FOR STIGLITZ, THE WEALTH GAP AUGURS ILL FOR DEMOCRACY
1 per cent owning more than a third of the nation’s wealth’’.
For Stiglitz, the broadening of the wealth gap augurs ill for democracy, and he traverses the many ways the social compact is unravelling under the pressure of two nations emerging in the US.
At some stage in his analysis, if Stiglitz is to distinguish himself from the critics who focus on the moral aspect of the disintegration of the US, he has to put his economic stamp on the sources of inequality. He realises this and notes: ‘‘ We all grapple with the question of how the high and growing inequality in the US can be explained.’’ Having made this cogent point, Stiglitz must be judged on the efficacy of his response to his own question.
As it turns out, the lack of a rigorous theory of free market economics permeates this book. Stiglitz is a refined liberal but, strangely, he has nothing to say on the deeply ambivalent relationship of liberalism and the unequal distribution of wealth. In essence, he fails to canvass how the classical liberal thinkers justified the inequalities of market societies. traveller must submit / to the twin powers / of commerce and tedium.’’
And so on, through all the things we know about, unredeemed by language or insight: the flight, the food, the discomforts (‘‘The seat in front of him lunges at him / but doesn’t quite touch’’), the landing, the taxi, the hotel room,
Sceptics will be underwhelmed by Stiglitz. They will take a leaf from classic liberals and argue that a market society is underpinned by freedom of contract and formal legal equality, and thus social justice prevails despite the unequal division of income and wealth.
Moreover, as all economic transactions are voluntary, some people accumulate more capital than others because of the choices they make and the endowments they possess to utilise resources and technology.
Stiglitz’s failure to engage with economic history is responsible for his incapacity to illuminate at a deep level how the rich might a nap, a short walk to a restaurant, a Scandinavian crime novel in the evening, the luxury of the bathroom next morning, a call from an ex-student, hope of a sexual encounter, a knockback, the conference types, the pompous papers, the bitching (Nonsense, the title of the book, is a fellow professor’s get richer because of the inherent structural features of a market economy. It is one of the disconcerting features of this book that a famous economist too often falls into the trap of issuing moral sermons on behalf of those on the downside of economic life instead of excavating the promethean forces that generate widespread inequality.
Stiglitz recognises that orthodox economic theory has to be interrogated in order to probe to the heart of inequality and the social poison that infects the fabric of American society. Yet, largely, he fails to explore the conceptual foundations of mainstream economics. The narrow ambit of his economic inquiry produces a restricted view of economic life. He makes the valuable observation that there is a lack of symmetry of information among economic actors. This is important because orthodoxy has thrived on claiming that equal information ensures a competitive climate for the price mechanism to create a rational allocation of resources. Stiglitz is right to note egalitarianism suffers when key information is the province of a privileged few.
The problem, though, is that he leverages the asymmetrical nature of market information to build a case that it is the fundamental dynamic underpinning inequality. According to Stiglitz, this is the phenomenon responsible for monopoly rent seekers who use their information aces to earn stratospheric incomes that widen the wealth gap.
In this scenario the information-poor are reduced to impecunious circumstances by a manipulative inner circle.The structural forces and evolution of the economy responsible for market distortions gets lost in the desire to blame lopsided information circuits and individual acquisitiveness for inequalities.
The upshot of Stiglitz’s analytical framework is to lay the blame for inequality and the economic crisis on an income distribution crisis. His cure is to wrench political dominance away from the economic elite that is bent on following policies that enrich themselves but at the cost of under-utilising human and productive resources that could spark a revival. He calls for the Washington legislative process to turn a deaf ear to the business lobbies bent on enacting the policies of the elite. It is time, he declares, for politicians to turn away from those promulgating what he terms the deficit fetishism credo that protects vested interest.
Stiglitz issues a clarion call to lift state expenditure and pay for it by raising taxes on the wealthy. He avers this would put the unemployed back to work and reduce glaring income inequality.
But his monocausal
omits judgment on what all his colleagues are talking about), dinner with a female academic with whom he’s had a conference affair, her lack of interest in resuming it, more conference and gossip, his having his say from the floor and not being able to communicate an over-subtle point, his escape and walk down to the waterfront, a beer in the sunlight there, looking out to sea, finding a momentary fulfilment. All of this is recounted in a guarded jaunty middle-class English manner.
Could it be such experience is meant to convey an unspoken sense of emptiness? What is being risked, though, is the imitative fallacy. Should a poem about chaotic feelings, for instance, be itself formless and chaotic? Mimesis is a fundamental technique of poetry, but it can be abused. For instance, Tennyson’s ‘‘ the murmuring of innumerable bees / in immemorial elms’’ seems rather comic — produces a tolerant smile for its selfconsciousness. Does Reid’s poem about numbed feelings get away with its own numbness? Reading it in some moods it seems mention of the continuing role of American business in stripping out excess capacity and restructuring in order to move labour out of sectors that are suffering from overcapacity and how this approach offers a better hope of eventual growth in employment and shrinking the income divide than government intervention. Technical progress and rationalisation combine to produce higher productivity and this opens up the prospect for a new phase of economic growth.
Almost every proposal put forward by Stiglitz has its lineage in the great British liberal inter-war economist John Maynard Keynes. Only Keynes had a prodigious mind and a vision to match: he went far beyond focusing on income distribution issues when the Great Depression struck; he was alert to systemic problems that could have a long-term impact on market efficiency.
Stiglitz’s recipe for economic ills is basically more of the fine-tuning monetary measures that collapsed into stagflation in the 1970s and resulted in the triumph of neoliberal policies. He sidesteps the bolder vein in Keynes’s thinking that noted banking and finance channels could experience a funding crisis due to being drained by bad debts accumulated by the type of speculative mania the world economy has just experienced.
And if speculative finance wreaked havoc, Keynes understood that profitable production would experience a crunch on its credit lines and that government would need to step in to provide the capital investment necessary for protecting jobs and incomes.
Stiglitz is not in Keynes’s league but he has an uncanny gift for promoting ideas that opinion-makers run with. As Britain deals with a deep recession and inequalities approaching Victorian levels, Deputy Prime Minister Nick Clegg has spoken of an economic war that requires a wealth tax to make sure the pain is shared around and a rupture to social cohesion avoided. Clegg is singing from the Stiglitz hymn sheet.
As the Australian mining boom cools, interesting economic and political times loom. Treasurer Wayne Swan has already leaned on Stiglitz to rail against the mining magnates and their rent-seeking proclivities while declaiming about the pernicious nature of the effect of Australia’s top 0.1 per cent on our inequality issues. If the economy experiences a slump and talk of sharing the pain comes into vogue in Australia, Swan and those who share his agenda now have a freshly minted book from Stiglitz to aid their crusade. almost daring; at other times, it feels so recessive as not to have much effectiveness at all. Is that beer to be considered a sufficient point to the poem (unpretentiousness, the value of commonplace experience), or is the lack of point its larger point?
The rest of Nonsense consists of a short series of music hall songs, as if from World War I, which are not at all catchy, and a collection of lyric poems ‘‘ celebrating everyday experience’’, the jacket blurb says, which would appear to contradict my interpretation of Professor Winterthorn’s Journey as having a suppressed, although negative, passion to it. The short poems are in their blandness similar to the main poem, but are clearly not part of some larger end.
If what I have conjectured, then, is not the conscious intention of Professor Winterthorn’s Journey, nevertheless, it is not unusual for a work to be wiser than its author.
A businessman averts his eyes as he walks past a homeless woman in New York City
The poet evokes the tedium of a long-haul flight