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

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 Prize for Economics and acclaimed professor and author, Joseph Stiglitz, provides the reader with a quote-fest of a book that addresses not only the reasons for such a financial divide but provides pragmatic economical ways to tackle them. This enlightening and pragmatic 449-page book is composed of the following ten chapters: 1. America's 1 Percent Problem, 2. Rent Seeking and the Making of an Unequal Society, 3. Markets and Inequality, 4. Why It Matters, 5. A Democracy in Peril, 6. 1984 Is Upon Us, 7. Justice for All? How Inequality is Eroding the Rule of Law, 8. The Battle of the Budget, 9. A Macroeconomic Policy and a Critical Bank By and for the 1 Percent and 10. The Way Forward: Another World Is Possible. Positives: 1. A well-written page-turner of a book that is accessible to the masses. A quote fest. 2. It's always a treat to read a book from an expert who knows what he is talking about and how to relay it to the public. 3. Great format. The author starts each of the ten chapters with a quick synopsis and closes out with concluding comments. 4. This book succeeds in getting to the heart of the thesis: why inequality is growing to the extent it is and what the consequences are. Stiglitz is relentless in his pursuit and we are the beneficiaries. 5. Why are economic system is unfair? Answered to satisfaction. Eye-opening information. 6. "While there may be underlying forces at play, politics have shaped the market, and shaped it in ways that advantage the top at the expense of the rest". It's a quote fest alright. 7. The 1 percent in perspective. " For an even more striking illustration of the state of inequality in America, consider the Walton family: the six heirs to the Wal-Mart empire command wealth of $69.7 billion, which is equivalent to the wealth of the entire bottom 30 percent of U.S. society. The numbers may not be as surprising as they seem, simply because those at the bottom have so little wealth". 8. How government policies shape inequality. "A major theme of this book is that inequality is the result of political forces as much as of economic ones". 9. There is so many mind-blowing facts in this book, " A little-noticed change in legislation, for example, can reap billions of dollars. This was the case when the government extended a much-needed Medicare drug benefit in 2003. A provision in the law that prohibited government from bargaining for prices on drugs was, in effect, a gift of some $50 billion or more per year to the pharmaceutical companies". Oh yeah, it's like that. 10. How societal norms shape inequality. How globalization as it has been managed contributes to inequality. Interesting stuff. 11. The true role of government and how our government failed the 99%. "The United States spent far more on its big bank bailout, which helped the banks to maintain their generous bonuses, than it spent to help those who were unemployed as a result of the recession that the big banks brought about. We created for the banks (and other corporations, like AIG) a much stronger safety net than we created for poor Americans". 12. The effects of inequality on national output and economic stability, and its impact on economic efficiency and on growth. 13. Some very key points that will stick with me, "The 2010 decision in the case of Citizens United v. Federal Election Commission, in which the Supreme Court essentially approved unbridled corporate campaign spending, represented a milestone in the disempowerment of ordinary Americans". A need to reform our political process. 14. How the 1 percent convinces the 99 percent that they have shared interests. It's about shaping perceptions. 15. The battle over laws and regulations that govern our economy and how they are enforced. How the powerful have turned America's legal system into a travesty of justice. 16. A great section on predatory lending. How the banks won at the expense of America. And an infuriating section on student loans. 17. How surpluses under Clinton were turned to deficits under the influence of four major forces. The budget in perspective. 18. Practical recommendations to reduce the deficit. "lowering the taxes on firms that created jobs and invested in America and raising taxes on those that didn't". 19. A section on debunking myths: the supply-side myth, the raising taxes on millionaires will hurt small businesses and therefore cost jobs myth, the government-run programs must be inefficient myth, blame the poor myth, the austerity myth, and the failed stimulus myth. 20. Understanding the real role of policy makers. "A central theme of the book is that some of the policy choices have simultaneously increased inequality, benefitting those at the top-- and hurt the economy". 21. "The Fed gambled, in trusting that banks on their own could manage risk--a gamble that paid off handsomely for the banks, and especially for the bankers, but in which the rest paid the price. The Fed could have curbed the reckless and predatory lending, the abusive credit card practices, but chose not to do so. Again, the banks were the winners; the rest the losers". I just can't word that any better. 22. The obsession with inflation. A good section. 23. Ending on a positive note. " This book is not about the politics of envy: the bottom 99 percent by and large are not jealous of the social contributions that some of those among the 1 percent have made, of their well-deserved incomes. This book is instead about the politics of efficiency and fairness. The central argument is that the model that best describes income determination at the top is not one based on individuals' contributions to society (the "marginal productivity theory" introduced earlier), even though, of course, some at the top have made enormous contributions. Much of the income at the top is instead what we have called rents". 24. A list of recommendations in narrative format that shows what needs to be done to create reforms we need in our economics and our politics. 25. A comprehensive notes section. Negatives: 1. The strength of this book is clearly explaining how we got to this level of inequality, the biggest weakness is the level of the cure not necessarily matching the disease. I feel that the recommendations covered in this book are good, it just doesn't live up to the diagnosis. I also disagree with a few of the recommendations. Getting the marginal tax back to 70% seems unfair even to this progressive-minded reviewer. 2. A little repetitive. 3. Some of the material in this book will make your blood boil. 4. Charts and illustrations would have added value. 5. The notes section was very comprehensive but a formal bibliography never hurts. In summary, this is a fantastic book. I really enjoyed it. Stiglitz has a great command of the topic and is able to convey his thoughts in a lucid an accessible manner. His arguments are sound and quite compelling and backed by countless references. If you want to learn how we got to this level of inequality, this is a fantastic book that covers it with expertise. I highly recommend it! Further suggestions: " Red Ink: Inside the High-Stakes Politics of the Federal Budget " by David Wessel, " The Benefit and The Burden: Tax Reform-Why We Need It and What It Will Take " by Bruce Bartlett, " It's the Middle Class, Stupid! " by James Carville and Stan Greenberg, " End This Depression Now! " by Paul Krugman, " Beyond Outrage: What has gone wrong with our economy and our democracy, and how to fix them " by Robert B. Reich, " The Republican Brain: The Science of Why They Deny Science- and Reality " by Chris Mooney, " Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class " by Jacob S. Hacker, " Screwed: The Undeclared War Against the Middle Class - And What We Can Do about It (BK Currents (Paperback)) " by Thom Hartmann, " The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis " by Michael W. Hudson, "Perfectly Legal..." by David Cay Johnston, and "The Looting of America" by Les Leopold.

Stiglitz has put together an excellent account of aspects of our economic backdrop that create and promote ineqality. He discusses how these outcomes hurt growth and lay the seeds of large problems. He is foundational in his approach and focuses on clear examples of market failures and information asymmetries that have misaligned income with outcome. Given his nobel prize was related to information asymmetries, Stiglitz is extremely well positioned to discuss how market failures interfere with the marginal productivity of labour theory. The book is divided into 10 chapters. Chapter 1- America's 1 pct problem presents the backgdrop of the distribution of wealth in the US how it has changed over the last 30 years, how the middle class is shrinking and how mean and median GDP are diverging. Chapter 2 - Rent Seeking and the Making of an Unequal Society discusses what is happening to the distribution of income through the recession and how the growing inquality has been created and is not the function of natural market forces. Other high income countries have different distributional outcomes than ours and ours is the worst. The author then discusse show wealth creates power and facilitates changes to the rules of the game to extract rents is an age old problem. Chapter 3 - Markets and Inequality discusses how markets can be modified politically to facilitate better outcomes for those with the power to change market structures. Chapter 4 - Why it matters discusses what the repurcussions of income inequality can be. It is not a standard economic subject but it is an extremely important one (one that was Marx put focus on for example). Chapter 5- Democracy in Peril is a discussion of the failing democracy in the US and how money is influencing politics. The Supreme Court decision to allow corporations to fund campaigns is an example. Chapter 6 - 1984 is upon us will probably create much protest. It discusses how humans dont have rational expectations and respond to questions via framing and how money can change social norms through the shaping of debate to promote beliefs that benefit the 1% as natural outcomes of the most fair state. Chapter 7 - Justice for All discusses how the legal system is not egalitarian and how outcomes for the poor are skewed against them given a lack of resources to maneouvre through the justice system. Chapter 8 - The Battle of the Budget is a discussion of the budget, how we got here and how to think about the problem. Chapter 9 - A macroeconomic policy and a central bank by and for the 1 pct is a condemnation of the central bank. It makes the case that the central bank is an instrument of the 1 percent and its policies promoted the interests of the 1%. I find this chapter quite biased and i think if the author was to argue a point he should discuss the need for macroprudential central banking instead of inflation targetting. Monetary policy cannot substitute for much fiscal failings. The way forward- Another world is possible is an overview of the book with short policy directions to consider. All in all this book is excellent. It discusses civic duty and justice, it discusses human nature and sociology and it discusses real economics. It gives accounts about how distribution of profits between labour and capital is a function of the institutional and legal regimes, it is not the natural consequence of economic order. It discusses how much invention is founded on public ideas and dwindling public research has an impact on our productivity. This book is political, economic and philosophical and it is well reasoned on all accounts. This puts together a lot of ideas and it does it very well. It is a must read for a well reasoned account of what is happening in the US. One doesnt have to agree with many points, but to ignore such literature would be ignoring important information necessary for productive discourse.

In his new book, Joseph Stiglitz focuses the current state of inequality the world, particularly in the US. After discussion the current state of inequality illustrated by many examples, the discussion turns to the causes of these disparities. Stiglitz shows impressively that the high level of inequality we observe today is not an unavoidable side product of our economic system but essentially shaped by politics, which are in turn shaped by powerful lobbies and individual interests. He discusses issues like ‘rent seeking’ or ‘deregulation’. Stiglitz shows as well that many theories of economic science are based on wrong assumptions and therefore yield to erroneous conclusions. The book is well suited for both, non-academic readers interested in getting a better understanding of the issues of inequality and academic readers searching for a general discussion of the phenomenon. Additionally, for interested readers about 100 pages of endnotes guide to scientific work behind the figures and theories Stiglitz describes. Sometimes the book is simplifying quite a lot by dividing the society in rich and poor people, making the discussion easier. However, the reader is advised (also by the author) to bear that in mind. The book is mainly focusing on the US context and especially when talking about the politic mechanisms behind today’s inequality, the reader is essentially confronted to the US context. Readers interested in other regions might see that as a disadvantage. A small critique would include the fact that the book is a little repetitive; some concepts are explained several times, even though presented in slightly different ways. Overall, I appreciate this book a lot and can really recommend it to all people interested in understanding the sources of inequality. The book is written in a very understandable way and no prior knowledge is needed.

This book needs to be read. It is written by an economist - former head of world bank and nobel prize winner - who knows what he is talking ablout. I am not an economist, nor could I be described as a 'socialist', but like many people I am instinctively disgusted by the world we are living in. Old people struggling in their homes, the disabled being left as there is no money to care for them, the ever-increasing sell-off of our cherished NHS to money-grabbing American organisations. All this while a subset of truly appalling people such as 'Fred the Shred' and Bob Diamond live in luxury and find paying taxes unnecessary. One knows it is so wrong, yet this book explains, in a non-technical way, exactly why it is wrong, why it doesn't work and what can be done about it. Although written for an American market it is applicable to the UK and the Eurozone. It underlines that austerity - the 'cure' being forced upon us all, never works and only makes the situation worse. He debunks the myths that there have to be super-rich people in order for the rest of us plebs to have something to do. The 'trickle-down' effect is another evil myth. These people, the top 1% or even the top 0.1% have rigged the laws, the regulations and the polictical system so that they remain at the top and we steadily get poorer. It is an excellent read. Impotent riots will only hurt ourselves, but this book points a way out of this mess by uniting (for once) around the concept of equality for everyone.

Importante alerta sobre a ampliação da desigualdade econômica e social entre os seres humanos e as prospectivas consequências dessa escolha política.

As an economist I have long felt that inequality was inefficient. Inefficient in terms of total utility (1 dollar more for a homeless brings much more utility than 1 dollar more for someone worth over a billion), inefficient in terms of allocation of capital (I'm not sure how making watches worth over a hundred thousand dollars benefits society), inefficient in terms of brain drain (all those engineers/physicists/mathematicians attracted by the money that comes with working for banks instead of improving our lives) and even inefficient in terms of employee motivation (working long hours, sacrificing your family life and sometimes your health knowing that you only get a tiny fraction of the benefits of your work). I have also long felt that inequality was both self-reinforcing (not being paid more means longer lasting mortgages with higher interest rates which eventually ends up making the rich even richer) and a recipe for disaster (lower/middle class being highly indebted can't be good when the economy turns sour). I am sure many others have feel the same way I do, economist or not. Then comes a brilliant man like Joe Stiglitz, a man with such intellectual integrity that a third of his book is devoted to references and endnotes to allow the reader the opportunity to refute any of the claims he made in his book, and this man offers us the result of his deep, borderline perfectionist research on this particular topic and you realize you weren't even close to realize the full extent of the problem at hand. This book is really an eye opener, the system of concentration of wealth will lead us to disaster and it is long overdue that we do something about it. Everyone should read this book, not only because it is brilliantly researched and exposes one of the biggest threats our economy and society faces but also because he's an example of what our intellectual leaders should be like. Read this book with all the critical thinking you can find, it makes it even more enjoyable. A must read.

This is a really great book. Stiglitz digs deep into the causes of inequality. He demonstrates how the top 1% have been working hard behind the scenes (over the last 4 decades) to perpetuate their power and influence in American society. What we see today is an established elite that has benefited from changes in the political landscape that commenced with deregulation during the Reagan years and culminated with the Global Financial Crisis of 2008. The elite is powerful and extremely influential and has relied on rent seeking instruments to enrich their estates while squeezing the middle class and the poor.