Mike Kueber's Blog

October 8, 2012

Sunday Book Review #86 – The Price of Inequality

Filed under: Book reviews — Mike Kueber @ 1:45 pm
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My previous book review was No, They Can’t by libertarian John Stossel.  I can’t imagine a greater contrast with this week’s The Price of Inequality by Joseph E. Stiglitz.  On one hand, Stossel, like many libertarians, drifted into his economic beliefs while experiencing a wide-ranging, pragmatic journey down a meandering path.  On the other hand, Stiglitz is a lifelong liberal academic who won a Nobel Prize in Economics.  (He seems a kindred spirit to that other liberal, Nobel-winning New Yorker Paul Krugman.)

Stiglitz served as a chairman for Clinton’s Council of Economic Advisors in the mid-90s, and his economics conforms precisely to Democratic politics – i.e., income tax rates should be more progressive, the estate tax needs to be more robust, bankruptcy laws need to be eased, especially on students, globalization of capital and labor is a bad thing, unions need to be strengthened, CEOs are over-compensated, Citizens United and voter ID laws threaten American democracy, and the national debt/deficit is overrated as a serious concern.

Stiglitz believes that Occupy Wall Street resonated with Americans because the “protesters were speaking to their values.”  In fact, this book emanated from a Stiglitz article in Vanity Fair titled, “Of the 1%, for the 1%, by the 1%.” 

Although I disagree wholeheartedly with Stiglitz’s pooh-poohing of the debt/deficit issue, I agree that the American economy seems to be operating for the benefit of the 1%, with a disproportionate share of its wealth going to the 1%.  Stiglitz gets into controversial territory, however, when he posits that the growing inequality is caused by perverse government policies.  Thus, while conservative economists worry about whether government policies that result in more equality will hurt the free-market economy and reduce the overall size of the pie, Stiglitz boldly asserts that our current artificial inequality hurts and restricts our economy.   

Much of this book attempts to expose the means by which the 1% get more than they should under a free market – such as sustainable monopolies that facilitate outsize profit, over-valuing captial and under-valuing labor, free inheritance, political actions that enable them to make the rules and choose the referees, buying things from government for pennies on the dollar, selling things to government for exorbitant prices, and no charge for externalities. 

Despite Stiglitz’s facts, I remain a libertarian in favor of the free market.  Government should promote equal opportunity (education, progressive taxation), but it is not smart enough to control the economy.  The most effective government reform is to reduce the influence of the 1% so that the game is no longer rigged.  Let’s strive for Lincoln’s government of the people, for the people, by the people.


1 Comment »

  1. […] probably blogged a dozen times over the years about equal opportunity, including a post about Stiglitz’s book called The Price of […]

    Pingback by Equal opportunity in America « Mike Kueber's Blog — February 18, 2013 @ 11:10 pm | Reply

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