A Flailing State

We’re somewhere between the legend and the facts of the U.S. economy. The legend, still in our heads, is it’s a rough-and-tumble democracy and a classless society.  Facts are: the top of the heap owns almost all the wealth and most of the politicians, and the top of the top – one percent – takes more and more of the income: almost 25 percent of the whole pot in Obama-time – it was less than ten percent in the seventies.

Legend is Americans don’t much like redistribution of income.  Facts say there’s been a steady upward redistribution of wealth and income over 40 years now. Legend is we’re in a slow recovery from the Great Recession of ’08.  Facts say it’s the high end getting the growth: “inequality has deepened,” the President said the other night: “upward mobility has stalled.”

We’re in the studio with Daron Acemoglu, the MIT economist and the co-author of Why Nations Fail. His argument is that the problem goes beyond soaring income inequality — to the eclipse of the myth that Average Joes rule our politics. Well into President Obama’s second term, deep in the doldrums of the status quo, he says the state of the union is “dangerous.”

Matt Taibbi from Rolling Stone joins us on the phone. He is by now a Diogenes on Wall Street. What I didn’t know was that he trained for his critical role in a ten-year stint in Yeltsin’s Russia, a world of back-room deals and a burgeoning oligarchy. He tells us, “A lot of things that I saw in the former Soviet Union, we’re starting to see here.”