Students, faculty, staff and members of the Salt Lake City community had the opportunity to hear Joseph Stiglitz speak on September 27 on the “great polarization” and “America’s Growing Inequality”. The lecture emphasized the facts and figures that show inequality, diving into why it occurs and then concluding with potential solutions. His discussion began by addressing why he entered economics in the first place. After growing up in Gary, Indiana, a city centered on the steel mill, he had observed inequality for too long and wanted to understand why it occurred. His interest in inequality was piqued when upon returning to Gary years later, he saw that the inequality had become worse rather than better when left to the United State’s economic policy of “leaving it to the market”. He wrote an article titled “Of the 1%, by the 1%, for the 1%” that was featured in Vanity Fair. The article touched largely on the next portion of his talk: the harsh realities of our current economic position.
In his own words, “economic laws are not completely set in stone”. The interpretation of this statement is that no matter what economists predict, too many other factors can influence the course of economics to get a clean-cut prediction of the future. Many things influence inequality: income, wealth, health, justice, and access to opportunities, all of which are interrelated. To begin, Stiglitz illustrated some of the income inequality in the United States with a graph showing the increase in average income. The increase for the top 1% of the US population was large and clearly visible while for the bottom 90%, “you [would] need a microscope” to see. He then inspected median incomes showing that it has stagnated over the past forty years.
While it may be easy to blame this on global inequality and it being this way for everyone, other countries, particularly China, can serve as an example of how to reduce inequality and introduce shared wealth. They were able to increase median income such that “they moved 740 million people out of poverty”. However, China, like the United States, also does not represent the world. Stiglitz even joked that “the world has gotten [very] efficient in producing inequality” with the “global middle class” excelling along with the top 1% leaving the bottom portion of the world and the middle and working classes of Europe and America to have drastic decreases in economic success. He used his discussion of global inequality to turn back to the other factors that influence inequality starting with health.
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Healthcare is vital to a successful nation. The US, “the only advanced country” that does not extend healthcare as a universal right, has experienced a decreasing life expectancy. He showed a particularly interesting graph that displayed mortality rates. While the mortality rates of people of color and women have been decreasing, the mortality rate of white males has increased. Stiglitz attributes this to “deaths of despair”: drug overdose, alcoholism and suicide, or a “social and economic disease” spreading across the United States. Stiglitz then turned to the inequality of opportunity showing that young Americans’ prospects at success come more directly from their parent’s financial success than the effort they put in themselves. Another particularly interesting graph compared inequality of opportunity to income inequality among advanced countries. Paraphrasing his exact statement, the laws of economics, such as laws governing globalization and technology, affect the people “north of our border” and in northern Europe the same way they affect us. Inequality of opportunity is not something we can blame on technology, but something we can blame on policy.
Coming back to a more monetary based discussion, Stiglitz touched on the other aspects that affect the economy. He again reiterated that the upper echelon of society is still considered when looking at raw data. This skews the results often showing that things such as labor shares stagnate when in reality, they decrease. He uses facts such as this and about capital and wealth to present an investment puzzle. The puzzle being that labor share has decreased along with capital share such that something has to increase.
Many different attempts have been made to explain why inequality has increased. First, Stiglitz mentioned a very specific explanation that there is a difference in savings rate based on one’s economic standing. This is not his personal theory as it makes many assumptions that Stiglitz proves as incorrect. He then dove into his own theory, a theory of distribution. In highly scientific terms, Stiglitz described that there must be balance between centrifugal forces and centripetal forces or what breaks and makes the economy. The movement between centrifugal and centripetal forces is what ultimately causes the inequality. Centrifugal forces can be considered in unequal tax rates and unequal public education from geographic segregation. His emphasis, however, focused on the growth of rents, the solution to his investment puzzle.
After a discussion on rents, Stiglitz connected rents to a decrease in the competitive nature of the market. In his opinion, no business would want a competitive market, as it would drive profit down. However, not only does this work as some “conspiracy against the public” but it also can be shown in actions taken against workers. The combination of taking advantage of both consumers as well as workers drives the power of the market. This is enhanced by instituted policy. To conclude, Stiglitz said, “Inequality is a choice”. The political policy for economics must change to reflect the changing economic laws. We must become anti-trust, anti-monopoly; we must rewrite the rules of globalization. Otherwise, we will be trapped, unable to escape the inequality.
I was thoroughly intrigued by the Stiglitz talk. As someone who has never spent a lot of time thinking about economics, the lecture was very accessible to me. I enjoyed his discussion of the union among income inequality with health and access to opportunity. He was able to make a very clear argument as to how these different inequalities are related and present strong evidence of the inequality that persists in the world. I did have trouble understanding his reasoning, however, about why inequality exists. His use of economic jargon in describing his theory as to the source of inequality made it harder for me to follow. At the end, I did feel as if I left the lecture informed and understanding of the changes that need to occur.
A couple of things struck me as particularly interesting. From a feminist perspective, the discussion about inequality was centered on males and therefore shows inequality in the observations themselves. While Stiglitz even addressed that the data just does not exist to include women and people of color in the United States, it would be interesting to see how including them would alter the results. An analysis of how women and people of color intersect with inequality of income, health and access to opportunities would be necessary to complete the picture. Further, I also noticed that in the discussion, all of the data focuses on advanced countries. In reality, approximately half of the world’s population lives on less than two US dollars and fifty cents (Shah).
Another way to round out Stiglitz’s analysis would be to incorporate data on where other cultural groups fit into the world. For example, are foragers included in his data? Or, are they included but not adjusted for their lifestyle? I think it would be very interesting to note on those groups. This would also change how we would need to go about changing our policies. Stiglitz’s solutions to fixing at least the United States’ inequality started with adjusting our policies around how inequality occurs. While I completely agree with him on how to solve some of the US inequality, it would likely need to be adjusted globally if it were to incorporate small-scale groups such as foragers. Overall, I was very interested in the lecture, so much so that I purchased one of his books that night.
