Stiglitz Analysis of the Price of Inequality

In the year 2013, issues of socioeconomic inequality are perhaps as pressing and problematic as they have ever been. This is the assertion at the crux of Joseph E. Stiglitz text, The Price of Inequality: How Today's Divided Society Endangers Our Future (ISBN-13: 9780393345063). Released in 2012 by W.W. Norton & Company publishers, the 560-page text is a timely and compelling contribution to the current public discourse on our need for greater economic equality in the United States.

Understanding the orientation of the text at the center of this analysis requires a more complete understanding of its author, the economist, Columbia professor and winner of 2001's Nobel Memorial Prize in Economic Sciences. According to his self-composed biography at the Memorial Foundation site, Stiglitz (2001) was born in Gary Indian in 1943. By his own report, his interests as a young student would lead him to become actively involved his debate club in high-school. He even notes that some of the debate subjects that would bring out the most passion in him as a student would emerge time and again in his later career as issues of great civic importance.

Stiglitz tells that "the intellectually most formative experiences occurred during the three years 1960-1963 I spent at Amherst college, a small, New England college (at the time, a men's college with around 1000 students)." (Stiglitz 2001, p. 1) Stiglitz speaks highly of his experiences at Amherst, where he dedicated the bulk of his undergraduate efforts to physics. By his senior year, Stiglitz reports, he had become enamored of economics and switched courses entirely in order to make this his focus during his graduate studies. For these, he earned a modest fellowship to assist a transfer to MIT, where he earned his PhD and held an assistant professorship. (Stiglitz 2001, p. 1)

From there, Stiglitz would go on to become of the most decorated, accomplished and influential economists of the last 30 years. According to his Curriculum Vitae (2013), Stiglitz holds honorary doctorates for more than 40 academic institutions, has held professorial positions in a number of top universities, served as the 17th Chair of the Council of Economic Advisors under President Bill Clinton and held the office of World Bank Chief Economist between 1997 and 2000. (Columbia University, p. 1)

The true scope of Stiglitz' contributions cannot be fully contained here. However, the surface view of the author's career suggests an individual highly qualified to make commentary on the state of the U.S. economy. Therefore, the highly critical nature of the text in question comes with a strong degree of credibility.

Summary:

Stiglitz makes no mystery about his perspective on the issue of economic inequality. The author indicates from the outset of the text that his perspective is progressive in nature and highly sympathetic to the struggles of the middle class, the working class and the impoverished. Moreover, the text approaches the issue of America's economic inequality as being connected to many of the patterns that we can observe on a global scale. According to Stiglitz, the outpouring of protest and discontent that defined the 'Arab Spring' and the Occupy Movement would be connected even if separated by wide cultural and geographical gaps. Additionally, Stiglitz tells in no uncertain terms that his point-of-view has more in common with the protest movement than with the hegemonic forces standing in its way.

Accordingly, Stiglitz observes that "the protesters were right that something was wrong. The gap between what our economic and political systems are supposed to do

What we were told they did do -- and what they actually do become too large to be ignored. Governments around the world were not addressing key economic problems, including that of persistent unemployment; and as universal values of fairness became sacrificed to the greed of a few, in spite of rhetoric to the contrary, the feeling of unfairness became a feeling of betrayal." (p. x)

This offers a philosophical framework for the larger part of the text, which takes the view that capitalism has been stifled by a generation of corrupt, lawless and entrenched interest groups which permeate both industry and politics. This is almost certainly the prerogative for a text that largely condemns the forces responsible for the economic ailments both of inequality and recession. Stiglitz will proceed to lay out across the course of his text an argument that true capitalism should cure rather than intensify socioeconomic inequality. The Price of Inequality asserts that greed and exploitation have created an increasingly sharp wealth divide in which...

This is done, Stiglitz argues, at the expense not just of individuals struggling for survival in a stagnant economy but also at the expense of our economic stability as a nation and global community.
Critical Analysis:

The Stiglitz text will ultimately proceed to illustrate that the causes of economic inequality in the United States and in the global community alike are threefold. According to Stiglitz, "markets weren't working the way they were supposed to, for they were obviously neither efficient nor stable; that the political system hadn't corrected the market failures; and that the economic and political systems are fundamentally unfair." (p. xi) Ultimately, Stiglitz will go on to lay out a strategy for addressing these intermingled causes for our current economic problems. But before doing so, the text offers some very startling realities to the reader.

Regarding our current economic situation, Stiglitz lends some insight into just how direct circumstances have grown for so many. The author describes the array of consequences for poor and middle class Americans in the fallout from the 2007-2008 financial crisis. While banks and auto companies were awarded bailout money for mismanaging key cogs in the U.S. economy, the citizens of the U.S. were greeted with a decidedly hopeless set of personal, professional and financial realities. According to the text, five years into the recovery endeavor, "one out of six Americans who would like a full-time job still couldn't find one; some eight million families had been told to leave their homes, and millions more anticipate seeing foreclosure notices in the not-too-distant future; still more saw their lifetime savings seemingly evaporate. Even if some of the green shoots that the optimists keep seeing were, in fact, the harbinger of a real recovery, it would be years -- 2018 at the earliest -- before the economy returned to full employment." (Stiglitz 2012, p. 1)

Indeed, a central argument of the Stiglitz text is that we have been done considerable damage by this most recent era of crony capitalism, corporate embezzlement and wrongheaded federal policy. The age of globalization has given over to an unfettered corporatization of American life, where small businesses, independent entities and other self-starters are unable to compete. Mobility has also been stifled with employment opportunities severely limited for debt-laden college graduates and middle-aged Americans being forced into retirement before their time. Stiglitz takes the view authored by the Occupy Wall Street movement, that the 99% had been exploited by the 1%. In fact, the author provides some fairly compelling statistical evidence to suggest that this claim was more than just protest rhetoric.

To the point, Stiglitz notes that "America has been growing apart, at an increasingly rapid rate. In the first post-recession years of the new millennium (2002 to 2007), the top 1% seized more than 65% of the gain in total national income. While the top 1% was doing fantastically, most Americans were actually growing worse-off." (p. 2)

The Stiglitz text provides a stark indictment of our current leadership, comprised as it is by a combination of politically ambitious figureheads and corporate interests. The result, the text ultimately shows, is that the interests of the general public are either relegated or fully defied altogether in favor of a continually widening gap between rich and poor.

Premise and Relevance:

The overarching premise of "The Price of Inequality" is that the unequal and exploitive nature of the current American economic system is not only ethically wrong but will also lead to a continued unraveling of the U.S. economy and way of life. This view is supported by wealth of evidence from the economy immediately account us. Indeed, few things could be more relevant to the public discourse today than a piercing look into the reasons for the harsh inequality that we have largely come to know. Moreover, it is important to make an evermore compelling case that this economic philosophy will be the undoing of wealthy and poor Americans alike. Accordingly, one review from The Jefferson Institute (2012) notes that the Stiglitz text is a troubling harbinger of economic crises yet to come. (Chinni, p. 1) The reviewer connects some of the economic trends cited by Stiglitz in concurring with the author's argument.

The review would observe that "recent figures from the Federal Reserve show that the median family has assets (including their house but subtracting their mortgage) of roughly $77,300. The top 10% of families have nearly $1.2 million. That's the kind of gap not seen since the 1920s, just…