The price of inequality : how today's divided society endangers our future

by Joseph E. Stiglitz

Hardcover, 2012

Status

Available

Publication

New York : W.W. Norton & Co., c2012.

Description

Examines how the wealthy classes have contributed to growing inequality in society and explains how the quest to increase wealth has hindered the country's economic growth as well as its efforts to solve its most pressing economic problems.

User reviews

LibraryThing member TLCrawford
Although I took only one economics class, in the 1970s, I am interested in the subject. After all I have to survive in whatever economy the United States has and for the last forty years the economics that politicians talk about is farther and farther from anything that Sorenson wrote about.
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Ohio’s Governor Kasich says that we need to give companies more money so they will hire more people. If I remember my lessons companies hire to expand their production capacity when the demand is larger than their current capacity. I don’t remember anything about hiring to relieve an over full bank account.

Obviously I need a refresher in economics. Milton Friedman is the current darling among politicians but, while studying history, I learned what happened when countries such as Chile adopted his ideas. Surely nobody in their right mind would want to do that to the United States? Studying history I learned that Adam Smith, yes, THAT Adam Smith, wrote that people worked hardest when it was for their own gain. I also read that many people complained that their slaves were lazy. It occurred to me that since slaves gained nothing from their hard labor there could be a connection between Smith’s theory and slave owners observations. When I went to find if anyone else had considered a correlation between the two ideas I found the name Joseph Stiglitz. He also was a winner of the 2001 Nobel Memorial Prize in Economics and an economic advisor to the last President to run a surplus. That was enough for me to decide to read his most recent book.

“The Price of Inequality” is written in plain language, mostly. Of the few economic terms that I had some difficulty with, mostly because they have meanings to economists slightly different than what they have in standard English, Stiglitz eventually got through even to me. “Rents” are bad because they add cost without adding value. My grandparents rented rooms but they had to maintain the buildings, which added value back to the buildings as they naturally depreciated over time. When my parents rented the family farm to someone else they added nothing. The farmer paying the rent also made all the investments in tools, seed, fertilizer, and labor. The land could have laid fallow and still maintained its value. “Rent” to an economist is income that comes not from work but from special situations such as possessing capital (my parents farm), monopolies, and subsidies.

Stiglitz is very good at explaining economic concepts. It seems that demand is out of fashion at the moment but it is still very important in the real world, as is most of what I learned from studying Sorenson 40 years ago. Friedman, in his day made some very important observations but when the data disputed his claims the Chicago School became more faith based than data driven. They adopt stands like “the market is right, but even when it’s wrong its not the market’s fault” and “the government is incapable of beneficial actions, even when they save our bacon”

One of the interesting topics Stiglitz examines is the question “is inequality necessary to provide incentives to work hard”. His answer seems to be a qualified yes with the stipulation that incentive pay has to be designed to be just that. As he pointed out bankers received what were originally called “incentive bonuses” even when they banks failed miserably. After some public outcry over millions of taxpayer dollars being paid out as bonuses for essentially mortally wounding the world economy the the only concession bankers made was to change the name of the payments to “retention bonuses”. Why anyone responsible for the meltdown was retained is beyond my imagination. In fact I agree with Stiglitz that many of them should have been detained in jails for the blatant fraud they perpetrated on their clients.

Every government policy has winners and losers. Adjusting government policy to assure that the top never lost, even when it failed, is what has created the massive inequality we face today. Stiglitz shows us how it came about and explains the dangers involved in allowing it to continue. His explanations are clear and he provides good foundations for his arguments but I do wish he had limited his use of“as we saw in a previous chapter” and the “now we will examine” but that is a minor point. The only real problem I have with Stiglitz is that he is so pessimistic.
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LibraryThing member DavidO1103
Great book, pretty good narration. Makes your blood boil, along with Joe Stiglitz, who lays out all the ways in which our society is unequal, to the advantage of "the 1 percent," and to the disadvantage of the 99%, particularly the poor. He also presents possible solutions.
LibraryThing member Sullywriter
The text is dense and the writing occasionally dry but Stiglitz explains complex economic issues with great clarity and thoughtful analysis. Anyone seeking an understanding of the developments that lead to the economic collapse of 2008 and the "Great Recession" will find this book enlightening.
LibraryThing member Meandu91
"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
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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 a living; or that banks should be allowed to engage in predatory lending or abusive credit card practices; or that drug companies be allowed to get special benefits out of the government in the form of overpayments; or that mining companies should be able to get natural resources at below competitive prices."

This is an excerpt from a Rolling Stone interview with Stiglitz that peeked my interest to read the book. He simply explains what is happening, how it happened and what we can do to fix it.
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LibraryThing member deadseasquirrels
It's an easy read if you're familiar with the topic either. The language is very simple, good for the layman, but I don't think it really presented new and original perspectives.

I would have liked a little more discussion on why "rent seeking" was bad, and perhaps a little more discussion about
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employment based monetary policy vs. inflation based, that is more technical analysis would have been nice, but that was not to be.

I think this is a Friedman level explanation of income inequality which would be good for those who are interested in the topic but who are not very familiar with economics or finance. But I have a feeling those who would pick this up are already very liberal minded individuals. This book is preaching to the choir. That being said I still gave it 4 stars because of how readable it was and how nicely sectioned the book was.
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LibraryThing member cartoixa
Joseph Stiglitz has a gift to make the world of economics understandable to the common man. His solutions seem so simple and reasonable, which render his conclusions all the more bittersweet : "The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles,
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but there is one thing that money doesn't seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this has been something that the top 1 percent eventually do learn. Often, however, they learn it too late."
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LibraryThing member stevenlevymath
This book is an excellent source for facts. It has over 100 pages of notes. If you need to do a report on inequality, look at this book first. It gives suggestions about what we need to change.
LibraryThing member iowabooker
Amazing! The research is broken down so that the common public can understand, get upset, and provide facts about how todays society is not as grand as its portrayed to be!
LibraryThing member bdtrump
Stiglitz presents a comprehensive review of the causes and consequences of inequality in a capitalist society. Lots of important and underreported phenomena are discussed, making this relevant and necessary for the contemporary reader.

Many good points, some with excessive political undertones, but
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overall a book that is easy to read and covers particularly important material for Americans today.
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LibraryThing member Darwa
While I do not fully agree with all of the policy suggestions that Joseph Stigilitz proposes -- I learned a lot from this book. Definitely worth reading!
LibraryThing member GlennBell
This is an excellent book on economics. I learned a lot and found it interesting. The author is highly knowledgeable and is good at explaining complex ideas in understandable language.
LibraryThing member pidgeon92
This book was fine. I don't think I learned much, it more solidified the thoughts I already had. The narrator of the audiobook was OK, but he was not compelling.

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11684
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