The great divide: Unequal societies and what we can do about them

The great divide: Unequal societies and what we can do about them. By Joseph E. STIGLITZ. New York, NY, W.W. Norton and Company, 2015. xxvi + 428 pp. ISBN 978-0-393-24857-9.

For decades the received wisdom among economists has been that there is a tradeoff between efficiency and equality. This is now increasingly challenged by mainstream economists, including Piketty, Atkinson and researchers at the IMF and the OECD. A prominent economist who has long criticized the supposed trade-off is Nobel Prize winner Joseph Stiglitz. His new book - summarized by its title, The great divide - contains a collection of essays and columns which, in a variety of ways, make the basic point that inequality hurts economic growth instead of supporting it.

There are several channels through which inequality negatively impacts the economy. First and foremost, since people with high incomes consume relatively less of their income than people with low incomes, inequality depresses aggregate demand. Second, poorer people have insufficient resources to educate their children (i.e. "invest...