The Great Divide: Unequal Societies and What We Can Do About Them
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In the face of rising inequality in America, Joseph E. Stiglitz charts a path toward real recovery and a more equal society.
A singular voice of reason in an era defined by bitter politics and economic uncertainty, Joseph E. Stiglitz has time and again diagnosed America’s greatest economic challenges, from the Great Recession and its feeble recovery to the yawning gap between the rich and the poor. The Great Divide gathers his most provocative reflections to date on the subject of inequality. As Stiglitz ably argues, a healthy economy and a fairer democracy are within our grasp if we can put aside misguided interests and ideologies and abandon failed policies. Opening with the essay that gave the Occupy Movement its slogan, “We are the 99%,” later essays in The Great Divide reveal equality of opportunity as a national myth, show that today’s outsized inequality is a matter of choice, and explain reforms that would spur higher growth, more opportunity, and greater equality.
as China restructures its economy away from export-led growth toward services and household consumption. Clearly, there is room for growth in private consumption; but embracing America’s profligate materialist lifestyle would be a disaster for China—and the planet. Air quality in China is already putting people’s lives at risk; global warming from even higher Chinese carbon emissions would threaten the entire world. There is a better strategy. For starters, Chinese living standards could and
somewhat, at the margins. But it was not until government spending soared in preparation for global war that America started to emerge from the Depression. It is important to grasp this simple truth: it was government spending—a Keynesian stimulus, not any correction of monetary policy or any revival of the banking system—that brought about recovery. The long-run prospects for the economy would, of course, have been even better if more of the money had been spent on investments in education,
economy, real stimulation was left to the Fed, which took up the task with unprecedented low-interest rates and liquidity. The war in Iraq made matters worse, because it led to soaring oil prices. With America so dependent on oil imports, we had to spend several hundred billion more to purchase oil—money that otherwise would have been spent on American goods. Normally this would have led to an economic slowdown, as it had in the 1970s. But the Fed met the challenge in the most myopic way
of Goldman Sachs, Lloyd Blankfein, made it perfectly clear: sophisticated investors don’t, or at least shouldn’t, rely on trust. Those who bought the products his bank sold were consenting adults who should have known better. They should have known that Goldman Sachs had the means, and the incentive, to design products that would fail; that they had the means and the incentive to create asymmetries of information—where they knew more about the products than the buyers did—and the means and the
leading hospitals, research universities, and advanced medical centers. But, though the U.S. spends more per capita and as a percentage of its GDP on medical care than any other country, its health outcomes are truly disappointing. American male life expectancy at birth is the worst of 17 highincome countries—almost four years shorter than that in Switzerland, Australia, and Japan. And it is the second worst for women, more than five years below life expectancy in Japan. Other health metrics