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Book Review: Stiglitz The Price of

Inequality Chapters 6-10


August 19, 2013 by Gavagai

Stiglitz, Joseph E. 2012 The Price of Inequality: How Todays Divided Society
Endangers Our Future.New York: W.W. Norton & Co. QP: $16.95, pp523
This is Part II of a two-part review. You can read Part I here.

The second half of Stiglitzs book expands upon the basic argument laid out
in the first. Each chapter delves deeper into the specific details of various
causes of the situation laid out in chapters one through five. Chapter six
focuses on the ways that the media uses and manipulates human
psychology of belief to frame the political and economic debates, and, in so
doing, distort public discourse. Chapter seven brings out problems with the
legal system and the ways that inequality leads to an erosion of the rule of
law. Chapter eight examines debates over the national budget, while chapter
nine analyzes macroeconomic policy. Chapter ten proposes a set of solutions
to address the problems examined in previous chapters.
Though Stiglitz develops more in-depth analyses of specific problems in
these chapters, the basic argument remains the same: those with money
and power have used them to acquire more money and power for
themselves at the growing expense of everyone else, while at the same time
undermining the shared democratic and human values that the United States
is supposed to be founded upon. Politics and economics, government and
markets, are inseparable. Real markets do not behave in the ways that the
ideal markers of economic theory are supposed to behave. These later
chapters simply lay out more of the details of our current situation.
Instead of rehashing the arguments, of which I give a brief overview in Part
I of this review, I would like to focus on a problem that I noticed early on in
the book, and which never really left me as I read.
The problem is that Stiglitz is not likely to engage, much less convince, those
who dont already share his worldview. A major source of this problem is his

use of biased language throughout his discussion. For example, Stiglitz


constantly refers to his opponents as the Right and the one percent.
While he takes pains early on in the book to clarify who and what he means
by these terms, this level of nuance is likely to be forgotten by many readers
by later chapters.
While Stiglitzs use of language is likely to be readily accepted by those who
already agree with him, it is just as likely to alienate those who do not come
to the book already open to his position, which is US mainstream liberal from
the start. The quality of his logic and evidence will be of little use if the
readers who do not agree with him to begin with write him off as just
another biased liberal academic and do not take the book seriously. That
doesnt
make
Stiglitz right or wrong, but given the importance he places on rebuilding a
robust democratic society, it seriously undermines the potential
effectiveness of his work for convincing others of the value of both his
analysis of the problems and his proposed solutions.
Two other reviews I read point out this problem as well. The first takes a
balanced approach to the book as a whole, and provided accounts of both
the positive and negative aspects of the economic arguments. The author of
this review criticizes Stiglitz for
a clear lack of academic neutrality, which would be fine if the author at least hinted
at valuable dissenting opinions. Not only does Stiglitz not do this, but he essentially
characterizes those he disagrees with as either corrupt or intellectually dishonest.
He does not offer the other side(s) a chance, ultimately making Stiglitz a
perpetrator of the same fraud he accuses his opponents of.

The author then points out that Stiglitz uses the same psychological tactics
that he criticizes his intellectual opponents of using in Chapter 6, and
accuses Stiglitz of inconsistency, perhaps even hypocrisy, on this point.
I dont think that this particular criticism is quite effective. It is true that
Stiglitz wrote the book in a way that makes use of what is known about
human psychology to convince his reader of his conclusions and influence
their beliefs. However, this approach is not a problem for at least two

reasons. First, all arguments are intended to influence the audiences beliefs,
so there is no problem in that respect. Second, Stiglitz has himself argues
that the psychological techniques he uses are effective means of rhetoric
and persuasion. It would be odd if Stiglitz defended their efficacy and at the
same time declined their use in favor of less effective measures.
But what, then, is the difference between Stiglitz and his opponents, if
anything? Here, we must look to the underlying moral argument of the book,
which I suggested in Part I is the central and most important argument. The
difference between Stiglitz and the one percent is that Stiglitz is using his
rhetoric to convince people of what he takes to be a viable moral position
and shared values, whereas the one percent use them in favor of selfish
self-promotion. In this respect, Stiglitzs use of rhetoric is much in line with
the view defended by Socrates in Platos Gorgias. Rhetoric is a neutral tool
what matters is whether the conclusions that the rhetoric is used to convince
you of are true and morally worthy (which for Plato were the same thing).
The author of the review linked to above only focuses on Stiglitzs economic
arguments, and while he discusses those in detail, he seems to miss the
underlying moral argument entirely.
Going further, the author of the above review criticizes Stiglitz for not
engaging in the academic debates in this work, and addressing only the
weaker popular arguments more likely to be found on the internet and on
cable news shows. Again, I am not convinced that this is a flaw in the book.
Stiglitz wrote The Price of Inequality for a popular audience, an audience that
is far more likely to be familiar with and concerned about the popular
arguments, and far less likely to be familiar with the academic debates.
Consequently, Stiglitz responds the arguments his readers are likely to know
and care about. Anyone who wants to go further can follow up on the ample
references in the lengthy notes section.
A second review of the book is in greater agreement with Stiglitzs claims
and arguments as a whole. The author states,
[Stiglitz] apportions a great deal of ink to the gaping holes inherent to overtly rightleaning political and economic ideologies, but his polemic does not concede some
of the equally injurious consequences of the leftist equivalents (socialist states, in
the opinion of this reviewer, are often far removed from any common definition of

utopia). A more balanced critique, hints of which can be found in past work, might
have rendered his rhetoric less susceptible to the inevitable cries of bias.

The reviewer then goes on to point out a couple of specific claims in Stiglitz
that he finds factually incomplete or off-base. However, in the end, this
reviewer sees these problems as relatively and still admittedly unsettled
minor deficiencies.
I disagree with this reviewer I think that the problem of bias (or apparent
bias) is far more serious than he gives it credit for. I believe this for reasons
that Stiglitz discusses at significant length in chapter six. Words and ideas
matter, as is the ability to engage those in effective discussion. Given the
degree of social and political division in our country and the readiness with
which people are willing to dismiss opposing political views as mere bias, any
appearance of bias is likely to have the effect of shutting out readers who are
in most in need of engagement. Consequently, this problem is not minor.
All of this discussion suggests that chapter six, which focuses on how people
come to believe what they do, is the most important chapter of the book,
and the key to addressing the problems that Stiglitz analyzes. Belief leads to
action, and action changes the world. Consequently, those who can influence
belief can influence how people act. In a democratic society, this ability is
essential to getting anything done. Unless those of us who want to change
the social, economic, and political landscape to one more in line with justice
and the common good can create and disseminate a convincing moral
narrative to counter that currently be propagated, we will fail to be relevant,
much less effective.
To sum up so far, while Stiglitzs tactics are potentially greatly effective for
those who delve into the book, they are also likely to prove a stumbling block
for those who are not inclined to agree with his conclusions from the outset.
It is like giving a powerful computer to someone who hates using technology.
In the right hands, it can be very effective the problem is, it may not be in
the right hands.
The solutions that Stiglitz lays out in chapter ten face a similar problem. In
order to bring about the changes in policy and law that Stiglitz recommends,

we need political and financial power, as well as the political will to work for
the changes. These are the resources that allow things to get done. However,
Stiglitz spends most of the book explaining how these are the very things
that the majority of citizens are losing, and how feedback loops lead to
greater and greater inequality of political power and financial resources in
ways that sap people of their political will. The situation looks bleak that
which we need to bring about the solutions Stiglitz recommends is exactly
what is lost in the context of growing inequality.
However, there is still some reason to hope. The Price of Inequality may
preach to the choice, but it may help to bolster the political will of those
singers. While large systematic problems may dampen the will, that will is
the one resource that those with power and money can never completely
take away, if we choose to keep it. Will can be created even in the most
oppressive environments; indeed, it is often oppression that inspires political
action, at least in some.
I suspect that with regard to this problem, most readers will either be
optimists or pessimists. Either they think it is not too late to turn back, or
they think we are past the point of no return, and there is not much hope for
correcting the system no matter how much political will we generate.
However, I think that there is a third way not as optimistic as Stiglitz is for
changing the big picture, but not as pessimistic as those who say that
nothing can be done.
Stiglitz focuses on the large context national and international policies,
laws, and trends. These are massive forces that go beyond any one
individual, group, or organization. While they are, in one respect, the sum
result of choices and actions of individuals, in another respect, they take on a
life of their own, and no individual controls them. Indeed, whatever influence
any particular individual can have will be vanishingly small, negligible.
My response: stop worrying about the big picture. Its a distraction. While
Stiglitz is right to focus on the big picture in the analysis of the problems, the
solutions are not likely to occur by focusing on that same big picture. I am
influenced here by the Roman philosophy of Stoicism, which teaches that we

should focus only on what is within our control, and resign ourselves to what
is beyond our control. And our own actions and attitudes are all that is within
our control. And those actions and attitudes can influence only those with
whom we come into contact, provided those people know us, respect us, and
take us seriously.
As Stiglitz points out, those who control the major networks of media are
also, currently, those who stand to benefit the most from greater inequality,
at least in the short term. That means that we cant look to major
commercial media outlets to be a significant part of the solution. However,
there are other options, many of them online. You can write to your local
newspaper, start a video series, write a blog. You can volunteer are local
agencies and NGOs and not-for-profits. You can change your own practices,
become better educated, and challenge and educate those around you.
You cannot individually change national financial policy so dont try.
Instead, focus on what is within your sphere of influence. Change your local
government. Educate the people around you. Make a difference in your own
community and neighborhoods. Given time, small-scale changes aggregate
into large-scale changes. That is how these problems came about, with small
changes over time. That is also how the solutions will come about not by a
large-scale and drastic overhaul at the national level, but by myriad local
adjustments. It is a slow process, but it is one where we actually can exercise
a significant direct influence and build lasting change. Perhaps this is why I
choose social work over politics.

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