Joseph Stiglitz's recent article in Vanity Fair is an excellent analysis of the western world's current economic problems. Stiglitz is a professor of economics at Columbia University and a Nobel prize winner. The article asserts a central tenet of modern economic theory that strikes me as elementary. That tenet is that a strong economy is based upon the spending of a robust middle class. That, historically, is what drives consumption. In America, the owners of businesses are short sighted to simply cut taxes to their own class, because their own class benefits most from a flush middle class. What they gain in the short term, they lose in the medium to long term. In addition, they condemn their businesses and the overall economy to more frequent and unnecessary boom and bust cycles in the process. The American economy is undermining its own engine of growth, consumption, in the hapless pursuit of immediate riches for the wealthiest Americans, who need the money the least and are the least likely to instantly increase their consumption or even their investing with any additional funds attained. With taxation policy, one must always seek an organic balance that first and always maintains the engine of growth, the consumption of the middle class. All else flows from that reality. It is they who are America's job creators, not the wealthiest few.
Here's a follow up Q&A with Stiglitz, also done by Vanity Fair.
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