The Great Divide: Unequal Societies and What We Can Do About Them
By Joseph Stiglitz.
Reviewed By Brandon Wicks.
Once upon a time, not altogether too long ago, we talked about something called “class.” There was a lower and working class. There was an upper class. It was understood that these were different groups, with different amounts of power and different, often conflicting interests. Eventually, in the industrializing West, the chasm between these classes grew so great that something had to be done. In 19th-century Europe, workers formed unions and the modern welfare state was born. In the U.S., in the wake of the Great Depression, the New Deal massively expanded public-sector employment. After the Second World War, for the first time in history, the gap between the rich and poor shrank. These were essentially conservative developments. The minimum wage, the eight-hour workday, progressive taxation – all this arose, in part, to ward off the threat of revolution as the Soviet Union loomed and anarchists set off bombs. For the upper class, it was adapt or die, possibly literally.
We don’t talk much about class anymore. Beginning under Richard Nixon, Republicans in the U.S. launched the culture wars, decoupling class from income. Working-class values, oddly, became right-wing values. “Elite” came to denote aesthetics rather than wealth.
In the Reagan-Thatcher years, the assault on the welfare state, the war on organized labour and the dawn of neoliberal globalization began to undo the fleeting progress of the postwar era. This model was exported to most of the West. Now, the only class we mention is the middle class, because, as polls indicate, nearly everyone, no matter how rich or poor, considers herself a part of it. Instead, we use another term: “income inequality.”
There have been a lot of books about inequality lately. This can be traced to three interconnected phenomena: first, the Great Recession; second, the Occupy movement, after which mentions of “income inequality” spiked in the news media; and third, last year’s English-language publication of Thomas Piketty’s Capital in the Twenty-First Century, a dense tome that became an unlikely bestseller. Everyone now understands that the gap between rich and poor is widening, that low and median incomes have stagnated or declined, and that the vast majority of wealth is concentrated at the very top.
In the United States, as Piketty famously documented, economic disparity has returned to levels not seen in a century; in places such as China and India, it has skyrocketed even as standards of living have improved, with the fruits of growth going to a select few. But there is a curious tenor to this discussion. In a recent New Yorker essay, the historian Jill Lepore identified it: “In the first Gilded Age, everyone from reporters to politicians apparently felt comfortable painting plutocrats as villains; in the second, this is, somehow, forbidden.” Our tale has no bad guys.
Is this starting to change? The language of Occupy – the 99 per cent versus the 1 per cent – avoided the supposedly Marxist overtones of “class” even as it divided the rich from the rest of us. Former chief economist of the World Bank and Nobel Prize-winner Joseph Stiglitz unwittingly gave birth to this slogan in a 2011 Vanity Fair essay called “Of the 1%, by the 1%, for the 1%,” which is included in his new collection, The Great Divide: Unequal Societies and What We Can Do About Them.
Early in the book, he describes a party hosted by “a bright and concerned member of the 1 per cent.” The host had brought together an assortment of plutocrats worried about inequality – but not too worried. “I overheard one billionaire – who had gotten his start in life by inheriting a fortune – discuss with another the problem of lazy Americans who were trying to free ride on the rest,” Stiglitz writes. “Soon thereafter, they seamlessly transitioned into a discussion of tax shelters, apparently unaware of the irony.”
For Stiglitz, this encapsulates the problem. Here, the chief villains are the plutocrats whose astronomical wealth have isolated them from the realities of daily life, as well as a political class that has not just allowed this concentration of wealth, but actively encouraged it. But none of this would have been possible without a broader ideological shift, which, in the US at least, resulted in truly poisonous measures: tax cuts for the rich so extreme that they actually became regressive; a deregulated banking sector that turned profits from predatory lending practices into galling CEO performance pay; and, of course, a financial crisis from which the country has yet to fully recover.
“As has been repeatedly observed,” Stiglitz points out, “all of the economic gains since the Great Recession have gone to the top 1 per cent.”