Customer Review

485 of 517 people found the following review helpful
5.0 out of 5 stars A Critical Warning for America, June 8, 2012
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This review is from: The Price of Inequality: How Today's Divided Society Endangers Our Future (Hardcover)
The Price of Inequality is an eloquent analysis of inequality in the United States and what it means for our political system, economy and society. The book does a good job of laying out the facts.

One sentence basically says it all: "The top 1 percent of Americans gained 93 percent of the additional income created in the country in 2010, as compared with 2009." Now think of that in terms of a party with 100 people and big pizza with 100 slices. Basically it means that one rich guy gobbles up 93 slices of pizza. The other 99 get to divvy up the other seven.

Stiglitz does an especially good job of refuting the received wisdom among conservatives: that incomes are in proportion to productive contribution to society. Instead, the book shows that much of our extraordinary income concentration is due to "rent seeking" by the wealthy elite, and that very often this involves taking advantage of taxpayers. We have a system that actively redistributes income and wealth from huge numbers of people at the bottom of the pyramid to a tiny number at the very top.

As the book shows, extreme income inequality is really a kind of cancer that infects almost every aspect of our social, political, economic and even legal system. A tiny elite is able to effectively purchase laws and regulations that work in its favor. For example, bankruptcy laws are designed to favor banks over homeowners and holders of student debt, even though the banks have access to much better information and expertise when making these loans. One idea that occurs throughout the book is that we should have "one person one vote" not "one dollar one vote." and yet the evidence is clear we are moving toward even more influence for those with money.
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Comments

Tracked by 11 customers

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Showing 1-10 of 87 posts in this discussion
Initial post: Jun 10, 2012 8:17:58 AM PDT
Hi Adam,

Thanks for the very good review. However, Stiglitz does address technology. It is Stiglitz's position that technology actually has very little to do with inequality. The effects of technology on displacing workers and enriching others is, of course, very real. However, macroeconomic policy can easily address and mediate this phenomena.

Stiglitz does not deny that technology plays part, but it is a rather minor role, which can easily be addressed.

Stiglitz thesis is that first and foremost inequality is a phenomenon of rent-seeking activity of private business interests, making inequality first and foremost a political phenomena.

Stiglitz points out that other developed nations, Germany, Japan, Canada, etc. etc. have the same technology, but no where near the same degrees of inequality. Again suggesting rather stongly, technology is not the main culpurit of sky-rocketing inequality in the U.S. since 1979.

best,

Hans

In reply to an earlier post on Jun 10, 2012 5:34:05 PM PDT
Last edited by the author on Jun 10, 2012 5:36:10 PM PDT
Adam says:
Hans,

Thanks for your comment. You are certainly correct that other countries have handled inequality (due to technology or other factors) better than the US. For example, Germany has a work sharing program, and most other countries have much better social safety nets that the US. That in itself would greatly help reduce inequality.

I don't think that means technology is unimportant. The US is really at the frontier, with the greatest technology impact and the least effective policies to deal with it.

The really important question though is what about the future? Many of us who work in the technology field feel that things are really ready to take off. The book I mentioned ("The Lights in the Tunnel") is really about the FUTURE.

I definitely don't question the importance of political capture/plutocracy in inequality. But technology could worsen things much more than most people expect in the near future.

In reply to an earlier post on Jun 11, 2012 9:01:53 AM PDT
Last edited by the author on Jun 11, 2012 9:07:04 AM PDT
Adam,

Thanks for your reply. My comment was not meant to say that technology isn't important (although I did not make this clear enough), it certainly is, especially for redistribution of sources of income. My comment really was to point out that Stiglitz very much addresses this topic. Indeed it is one of the strengths of his book that he takes on alternative explanations head on, including the "skill-bias" explanation (i.e. technology).

Further we can say technology is not necessarily an alternative narrative, but rather an incomplete explanation by itself. Technology indeed generates inequality, but the economic and political system is what is supposed to mediate this inequality so that the system as whole does not collapse. Stiglitz is arguing that the adjustment processes, both economically and politically, are broken.

So if you look at it from one perspective, I believe it is entirely fair to say technological change and skill-bias is the problem, but from another perspective we can ask how do some societies mediate these disruptions and others fail? (James K. Galbraith's work, ongoing now for 30 years, has been making and documenting this very argument. He has summarized much of this work in Inequality and Instability: A Study of the World Economy Just Before the Great Crisis).

In comparsion with other societies with the same, or at least very similar technology ... Now, it is Now, it becomes a quintessentially political phenomenon!

You are correct to insist that Martin Ford's insights toward the symbiotic relationship between producers and their pay and consumption is crucial and important. Technology can disrupt the system. But only if the economic adjustment processes (i.e. price supply-demand system) and the political adjustment processes (i.e. democracy, income class struggles, and so-called automatic stabilizers) are not functioning properly.

Stiglitz is arguing _both_ systems of adjustment are broken.

Oligarchic capitalists, especially within the financial system have usurped the system. For this reason, the price supply-demand adjustment system is not functioning to mediate the rise of inequality (actually this has never really worked well, and Stiglitz won the Noble prize in economics for his work in this area), second the political process of adjustment is also no longer working in the United States. Third, the judicial system is now functioning to the favor of the oligarchic capitalists. Hence inequality is skyrocketing and the American capitalistic system, the quasi-democracy that supported it, and the rule of law, are all in "peril."

Stiglitz's argument is that this is unsustainable and protests will continue to manifest until this threefold system is fixed, or collapses completely.

In short, technology is only a problem when the political system allows it to be problem.

Hope this helps our discussion.

Hans

Posted on Jun 17, 2012 12:00:18 PM PDT
Bobb Boston says:
The author was just on PBS radio talking about the book. Joseph Stiglitz worked in the Clinton administration as the chair of the President's Council of Economic Advisors, then at the World Bank as Senior Vice President and Chief Economist.

He talked a lot of the 1% and how govt helps the rich, etc and does mention that Citibank got THE largest bailout of them all, but fails to mention that Robert Rubin ( Citibank boss through it all) was Secretary of the Treasury in the Clinton administration when Glass-Stegall was signed. HE took full advantage and took Citi from a bank to the worldwide conglomerate that was 'too big to fail'.

Whenever the host said " but that happened during the Clinton Administration, didn't it ?" he replies , " Yes, but I disagreed." Sounds like it is true, but he name drops a lot when convenient and then sidesteps issues when not so.

He also referred to the bank CEO's who were getting bonuses based on 'return', when the 'return' was only because the govt loaned them money at 0.5% and they bought govt bonds paying 2%, thereby getting rewarded for making 1.5%. .... Again, it was the GOVERNMENT's idea. SO, although he says that 'the 1%' get the benefit, it is politicians/money that ALLOW the big companies TO benefit by 'getting their way' via the legal system.

When times are tough, the rich will always do better than the poor. the rich can put their money in the bank and 'make money; while the poor cannot. That's not new. What IS 'different this time' is that with the expansion of the world there are many people that will do assembly work for a few dollars per day. The problem for leaders to solve is: what do you do 'for the masses' here to keep them employed ? So far their answer is extended unemployment/more govt assistance. That's not the answer.

Then consider the immigration issue. In the 40's, 50's immigration was not a problem because there was plenty of low level work for folks with no training to do. Add to that those unemployed by mergers ( 2 accounting depts, 2 personnel depts, etc ) and there are a lot of poeple trying to make ends meet. Meanwhile those that had already made money in business, or finance, or real estate benefit BECAUSE so many people are looking for work. That not the FAULT of those that own businesses. Nor is the solution for the govt to provide "free healthcare, free cars, or free refrigerators" ... it's not FREE - the govt is simply borrowing more.

Stiglitz does raise issues : mostly about the corruption in politics but seemed to blame the rich for bribing the politicians, rather than for politicians accepting the bribes. Seems to me that if the politicians wanted to end this, they could all wear wires, meet with lobbyists, record the evidence and send all of the potential bribers to prison. That could be solved in a month.

Posted on Jun 19, 2012 5:08:53 AM PDT
[Deleted by the author on Jun 19, 2012 5:12:04 AM PDT]

Posted on Jul 4, 2012 12:05:01 PM PDT
Enigma says:
>>> One sentence basically says it all: "The top 1 percent of Americans gained 93 percent of the additional income created in the country in 2010, as compared with 2009." Now think of that in terms of a party with 100 people and big pizza with 100 slices. Basically it means that one rich guy gobbles up 93 slices of pizza. The other 99 get to divvy up the other seven.

No, No, No - this is called zero sum economics and it's completely false. It also doesn't tell us anything about the size of the pizza. Imagine if the pizza was the size of the earth each those other so-called 99 would get a slice about the size of America - is that enough for them????????

Cheers

PS I am concerned about the growing inequality but zero sum economics is a fraud and shouldn't be used as an argument against the inequality.

In reply to an earlier post on Jul 5, 2012 8:21:07 AM PDT
[Deleted by Amazon on Jul 5, 2012 8:22:39 AM PDT]

In reply to an earlier post on Jul 5, 2012 8:26:17 AM PDT
Enigma you make a fine point. However, absolute inequality matters. Thus, although "the size of the pie" matters, what we have learned about inequality is that regardless of how rich a nation is inequality has massive noxious consequences, including higher mortality rates, higher crime, lower political participation, etc. etc. (see Richard Wilkinson's The Impact of Inequality: How to Make Sick Societies Healthier on these issues) and inequality destabilizes the macroeconomy, regardless of the size of the economy (see James K. Galbraith's Inequality and Instability: A Study of the World Economy Just Before the Great Crisis on this issue).

Posted on Aug 13, 2012 10:35:06 AM PDT
Liberals will not be happy until equality of outcome is sewn into the fabric of our culture and economy.
Dan Burr

Posted on Aug 14, 2012 11:26:12 AM PDT
Daniel,

Frankly, I do not know what "equality of outcome is sewn into the fabric of our culture and economy" means. However, American conservatives and defenders of the American economic system were once able to proclaim great triumph for the fact that when economic productivity increases, real wages for American workers followed suit. Productivity and real wages marched in unison for 200 years in U.S. history.

Then began a great divergence beginning in the late 1970s, and still continuing today. Namely, productivity of the American worker increases impressively, American workers are more educated, have less vacation time and work longer hours, while the real wages of 90 percent of Americans are flat or falling.

Personally, I have never met anyone advocating "equality of outcome." Nearly everyone defends a system of distribution based on merit and effort. The concern today in the distribution patterns of the U.S. is that there is barely any merit or effort involved.
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