The Wealth Industry

Many economists and market analysts believe the growing inequality in wealth in America played a major role in the recession. Before 2007, America was in the midst of the greatest wealth redistribution in history. Financial institutions preyed on poor Americans because the increase in business boosted their stock prices, which benefitted the wealthy American stock holders. Joseph Stiglitz attributes the original division in wealth to education and rent-seeking:

If you're born at the bottom of the income distribution, your likelihood of reaching the top isn't very high, largely because the odds of receiving a good education is tied to your parents' income. And a lot of the largest fortunes have to do with rent-seeking activities . . . “our legal framework [providing] scope for an increase in inequality."

Later in the article, Stiglitz states that a piece of the inequality solution is in creating regulation that discourages rent-seeking abilities. This sort of regulation will be nearly impossible to pass because creating that kind of legislation will require a large amount of lobbying in itself. While maybe a large percentage of America would indeed benefit from that kind of regulation, the group that can contribute the funds necessary would not benefit. The wealthy would instead put their funds towards lobbying for regulations that encourage rent-seeking because they want regulation that makes it harder for lower-class America to rise to the top 10 or 1%. In reality, the wealthiest Americans seek regulations where they can control how difficult it is to reach their level.