The Price of Inequality

This chapter sets out a series of reforms that Stiglitz believes can mitigate the fact that “America is no longer the land of opportunity” (267). Inequality has taken its toll. The current economic model is not based on how a person at the top contributes to society, even though many do more than make money from rent seeking alone. If America is to be more equal, and if others besides the poor and the 99 percent are to pay the price for inequality, then reform is needed. Stiglitz’s suggested reforms are not based solely on output (GDP) but on indicators that can show standard of living and sustainable growth.

The first group of reforms is designed to limit excess at the top by ending rent seeking and downsizing the financial sector to give all Americans a chance. The reforms will end the worst banking practices (e.g., predatory lending), make banks more transparent, limit bonuses, close offshore banks to keep capital at home, enforce competition laws (e.g., ending monopolies and unfair competition), improve corporate governance (e.g., making laws that keep CEOs from funneling money to themselves), end corporate welfare by closing loopholes, and make legal reforms that ensure everyone can have their day in court.