By Carol Goar, Toronto Star. August 12, 2012
Nobel laureate Joseph Stiglitz has written six books in the last 10 years warning of the dangers of extreme income polarization. The American economist’s latest wake-up call is his most urgent.
The Price of Inequality: How Today’s Divided Society Endangers Our Future, is clear (it is written for non-economists), compelling (his evidence is irrefutable) and comprehensive (he covers everything from the rise of social unrest to the despoiling of the ecosystem).
People are finally paying attention. The 450-page book has been on the bestseller list for almost a month.
The media are listening. Dozens of newspapers, magazines and specialty publications have run excerpts from the book, interviewed Stiglitz and invited reader comment. Paul Krugman of the New York Times amplifies Stiglitz’s themes in virtually every column.
A growing band of intellectual heavyweights — Lawrence Lessig and Michael Sandel of Harvard University, Jacob Hacker at Yale, Paul Pierson at the University of California, Berkeley, Nouriel Roubini of New York University, to name a few — is echoing Stiglitz’s message.
But political leaders, bankers and business magnates are resolutely shutting their ears.
U.S. President Barack Obama and his rival Mitt Romney are wilfully ignoring the concentration of wealth in the uppermost echelon of American society (for different reasons and in different ways). Eighty-five days before Americans go to the polls, the issue is not on the agenda.
Prime Minister Stephen Harper refuses to deviate from his “economic action plan,” which calls for austerity for the many and tax incentives for the privileged few. This strategy, he insists, will produce growth, jobs and prosperity.
The leaders of the European Union are imposing harsh economic strictures on the weakest members of the federation, disregarding both the lessons of history (debt-crippled countries can’t recover without capital) and the deepening crisis around them.
As for the corporate high-flyers whose irresponsible behaviour triggered the 2008 crisis and subsequent stagnation, they are unrepentant. They block every legislative proposal that would set the economy on a healthier footing.
An economist less resilient than Stiglitz — who was fired by the World Bank for refusing to toe the line; ridiculed for 40 years by the ascendant proponents of free markets, small government, deregulation and privatization; and treated by most of his peers as a dissident — would be in despair by now.
But the 69-year-old native of Gary, Ind., is sanguine. He is convinced people will respond if he makes the case clearly enough with enough examples that reflect what’s happening in their lives. “Most Americans don’t think speculators should be taxed at a fraction of what people who work for a living pay,” he told Rolling Stone magazine. “They don’t think banks should be allowed to engage in predatory lending or abusive credit card practices. They don’t think drug companies should be allowed to get special benefits from the government.”
The reason they haven’t acted, he says, is that most still yearn to believe — despite the evidence — that anyone can succeed in America and many still accept the assurances of their mainstream economists that everyone gains when the rich get richer.
Stiglitz hopes The Price of Inequality will put those myths to rest. And he hopes readers will consider the “simple remedies” he offers.
Looking ahead, the economist sees two possible scenarios.
One is that the mega-rich 1 per cent of the population will realize it is in their own interest to reverse today’s extreme polarization of income. No one benefits from a less productive, less dynamic and less efficient economy.
The other is that the 99 per cent will realize they’ve been sold a bill of goods by their leaders and demand change in ways governments, political parties and employers cannot brush off.
People intuitively get it, he says. They just have to muster the political will to act.