Book Review: Stiglitz The Price of Inequality – Chapters 6-10August 19, 2013 by Gavagai

Stiglitz, Joseph E. 2012 The Price of Inequality: How Today’s 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 Stiglitz’s 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 don’t 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 Stiglitz’s 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

doesn’t 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 don’t 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 audience’s 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, Stiglitz’s use of rhetoric is much in line with

the view defended by Socrates in Plato’s 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 Stiglitz’s 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 Stiglitz’s claims

and arguments as a whole. The author states,

[Stiglitz] apportions a great deal of ink to the gaping holes inherent to overtly right-

leaning 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 Stiglitz’s 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. It’s 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 can’t 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 don’t 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.