The Price of Inequality

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Penguin Books Limited, Jun 28, 2012 - Social Science - 592 pages

Nobel Laureate Joseph Stiglitz explains why we are experiencing such destructively high levels of inequality - and why this is not inevitable

The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, 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 is something that the top 1 percent eventually do learn - too late.

In this timely book, Joseph Stiglitz identifies three major causes of our predicament: that markets don't work the way they are supposed to (being neither efficient nor stable); how political systems fail to correct the shortcomings of the market; and how our current economic and political systems are fundamentally unfair. He focuses chiefly on the gross inequality to which these systems give rise, but also explains how inextricably interlinked they are. Providing evidence that investment - not austerity - is vital for productivity, and offering realistic solutions for levelling the playing field and increasing social mobility, Stiglitz argues that reform of our economic and political systems is not just fairer, but is the only way to make markets work as they really should.

Joseph Stiglitz was Chief Economist at the World Bank until January 2000. He is currently University Professor of the Columbia Business School and Chair of the Management Board and Director of Graduate Summer Programs, Brooks World Poverty Institute, University of Manchester. He won the Nobel Prize for Economics in 2001 and is the best-selling author of Globalization and Its Discontents, The Roaring Nineties, Making Globalization Work and Freefall, all published by Penguin.

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I agree with the seeming majority of other reviewers, this is an excellent book and deserves to be read. It is indeed rather repetitive in places. On the other hand, there are many examples where the author explains with such lucent and simple prose why bad ideas are bad and are hurting the economy, that it's beautiful, although at the same time very frustrating - isn't anyone in power reading this stuff?? For myself, I can only conclude that there is indeed a class war going on, on the part of the rich to shut everyone else out. It is well understood that owners benefit from high unemployment in the short term, giving them leverage to lower wages or other forms of compensation without losing productivity. In the long term of course this leads to societal breakdown if not outright revolution. But who takes the long term any more?
One point that does bother me, as with other economists the author downplays or ignores the role of cheap energy as a driver of wealth production in the post-WWII world. When the US hit peak oil in the 1970s, world oil prices went up almost immediately as OPEC now had the economic leverage to raise those prices without the US keeping prices low with its own supply. Although higher oil prices raise profits, they also raise costs for just about everything we buy including food, clothing, housing etc. I have yet to see a hard-core economist explain how we can expand "wealth" distribution to the entire population, even with fairer tax codes, etc, in the face of higher intrinsic costs of production of all goods. The economists who do in fact address rising oil prices and coming oil shortages, seem to think on the whole that endless growth is impossible. If the human population keeps growing, but total wealth does not, then obviously people overall will get poorer, even if some ("capitalists" say) get richer.

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About the author (2012)

Joseph E. Stiglitz was Chairman of the President's Council of Economic Advisers 1995-7 and Chief Economist at the World Bank 1997-2000. He is currently University Professor at Columbia University, teaching in the Department of Economics, the School of International and Public Affairs, and the Graduate School of Business. He is also the Chief Economist of the Roosevelt Institute and a Corresponding Fellow of the Royal Society and the British Academy. He won the Nobel Prize for Economics in 2001 and is the bestselling author of Globalization and Its Discontents, The Roaring Nineties, Making Globalization Work, Freefall, The Price of Inequality and The Great Divide, all published by Penguin.