Bullet Point Book Review #3

Book title: People, Power and Profits
Author: Joseph Stiglitz

Some takeaways from the book that capture some of the main ideas. Follow me on Twitter for bite-size insights from the books I read: https://twitter.com/PnP_Science

Unfettered Capitalism left on its own will, by design, create rampant inequality. If managed properly, it can bring a decent, fulfilling life for everyone.

• GDP is a skewed and therefore misleading metric to gauge the health of an economy and the wealth of its people. When the income of the top 0.1% rises with 10%, GDP could be increased by 1% overall, while the rest of the population sees no growth at all. This dynamic, which has been in place since the 1980’s is not a sign of a healthy economy: The realmedian income of a male worker has stagnated over the past 40 years, all the while GDP per capita has doubled.
• The Challenge Of New Technologies: One thing that has been on people’s minds, especially with the release of ChatGTP, has been the mass replacement of workers by machines. If done too excessively — something that many employers having to pay high labour costs would argue for — , there won’t be enough buying power left in the economy to consume the machine manufactured goods. This is in direct opposite of Ford’s reason of giving his employees higher pay: so they could actually afford the cars they made.
  This dynamic happened right before the Great Depression, where farmers lost a lot of pricing power in the goods they sold due to technology improvements. As a result, buying power for the goods produced in the cities diminished, leading to overproduction and mass layoffs in the cities.
• For most Capitalism’s recent failures, it is not the economic difficulties that pose the barrier to a better system, but rather a lack of political courage to
  - acknowledge the current monopolies for what they are, and curtail their further market manipulation,
  - make the ultra wealthy pay their fair share of taxes, getting rid of loopholes that effectively implement a regressive tax,
  - curtail the short sightedness of the financial sector, giving incentives to return to long-term investing in long-term projects,
  - reduce the influence of money in politics by terminating unlimited corporate funding during election cycles, tackling revolving-door mechanics, reducing the amount and power of lobbyists in Washington, just to name a few.

Fun Fact:
A large reason why GDP per capita in the US remains to be among the highest in the world, is due to the sheer fact that the average American works longer hours than do people in, for instance Europe. If your average employee works 40+ hours instead of 35 (France), no wonder they produce more. But are they more content with their life?