Immigrants helped create 1.3 million jobs in Germany, study finds

By Ishaan Tharoor, Washington Post, August 11, 2016

In 2014, entrepreneurs and small-business owners with foreign backgrounds created some 1.3 million jobs in Germany, according to a new report released Thursday.

Global Debt Exceeds $100 Trillion

Global Debt Exceeds $100 Trillion as Governments Binge, BIS Says

By John Glover, Bloomberg

The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements.

The Insanity of Our Food Policy

A Nobel Laureate (Economics) Writes on the Insanity of Our Food Policy

by Hemi Weingarten

                                for the original article click here

Nobel prize winner Joseph Stiglitz is considered one of the top 5 economists in the world today. He is currently a professor at Columbia University in New York, and has a distinguished track record on both international and national monetary and social issues.

What happened to the billions of Dollars the FED printed?

Confessions of a Quantitative Easer

By Andrew Huszar, WSJ, Nov. 11, 2013

I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.

In a town in Peru money does grow on trees

Alejandro Quispe Chilón

By Dowser.org, October 8, 2013

The Andes Mountains, the largest mountain range in the world, are home to 32 percent of Peru’s population, many of which rank among the poorest communities in the country. The struggle to keep crops and livestock alive in the harsh conditions brings many to either leave for hope of a better life in the city (which often fails to provide relief due to the mass amount of people with this same sentiment all unable to find work), or be stuck with little hope of creating a better life in their own community.

BEE APOCALYPSE NOW - Scientists discover what’s killing the bees and it’s worse than you thought

By Todd Woody @greenwombat 

July 24, 2013

As we’ve written before, the mysterious mass die-off of honey bees that pollinate $30 billion worth of crops in the US has so decimated America’s apis mellifera population that one bad winter could leave fields fallow. Now, a new study has pinpointed some of the probable causes of bee deaths and the rather scary results show that averting beemageddon will be much more difficult than previously thought.

What Happens If the Mississippi Runs Dry?

By Tim Wall, Discovery News
The Mississippi River may soon be too shallow for barge shipping, which could hurt international trade and cause increases in domestic energy and food costs. Switching to other shipping methods could increase pollution.

However, there may be a bright side: drought and reduced traffic on the desiccated rivers may benefit wildlife in the long run.

Prison of Debt Paralyzes West

By Cordt Schnibben, Der Spiegel
Be it the United States or the European Union, most Western countries are so highly indebted today that the markets have a greater say in their policies than the people. Why are democratic countries so pathetic when it comes to managing their money sustainably?

In India, Henry Ford’s Assembly Line Inspires the High-Tech Hospital of the Future

By Julien Bouissou, Le Monde, BANGALORE

Dr. Devi Shetty in Bangalore created a low-cost hospital franchise, offering open-heart surgeries for only $2,000, compared to a minimum of $20,000 in the U.S. and Europe. The Narayana Hrudayalaya group has 14 hospitals in 11 Indian cities, and performs 12% of all heart operations in this country of a billion inhabitants. “A century after the first heart operation, only 10% of patients worldwide can afford it. Lives are lost because of the hefty price tags on these operations. It’s a crime,” complains Shetty, who was Mother Teresa’s doctor. But behind his well-rehearsed speech —one of the reasons why he is known as the “Messiah of the poor”— there is an acute businessman. His group makes $250 million in revenue, and a profit margin most American hospitals can only dream of. The reason behind these unbeatable prices is not compassion for the poor but rather a keen sense of management.

In his hospital, Shetty rationalizes every task, from surgical scrubs in the locker room to the nurse handing the instruments to the surgeon in the operating room. A century ago, Henry Ford chose the same method to assemble cars for a lower cost and in record time. What worked for Ford also works for surgery: the time has come for assembly-line operations. The Bangalore hospital’s 29 surgeons operate 70 hours a week. Each one of them is specialized in two or three types of operations, so that they can work faster. “The more a surgeon operates, the better he becomes,” Shetty explains.

As he operates patients the same way one would assemble cars, Shetty applies methods inspired by Toyota: “They invented quality groups. Now, in my hospital too, I want nurses to be able to tell the surgeon if he needs to change his gloves because they are dirty.”

Unlike the U.S., wages are not the hospital’s main expense. The most expensive post is medicine and disposable materials. So Shetty asked himself a question: who in the world knows the best way to buy? His answer: Wal-Mart. To learn how to reduce inventory and handling costs by implementing Just in Time ordering (JIT), the hospital’s managers read all the manuals and bestsellers written on Wal-Mart.

In the near future, temperature curves and medical charts will be replaced by electronic tablets, connected to a main computer, where skilled nurses will be able to follow the patients’ progress. Technology also solved another problem: Previously, patients needed to be examined closely by a doctor. Now, in most cases it can be done through a Skype consultation. In Narayana Hrudayalaya hospitals, more than 53,000 patients have been healed thanks to e-medicine services. “Computer-aided diagnosis will be a norm in the next five years,” Shetty affirms.

Shetty wants to reinvent the hospital, in the way the Indian carmaker Tata revolutionized cars by building the world’s cheapest automobile- the Nano. A 300-bed hospital is about to be built in Mysore, a city 150 kilometers from Bangalore. It will have only one floor, to avoid the expense of installing elevators—the latter will be replaced by passageways. The hospital won’t be air-conditioned because it contributes to the spread of nosocomial diseases; there will be a natural ventilation system instead. The building will be built in record time for only 6 million dollars. All together, Shetty’s group plans to invest 830 million euros in the construction of 100 low-cost hospitals in India, and three “medical towns” with a capacity of 30,000 beds.

Following heart surgery, eye operations and cancer treatments are about to make an entrance into medical Fordism. Next to his cardiology clinic, Shetty has built a hospital specialized in oncology, as well as ophthalmologic, orthopedic and dental clinics. It is like a huge supermarket, where golf carts take patients from one specialty to another.

The low-cost hospital model now interests other countries. The Narayana Hrudayalaya group has invested in a new hospital in the Cayman Islands. Others are expected to follow suit in Ethiopia and European Eastern countries. “I’m going to countries in which Indian doctors are authorized to practice medicine,” Shetty explains.

The Narayana Hrudayalaya empire was built on the ruins of the public health system. In state-owned hospitals, there aren’t enough doctors, and patients often wait months before being operated. Public health expenses represent only 1.4% of the Indian GNP—less than in Bangladesh or Nepal. Private hospitals are often the only solution, even for very poor people.

In Narayana Hrudayalaya hospitals, the wealthy and the poor have the right to the same treatment. Patients arrive either in luxury cars with drivers or by foot, sometimes wearing only a loincloth. This is Shetty’s revolutionary idea: a private hospital which doesn’t only cater to the wealthy. His hospital is now part of a case study taught in Harvard Business School.

How the New American Empire Really Works

By Paul Craig Roberts, Counterpunch
Great empires, such as the Roman and British, were extractive. The empires succeeded, because the value of the resources and wealth extracted from conquered lands exceeded the value of conquest and governance. The reason Rome did not extend its empire east into Germany was not the military prowess of Germanic tribes but Rome’s calculation that the cost of conquest exceeded the value of extractable resources.
The Roman empire failed, because Romans exhausted manpower and resources in civil wars fighting amongst themselves for power. The British empire failed, because the British exhausted themselves fighting Germany in two world wars.
In his book, The Rule of Empires (2010), Timothy H. Parsons describes the successes of the Romans, the Umayyad Caliphate, the Spanish in Peru, Napoleon in Italy, and the British in India and Kenya in extracting resources.
Parsons does not examine the American empire, but in his introduction to the book he wonders whether America’s empire is really an empire as the Americans don’t seem to get any extractive benefits from it. After eight years of war and attempted occupation of Iraq, all Washington has for its efforts is several trillion dollars of additional debt and no Iraqi oil. After ten years of trillion dollar struggle against the Taliban in Afghanistan, Washington has nothing to show for it except possibly some part of the drug trade that can be used to fund covert CIA operations.
America’s wars are very expensive. Bush and Obama have doubled the national debt, and the American people have no benefits from it. No riches, no bread and circuses flow to Americans from Washington’s wars. So what is it all about?
The answer is that Washington’s empire extracts resources from the American people for the benefit of the few powerful interest groups that rule America. The military-security complex, Wall Street, agri-business and the Israel Lobby use the government to extract resources from Americans to serve their profits and power. The US Constitution has been extracted in the interests of the Security State, and Americans’ incomes have been redirected to the pockets of the 1 percent. That is how the American Empire functions.
The New Empire is different. It happens without achieving conquest. The American military did not conquer Iraq and has been forced out politically by the government that Washington established. There is no victory in Afghanistan, and after a decade the American military does not control the country.
In the New Empire success at war no longer matters. The extraction takes place by being at war. Huge sums of American taxpayers’ money have flowed into the American armaments industries and huge amounts of power into Homeland Security. The American empire works by stripping Americans of wealth and liberty.
This is why the wars cannot end, or if one does end another starts. Remember when Obama came into office and was asked what the US mission was in Afghanistan? He replied that he did not know what the mission was and that the mission needed to be defined.
Obama never defined the mission. He renewed the Afghan war without telling us its purpose. Obama cannot tell Americans that the purpose of the war is to build the power and profit of the military/security complex at the expense of American citizens.
This truth doesn’t mean that the objects of American military aggression have escaped without cost. Large numbers of Muslims have been bombed and murdered and their economies and infrastructure ruined, but not in order to extract resources from them.
It is ironic that under the New Empire the citizens of the empire are extracted of their wealth and liberty in order to extract lives from the targeted foreign populations. Just like the bombed and murdered Muslims, the American people are victims of the American empire.
PAUL CRAIG ROBERTS was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury.

Why some nations are poor and other make progress

Why Some Countries Go Bust

By Adam Davidson, NY Times, March 13, 2012
By his own admission, Daron Acemoglu is a slightly pudgy and fairly nerdy guy with an unpronounceable last name. But when I mentioned that I was interviewing him to two econ buffs, they each gasped and said, “I love Daron Acemoglu,” as if I were talking about Keith Richards. The Turkish M.I.T. professor—who, right now, is about as hot as economists get—acquired his renown for serious advances in answering the single most important question in his profession, the same one that compelled Adam Smith to write “The Wealth of Nations”: why are some countries rich while others are poor?
Over the centuries, proposed answers have varied greatly. Smith declared that the difference between wealth and poverty resulted from the relative freedom of the markets; Thomas Malthus said poverty comes from overpopulation; and John Maynard Keynes claimed it was a byproduct of a lack of technocrats. (Of course, everyone knows that politicians love listening to wonky bureaucrats!) Jeffrey Sachs, one of the world’s most famous economists, asserts that poor soil, lack of navigable rivers and tropical diseases are, in part, to blame. Others point to culture, geography, climate, colonization and military might. The list goes on.
But through a series of legendary—and somewhat controversial—academic papers published over the past decade, Acemoglu has persuasively challenged many of the previous theories. (If poverty were primarily the result of geography, say, or an unfortunate history, how can we account for the successes of Botswana, Costa Rica or Thailand?) Now, in their new book, “Why Nations Fail,” Acemoglu and his collaborator, James Robinson, argue that the wealth of a country is most closely correlated with the degree to which the average person shares in the overall growth of its economy. It’s an idea that was first raised by Smith but was then largely ignored for centuries as economics became focused on theoretical models of ideal economies rather than the not-at-all-ideal problems of real nations.
Consider Acemoglu’s idea from the perspective of a poor farmer. In parts of modern sub-Saharan Africa, as was true in medieval Europe or the antebellum South, the people who work the fields lack any incentive to improve their yield because any surplus is taken by the wealthy elite. This mind-set changes only when farmers are given strong property rights and discover that they can profit from extra production. In 1978, China began allowing farmers to benefit from any surplus they produced. The decision, most economists agree, helped spark the country’s astounding growth.
According to Acemoglu’s thesis, when a nation’s institutions prevent the poor from profiting from their work, no amount of disease eradication, good economic advice or foreign aid seems to help. I observed this firsthand when I visited a group of Haitian mango farmers a few years ago. Each farmer had no more than one or two mango trees, even though their land lay along a river that could irrigate their fields and support hundreds of trees. So why didn’t they install irrigation pipes? Were they ignorant, indifferent? In fact, they were quite savvy and lived in a region teeming with well-intended foreign-aid programs. But these farmers also knew that nobody in their village had clear title to the land they farmed. If they suddenly grew a few hundred mango trees, it was likely that a well-connected member of the elite would show up and claim their land and its spoils. What was the point?
I encountered another side of Acemoglu’s thesis during what must have been one of history’s great natural economic experiments: post-Saddam Hussein Baghdad. On April 9, 2003, the day the city was captured, one of the world’s most tightly controlled economies suddenly became a free-for-all. Amid the chaos, many former state functionaries turned into entrepreneurs. Nearly every engineer from the ministry of housing, it seemed, had opened his own construction company. Satellite TVs, once illegal to all but a very small elite, were sold on every major street. Under Hussein, only one company (widely rumored to be monitored by the intelligence service) offered Internet access, and it was incredibly bad and expensive. After it was gone, there were so many new Internet companies that I had far more access options then than I do today in Brooklyn.
Yet the American authorities, who had not planned for this budding free market, all but destroyed it when they gave the bulk of new contracts to large companies outside the country. Often, these outsiders subcontracted to Iraqi firms with close ties to the state’s new political establishment. By the anniversary of the United States invasion, it was clear that economic success would again come from connections and corruption rather than talent and hard work. Today, Transparency International ranks Iraq as one of the most corrupt nations on earth. An Iraqi friend once told me that he had hoped we would teach the Iraqis how to be Americans. Instead, the Americans learned how to be Iraqi.
Acemoglu, Robinson and their collaborators did not come up with the idea that incentives matter, of course, nor the notion that politics play a role in economic development. Their great contribution has been a series of clever historical studies that persuasively argue that the cheesiest of slogans is actually correct: the true value of a nation is its people. If national institutions give even their poorest and least educated citizens some shot at improving their own lives—through property rights, a reliable judicial system or access to markets—those citizens will do what it takes to make themselves and their country richer.
In the United States, economic inequality has grown substantially over the past few decades. Is the 1 percent emerging as a wealth-stripping, poverty-inducing elite?
Well, maybe. Acemoglu and Robinson’s frequent collaborator Simon Johnson, the former chief economist at the International Monetary Fund, told me that financial firms have so thoroughly co-opted the political proc­ess that the American economy has become fundamentally unsound. “It’s bad and getting worse,” he told me. Barring some major shift in our political system, he suggested, the United States could be on its way to serious economic failure.

Germans are smart and efficient, even when they go on strike!

Intelligent Strike Paralyzes Frankfurt Airport.
F.G.Helmke
After a small group of workers on the airport apron resumed a strike over pay on Friday, almost 300 flights were cancelled at Frankfurt, Europe’s third largest airport. They said the action could continue next week.
German unions don't like using big numbers of workers to strike,  because of the high cost of such actions. Instead, few people in strategic positions are  being used to bring complex operations to a halt. The effect of the strike is the same, but  risks and investments remain much smaller

How an Ex-Convict Bought a Whole Country!—Simple Money Lessons for Everybody

By F.G.Helmke, January 19, 2012
Good times don’t last forever. That’s logical, one should think. But most people and especially the ones in the government don’t seem to know this. Prisoner Joseph Jacobson knew it from bitter experience. He was raised as the second youngest son of a wealthy cattle owner, but had become victim of family intrigues and slave trafficking before he finally wound up in jail in a foreign country. His work ethics plus his rare ability to interprete dreams made him a famous esoteric guru though, and that saved first him, then millions.
The ruler of that country had been suffering from reoccurring nightmares and asked him for advice. The answer was simple: “You’ll have some very prosperous years, but they will end. Then bad times will come and eat up all your riches.” Unlike our modern rulers this one took some very smart action: He wisely appointed J.J. as a head of a government food bank that began storing up big parts of the harvest as a reserve for the future. (The only country I know of that does something similar nowadays is Norway.)
Things haven’t changed much since then. When I was younger I learned very fast that the more you earn the more the bank lends you. As a result I was constantly $3000 in debt. Later I found out my big brother had a $50.000 credit line he was using to the limit. I soon got used to it, actually the new zero was now 2000 negative by just paying a little interest every month. That was no problem, until one day my income dropped drastically, and some time later the bank asked me how I was going to take care of this debt.
And this is exactly how governments and many people live. They spend money they borrowed, never return it to the bank but instead just pay interest every month. That’s excellent business for the bank, because in the end all the interest paid over the years adds up to much more than the amount that was lent. But the best part is that these interest payments never end, the bank keeps on making money endlessly, because the borrowers usually don’t want to pay back the loan. And then one day they can’t, even if they wanted to.
Some 3500 years ago the Egyptian Food Bank under Joseph made the government practically owner of the whole country. Having all their money spent the citizens first mortgaged their houses to buy food, then their lands, then everything they owned.  They could have very well laid aside reserves during the fat years, but they didn’t. So finally they had to sell their freedom and became slaves, forced to pay a monthly 20% of the GNP to the government-bank. And that not only for the rest of their lives, but for the rest of their children’s lives too.
History repeats itself. Exactly like Joseph and the Pharaoh of old, modern banks and governments got together once again to help each other collect taxes and interest from us and our children, guaranteeing each other’s survival. And now that the economy is worsening, some countries are starting to take pretty drastic measures to squeeze out the most they can from their citizens.
There is very little we can do about that. But let’s at least save up when we have plenty, so when the good times end we won’t become slaves of the bank. 

The Secret of the Situation of the American Economy

Has America Become an Oligarchy?

By Thomas Schulz, Der Spiegel
The Occupy Wall Street movement is just one example of the sudden outbreak of tension between America’s super-rich and the “other 99 percent.” Experts now say the US has entered a second Gilded Age, but one in which hedge fund managers have replaced oil barons—and are killing the American dream.

At first, the outraged members of the Occupy Wall Street movement in New York were mainly met with ridicule. They didn’t seem to stand a chance and were judged incapable of going up against their adversaries, Wall Street’s bankers and financial managers, either intellectually or in terms of economic knowledge.

“We are the 99 percent,” is the continuing chant of the protestors, who are now in their seventh week of marching through the streets of Manhattan. And, surprisingly, they have hit upon the crux of America’s problems with precisely this sentence. Indeed, they have given shape to a development in the country that has been growing more acute for decades, one that numerous academics and experts have tried to analyze elsewhere in lengthy books and essays. It’s a development so profound and revolutionary that it has shaken the world’s most powerful nation to its core.

Inequality in America is greater than it has been in almost a century. Those fortunate enough to belong to the 1 percent, made up of the super-rich, stand on one side of the divide; the remaining 99 percent on the other. Even for a country that has always accepted opposite extremes as part of its identity, the chasm has simply grown too vast.

Those who succeed in the US are congratulated rather than berated. Resenting other people’s wealth is viewed as supporting class struggle, which is something very frowned upon.

Still, statistics indicate that the growing disparity is genuinely overwhelming. In fact, the 400 wealthiest Americans now own more than the “lower” 150 million Americans put together.

Nearly two-thirds of net private assets are concentrated in the hands of 5 percent of Americans. In comparison, the upper 5 percent of Germany hold less than half of net assets. In 2009 alone, at the same time as the US was being convulsed by mass layoffs, the number of millionaires in the country skyrocketed.

Indeed, if you look at the reports it compiles on every country in the world, even the CIA has concluded that wealth disparity is greater in the US than in Tunisia or Egypt.

In a book published in 2010, American political scientists Jacob Hacker and Paul Pierson discuss how this “hyperconcentration of economic gains at the top” also existed in the United States in the early 20th century, when industrial magnates—such as John D. Rockefeller, Andrew Carnegie and J. P. Morgan—dominated the upper stratum of society and held the country firmly in their grip for years.

Writer Mark Twain coined the phrase “the Gilded Age” to describe that period of rapid growth, a time when the dazzling exterior of American life actually concealed mass unemployment, poverty and a society ripped in two.

Economists and political scientists believe the US has entered a new Gilded Age, a period of systematic inequality dominated by a new class of super-rich. The only difference is that, this time around, the super-rich are hedge fund managers and financial magnates instead of oil and rail barons.

The academics fear this change could have serious consequences for the country’s economic future. As they see it, this extreme inequality threatens to dramatically slow growth in the world’s largest economy. This is part of a development, they argue, that has been under way for years but remained largely hidden in the years of cheap credit, rising real estate prices and excessive consumption—when it seemed everyone was on the way up. And the problems only came to light with the arrival of the financial crisis.

Through the 1970s, income for Americans across all social classes rose nearly in lockstep, by an annual average of roughly 3 percent. Starting in the 1980s, however, this trend underwent a fundamental transformation. Granted, the economy continued to grow—but almost exclusively to the benefit of the country’s top earners. The major economic expansion under President Ronald Reagan benefited only a few, and the problem only grew worse under George W. Bush.

At least since the beginning of the millennium, it has no longer been a simple matter of two societal extremes drifting further apart. Instead, the development is also accelerating. In the years of economic growth between 2002 and 2007, 65 percent of the income gains went to the top 1 percent of taxpayers. Likewise, although the productivity of the US economy has increased considerably since the beginning of the millennium, most Americans haven’t benefited from it, with average annual incomes falling by more than 10 percent, to $49,909 (€35,184).

 Even for a country that loves extremes, this is a new and unprecedented development. Indeed, as Hacker and Pierson see it, the United States has developed into a “winner-take-all economy.”

The political scientists analyzed statistics and studies concerning income development and other economic data from the last decades. They conclude that: “A generation ago, the United States was a recognizable, if somewhat more unequal, member of the cluster of affluent democracies known as mixed economies, where fast growth was widely shared. No more. Since around 1980, we have drifted away from that mixed-economy cluster, and traveled a considerable distance toward another: the capitalist oligarchies, like Brazil, Mexico, and Russia, with their much greater concentration of economic bounty.”

This 1 percent of American society now controls more than half of the country’s stocks and securities. And while the middle class is once again grappling with a lost decade that failed to bring increases in income, the high earners in the financial industry have raked in sometimes breathtaking sums. For example, the average income for securities traders has steadily climbed to $360,000 a year.

Still, that’s nothing compared to the trend in executives’ salaries. In 1980, American CEOs earned 42 times more than the average employee. Today, that figure has skyrocketed to more than 300 times. Last year, 25 of the country’s highest-paid CEOs earned more than their companies paid in taxes.

By way of comparison, top executives at the 30 blue-chip companies making up Germany’s DAX stock market index rarely earn over 100 times the salaries of their low-level employees, and that figure is often around 30 or 40 times.

Hacker and Pierson are far from the only economists and political scientists to recognize a fundamental societal distortion. Larry Bartels, one of America’s leading political scientists, also believes America has entered a new Gilded Age. Bartels’ 2008 book on the subject, “Unequal Democracy: The Political Economy of the New Gilded Age,” has drawn a great deal of attention and even been quoted by President Barack Obama.

“The really dramatic economic gains over the past 30 years have been concentrated among the extremely rich,” Bartels writes, “largely bypassing even the vast majority of ordinary rich people in the top 5 percent of income distribution.” He doesn’t see this fundamental shift in the distribution of wealth as having resulted from market forces or drastic events, such as the financial crisis. Instead, he believes they are “the result of policy choices.”

As Bartels explains, much as the economic giants of the Gilded Age developed such enormous influence that they could dictate basic political conditions, today’s Wall Street bosses and CEOs have successfully arranged extensive deregulation for their industries. Indeed, he argues that this is the only thing that can explain how hedge fund managers suddenly started making billions of dollars a year. Former Citigroup CEO Sanford Weill, for example, kept a framed pen in his office as a symbol of his influence. It was the pen President Bill Clinton—at Weill’s instigation—used in 1999 to sign into law legislation repealing the provisions in the Glass-Steagall Act of 1933 that separated the transactions of investment and commercial banks.

At the same time, Bartels writes, the wealthy receive enormous tax breaks worth hundreds of billions of dollars. In the 1970s, capital gains tax was 40 percent, and the highest income tax bracket paid a rate of 70 percent. Under George W. Bush, these rates dropped to 15 percent and 35 percent, respectively. For example, it emerged a few weeks ago that legendary investor Warren Buffett earned $63 million last year but was only required to pay 17 percent in taxes.

In a medium-term, the consequences of this societal divide threaten the productivity of the entire economy. Granted, American economists in particular have long espoused the view that inequality is simply a necessary side effect of above-average growth. But that position is now being called into question.

In fact, recent research indicates that the economies of countries experiencing periods of pronounced inequality often show considerably less growth and more instability. On the other hand, it also finds that economies grow faster when income is more evenly distributed.

In a study published in September, the International Monetary Fund (IMF) also concluded that: “The recent global economic crisis, with its roots in US financial markets, may have resulted, in part at least, from the increase in inequality” in the country.

Cornell University economist Robert Frank analyzes this development in his recently published book “The Darwin Economy.” In it, he concludes that financial realities are best described not by Adam Smith’s economic models but, rather, by Charles Darwin’s thoughts on competition.

Frank writes that, with its often extreme deregulation, today’s financial and economic system makes it impossible for individuals’ self-serving behavior to ultimately contribute to the prosperity of society as a whole, as Smith had envisioned it. Instead, it leads to an economy in which only the fittest survive—and the general public is left behind.

The question is: How long can the US withstand this internal tension?

Differences between rich and poor are tolerated as long as the rags-to-riches story of the dishwasher-turned-millionaire remains theoretically possible. But studies show that increasing inequality and political control concentrated in the hands of the wealthy elite have drastically reduced economic mobility and that the US has long since fallen far behind Europe on this issue. Indeed, only 4 percent of less-well-off Americans ever successfully make the leap into the upper-middle class.

“The major difference between this Gilded Age and the last one is the relative absence of protest,” historian Gary Gerstle told the online magazine Salon in October. “In the first Gilded Age, the streets were flooded with protest movements.”

Manhattan hasn’t yet quite reached that point.