Book Review : Joseph Stiglitz’s The Price of Inequality


BY OAISHIK BHATTACHARYA

The scope of this article is to review the critically acclaimed book “The Price of Inequality” written by Joseph.E.Stiglitz. The book published in 2012 was written amidst global protests that erupted and engulfed various governments in pushed them in throes of revolution. Joseph.E.Stiglitz a staunch critic of the Neo-Liberal order doesn’t mince his words when he is admonishing Republican laissez-faire theories that have led to preposterous and inequitable world order. A recipient of the Nobel Prize in Economic Sciences for his work on the “analyses of markets with asymmetric information”, Stiglitz portrays in great detail that tax cuts for the rich and austerity measures are harmful as macroeconomic sanctions.

Joseph Stiglitz’s book primarily deals with the highly unjust, unequal  and raucous system the mires the modern life of the American society. Rife in usurpation politics, the book narrates the tribulations of the faceless many who have been systematically dehumanized. It analyses how the few, by a vile scheme of indoctrination that serenades “the ninety-niner’s” and coxes them into believing that the needs of the few is congruous with that of the needs of the many, rule them. The book becomes an incessant barrage against neoliberal ideology and its ideologues who have created hierarchies in society. With the poor in doldrums due to the unjust and inequitable practices that run amok in the American state, the stark inequality is highlighted.

The book talks about the erroneous macroeconomic policies that led to the bludgeoning of income and wealth inequality in society. It also highlights how deregulations, privatizations, the moniker of “free trade”, globalization, incentives  and similarly curtailing of government influence has lead to the disparaging income inequality rampant currently in the United States of America. It brings to the forefront the inherent discrepancies in the logic of the American Right that has caused a lot of the financial tumult amidst the working class. Without medical coverage and due to information asymmetry that enables exploitation the poor becomes poorer. Similarly, the book deals with the politics of deficit fetishization and talks about the Information technology bubble as well as the housing bubble and the subsequent deals made by big banks with the government that led to the erasure of countless debts incurred through lavish and callous speculative trade. It also elucidates on the narrative built around the idea of incentives to the financiers and subsidies to the poor. The book elucidates on how mining licenses are doled out to private corporations at little or no cost. Stiglitz is never vacuous in his argument and raises an important issue as he points to the countless transgressions committed by banks like AIG,HSNBC and others. Similarly he illustrates in great detail policies like jerry mandering and filibustering rampant in the American executive and legislative systems undermine democracy. However a method for a better tomorrow is also devised which when implemented could enable a society towards equitable growth. However Stiglitz easy fix for the economy is open to debate.

The book has been carefully divided into ten chapters, the first of which narrates the “sickness” that governs American polity, then moves on to the fundamental factors causing the problem. A book spanning through three hundred and sixty five pages it encapsulates economic data worth five decades . Stiglitz refers to the works of Emmanuel Saez and Thomas Piketty which delineate how the top one percent control more than 35 percent of the wealth in the country. The author further reveals how people at the middle and the bottom have seen their incomes fall over a period of 30 years. In the following chapter the onerous narrative of rent seeking is carefully unravelled by Stiglitz. The book further delineates on how markets function and how an unfettered market may be inherently imbued with mechanisms that favour the few and oppress the many. Stiglitz then sets into account how this uneven skewering of power creates an unjust uneven society. In the next chapter he also sets the ball rolling on the important discussion of how disproportionate power in hands of the few affects democracy.

Chapter five briefly outlines how Democracy lies in peril and has been sabotaged by the global conglomerates who having turned into behemoths from the innumerable tax cuts and incentives it has received, is now only concerned about the benefits that may be incurred to its owners. In the succeeding chapter the image of a dystopia is invoked in order to highlight how through behavioural economics much exorcised myths and narratives of “Unions”, “Subsidies” are effectively created to keep the ninety percent from raising their voice. This brainwashing carefully lulls them into believing the narrative spun around “hard working American man/woman” “land of equality” and “opportunity for the all”. Similarly the narrative around the much acclaimed “American dream” now lies in tatters according to Stiglitz and he analyses how the systematic neutering of government presence in fields of education, healthcare and social policy has proved detrimental for the “many”. An increase in deregulations leads to austerity measures as the government cuts aid to ensure fiscal deficit does not escalate. He also lays bare the acerbic nature of Capitalism that aims at profit maximization and showcases how the entire process is dehumanizing as it alienates individuals.

The next chapter deals with how the adage “Justice for all” was turned into a farce by the American polity and judiciary. He reveals how through lobbying various multinational companies creates pressure in the American parliaments. Through large pay checks, campaign contributions and through the system of “revolving doors” the global conglomerates like Exxon and others exercise significant control on the laws signed and passed in American legislature system. The book lays bare facts on the student debt crisis and information asymmetry that governs the banking sector.  

In the following chapter Stiglitz talks about budget allocation stratagems .He reveals the Rights motive of providing tax cuts to the rich, similarly the writing down of a progressive tax system and the abolition of estate tax is harped upon. He talks of the Reagan and Thatcher tenure where the policy of fiscal conservatism was ushered in. Similarly the Bush regime lowered the tax rates for the rich to as low as fifteen percent and enabled corporations  to enjoy repatriation tax holiday. Similarly he illustrates on the exorbitant defence expenditure that burns a hole in the national budget.

The final chapter Stiglitz reveals careful stratagems that may help resuscitate the economy and return to a situation of fiscal surplus that President Bush had inherited from President Clinton. The methods illustrated by Stiglitz reveal how an economic reform agenda will be beneficial for the poor, by curbing the excesses at the top, devising a method to rein in the financial sector that otherwise allow them to indulge in speculative trade, also the implementation of competitive laws and the ending corporate welfares may help to an end to the kleptocrats. Similarly, a vision for a better tomorrow that focuses on equitable growth and distribution of all will benefit all. Investment in Healthcare, Education and policies concerning social welfare that are major determinants of the human development index will ensure development and will be tantamount to freedom.

Categories: Economy

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