“The Price of Inequality” by Joseph E. Stiglitz: Law School Reaction Paper
[I submitted this paper on September 12, 2017 in response to the book “The Price of Inequality” by Joseph E. Stiglitz (Chapters 1, 4, 7 & 10) for a law school seminar called “Class and Inequality”.]
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In his criticism of the Right’s claim that poverty in America is not “real” poverty because people have TVs and air conditioners, Stiglitz could have gone a step further. I would like to see statistics on low-income access to adequate health care e.g. average distance to hospitals in America as compared to India and China (the countries he gives as examples). This reflects how important perception is. Just today I read an article on the New York Times about perception of class in America. Wealthy New Yorkers want to be seen as ordinary Americans, so they remove tags on goods that they buy so that their lower income nannies do not have to see it. Does this point to a larger cultural problem? Focus on material wealth may distract us from the real (invisible) sources of inequality in America. For instance, Stiglitz provides a calculation of what would be left for a family with a single parent earner. His words are particularly salient in the wake of Hurricanes Harvey and Irma: “[i]f something goes wrong, there simply is no buffer.” These are the families that must stay back and risk their lives in the event of a natural disaster.
Stiglitz provides a lot of concrete examples and empirical evidence to support his claims. For example, his discussion on the governmental regime of estate taxes illustrates how laws are designed to keep wealth within families and make it difficult to access for those outside. This reminded me a lot of my 1L summer job. I was working at a civil legal services provider in New York City, representing clients whose federal disability benefits had been terminated or whose application for those benefits had been denied. For those receiving Social Security Insurance (who have insufficient or no work history and therefore have not paid into Social Security), the household cannot have more than $2,000 at any one time. This makes it impossible for a family to climb the social ladder. Such severe restrictions mean that people are limited in how much they can earn. If they earn just above the requirements, they risk losing the benefits that come with public assistance, such as child care and food stamps, but they would not be able to afford those services on their new salary.
My biggest qualm with Stiglitz’s positions in this reading is the normative judgment he puts on the financial industry. Is this because of the financial crisis? He decides that a valuable way place to innovate would be, for example, medicine. Surely, this improves people’s health e.g. life expectancy. But is this necessarily what is in the best interest of society? People are living longer, but this also means many elderly are left alone in retirement homes without family who visit them. People are bombarded with advertisements for prescription drugs for every possible symptom under the sun, instead of being encouraged to live healthy lifestyles. It could be that the issue is more that people are not investing money into their communities. If all these financial analysts used their accumulated wealth for altruistic purposes, then would Stiglitz see their value differently? If yes, is the root of the issue he identified not ultimately cultural? Maybe European countries that he looks up to as examples may just have cultures that are more community-oriented, where the focus is less on wealth accumulation, and more on well-being.
I read the section in Chapter 7 on student loans from my perspective as a law student. Law school is the perfect illustration of manifested class inequality. The barriers to entry are extremely high. You must have performed well in college, but most importantly you must have scored well on the LSAT (especially for top schools), both of which are directly correlated to wealth. As Stiglitz’s section on bankruptcy law makes clear, access to loans is (almost too) easy. Therefore, barriers must be created after the fact. In California for instance, the bar passage rate is about a third, partly because there are many non-accredited law schools. This means thousands of students put themselves in debt without a guarantee that they will even be able to practice law in the future, let alone earn enough to pay off those debts. This is just another example of an area where the government could intervene in private market forces, in the interest of creating a more equitable society.
As a side note, I was a little skeptical at Stiglitz’s claim that there is less opportunity in American society now than in the past. This type of claim makes clear the importance of method in quantitative studies. How can we compare statistics now to a time when there were whole factions of society that didn’t count as full citizens (women, Black Americans)? Stiglitz even encourages us to think critically of other statistics. For instance, he points out that incarceration distorts unemployment numbers. I had never thought about it that way.
Ultimately, this week’s reading has demonstrated how relevant Marx’s focus on exploitation still is. Whether it’s on a global scale with the depression of wages resulting from a worldwide labor market, or racial discrimination in the workforce in the United States, power exists in the hands of few to control many. I believe that the beginning arch of some type of class consciousness arises until those few in power tweak power structures just enough that they look like long-term changes. No example is as illustrative of this in my mind as Michelle Alexander’s theory that mass incarceration of predominantly Black men in America today is just a repurposed Jim Crow regime, which is itself repurposed slavery. Stiglitz talks at one point about a large amount of people in America having felt the illusion of access to the American Dream through the housing bubble, until that bubble burst. I had not thought about this while reading Atkinson, but surely this is the type of world event that Marx would have seen as the source of an inevitable class consciousness. Is the election of Donald Trump a manifestation of that class consciousness? After all, whether Trump was objectively a good choice for the interests of his voters seems irrelevant.
