Joseph Stiglitz. 2015. The Great Divide. Allen Lane. Reviewed by Ben Pringle, Post- Crash Economics Society Joseph Stiglitz’s The Great Divide looks into growing inequality in the Western world, with the majority of his focus being on the role that inequality has played in his own country, the United States. The book is organized in a way that you would not expect from a Nobel Prize winner. The structure of the book, unusually, is that of a collection of articles, essays and reflections that Stiglitz has had published, mainly after the financial crisis. The argument that Stiglitz presents in this book is that inequality is a choice, a choice made by western governments. Governments are therefore inequality accelerators or inequality decelerators, based on the policies that they implement. The book looks at a range of issues and policy decisions that the U. S government has made which have exacerbated poverty, while also looking at other countries that are trying to achieve a more balanced economically viable model. “ The magnitude of rent seeking in our economy, while hard to quantify, is clearly enormous” (p. 98) What I am first going to focus on are the links between economic and political inequality, something that Stiglitz frequently revisits throughout the book. Stiglitz clearly believes that rent seeking is further worsening inequality in the U. S and, as he puts it, “creates a vicious circle” (p. 189). Rent seeking can be described as the way in which the current political system helps those that are richest in society. The argument here is that the richest companies are lobbying government in order to gain an advantage over their competitors, by leading those in power to make the market they operate in less competitive. This could be through property laws or government handouts, for example. The conclusion from Stiglitz is that rent seeking has been one of the.
Editorial Reviews Paul Krugman - New York Times “[ Joseph Stiglitz] is an insanely great economist.” Publishers Weekly Nobel Prize–winning economist Stiglitz's collection of recent essays is a fine, if at times repetitive, look at the steady increase in income inequality throughout the world over the past several years. Stiglitz ( The Price of Inequality) contends that a number of U. S. policies created in the last 30 years have contributed both to this phenomenon and to the Great Recession. He also argues that trickle-down economics and the too big to fail arguments of the financial industry have led the U. S. down a dangerous path that disrupts innovation, lowers life expectancy, and will cripple the country economically for the next few decades. He proposes any number of solutions that would reduce income inequality and the power of the wealthiest 1% but also seriously increase the scope of government. The essays are grouped thematically into different sections with titles like Dimensions of Inequality and Policy. While many would work perfectly well as standalones, when grouped together they risk boring the reader with redundant background information. That said, with this book Stiglitz has succeeded in breaking down complex economic concepts into language that educated laypeople can understand, and readers will be fascinated by his ideas. ( Apr.) Kirkus Reviews Nobel Prize-winning economist Stiglitz ( The Price of Inequality, 2012, etc.) examines some of the macro dollars-and-cents issues that separate the haves from the have-nots—and money is just of them. Inequality kills democracy, and, the author observes, it is rapidly on the rise, more so in the United States than in any other Western country and on a par with Russia and numerous developing nations, a club of which we should not be proud to be a member. Stiglitz has been working in this vein.
AN insidious trend has developed over this past third of a century. A country that experienced shared growth after World War II began to tear apart, so much so that when the Great Recession hit in late 2007, one could no longer ignore the fissures that had come to define the American economic landscape. How did this “shining city on a hill” become the advanced country with the greatest level of inequality? One stream of the extraordinary discussion set in motion by Thomas Piketty’s timely, important book, “ Capital in the Twenty- First Century,” has settled on the idea that violent extremes of wealth and income are inherent to capitalism. In this scheme, we should view the decades after World War II — a period of rapidly falling inequality — as an aberration. This is actually a superficial reading of Mr. Piketty’s work, which provides an institutional context for understanding the deepening of inequality over time. Unfortunately, that part of his analysis received somewhat less attention than the more fatalistic-seeming aspects. Over the past year and a half, The Great Divide, a series in The New York Times for which I have served as moderator, has also presented a wide range of examples that undermine the notion that there are any truly fundamental laws of capitalism. The dynamics of the imperial capitalism of the 19th century needn’t apply in the democracies of the 21st. We don’t need to have this much inequality in America. Our current brand of capitalism is an ersatz capitalism. For proof of this go back to our response to the Great Recession, where we socialized losses, even as we privatized gains. Perfect competition should drive profits to zero, at least theoretically, but we have monopolies and oligopolies making persistently high profits. C. E. O.s enjoy incomes that are on average 295 times that of the typical worker, a much higher ratio than in the past.
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