Book review: The reality of the American dream

Updated: June 24, 2012 - 4:11 PM

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THE PRICE OF INEQUALITY

By Joseph Stiglitz. Norton; 414 pages; $27.95.

The American dream is that any child can make it from the bottom to the top. That may still be true in politics. But it is much less true, in economic terms, than most Americans think. For example, three-quarters of Danes born in the lowest-earning 20 percent of the population escape their plight in adulthood. But fewer than six in 10 Americans do so.

Joseph Stiglitz, a Nobel Prize winner in economics, addresses this issue in his new book. To Stiglitz, this inequality is the result of public policy being captured by an elite who have feathered their own nests at the expense of the rest.

Imagine, he says, what it would be like if the world had free movement of labor, but not of capital. "Countries would compete to attract workers. They would promise good schools and a good environment, as well as low taxes on workers. This could be financed by high taxes on capital." Whether or not he has the right answers, Stiglitz is surely right to focus on the issue.

THE ECONOMIST