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1-Page Summary of The Price of Inequality
Overall Summary
In 2007, the U.S. experienced a recession that caused living standards to plummet for most Americans while increasing wealth for the top 1 percent of Americans. Joseph E. Stiglitz wrote The Price of Inequality: How Today’s Divided Society Endangers Our Future in 2012 to explain this income gap and offer some hope that it can be closed. Critics praised the book as comprehensive and prescient, and it received the Robert F. Kennedy Center for Justice and Human Rights Book Award in 2013.
The book’s central theme is that inequality hurts the U.S. economy because it limits growth and efficiency, but there are also political reasons for this problem. The market economy is shaped by society and government, which enforce the rules, but as Stiglitz suggests, when government fails to create a fair playing field for all people in society (the 99%), then we have an unsustainable situation on our hands.
The rich are getting richer and the poor are getting poorer, which is bad for everyone. In addition, investment in public infrastructure is decreasing because of the tax system’s unfairness to middle-class earners. There is no chance for reform because of political gridlock. America’s image as a country that promotes fairness and equality has decreased due to these problems.
Nobel Prize-winning economist and Columbia University professor Joseph Stiglitz remains hopeful about the growing gap between rich and poor. He believes that there are a number of ways to reform our economy so that it works for everyone, not just the wealthy.
Chapter 1: “America’s 1 Percent Problem”
This chapter illustrates the depth and breadth of economic inequality in the United States. The gap between the rich (the 1 percent) and everyone else is growing, with 20% of national income going to the top 1%. This means that America isn’t as much a land of opportunity anymore for those at the bottom. However, this trend toward increasing inequality isn’t inevitable; it’s caused by market forces but also can be changed by policy changes.
In the past, there was less inequality in America. However, it is increasing rapidly. The top 1 percent of Americans earn a much larger percentage of income than they used to 30 years ago (12% versus 30%). Defenders of today’s growing inequality argue that rich people deserve what they get because capitalism rewards hard work and talent; if the system isn’t fair, it would be too costly to fix; when the top 1 percent have more money, everyone benefits from their spending. Stiglitz disagrees with these arguments for several reasons:
The US economy has grown faster when there is more equality because inequality negatively affects the economy. A lack of social safety nets and opportunity for poor people, along with a significant drop in standard of living, have led to a higher poverty rate. The top 1% are taking wealth from the 99% rather than creating it because of market distortions. Wages for wealthy Americans have steadily increased while barely rising for bottom 90%. At the same time, jobs that offer decent wages moved overseas and middle-class workers were pushed into low-skill jobs even as CEOs made 200 times what their employees made.
Since the Great Recession, America’s 99 percent have not benefited as much as they should. In The Price of Inequality, Stiglitz argues against positions that are held by America’s political right (or Right). These include the idea that inequality is measured over a lifetime (some people are always at the bottom), poverty in America is relative depravation because poor people have access to things like televisions and indoor plumbing, and statistics are wrong because inflation is estimated at too high a rate so growth in income has been underestimated. Stiglitz counters this with the argument that we need to understand why there is inequality and how it came about.
