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The Price of Inequality: How Today's Divided Society Endangers Our Future by [Stiglitz, Joseph E.]
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The Price of Inequality: How Today's Divided Society Endangers Our Future Kindle Edition

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Length: 449 pages Word Wise: Enabled Enhanced Typesetting: Enabled
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A forceful argument against America's vicious circle of growing inequality by the Nobel Prize–winning economist.

America currently has the most inequality, and the least equality of opportunity, among the advanced countries. While market forces play a role in this stark picture, politics has shaped those market forces. In this best-selling book, Nobel Prize–winning economist Joseph E. Stiglitz exposes the efforts of well-heeled interests to compound their wealth in ways that have stifled true, dynamic capitalism. Along the way he examines the effect of inequality on our economy, our democracy, and our system of justice. Stiglitz explains how inequality affects and is affected by every aspect of national policy, and with characteristic insight he offers a vision for a more just and prosperous future, supported by a concrete program to achieve that vision.

Product details

  • Format: Kindle Edition
  • File Size: 1500 KB
  • Print Length: 449 pages
  • Publisher: W. W. Norton & Company; 1 edition (11 June 2012)
  • Language: English
  • ASIN: B007MKCQ30
  • Text-to-Speech: Not enabled
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  • Word Wise: Enabled
  • Screen Reader: Supported
  • Enhanced Typesetting: Enabled
  • Average Customer Review: 5.0 out of 5 stars 2 customer reviews
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I have no economics background at all so I found it was quite hard to read, but it was worth it. It gave voice and numbers to the feeling I've had that something is amiss in our system. A thoroughly informative and interesting book.
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Joseph Stiglitz has really described how it really is for us. First class, persuasive material.
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Most Helpful Customer Reviews on (beta) (May include reviews from Early Reviewer Rewards Program) 4.4 out of 5 stars 488 reviews
9 of 9 people found the following review helpful
5.0 out of 5 stars The Great Depression should have proven that 14 June 2016
By S. Freeman - Published on
Format: Kindle Edition Verified Purchase
Superb book. This is a careful, very detailed dissection of all of the arguments for a society to allow development of the kind of extreme distribution of wealth the U.S. has allowed to occur over the past 35 or so years--since Reagan instituted policies designed to wreck our economy and basically destroy the nation. That may sound harsh, but the truth is no nation can survive concentrating tremendous wealth in the hands of a very small portion of the population. That might have worked 200 years ago, but it cannot work in a modern society. The Great Depression should have proven that, and did to every knowledgable, thinking person. The only people who believe the lies being perpetrated by the plutocracy are their paid mouthpieces and the ignorant (meaning lacking knowledge, not stupidity) people duped by their lies.
4 of 4 people found the following review helpful
5.0 out of 5 stars Insightful Read 10 March 2015
By M. Thompson - Published on
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Provocatively written with a rich reference of data and research, this book is a great example of a neo-Keynesian assessment and critique of the economy.

The central theme of The Price of Inequality: How Today’s Divided Society Engenders Our Future, written by Colombia professor, winner of the Nobel Prize of Economics, and overall economic wizard, is that political and economic forces have shaped and reinforced the extent to which concentration of income at the top is created and protected by certain institutions in which the richest members of society exert considerable influence in the creation and implementation of public policies. This book is a significant contribution to the policy debate on the real cost of inequality in income and opportunity.

One of the main arguments Stiglitz makes is that deregulations and the unrestrained powers of the market have given rise to an unjust and inefficient economic system. Throughout the book Stiglitz extends and enhances a political economy argument the essence of which is that government policies, instead of market forces alone, are responsible for the forming and perpetuating inequalities in income. In a neat outline format, the author identifies the underlying causes of the recent corrosion in income distribution to ideologically-driven measures of right wing politicians and economists to dismantle government programs and regulations that were instrumental in addressing the problems of excessive inequality in income and opportunity.

Amongst the well-cited material enclosed in the book, Stiglitz discusses the forces and policies that are largely responsible for concentration of income at the top of the distribution pyramid and the significant loss of opportunities for the middle and low income household incomes. These include inadequate financial sector regulations, weakening corporate governance, creation and protection of massive subsidies for the rich, tax loopholes, rents and monopoly profits, and elimination of government programs that aided poor and middle income people have a fair shake in life. As the data shows, most of these factors created huge rent for the rich but with limited economic opportunities for the rest of the population. Disappointingly, the economic rent for the rich was created and in fact protected by our own government and its polices as well as various political institutions that were constructed to sponsor the interests of the rich.

The book argues from a political economy perspective how government policies and deregulation measures marginalized the interests of middle and low income families. Rent seeking behaviors of the super-rich and their united effort to purchase influence in politics are driving forces of inequality where the rich use their economic prowess to shape politics and economic policies to their own economic interest. Market forces, the book describes, function within a socio-political environment and their outcome is influenced by the effectiveness or failure of government policies to bring about a rather robust and equitable economic system. The morale of the argument is that addressing the problems of inequality on a sustainable level requires the reformation of political forces and government policies that give rise and sustain them.
The issues of income distribution and inequality have been used by both the Left and Right aisles of the ideological schism as weapons: the Right considers inequality as an unintended consequence of a market system that rewards economic agents according to their respective contribution to the economy (which Stiglitz argues is rather hard to measure: a person’s contribution). The mantra is that so long as income inequality is the reflection of inequality in capability, there is nothing wrong about it except encouraging economic agents to improve their capabilities through their own efforts and investments. The Left, with which Professor Stiglitz identifies himself, rejects this notion and argues that market failure is pervasive and income concentration at the top hardly reflects the contribution of those economic agents involved in economic output and social outcome. Inequality instead, Stiglitz argues, deprives society of realizing its economic and social potentials and condemns those with limited opportunities to accept absolute poverty as a fact of life. Atta boy Stiglitz!

Government policies are necessary to correct market failures and mitigate excesses by powerful and rent-seeking portions of society.
Professor Stiglitz argues that the rich persuades the middle class to see the world in a distorted way that confuses their own interests with that of the rich (false consciousness/ideological control). This idea that the top one percent somehow made the non-one percenters share its perception and does not know its economic interest and choices is indeed fathomable. Perception and “intellectual capture” have strong influence and the rich have the incentive, resources and motivation to shape the perception of the masses to its advantage through the influence of the media, public institutions and other arenas.

The disenfranchisement of the middle class and it subsequent alienation from the political processes is an issue that would impact its present and future economic and social interests. The median voter is richer than the median income earner in the United States. The battle of ideas, should then sensibly focus solely on empowering the middle class to appreciate and exercise its political rights and social responsibilities.
The price of inequality is very closely related to the price of civilization that requires members of society to exercise their rights as well as responsibilities in line with certain social objectives. The American electorate seems to be almost equally divided, according to Stiglitz and he admits the failure of the political and electoral processes and suggests following the examples of Australia, Belgium and Luxembourg, where the electorate is accommodated to vote during elections.

Stiglitz concludes the book with an idea of reform agenda that covers both economic policy and political reforms that could make the current economic system more efficient, generate jobs, and addresses the problems of inequality.
Professor Stiglitz has managed to elevate the scope and depth of the discussion of inequality a step further and encourages readers to observe the challenges of inequality from a new and more informed perspective.

Way To Be Jo!
4 of 4 people found the following review helpful
5.0 out of 5 stars A MUST READ!!! 14 October 2015
By Bruninghaus - Published on
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Mr. Stiglitz book "The Price of Inequality" is a MUST READ for anyone interested in truly understanding why our country will continue to be in decline as long as certain right-leaning politicians and economists run America into the lower echelon of countries with their outdated, self-serving and incorrect theories on the economy. I will be reading all of Mr. Stiglitz' publications. He is a revolutionary thinker with FACTS to back up his assertions. What a concept!The Price of Inequality: How Today's Divided Society Endangers Our Future
3 of 3 people found the following review helpful
5.0 out of 5 stars Enlightening 13 January 2016
By rreader10 - Published on
Format: Kindle Edition Verified Purchase
Quite a scary look at the development of a plutocracy in the U.S. His discussion of the bank bailout gives a classic example of how deeply corrupt the system is.

Personally, though, I would have liked to have seen more specific examples of some of the points that he makes, especially with regard to the role of the media

He seems to have made a conscious effort to make the subject more understandable to the general reader (the non-economist), being conscious that it really is a subject that everyone needs to hear about.
3 of 3 people found the following review helpful
5.0 out of 5 stars Very good and very important book for all countries both developed and developing 26 February 2014
By Vladimir Shper - Published on
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The main ideas:
Markets are neither efficient nor stable (as they are supposed to be); our political and economic systems are fundamentally un-fair. We created the system of "one dollar – one vote" instead of "one person – one vote". We created the system in which "…"justice for all" is being replaced by …"justice for those who can afford it"" "America is no longer the land of oppor-tunity". All this is the price we are paying for inequality which was growing steadily in the last twenty years. The author gives a lot of examples and data on inequality in America. E.g.:
- one out of six who would like to have a full-time job still couldn't find one (p.1);
- 8 million families had been told to leave their homes (ibid);
- By 2007 … the top 0,1 percent of America's households had an in-come that was 220 times larger than the average of the bottom 90 percent (p.2)
- the ratio of CEO annual compen-sation to that of the typical worker by 2010 was … 243 to 1 (p.3);
- in 1980 out Gini coefficient was just touching 0,4, today it's 0,47 (p.23);
- AIG got more than $150 billion – more than was spent on welfare to the poor from 1990 to 2006 (180); etc.
What is the cause of this inequality? Stiglitz's answer: this is the theory which is called "marginal productivity theory": "those with higher productivities earned higher incomes that reflected their greater contributions to society. Competitive markets, through the laws of supply and demand, determine the value of each indi-vidual's contributions" (p.30). The major theme of the author is that nowadays this theory is a Utopia. "…inequality depends on the distributions of "endowments," of financial and social capital" (p.31). And this distributions depends highly on the government policy which creates the rules of the game. "There are two ways to be-come wealthy: to create wealth or to take wealth away from others. The former adds to society. The latter typically subtracts from it" (p.32). All next chapters are de-voted to detailed explanations of how this process is going in America and what are the arguments of those who defend the existing rules of the game. And "America has a government of the 1 percent, by the 1 percent, and for the 1 percent".
Some important notes.
Stiglitz labels the numerous ways by which current political system helps the rich at the expense of the rest as rent seek-ing. "Countries rich in natural resources are infamous for rent seeking activities".
"…one can't really separate out any indi-vidual's contributions from those of oth-ers" (p.78).
Many in business sector are craving for profits "they might garner now". They think of their narrow short-term self-interest (p.90).
CEO's do not earn the money they get - they redistribute them in their own favor.
GDP is a bad metric because when it arises the country's wealth may diminish and the wealth of the 99 percent may worsen.
"The level of real per capita GDP … and the rate at which it is growing, is not a good measure of success" (p.183).
"Individuals can often be better motivated by intrinsic rewards – by the satisfaction of doing the job well – than by extrinsic rewards (money). To take one example, the scientists whose research and ideas have transformed out lives in the past two hundred years have, for the most part, not been motivated by the pursuit of wealth" (p.112).
"…the kinds of incentive pay schemes employed by many corporations, while they create more inequality, are actually counterproductive" (p.114).
Inequality lowers trust, and only those economies flourished where there was a higher level of trust. People must feel con-fident that they will be treated well, with dignity, fairly. Then they recipro-cate…(p.122). "… the financial markets' interests frequently do not coincide with those of the country. The markets are shortsighted and have a political and eco-nomic agenda that seeks the advancement of the well-being of financiers rather than that of the country as a whole" (p.139). etc.
So what Stiglitz suggests?!
- Reducing the rent seeking and lev-eling the playing field (first of all by curbing the financial sector and by tax reform);
- Helping the rest (through changes in the system of education, sav-ings, health care, social protection, control of employment).
"Is there hope?" - asks the author in his last chapter? And answers: "Four years ago there was a moment where most Americans had the audacity to hope. Trends more than a quarter of the century in the making might have been reversed. Instead, they have worsened. Today that hope is flickering" (p.290).