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Income Inequality: The 12 Cookies Joke

Photo courtesy of Flickr Creative Commons.

This is a cross-post from Huffington Post by Stan Sorscher, labor representative for the Society of Professional Engineering Employees in Aerospace/IFPTE Local 2001 (SPEEA/IFPTE).

A CEO, a Tea Party member and public employee sit at a table with 12 cookies on a plate. The CEO grabs 11 cookies and tells the Tea Party member, "You better watch him. He wants your cookie."

The CEO took 11 out of 12 cookies. This isn't a question of what's fair. The CEO has the economic power to take 11 cookies—and he does.

I found a conservative blog that explained this point of view. The CEO deserved 11 cookies. Without the CEO, the 12 cookies would never have been baked. No one would have anything without the CEO. Not only did the CEO deserve 11 of the 12 cookies, but if we somehow had 15 cookies, the CEO would deserve 14. If the CEO made 24 cookies in China, he should get 23. The Tea Party member and the public employee should thank the CEO for their one cookie.

The conservative blogger acknowledged his interpretation wasn't funny.

A recent study said that 93 percent of all new income in America in 2010 went to the richest one percent. The remaining seven percent of all new income in the country was split up (not evenly of course) among the remaining 99 percent of us.

For thoe 99 percent of us, the average income gain was $80 for the year. The average gain for the richest one percent was $105,637 for the year. The average gain for households in the very richest 0.01% was $4.2 freakin' million dollars that year.

I immediately thought back to the cookie joke. Seven percent is essentially one in 15. Indeed, in 2010, CEOs did get 14 of the 15 cookies! The rest of us, 99 percent of America, split the remaining cookie.

It should be no surprise, then, that inequality is at historic highs in America and widening fast.

Joseph Stiglitz's new book is called The Price of Inequality: How Today's Divided Society Endangers Our Future. What Stiglitz adds to public discussion is an analysis of dangers of this inequality in terms of political stability, social cohesion, public trust and ultimately economic prosperity.

Stiglitz is a Nobel Prize laureate in economics, former chief economist at the World Bank, and he served on the Council of Economic Advisors in the Clinton administration. He puts the issue squarely in political terms, paraphrasing Bill Clinton's campaign motto, "It's the politics, stupid!" We in the 99 percent have lost political power. The richest one percent have consolidated political power and used it to shape our society to their advantage.

By shoveling 93 percent of new income to the top one percent, we are currently living the cookie joke in full measure. This isn't working. If trickle-down policies could ever work, then our figurative cookie-bakers would already have hired millions of new employees. They didn't. It hasn't worked for the last 35 years.

It doesn't work.

Well... it doesn't work for 99 percent of us. Stiglitz puts it this way, "We've been shaping our society to create people who are more selfish." Increasingly, policies are created by the richest one percent, and for the richest one percent. Their interests are placed first, through globalization, privatization, deregulation and insanely expensive political campaigns.

Meanwhile, 99 percent of us are put at risk. We risk losing our jobs, our economic security, our homes, health care, education for our children and economic opportunities.

"As always [the rich] seem to be the winners from the policies that they advocated and that imposed such high costs on others."

This is bad for democracy, bad for our future as a nation, bad for our ability to solve serious problems on national and international levels, bad for the environment and the planet, and just plain bad.

We could just as well shape society to restore balance to our social, political and economic life. We start with a rehabilitation of the Social Contract. We need each other to prosper. That is, our neighbors must prosper for us to prosper.

We need to restore trust in institutions of civil society. That includes government.

Bad government and bad policies can threaten our future. Good government and good policies can raise our living standards and provide economic, social and political security.

Warren Buffett recognizes that fact. For all his intellect, hard work and cookie-baking skills, if he had been born in Bangladesh he knows his net worth today would be a tiny fraction of his current billions. His success depended on prosperous customers and sound government.

We can manage globalization better, and we can manage our domestic policies better.

Democracy works best when we have strong institutions of civil society and when all stakeholders are involved in decisions. Institutions of civil society speak for the environment, human rights, labor rights, public health, education, fair and honest elections, reasonable regulation, good corporate governance and investment in public goods.

It's not enough to "make business succeed," or to "compete in a global economy." We need to finish the thought: "... and raise the standard of living for us and our children."

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