- Hardcover: 368 pages
- Publisher: Free Press (August 20, 1998)
- Language: English
- ISBN-10: 9780684849881
- ISBN-13: 978-0684849881
- ASIN: 0684849887
- Product Dimensions: 6.8 x 1.2 x 9.8 inches
- Shipping Weight: 1.3 pounds (View shipping rates and policies)
- Average Customer Review: 12 customer reviews
- Amazon Best Sellers Rank: #3,573,706 in Books (See Top 100 in Books)
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Created Unequal: The Crisis in American Pay Hardcover – August 20, 1998
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From Publishers Weekly
Economists of every ideological stripe acknowledge that wages have grown increasingly unequal since 1970 in the U.S. Galbraith (Balancing Act), a professor of economics at the University of Texas and a former Executive Director of the Congressional Joint Economic Committee, considers that widening gap?between the very rich and the middle and working classes?dangerous to our democratic ideals, and he is passionate in his quest to identify the culprits. The popular explanation for the trend, he notes, is that high-tech workers garner the majority of wage gains (due to superior productivity in companies fulfilling strong market demand) while workers subject to less felicitous market forces lose ground. Spotting anomalies in that argument, Galbraith dives into U.S. Department of Commerce data and, using ingenious analysis, finds six factors responsible for the trend: unemployment, the exchange rate, inflation, economic growth, the interest rate and the minimum wage. Since all six are candidates for artful manipulation (whether by Congress, the Executive or the Federal Reserve), why, Galbraith asks, have we been passive for 25 years in the face of rising wage inequality? He then unveils an action plan that will cause heated debates in corporate board rooms and in Washington, if not in the media. The data crunching that shores up Galbraith's position may prove daunting to some who gave up on Econ 101, but the numbers, charts and graphs are moderated with rousing tributes to Adam Smith, Joseph Schumpeter and John Maynard Keynes, economists who were revolutionary social critics as well as shrewd bean counters.
Copyright 1998 Reed Business Information, Inc.
From Library Journal
A University of Texas economics professor and son of John Kenneth Galbraith, Galbraith sees the growing inequality of pay in America as the cause of the struggle over welfare reform, affirmative action, healthcare, and other issues. His mild polemic seeks to challenge the current economic orthodoxy that such inequality is caused by job displacement owing to high technology and lack of educational attainment rather than government policies stipulating tight money, low tariffs, and high unemployment. He proposes that since government is the cause of this inequality, government can be the solution by returning to policies of seeking full employment, a higher minimum wage, a more competitive value of the dollar, and price stability. Although these proposals are close to Democratic Party positions, Galbraith criticizes the fiscal irresponsibility of both parties. Galbraith supports his interesting though not entirely convincing contentions with almost 60 pages of notes, appendixes, and bibliography. He overstates the problem, given the current strength of the U.S. economy. This might have been a best seller during the last recession. As such, it is a useful addition to upper-division undergraduate and graduate academic libraries serving economists.APatrick J. Brunet, Western Wisconsin Technical Coll. Lib., La Crosse
Copyright 1998 Reed Business Information, Inc.
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rooted in the assumption of competitive market outcomes. He shows, on the contrary, that the marked increase in income
inequality since the 1970s was a direct consequence of public policy catered to the interests of monopolistic firms,
elite shareholders, and creditors. In the struggle against inflation, waged more or less continuously since the mid-1970s,
the winners gained the benefits of lower wage costs, high interest rates, and inexpensive imports, while the losers
suffered unemployment, downward wage pressure, and lost bargaining power. If you want to understand why middle-
class Americans have endured 40 years of economic malaise, read carefully. With thousands protesting rising
economic inequality across the nation, this book stands as a remarkably prescient document.
Professor Galbraith's central thesis is that the amount of wage inequality (the difference between what the wealthiest make and what the poorest make) is tied directly to a number of key factors: the unemployment rate, the interest rate, the strength of the dollar, and so on. Essentially, the lower the unemployment rate, the less the degree of wage inequality. I am simplifying his thesis considerably here, but this is the essence of it. There is a considerable amount of technical research presented that supports the thesis and demonstrating a strong correlation between wage inequality and unemployment.
So, Professor Galbraith makes a persuasive case that the government can affect wage inequality by making certain policy decisions, such as lowering unemployment, raising the minimum wage, weakening the dollar against international currencies, and so on.
But, what is missing from the book is a serious justification of why the free market should not dictate the value of labor. In other words, from a normative standpoint, why should workers be paid two or three or more times the value of their labor? There are egalitarian arguments to be made, of course, but at the same time, if the value of Bill Gates' labor is, say, 100 times more valuable than the work of a custodian, why should Gates' wages be limited to, say, 30 times that of custodian? (At one point, Professor Galbraith suggests a 30-1 limitation.)
In the end, this is an impressive and valuable work. You may or may not agree with the policy decisions that Professor Galbraith supports, but his analysis must be reckoned with.
In particular he makes an interesting case about the monopoly-like nature of the technology industry and how it interacts with macroeconomic policy to create inequality.
Unfortunately for a book with many insights and broad appeal, Created Unequal is a very challenging read. It's rambling at times (better summaries or bullet points at the end of each chapter would have helped greatly) and the book assumes an undergraduate level of economics knowledge.