Joseph E. Stiglitz, a 2001 Nobel Prize winning economist, in this book targets numerous examples of economic activity/policy what lead to consequences incompatible with America's self image as the "land of opportunity." All through the book he points out needless inefficiencies that are embedded in our banking, tax and legal codes. And with each problem cited there's an existing interest group lobbying and making political contributions to assure that no changes are made to endanger these structural inefficiencies found throughout our economic system.
The end result of the present situation is the United States has the largest and growing rich-poor gap among industrialized countries. According to Stiglitz this inequality brings stagnation and dormancy to our economy. It's interesting to note that the previous peak in American economic inequality came in the 1920s immediately before the Great Depression. The United States also provides the least equality of opportunity for economic advancement when compared to other wealthy industrialized countries (i.e. the percentage of people born into a low economic status that end up in a higher economic class.) This in the land that is supposedly the "land of opportunity."
Stiglitz repeatedly criticizes the overblown American financial system and the "too big to fail" banks. The following quotation offers a concise description of the 2008 financial bailout of the large financial institutions:
"Never before in the history of the planet had so many given so much to so few who were so rich without asking anything in return."
It's interesting to note that the financial industry accounts for approximately half the wealth in the United States. It follows that the so called "real" economy lags far behind. In other words, half our wealth is found in paper and pixels. Aren't those the ingredients of a bubble?
I was particularly pleased to find that Stiglitz noted something about the state of our economy that I had noticed myself before reading this book. It is the observation that we have a "demand" problem, not a "supply" problem. In other words, we could give all that tax breaks imaginable to the wealthy and no increase in business spending would result because there's no unfilled demand for goods and services that are currently unmet. The demand is not there because middle class wealth gains were eliminated by the 2008 recession while at the same time the wealth of the top economic tier has tripled since 1980. Ironically, American businesses currently have historically high cash balances. The principle incentive for businesses under the current conditions is to invest in automation, computers and robots to enable them to survive with fewer employees--thus insuring a jobless recovery from the recession.
My review probably sounds pessimistic, but Stiglitz is surprisingly upbeat by proposing solutions. Do any of our lawmakers read books such as this? All I can do is to hope so.