The Price of Inequality: How Today's Divided Society Endangers Our Future

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The Price of Inequality: How Today's Divided Society Endangers Our Future

4.0 of 5 stars 4.00 · rating details · 923 ratings · 189 reviews

The top 1 percent of Americans control 40 percent of the nation's wealth. And, as Joseph E. Stiglitz explains, while those at the top enjoy the best health care, education, and benefits of wealth, they fail to realize that their fate is bound up with how the other 99 percent live.

Stiglitz draws on his deep understanding of economics to show that growing inequality is not i...more

Hardcover, 414 pages

Published June 11th 2012 by W. W. Norton & Company (first published June 4th 2011)

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Sep 02, 2012 Trevor rated it 5 of 5 stars

Shelves: economics

I guess the most disturbing part of this book is the fact that we are very unlikely to follow the advice that is contained in it. And this is a real pity, as it seems inevitable that the policies our governments and potential governments are likely to pursue will only make matters worse. That the alternative government in the US is proposing a Vice President who is obsessed with Ayn Rand and Fred Hayek ought to be enough to terrify anyone, such as myself, still foolish enough to believe that cap...more I guess the most disturbing part of this book is the fact that we are very unlikely to follow the advice that is contained in it. And this is a real pity, as it seems inevitable that the policies our governments and potential governments are likely to pursue will only make matters worse. That the alternative government in the US is proposing a Vice President who is obsessed with Ayn Rand and Fred Hayek ought to be enough to terrify anyone, such as myself, still foolish enough to believe that capitalism doesn't necessity have to be anti-democratic. Such a view is becoming increasingly hard to sustain - for Rand and Hayek to be 'heroes' confirms that democracy is a concept suffering its death throws in the United States. Something else that should terrify us.

This book documents the world we now live in. A world where a tiny minority of the extreme rich are now happy to behave as if it was society's responsibility to do all we can to ensure they continue to receive the vast majority of the wealth produced as a kind of rent. These rent seekers have created a situation where they own corporations that are seen as being 'too big to fail' and in being too big to fail they are also immediately also too big to restructure or even too big too prosecute no matter what their crimes. Crimes which go unpunished, unacknowledged and ignored. This means that while corporations have increasingly privatised the rewards of their criminal schemes, they have effectively socialised all risks. This is moral hazard of such a scale it would almost be funny if the financial pages of newspapers were written as farce, rather than commentary. There are statistics in this book that will make your hair curl. Take the fact that bailing out AIG meant giving this one company 150 billion dollars, or more money than was given to the poor on welfare in the US for the 16 years to 2006. I struggle to comprehend the obscenity of such a fact. We live in a society where all that matters is that the insultingly rich are protected from their failures at the expense of the poor and huddled masses.

This is made worse by the fact we have a media that is owned and controlled by those who benefit from policies that make our societies less equal, policies that diminish opportunities for the mobility of the poor and policies that undermine democratic processes and structures so they become increasingly ineffectual. We have a situation now where government is despised by large sections of society and corporations are praised despite these being completely undemocratic organisations. Where the very notion of 'power to the people' is held in contempt and all that is valued is 'one dollar one vote'.

We live in a post-truth world, as another book I've recently finished said - and the media is greatly to blame for this state of affairs. We desperately need access to sources of information that are not completely dominated by the views and preferences of those with power. We need an electoral system not run solely in the interests of the super-rich and the powerful.

It is clear that this book is written by someone who was awarded a Nobel Prize in Economics for work done on the problems of asymmetries in information and the impact these have upon economics. To understand why this is important - important enough to deserve a Nobel Prize - you need to remember that standard economic theory (something that seems to have been developed in a kind of fairytale dream world) assumes that everyone has perfect access to the information they need to make decisions and, as a matter of course, always act on that information in ways that are to their perceived benefit and self-interest. The author shows that not only is this a gross overstatement of our much more limited capabilities, but also that our current system would be unlikely to continue to exist if access to real information was readily available to people generally. In fact, a glance at the voting patterns (the effective avoidance of voting) by large numbers of citizens in the US and UK shows just how disaffected citizens have become with democracy - something encouraged by those in power as it allows them to continue to dominate. Nevertheless, the only thing capable of standing in the way of their excessive power are effective democratic structures.

Our societies are being bleed white by the greed of those at the very top, those who increasingly contribute nothing to the development of our society and, in fact, have a direct negative impact on all aspects of our economic and political life.

The author looks to the uprisings in the Middle East as cause for hope. I am not as confident as he is, but I do know that those in the one percent and the point one of one percent ought to beware. Lies work for only so long. When people realise they have been so grossly, unashamedly and tragically lied to and stolen from they are likely to act with the same level of compassion to those who have lied to them as has been shown to them by the liars.

Both Stiglitz and Krugman make it clear that more equality would make a better economy. They both believe Capitalism can be saved from itself. They believe making it clear what needs to be done ought to be enough to make it happen. I hope I am just grossly cynical and they are both right.(less)

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Jul 20, 2012 Reed Dame rated it 3 of 5 stars

I decided to read this book to get a sense of "another perspective".

The vast majority of the book made me extremely angry. I feel that he misrepresents and manipulates several economic theories to fit his central thesis. For example, he seems to believe that (due to the recession of 2008) "capitalism has failed us, therefore we need more government". He says this as: "Indeed, the sheer waste of resources brought on by this crisis caused by the private sector" (Page 90). Nowhere until one of the...more I decided to read this book to get a sense of "another perspective".

The vast majority of the book made me extremely angry. I feel that he misrepresents and manipulates several economic theories to fit his central thesis. For example, he seems to believe that (due to the recession of 2008) "capitalism has failed us, therefore we need more government". He says this as: "Indeed, the sheer waste of resources brought on by this crisis caused by the private sector" (Page 90). Nowhere until one of the final chapters regarding the federal reserve does he mention that the government had any role in the financial crisis, such as the Community Reinvestment Act.

Additionally, these are a few select quotes that angered me and my critiques of them:

"broadly beneficial public investment and support for public education" (Page 92).
Often the problem is not the amount of funding, but the way schools are run. I am a big support of school vouchers and charter schools, as they have been proven to provide an education with better outcomes for the students. Washington, DC spends $28,000 per pupil per year and achieves some of the worst results in the country, yet charter schools do better. I'm guessing he does not support charter schools.

"In earlier chapters we saw how prospects of good education for the children of poor and middle-income families were far bleaker than those of the children of the rich. Parental income is becoming increasingly important, as college tuition increases far faster than incomes, especially at public colleges, which educate 70 percent of Americans. But, one might ask, don't expanded student loan programs fill the gap? The answer, unfortunately, is no; and again, the finacial sector is more than a little at fault."
Of course! Blame the private sector! Never mind the fact that every time the government puts its very inelastic demand behind something, the price increases exponentially. The same thing occurs when the state subsidies housing, health care, etc. Here's an alternate take on the cost of higher education for those interested: http://www.thefreemanonline.org/colum...

"Government is the formal institution through which we act together, collectively, to solve the nation's problems."
I don't know where to begin with this one. I believe individuals are born free, without any obligation to serve any lord, king, president, or person. In addition, THE FREE MARKET is the institution through which we act together, to solve the nation's problems. Far more problems have been solved by the free market and the free enterprise system than will ever be solved by the government. For how the market causes collective action voluntarily, I suggest watching this video, it's by Milton Friedman and the title is "The Pencil".

I agreed with him about a few points:
-The Federal Reserve needs to be severely restructured if it is to serve the interests of the "99 percent".
-For-profit colleges are awful.
-Government agricultural subsidies are awful (and should be eliminated).
-The current election system depends too heavily on campaign contributions. However, I am worried about switching or depending more heavily on a system of public finance, because in a free society economic power ought to be a check on political power, rather than a reinforcement. I worry that with public financing of elections, those in power, Democrats and Republicans, would make it difficult for third parties to obtain funding, thus economic power would become a reinforcement of political power rather than a check.(less)

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Sep 01, 2012 Meredith rated it 3 of 5 stars · review of another edition

Shelves: audiobooks, nonfiction, economics-for-laymen

Despite winning a Nobel Prize in economics, Joseph Stiglitz has written a book for the lay reader in which he clearly and simply explains what is causing the gross inequality in current American society, why is growing at an alarming rate, and why a large degree of inequality is bad. He doesn't argue for total equality, just less inequality, which will result in more opportunity for ordinary Americans and less economic volatility.

Warning: the transparency this book gives to how the people with...more

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May 07, 2013 Ruth Elisabeth rated it 5 of 5 stars

Jangankan Indonesia, AS sekalipun saat ini menghadapi masalah ketimpangan ekonomi yang serius. 1% orang kaya di AS menikmati 65% pendapatan. Lebih hebatnya lagi, tahun 2010 , 1% orang kaya di sana menikmati tambahan pendapatan 93% paska krisis 2008.
Sebenarnya tidak terlalu mengejutkan untuk negara yang terang2an menyebut dirinya negara kapitalis. Namun, cukup mengejutkan karena angka ketimpangan semakin meroket, ketika mereka ingin dijadikan contoh bagaimana negara yang demokratis dapat mencipt...more

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Sep 05, 2012 Doug Stotland rated it 4 of 5 stars

Great book to read in the wake of Ryan getting added to the ticket. Even though the solution is pretty half-assed I found the diagnosis very persuasive. I'd imagine those who believe draining the debt through austerity, less government regulation, increased privatization and lower taxes at the top would find this a painful read. That said, I'd love for one of my libertarian-leaning friends to give it a go to hear what they think. I'd gladly read a book of their choosing as a quid pro quo (as lon...more

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Jun 09, 2013 Henriette rated it 4 of 5 stars

It is truly disturbing that such clear and crystalline analysis and insight does not meet decisive action. It confirms the notion that the few who benefit the most from inequality and austerity policies are way too powerful and influential for anything to change. For those at the bottom, life is a constant struggle to keep heads above water and there's a lot of people doing a successful campaign in persuading everyone, also the poor, that it's their own fault, meanwhile at the top people are enr...more

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Mar 27, 2013 Jay Roberts rated it 4 of 5 stars

Shelves: economics, politics

Like many other books, this author frames the story of our economic woes in terms of the 1% against the 99%. After reading so many tales such as this one, I have to say that the author is wrong. No, nothing he really says in the book is wrong. And it is a very good read, by the way. He’s just wrong about the 99%.

There is no 99%. The reality is that there are two 49.5%s. The first 49.5% are the kind of people that can actually read a book like this. In fact, they are the kind of people that can r...more Like many other books, this author frames the story of our economic woes in terms of the 1% against the 99%. After reading so many tales such as this one, I have to say that the author is wrong. No, nothing he really says in the book is wrong. And it is a very good read, by the way. He’s just wrong about the 99%.

There is no 99%. The reality is that there are two 49.5%s. The first 49.5% are the kind of people that can actually read a book like this. In fact, they are the kind of people that can read any sort of book, no matter what perspective the author comes from. These folks are the minority of informed decision makers in our democracy. I would say that this camp suffers more than any other group due to the fact they understand exactly how inequality hurts them.

The other 49.5% out there are the willingly stupid. Even if they possessed the ability to tackle any sort of thoughtful work on the economy (or just about any other subject), they long ago gave up on that sort of effort. This is the sort of folk that reality TV was designed for. Low information, low understanding, and low care. These people choose comfortable conformity over disturbing enlightenment.

So when I read a book like this that outlines the problems caused by the 1%, I can only look to the 49.5% of people who gullibly follow them. They’ve bought into fairy tale and indulgent tales of times past. And while the author touches on the education problem, the real problem is that many of this 49.5% would simply ignore the education provided. And that is the real issue. The fact is that the 1%, as the author points out, receives its funding from rents. And it uses a portion of these profits from the rents to pander to this 49.5% of people’s indulgences and ignorance.

Not much will change as long as people focus on the 1%. The focus needs to shift to the people that have bought into the lies of the 1%. Until then, it will be 50.5% of people against the remaining 49.5%. It’s not hard to see who will lose here.
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Mar 22, 2013 Nilesh rated it 2 of 5 stars

The book makes a few critically important points about inequality at the start but degenerates into a repetitive, angry harangue in most of the rest. As a result of the strong biases against almost everything, everywhere, some extremely good suggestions are completely lost. Most jarringly, the author not only finds nothing good in anything current but also is highly inconsistent and contradictory in his criticisms and takes too much liberty with the truth/facts.

Wealth and income inequality are e...more The book makes a few critically important points about inequality at the start but degenerates into a repetitive, angry harangue in most of the rest. As a result of the strong biases against almost everything, everywhere, some extremely good suggestions are completely lost. Most jarringly, the author not only finds nothing good in anything current but also is highly inconsistent and contradictory in his criticisms and takes too much liberty with the truth/facts.

Wealth and income inequality are extremely serious issues that few politicians or economists have really focussed on blinded by their their growth fetish - this point is well made by the author. In many growth economies, including the US, income levels of the average person are not increasing for decades and the growth is accruing to the select few.

After these valid points, the author sprays blame all around with particular focus on things he detests the most. Take this: the author would blame banks for charging too much on credit cards and too little on mortgages (this is now predatory lending). He would blame banks for not giving loans to small businesses and homeowners post 2008 also for too many loans pre-2008. He would blame IMF for forcing banks to go bankrupt in Asia in 1997 (excessive tightening and fiscal correction) and blame the Fed for TARP and US government for excessive easing in 2008. The author goes on and on with such shortcomings without any framework on real causes.

The solutions offered are equally frightful on account of the biases (and they take too little a space on account of the diatribe in the rest of the book). The author fails to identify the true source of wealth inequity and confuses that with the income inequity, He forgets to mention that as bad as CEO/senior executive pays are in a handful of a few hundreds or thousands of cases, they are tiny in the big scheme of wealth inequity schemes (add them all up over a few years and one is unlikely to hit the total wealth of the world's top ten richest today). The author completely ignores at least temporary positive impact of 2009 bailouts as seen in terms of recovery and jobs up until now compared to the alternate scenario of total meltdown a la so many cases globally (also forgets to mention that they are repaid) and easing in relieving the homeowner pain. He also forgets to mention the positive societal impact created by the US 2003-7 cycle compared to countries that did not have them like Japan.

Similarly valid points on the shortcomings of democracy as it is practiced now in the US are lost in the anger over micro-examples. The problems on account of lobbying, justice, governance are valid but the suggestions at the end are nothing but a general preaching to all to change something. There are few practical, well-defined suggestions from within the system in the book and the author is still too timid to make a Marxian revolution calls. He certainly believes in bringing down most of the things that exist today despite all the general gains enjoyed by people in developed societies today compared to a few decades ago, Yet, he has no real structure for the next society except some ideal concepts.

In summary, the book is powerful enough to make one enraged, prejudiced and rearing for action like an incendiary politician's speech. This is based on the rightful accounting of some extremely disturbing real world phenomenon in a powerful way. But beyond the clarion call for some sort of destructive action, the book falls flat. (less)

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Feb 19, 2013 Steve rated it 5 of 5 stars

Shelves: economics, humanism

This is an important book, because Stiglitz goes beyond the very real concerns of suffering that systemic economic inequality brings about, and talks about the lasting damage done to the entire society as democracy slowly dies and the oligarchs and plutocrats come to power in the United States through the power of inherited wealth government giveaways and laws that favor the 1% over the rest of us.

Not only does Stiglitz outline the depth of the problem, but he offers real solutions to the proble...more

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Jan 16, 2013 Mike Schwartz rated it 4 of 5 stars

This book, building off a powerful argument Stiglitz made in his essay “The Book of Jobs” in Vanity Fair, makes the case that it wasn’t merely technological and social change that led to the large gap between the haves and have-nots, rather the concentration of power in the hands of the rich and their conscious efforts to rig our legislative and regulatory processes in their favor. Stiglitz makes the case that concentration of power in the hands of the rich doesn’t just threaten democracy but al...more

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Jan 14, 2013 Amanda Brinkmann rated it 4 of 5 stars

Stiglitz' CV is impressive and immediately creates the context for receiving that he has to say - one experiences him as authorotative, a specialist in his field as well as having the credentials to tackle the holy cows, in this case, the gross and vast inequality that is prevalent in the so-called, " land of the free" - the USA. Although he challenges the entire construct of the economic and social systems within the USA, his observations and recommendations, have global relevance.

Stiglitz ' t...more Stiglitz' CV is impressive and immediately creates the context for receiving that he has to say - one experiences him as authorotative, a specialist in his field as well as having the credentials to tackle the holy cows, in this case, the gross and vast inequality that is prevalent in the so-called, " land of the free" - the USA. Although he challenges the entire construct of the economic and social systems within the USA, his observations and recommendations, have global relevance.

Stiglitz ' takes no prisoners' and really does take his gloves off as the creates a very vivid, realistic and often shocking narrative of what he describes as, " corruption, American style". This corruption and perpetuation of ruling class - the much written about 2% at the top - is exposed in all of its forms, but specifically, in the ' how' this inequality has been perpetuated over 100's of years.

He makes real, the unfairness and gross malfaesance perpetrated by the US Government in the bail-out of the banks. The injustice of nearly 11 million American, who fell prey to the predatory lending practices and communal fraud perpetuated by these bankers and financial sector, now having lost their homes and in most instances, their life savings. So - the banks were rewarded for effectively catalysing the collapse of the global economic system, yet were not expected to restructure their fraudulent and illegal loans, so as to keep as many Americans as possible in their homes. Stiglitz paints a visceral picture of whole neighbourhoods that are standing empty, the homes being vandalised and/or not maintained, thereby losing more value. This makes NO sense when contrasted by the alternative, which is to have forced the banks to restructure the mortgages, thereby keeping Americans in their homes, but also ensuring that the value of these properties are not eroded further.

He exposes the student loan scam - and how government is a silent witness and proponent to a system that dooms students to a life of repaying their exorbitant student loans - whether or not they were studying towards a qualification that held the promise of finding a job or that could doom them to a life of working 2-3 menial jobs for the rest of their life to pay off these loans. This is a financial system that has given these banks the guarantee of repayment of student loans, by excluding it from bankruptcy processes. So - the banks and private colleges conspire in yet another layer of predatory lending practices, with NO responsibility thereafter.

The existing tax system - which is not progressive - meaning that the top 2%, who own the largest chunk of the resources and wealth in the US, pay proportionately less tax than the fast eroding middle-class [ which is effectively earning 10% than they were 15 years ago] and keep those at the bottom of the pyramid right where they are - with little possibility of accessing educational and other opportunities to better themselves. In fact, as one starts understanding the US budget deficit and how the economy is structured [ the depth of their indebtedness and thereby the complete lack of liquidity], one can be forgiven to want to breathe into a paperbag - it feels as though this status quo has inherent in its structure, the ability to collapse the entire world economy in totality. I personally felt, from an economic perspective, that Africa and developing countries at least hold some hope to deal with inequality, corruption etc - but that this ship has sailed for the US.

The patent ownership of the government as well as the resources by Big Business, Lobbyist and those in the monied class, is patent and shocking. The hidden subsidies that encourage large businesses to off-shore their operations, thereby shedding more jobs in the US, whilst not requiring these companies to pay taxes in the States, from the profits of their off-shore [ cheap labour] activities, is jarring and makes no sense. In fact, the system is in the USA is, in the eye of the observer, set up to expidite a race to the bottom for its citizens. At the same time, the 2% are further protected via low or no estate taxes, so that they are better able to pass their oligarchies of wealth and power over generationally. Another shocking and jaw-dropping realisation.

Stiglitz goes on to make a range of practical, cogent, pragmatic recommendations as to what is required to stabilise the economy, start the process of dealing with the gross inequality. He speaks to a New Social Compact to support workers via collective action by the citizens. He suggests a growth agenda based on much-needed public investment and unpacks the inherent benefits thereof. He deals with the tension between efficiency - which creates further job losses - and innovation in respect of saving resources. He stresses the point that firms/corporations should be obliged to pay for the full environmental damage that they continue to cause.

In the end, what is required in the US [ and a great many other countries and governments], is a complete Political Agenda Reform - the concept of ' self-interest' my be fully understood, to include the self-interest of ALL citizens and to direct this individual self-interest in the common interest - that which will be good for all.

It did however feel to me as though Stiglitz himself does not hold much hope that any of these reforms will happen - not soon in any event. The average citizen is just not aware enough of their own power to resist and to shape the system and agenda, which is again no different from the rest of the world. The ' Sheeples' syndrome seems to be alive and well globally.

I remain hopeful, that as leaders in our own right, we will continue to educate, advocate and push for a redesign of the whole, skewed, global system. The current version has patently NOT worked - so we need to start from scratch and design a system that spreads resources more fairly and that actively seeks to eradicate inequality and poverty - both very serious 'conditions' that are entirely preventable and should in fact, in the 21st century, NOT exist at all. We live in a world that has abundantly more than enough so that children should NOT be dying of hunger and starvation daily. The book has inspired me to research the topic ever deeper - but also, again, rationalised my own thoughts and the work that I am personally involved in to systemically as well as systematically create a far more ideal and positive future. Recommended reading for anyone who is interested in social engineering, economics, behaviorism and systems thinking. I enjoyed every page!(less)

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Jan 13, 2013 Steven Peterson rated it 4 of 5 stars

Joseph Stiglitz is a Nobel Prize winner in Economics. In this work, he examines the effects of inequality in wealth and income in the United States. In this book, he addresses how inequality (Page xi) ". . .is cause and consequence of the failure of the political system, and it contributes to the instability of our economic system, which in turn contributes to increased inequality. . . ."

The book addresses a number of related issues in its various chapters. He begins by laying out the extent of...more

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Nov 19, 2012 Kate rated it 5 of 5 stars

Shelves: 3-non-fiction, 7-reference

My education was in engineering, not economics. So, in a desire to better understand what is happening to our economy and, more importantly, to our society, I have been trying to educate myself more. I can't be part of the solution if I don't fully understand the problem or the solutions or even that many of the solutions proposed are actually wrong and will only make things worse.

In his book, The Price of Inequality: How Today's Divided Society Endangers Our Future Stiglitz discusses a variety...more My education was in engineering, not economics. So, in a desire to better understand what is happening to our economy and, more importantly, to our society, I have been trying to educate myself more. I can't be part of the solution if I don't fully understand the problem or the solutions or even that many of the solutions proposed are actually wrong and will only make things worse.

In his book, The Price of Inequality: How Today's Divided Society Endangers Our Future Stiglitz discusses a variety of factors that have created the extent of the inequality that we have in our society, and he also proposes solutions that will benefit most everyone in our society. Not surprisingly, he encourages investment in our society - in education, technology, infrastructure. Unfortunately, much of the political talk in recent months has been to cut back on what we must need to invest in. How can we expect our future generations to succeed when we refuse to invest in them?

The answer in why we don't invest in what we should be investing, and why we let the financial elite dictate the course our economy is heading is stated nicely by Stiglitz:

"It is clear that many, if not most, Americans possess a limited understanding of the nature of the inequality in our society: They believe that there is less inequality than there is, they underestimate its adverse economic effects, and they overestimate the costs of taking action. They even fail to understand what the government is doing - many who value highly government programs like Medicare don't realize that they are in the public sector."

Now, I know that many will read that last part and think, "Medicare? But it's an entitlement! It adds to our deficit. We must reduce government." If you say that, then you must also agree that we must stop "entitlements" and "gifts" that the well-off financial sector receives. If you don't know what those are, you should read this book. They receive significantly much more than what we spend to take care of our most vulnerable, our young, our poor, and our elderly. Don't talk entitlements for the vulnerable until you are willing to talk entitlements for those who glut themselves off of the taxpayers and the middle class, and yes, even the poor.

The book ends with a line of hope, but it's shaky. It's hard to change policy when the top 1% control what policies are implemented by effectively buying elections. Instead of one person, one vote, we have seen our election process become one dollar, one vote. But, the author believes that we can make those changes. I think we can, too.(less)

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Oct 19, 2012 Brenda rated it 4 of 5 stars

This book is exhaustively researched with end notes for resources and well written for people like me who have no economic background, but have lived the ups and downs of the last 30 years when the 'trickle down' theory was first instituted in my lifetime.

First time reader of Joseph Stiglitz and having read a few books this year on the financial collapse and bail outs, this painted a broader picture of the true losers in this crisis. Society at large, but mostly the poor and what's left of the...more

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Sep 19, 2012 Jerry rated it 2 of 5 stars

Shelves: economics

The author is a Nobel Prize-winner, was chief of the Council of Economics Advisers under President Clinton, and teaches at Columbia University. He loves John Maynard Keynes and hates Milton Friedman and supply-side economics. Thus much of his writing is left-wing BS.

But I did find some useful insights while wading through the reams of BS. And I found that I agree with some of his prescriptions, particularly regarding the financial sector.

“The success of an economy can be assessed only by looki...more The author is a Nobel Prize-winner, was chief of the Council of Economics Advisers under President Clinton, and teaches at Columbia University. He loves John Maynard Keynes and hates Milton Friedman and supply-side economics. Thus much of his writing is left-wing BS.

But I did find some useful insights while wading through the reams of BS. And I found that I agree with some of his prescriptions, particularly regarding the financial sector.

“The success of an economy can be assessed only by looking at what is happening to the living standards – broadly defined – of most citizens over a sustained period of time. In those terms, America's economy has not been performing well, and it hasn't been for at least a third of a century... Although it has managed to increase GDP per capita, from 1980 to 2010 by three-fourths, most full-time male workers have seen their incomes go down... The way the American economic engine has been run has given the benefits of that growth to an increasingly small sliver at the top – and even taken away some of what had previously gone to the bottom.”

“The financial crisis unleashed a new realization that our economic system was not only inefficient and unstable but also fundamentally unfair... What happened in the midst of the crisis made clear that it was not contribution to society that determined relative pay, but something else: bankers received large rewards, though their contributions to society – and even their firms – had been negative. The wealth given to the elites and to the bankers seemed to arise out of their ability and willingness to take advantage of others.”

“There are two ways to become wealthy: to create wealth or to take wealth away from others.”

“Competitive forces should limit outsize profits, but if governments do not ensure that markets are competitive, there can be large monopoly profits.”

“When markets work well it is because private rewards and social benefits are well aligned, that is, because private rewards and social contributions are equal, as had been assumed by marginal productivity theory. In that theory, the social contribution of each worker is exactly equal to private compensation... Private rewards and social returns are not well aligned when competition is imperfect; when there are externalities; when information is asymmetrical; or when risk markets are absent... The financial sector used its political muscle to make sure that the market failures were not corrected, and that the sector's private rewards remained well in excess of their social contributions – one of the factors contributing to the bloated financial sector and to the high levels of inequity at the top.”

“Making markets less transparent is a favorite tool. The more transparent markets are the more competitive they are likely to be. Bankers know this. That's why banks have been fighting to keep their business in writing derivatives in the shadows of the 'over the counter' market... While lack of transparency results in more profits for the bankers, it leads to lower economic performance.”

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Sep 07, 2012 Jud Barry rated it 5 of 5 stars

Stiglitz delivers a clearly-written and compelling analysis of the current economic and political situation in the United States. Undoubtedly much of my positive response is driven by the fact that I'm the child of parents who worshipped at the shrine of the New Deal, however no small part of it is simple appreciation for Stiglitz's rare knack for cogent explanations that are as compellingly readable as they are putatively authoritative.

There is also the fact that Stiglitz is very informative ab...more

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Sep 04, 2012 Bryan rated it 4 of 5 stars

More good stuff from Stiglitz, whether you agree with him or not. I imagine there will be a lot who disagree. But the author pulls a heavy truckload of credibility, and ensures he reminds his audience of this regularly throughout the book. This is what I like about Stiglitz: he knows what he knows, and he sees no reason to be modest about his former titles or accolades. I don't blame him.

In the preface I got the sense that this is somewhat of his magnum opus, when it comes to books on economic...more More good stuff from Stiglitz, whether you agree with him or not. I imagine there will be a lot who disagree. But the author pulls a heavy truckload of credibility, and ensures he reminds his audience of this regularly throughout the book. This is what I like about Stiglitz: he knows what he knows, and he sees no reason to be modest about his former titles or accolades. I don't blame him.

In the preface I got the sense that this is somewhat of his magnum opus, when it comes to books on economic commentary. (His actual work within the field of published economic research is surely his real magnum opus. But who will read that stuff?) His doctoral dissertation and much of his life work has been on the subject of inequality, and the timing was just right for him to unload all of his experience and knowledge into one book, falling in line with opposition against the Right.

At the heart of this book is a fundamental difference between the current crop of Republican and Democrat leaders: economic policy and the distribution of wealth. In the battle over these differences, Stiglitz presents strong evidence that the Right is winning and has been winning for decades. After framing the stark differences between the distribution of wealth among the "1%" compared to the "99%" Stiglitz offers great firepower to Occupy Wall Street sympathizers. The battle between the 1% and the 99% is the underlining structure of his argument. He also offers great firepower to neoconservatives, who will certainly view almost all of his recommendations as out of line with American values. But today's conservative pundits call anyone not part of their orthodoxy as either a socialist or the devil himself, so giving these people firepower isn't saying much.

For example, one of Stiglitz's most interesting recommendations is mandatory voting, as is done in Australia and elsewhere. I can only imagine the hysteria which will erupt after someone on the political Left suggests this. But the recommendation is a clever work-around to the problems with money in politics. Instead of "one person one vote" it seems more like "one dollar one vote," argues Stiglitz, because voter turnouts, hence results, are heavily determined by the level of involvement and excitement over candidates or issues. It takes a lot of dollars to get stories on the TV, in the newspaper, in social media, and out to the masses. If you want to get people excited to vote for your cause, it is impossible to do without loads of money. It used to be that the money behind these information wars was capped and controlled. A lot of this control has been lost with recent changes in the laws, such as the Supreme Court ruling on the Citizens United case. There is now the opportunity for unlimited funding in support or against any opponent or idea, which is great for the powerful, but can easily drown out the voices from those as the bottom. However, to get to the point, if the goal was not getting out the polarized base to vote by using asinine claims and emotional rhetoric (or flat-out lies), the focus and energy would immediately shift to the center to capture the interests of most voters. It would also change they types of candidates chosen, and eventually (potentially) help the political system move beyond gridlock since the real accountability would be more from the moderates instead of from the poles. Interesting idea.

Other ideas are more practical in the short term, like his suggested tax reforms, social spending programs, emphasis on education , and relief for underwater mortgages. I don't necessarily agree with all of it, for example, mortgage relief. Had the government let the banks fail and instead used the bailout money to cover the banks losses in real estate for a "mark to market" accounting procedures for individuals with underwater mortgages, the economic recovery would have been much more pronounced, and certainly more effective than the bailouts were. But, of course, as Stiglitz mentions, it would have resulted in a lot of angry people who paid off their houses and who weren't reimbursed for the fall in home prices, and other problems too, such as a valid argument of unfairness to go on top of inequality. So, the bailouts were not ideal in my opinion, and the money used for recovery could have been used more effectively, but there are big tradeoffs with these types of actions, and I don't really know if I agree with Stiglitz on this one recommendation.

But I agree with just about every other recommendation he makes, which made it enjoyable to read for me. It is refreshing for me to read because almost every sentence reinforced that there are other people in the world who see things the way I see them.

Overall, the book stays on topic and is very up-to-date and current. The problems in the US on the subject are too big and too important to ignore. As you might expect by the title, the book argues that there is a steep price we pay for high levels to inequality. In addition to moral dilemmas with drastic levels of inequality as the US is now experiencing, Stiglitz provides various examples of how the suppression of the 99% impedes economic growth, creates social unrest, leads to inefficient outcomes, and eventually threatens all of our society including those at the top.(less)

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Sep 04, 2012 Paul Mullen rated it 3 of 5 stars

Every once in a while, it is a good idea to read something written from a perspective divergent from your own. Such is the case for me as I read Joseph Stiglitz's "Price of Inequality." Stiglitz was Clinton's Chairman of the Council of Economic Advisors and worked for international financial agencies as well. His central thesis is that the economy is subject to politics and policy and that we have been pursuing a policy of hands-off (free market, invisible hand) economic management. He argues fo...more

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Jul 01, 2012 Caren rated it 4 of 5 stars

Shelves: adult-nonfiction

I see this as an important book which thinking Americans will want to read. It is one of what seems to be a flurry of other books on this topic. The encouraging thing about that is that we seem to realize we have a problem, and serious scholars , such as the Nobel prize winning Dr. Stiglitz, are examining the issues involved and offering possible paths toward amelioration. Although this is not light reading, it is meant for the lay person, and the ideas therein are certainly accessible by the no...more I see this as an important book which thinking Americans will want to read. It is one of what seems to be a flurry of other books on this topic. The encouraging thing about that is that we seem to realize we have a problem, and serious scholars , such as the Nobel prize winning Dr. Stiglitz, are examining the issues involved and offering possible paths toward amelioration. Although this is not light reading, it is meant for the lay person, and the ideas therein are certainly accessible by the non-economists among us. Especially interesting to me was the way the wealthy have been able to present ideological ideas as though they are in the best interest of all, when in fact, they are usually only in the best interests of the top 1%. The ideas that fuel our politics feed the engine of our economy. Here are his remarks about that, from page 172:
...but the battles rage most intensely in the field of big ideas. One such battle involves on one side those who believe that markets mostly work well on their own and that most market failures are in fact government failures. On the other side are those who are less sanguine about markets and who argue for an important role for government. These two camps define the major ideological battle of our time.
I also like these lines from page 29:
As the ancient Greek historian Thucydides famously said, "right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must." Those with power used that power to strengthen their economic and political positions, or at the very least to maintain them. They also attempted to shape thinking, to make acceptable differences in income that would otherwise be odious.

I am always happy when an author of a book such as this offers possible prescriptions for our national ailments. Otherwise, leaving us without hope is just depressing, isn't it? He doesn't say remedies will be easy, but that they are not impossible. No matter where your politics swing, this book is well worth reading. For all of us to accept the status quo and remain silent could be the death knell for our nation as we knew it. Here are some of his closing remarks from page 289:

There are two visions for America a half century from now. One is of a society more divided between the haves and the have-nots, a country in which the rich live in gated communities, send their children to expensive schools, and have access to first-rate medical care. Meanwhile, the rest live in a world marked by insecurity, at best mediocre education, an in effect rationed health care--they hope and pray they don't get seriously sick. At the bottom are millions of young people alienated and without hope. I have seen that picture in many developing countries; economists have even given it a name, a dual economy, two societies living side by side, but hardly knowing each other, hardly imagining what life is like for the other. Whether we will fall to the depths of some countries, where the gates grow higher and the societies split farther and farther apart, I do not know. It is , however, the nightmare toward which we are slowly marching.

I would urge readers to think deeply about the ideas presented in this book and to keep the conversation alive.

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Aug 12, 2012 Jorge rated it 5 of 5 stars

Shelves: politics-economics

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

"The Price of Inequality" is one of the most compelling economic books about the excessive inequality in the United States. It does a fabulous job of explaining three interlinking themes: that inequality is cause and consequence of the failure of the political system, and contributes to the instability of our economic system, which in turns contributes to inequality. Winner of the 2001 Nobel Memorial...more

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Nov 17, 2012 Clif Hostetler rated it 4 of 5 stars · review of another edition

Shelves: current-events

Joseph E. Stiglitz, a 2001 Nobel Prize winning economist, in this book targets numerous examples of economic activity/policy what lead to consequences incompatible with America's self image as the "land of opportunity." All through the book he points out needless inefficiencies that are embedded in our banking, tax and legal codes. And with each problem cited there's an existing interest group lobbying and making political contributions to assure that no changes are made to endanger these struct...more Joseph E. Stiglitz, a 2001 Nobel Prize winning economist, in this book targets numerous examples of economic activity/policy what lead to consequences incompatible with America's self image as the "land of opportunity." All through the book he points out needless inefficiencies that are embedded in our banking, tax and legal codes. And with each problem cited there's an existing interest group lobbying and making political contributions to assure that no changes are made to endanger these structural inefficiencies found throughout our economic system.

The end result of the present situation is the United States has the largest and growing rich-poor gap among industrialized countries. According to Stiglitz this inequality brings stagnation and dormancy to our economy. It's interesting to note that the previous peak in American economic inequality came in the 1920s immediately before the Great Depression. The United States also provides the least equality of opportunity for economic advancement when compared to other wealthy industrialized countries (i.e. the percentage of people born into a low economic status that end up in a higher economic class.) This in the land that is supposedly the "land of opportunity."

Stiglitz repeatedly criticizes the overblown American financial system and the "too big to fail" banks. The following quotation offers a concise description of the 2008 financial bailout of the large financial institutions:

"Never before in the history of the planet had so many given so much to so few who were so rich without asking anything in return."

It's interesting to note that the financial industry accounts for approximately half the wealth in the United States. It follows that the so called "real" economy lags far behind. In other words, half our wealth is found in paper and pixels. Aren't those the ingredients of a bubble?

I was particularly pleased to find that Stiglitz noted something about the state of our economy that I had noticed myself before reading this book. It is the observation that we have a "demand" problem, not a "supply" problem. In other words, we could give all that tax breaks imaginable to the wealthy and no increase in business spending would result because there's no unfilled demand for goods and services that are currently unmet. The demand is not there because middle class wealth gains were eliminated by the 2008 recession while at the same time the wealth of the top economic tier has tripled since 1980. Ironically, American businesses currently have historically high cash balances. The principle incentive for businesses under the current conditions is to invest in automation, computers and robots to enable them to survive with fewer employees--thus insuring a jobless recovery from the recession.

My review probably sounds pessimistic, but Stiglitz is surprisingly upbeat by proposing solutions. Do any of our lawmakers read books such as this? All I can do is to hope so.
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Nov 30, 2012 Dave rated it 4 of 5 stars

Shelves: economics

This is an excellent book in understanding our current economic environment and how we arrived here. What steps we should be taking, to reposition ourselves, as a nation, for the new century. Few have given this much thought….This not surprising; few are accountable for generating their own fact based opinions, because they are so poorly equipped to do so. You are responsible for your own personnel investment in intellectual capital. This book provides insight into a position the 98%, should con...more

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Oct 09, 2012 Grant Sanders rated it 4 of 5 stars · review of another edition

Yes, I agree with everything in this book. Those who are hooked on the idea of austerity and tax cuts will find it annoying and will search their hearts for ways to deny its ideas. Conformation bias is working overtime these days on both sides of the political spectrum.

It's human nature to choose winners and losers and to cheer for the winners. This is what it has come down to in our society. Unfortunately, this rather short-sighted way of approaching our world means that the winners walk away...more

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Aug 24, 2012 David rated it 3 of 5 stars

This is book did not contain a lot in the way of new information for me; rather, it compiled mostly existing information and ordered it around a centerpiece of observations about asymmetric wealth accumulation and income distribution, and how that distribution is inefficient and has become progressively injurious to economic growth. It is a solid critique of supply-side economics and conservative politics, but at times comes off as immoderately partisan and it certainly isn't going to convert th...more

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Aug 19, 2012 Brenda Surin rated it 4 of 5 stars

"Talk more about the political impact. How do you see inequality undermining our democracy?

High levels of economic inequality lead to imbalances in political power as those at the top use their economic weight to shape our politics in ways that give them more economic power. If you look at so many of the outcomes in our political process, no one can say that they reflect the interests of most Americans. Most Americans don’t think speculators should be taxed at a fraction of people that work for...more

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Sep 20, 2012 Chuck rated it 5 of 5 stars

The top 1 percent of Americans control 40 percent of the nations wealth. And, as Joseph E. Stiglitz explains, while those at the top enjoy the best health care, education, and benefits of wealth, they fail to realize that their fate is bound up with how the other 99 percent live. Stiglitz draws on his deep understanding of economics to show that growing inequality is not inevitable: moneyed interests compound their wealth by stifling true, dynamic capitalism. They have made America the most uneq...more

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Aug 29, 2012 Travis Todd rated it 5 of 5 stars

So, a confession...I didn't get remotely close to finishing this book but got tired of seeing it on my facebook so I said that I "finished" it because I didn't know how to say "I abandoned this book and returned it to the library because I just found it too fucking depressing to get through so instead I watched a bunch of episodes of Archer and got drunk." If Goodreads even has that option, ha ha ha. Also I didn't want to say I finished this book because I don't want to compromise the integrity...more

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Oct 11, 2012 Michael Austin rated it 5 of 5 stars

Shelves: read-in-2012

I did not know until I read Joseph Stigletz’s wonderful new book, The Price of Inequality, that economists have a word for making a lot of money without actually creating wealth or jobs: this is caled “rent seeking,” using a very old sense of the word “rent” that means something like “seeking concessions” rather than “deriving income from property.” Rent seeking refers to any economic activity that attempts to manipulate political or social conditions to capture a larger share of a society’s wea...more I did not know until I read Joseph Stigletz’s wonderful new book, The Price of Inequality, that economists have a word for making a lot of money without actually creating wealth or jobs: this is caled “rent seeking,” using a very old sense of the word “rent” that means something like “seeking concessions” rather than “deriving income from property.” Rent seeking refers to any economic activity that attempts to manipulate political or social conditions to capture a larger share of a society’s wealth. Such activities commonly include seeking no-bid government contracts, special tax incentives, sanctioned monopolies, or regulatory relief that shifts resources away from one sector of the economy and into another.

Rent seekers have been with us always. But Stiglitz sees rent-seeking activities as a primary cause of the most recent “great recession.” Those who profited from the real-estate bubble and from complicated financial derivatives were not, by any stretch of the imagination, creating wealth. They were reaping huge profits by transferring economic risk to the public sector while keeping nearly all of the profits in the private sector. As result, the people who have paid the highest economic costs of the recession (losing their jobs or their houses) are not the same people whose economic activities are the most to blame.

But what really interests Stiglitz (and me too) is what has happened since the crash of 2008. According to a certain narrative, the only way out of the recession is to cut taxes dramatically and put as much money as possible into the hands of job creators—business owners and innovators who have the intelligence and the inclination to use that extra money to create jobs and move the lagging economy forward. And, to a large extent, this is what we tried to do.

But it hasn’t worked very well. between 2009 and 2011, the top 1% of wage captured 93% of the income growth (compared to 65% between 2000 and 2007). If we look at averages, then, the American economy has completely recovered from the recession. If we look at medians, it has not. The great recovery of 2009-2011 simply shifted the wealth of the nation decisively towards those who were already very well off.

And this kind of social inequality has real consequences. Neither Stiglitz nor anybody else suggests that we can or should get rid of inequality. He is not a Marxist or even a particularly committed redistributionist. He believes that markets have tremendous power to create and distribute wealth. But unregulated markets will always flow towards deep inequalities of wealth and income. Like so many other good things (chocolate, oxygen, and close relatives to name a few), capitalism works best when it is diluted.

Inequality in America is worse now than it has been since the late 19th century, when factory workers were paid in company script and the most important industry in the Southern states was sharecropping. The distribution of wealth in the United States (as measured by the Gini coefficient) is about as unequal as it is in Iran and far less equal than it is in nearly every other country in the Industrialized West. In the long term, this will have serious consequences for America. High levels of income inequality are incompatible with political stability, public investment, and long-term expansion.

And yet, we are rapidly disinvesting in our educational infrastructure, contemplating a reversal of our commitment to our elderly citizens, and acting on multiple fronts to repeal most of the regulations that, for the last hundred years or so, have prevented capitalism from becoming nothing more than a tool for economic predation. In the process, we are coming perilously close to creating precisely the kind of self-perpetuating, multi-generational aristocracy that America was founded not to be. (less)

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Sep 20, 2012 Chris rated it 4 of 5 stars

Shelves: non-fiction

Mr. Stiglitz offers a compelling and (mostly) readable argument that economic inequality is pervasive in the United States, that it is likely to increase, that inequality is detrimental to the functioning of our society and economy, but despite all this, that targeted efforts to reduce economic inequality may improve our economic resiliency, sustainability, and functioning.

I have to admit, however, that I found Mr. Stiglitz often verbose and I became distracted by citations and economic technic...more

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May 16, 2013 D.F. Lamont rated it 5 of 5 stars

Great book. At times, reading the accounts of abuses and wrongdoing, it is hard to read without becoming upset or angry.

In the avalanche of facts, it is easy to feel overwhelmed or that the situation cannot be fixed, and that the prospects for democracy are growing dim.

The only criticism is extremely minor - it is a quibble. That, in an effort to emphasize the impact of the changes he phrases things in a way that make the situation verge on hopeless - for example, when he says "the American Dr...more

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About Joseph E. Stiglitz

Joseph Eugene Stiglitz, ForMemRS, FBA, is an American economist and a professor at Columbia University. He is a recipient of the Nobel Memorial Prize in Economic Sciences (2001) and the John Bates Clark Medal (1979). He is also the former Senior Vice President and Chief Economist of the World Bank. He is known for his critical view of the management of globalization, free-market economists (whom h...more

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Books by Joseph E. Stiglitz

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The Three Trillion Dollar War: The True Cost of the Iraq Conflict

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“There are two visions of America a half century from now. One is of a society more divided between the haves and the have-nots, a country in which the rich live in gated communities, send their children to expensive schools, and have access to first-rate medical care. Meanwhile, the rest live in a world marked by insecurity, at best mediocre education, and in effect rationed health care―they hope and pray they don't get seriously sick. At the bottom are millions of young people alienated and without hope. I have seen that picture in many developing countries; economists have given it a name, a dual economy, two societies living side by side, but hardly knowing each other, hardly imagining what life is like for the other. Whether we will fall to the depths of some countries, where the gates grow higher and the societies split farther and farther apart, I do not know. It is, however, the nightmare towards which we are slowly marching.” — 4 people liked it

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