Why the US needs socialism

Joseph Stiglitz, in a recent article in Vanity Fair, has expressed dismay over the fact that 1% of Americans control 40% of the nation's wealth. While the top 1% has seen its income increase by 18% in the last decade, the rest of America has seen an erosion. United States has long been the global champion for capitalism, so it should not come as a surprise that inequality has only increased over the years, and that in terms of income equality, it fares much poorer than the European countries. But that it ranks at par with Iran and a decadent Russia might raise a few eyebrows.

One wonders if America has evolved into a plutocracy in the last ten years, with the State failing to take any meaningful action against Wall Street, despite its obvious role in precipitating the credit crisis. The explanation is forthcoming from Stiglitz:

"Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent..."

Now, if you think about it, this scenario is improbable in the long run. If 99% of the people are unhappy with the current scheme of things, then they should simply stop voting for the 1%. In a democracy, they can always ask their representatives to change the policy. But this has not happened in the US.

One explanation that I can think of is the country's obsession with "free-market". You take any step against big business and it can stoke age-old fears of socialism. The proponents of free market are quick to come up with doomsday scenarios, stating that any interference by the State would halt all business in the US, which would pull the country into another Great Depression. Then, they talk about the obvious benefits of the 'trickle down effect', which has been succinctly described by Galbraith as "If you feed the horse enough oats, some will pass through to the road for the sparrows".

However, with youth unemployment hovering around 20%, I am not sure if the 1% would be able to sustain the lies for long. What US needs, more than GDP growth, is job creation, even if it means lower profits for Corporate America. It is the price they need to pay for a stable social system.