that have been spreading across this country (and globe) over the last few years are not enough to illustrate that inequality is already bad enough to necessitate action, what will? Self-immolation? Well, we’ve got that too.
Yet Shiller also stated, “We should be thinking about this now, not wait until after it happens,” meaning that a contingency plan should be drafted.
If, however, the man who just won a Nobel Prize in Economics, who had the numbers, the intel, the scoop and the means to know, really know the level and extent to which inequality dominates this country still speaks in terms of “if inequality gets worse”, then we, as a country, are in far deeper trouble than we thought.
The current government shutdown is the latest theater of action in the class war that has been instigated and fought since this country was first invaded. Now that it is over, it will take some time to see whether Shiller’s theory of a vibrant, rebounding economy proves accurate.
Whether one believes the battle is between Republicans and Democrats over power to facilitate the will of the people, or the will of their parties; or whether one believes it to be a staged drama for the masses to present the illusion of the former while cementing the bricks of the class war like some dark Poe story, building an ever-rising wall between the poor and the ultra rich, eliminating the middle class entirely, America will continue to spell its name: F-o-r-t-u-n-a-t-o. It will be the rest of the world who narrates the story from there.
Every plan such as Robert Shiller suggests Americans put into place now is another brick from the wall dividing us down the road. There is more than one way to kick a can.
Nobel Prize in Economics Winner, Robert Shiller, Says Economics is Not Exact Science