Inequality Is the Real Debt Burden

by Terry Link | Friday, July 16, 2010 | Lansing State Journal

Recent polls indicate that many Americans are almost as concerned about growing government debt as they are about terrorism. It's interesting that concern about debt occurs almost rhythmically when conservatives are out of power.

What else would explain the support of a $3 trillion war in the Middle East without concern for "growing debt"?

But politics aside, this effort to convince the American people that debt which supports the unemployed, the sick, and education is bad while debt that truly imperils current and future generations is acceptable is dangerously misguided.

There are certainly many good reasons to minimize debt. But how many of us buy a house or a car with cash?

We borrow because we believe that the investment in that debt not only brings immediate benefit but hopefully constitutes a long-term investment that makes sense.

Debt of and by itself is not the enemy. It is being used as a red herring by those who don't want government lending a helping hand to families in need and who want to push off environmental and social debts to others while enriching the elite.

Nobel economists Amartya Sen and Joseph Stiglitz recently led a team of economists to review how we measure our economy. Their report "Mis-Measuring Our Lives: Why GDP Doesn't Add Up" -- lays bare the simplistic notions on which both parties are banking their fall election campaigns. Those candidates so heavily focused on debt (note: only government debt - not individual, corporate or, heaven forbid, environmental debt) are either naive or disingenuous.

Stiglitz's team points out that the prevailing economic dogma measures construction and destruction as if they are equivalent. We celebrate growth of GDP regardless of whether many people are worse off because any gains have been captured by a small elite while the majority lose ground.

We also treat all the economic activity done at the household level and in charitable organizations by volunteers as if it doesn't matter.

No wonder the policies as prescribed by Milton Friedman and his followers have left a wake of growing inequality both globally and within nations that is the seed of our current and continuing malaise.

We have unwittingly spent up the interest that nature provided and have been spending the capital for more than a generation. The proof is pretty clear to the scientific world - see, for example, the 2005 U.N. Millennium Ecosystem Assessment and countless studies from the National Academies of Sciences of the U.S., Britain, France, India, etc. Those who have been convinced by the sales job of the Milton Friedmans of the world that free markets are some holy grail, ignore the environmental and social costs of doing business.

Another recent study by two British epidemiologists, "The Spirit Level: Why Greater Equality Makes Societies Stronger", demonstrates overwhelmingly that the real culprit for our predicament is growing inequality. It's way past time to start talking about our real debt - the costs of inequality we bear and will pass on to our children and theirs.