The Price of Inequality

This chapter shows how the US political system fails to correct the problems of an unequal economic system and contributes to inequality. Laws like the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 were meant to stave off another Great Recession but did not “far enough,” as federal regulators did not ever fully punish the banks for their fraudulent (and sometimes criminal) conduct. Stiglitz also examines the “economics and politics of voting itself” (119) to see how the rules of the political and economic “game” are controlled by the 1 percent. In so doing, he presents six factors that undermine voting in America.

First is the “voting paradox.” Many people think the system will not work for them, so they do not vote, while those who believe the system will work, and who can invest money into the political system, do vote. This kind of “voter disillusionment” deepens when voters see that they lack the resources to shape the political system toward their interests.

Second, with the inequality and market failures that led to predatory behavior from the banks (e.g., charging usury interest rates on credit cards), trust in the system has fallen so far that if inequality is not managed, it could lead to social conflict.