Outline of The Price of Inequality


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Outline of The Price of Inequality

  1. 1. A Review of Joseph Stiglitz's The Price of Inequality EDISON E. EASTON
  2. 2. Stiglitz BELIEVES... 1.We should strive for... Equality of opportunity Growth & equitable distribution 2.Reasonable competition with full costing 3.Politics shapes income & wealth & inequality 4.The rich shape politics significantly 5.Greater inequality means less growth
  3. 3. MAKING AN UNEQUAL SOCIETY 1. Politics shapes unearned wealth 2. Financial income taxed more lightly 3. 73% of the top 1%'s income is financial 4. Subsidies increase business profits of wealthy 5. Subsidies cause “misallocation”of resources
  4. 4. MARKETS AND INEQUALITY 1. European countries have less inequality 2. They provide more security for worker 3. Weaker unions – smaller share of income 4. Jobs overseas – lower wages, lower skill levels --and advancing technology 5. Stagnant pay & influence – greater inequality
  5. 5. IMPACT OF TAXATION 1. Wealthy aided by top rate down from 70 to 35% 2.Top 10% received 90% of LTCGs; 90% -10% 3 Top 400: 73% of income from LTCGs, div's, int 4.Top 1%'s top rate down from 37 to 29%;avg 22 5. Corporate tax –from 30% to 9% of Fed revenue 6. Estate exclusion for couple from 2 to $10.5 mil 7. 60 to 75% of recent growth to top 10% 8. Inequality determines degree of opportunity, etc
  6. 6. WHY IT MATTERS 1.Lobbies shape policies for rich, not public good 2.Rich tax cuts: no stimulus, enlarged debt 3.Resources allocated to top, lessening demand 4.More to financial sector: 20 to 40% of US profits 5.Fed concentrates on inflation & finances, not on unemployment 6.Financial reg's half finished & 5 banks too big to fail
  7. 7. A DEMOCRACY IN PERIL 1.Politics seems dominated by corp's & the rich 2.Little influence at the bottom in the US 3.Less equity, less trust, less compromise 4.State capitalism more decisive, less stagnation 5.US democracy needs less inequality, easier voting, limited contributions, corporations treated as businesses—not as people
  8. 8. MISLEADING PERCEPTIONS 1. Inequality not significant, perhaps helpful 2. Markets w/o regulation are efficient 3. Work hard and success is yours 4. The rich help with investments and charity 5. Austerity necessary to lower debt and establish a healthy business climate to help all
  9. 9. ERODING THE RULE OF LAW 1. Unregulated pollution causes health problems 2. Mortgages issued w/o accurate, pertinent info 3. Bankruptcy amendments favored lenders 4. Foreclosures w/o negotiations or hearings 5. Banks – not bankers – have been indicted 6. Tax evasion in many forms
  10. 10. THE BATTLE OF THE BUDGET 1.Stimulus comes thru tax cuts &/or spending cuts 2. Helping poor is helping the lazy 3. Austerity will bring recovery 4. Biggest problem is lack of Demand (sales) (demand increases with income) 5. Need increase in top rates, LTCG rates,elimination of subsidies & loopholes 6. Govt. should borrow & invest in infrastructure
  11. 11. NEEDED CHANGES 1. Recognize that pure competition would take a long time to be effective 2. Keynes: “In the long run markets may work well, but in the long run we are all dead.” 3. Incomes should reflect contributions to output 4. Higher standard of living will increase stability 5. More equitable, effective taxation & financing 6. Full, skilled employment & greater D are crucial