Abstract:
In The Price of Inequality, Nobel Prize winning economist Joseph E. Stiglitz explores the growing problem of wealth inequality in the United States.1 Stiglitz, riding the momentum of the Occupy Wall Street protests and “the 99 percent” political slogan, argues that economic and political factors have worked in concert to increasingly help shift wealth from the middle and lower classes to those at the top of the American socioeconomic ladder. With traditional economic models and political theory, Stiglitz analyzes the nature of wealth inequality by examining its causes, potential ramifications if policymakers continue to ignore it, and solutions to help reverse the trend.
Overall, Stiglitz provides a searing indictment of the top 1 percent of America’s socioeconomic ladder, as well as the government officials who pander to the requests of the wealthy. One of the central tenants of his book is that political factors, such as policy decisions laden with inherent trade-offs, have contributed to the growing inequality problem just as much as economic factors. Together, these forces have continually shifted wealth from the middle and lower classes up the ladder to the elites of society.
In The Price of Inequality, Stiglitz’s contribution to the political discourse should not be understated. He has offered policymakers and individuals alike a comprehensive explanation of many of the economic problems plaguing the American system, without relying too heavily on technical jargon. Stiglitz succeeds in explaining complex and interrelated issues in an understandable and accessible manner. However, because Stiglitz writes for a broad audience, he provides little detailed analysis of the legal issues associated with wealth inequality. By building on Stiglitz’s arguments, this Review contends that the legal framework of bankruptcy laws in America was designed by the credit industry for the credit industry, furthering inequality rather than alleviating it. This Review identifies the strengths of Stiglitz’s arguments by applying his theories on rent seeking, lobbying and campaign contributions, and regulatory capture to American bankruptcy laws.
Part II will give a short overview of wealth inequality in America and how it compares with other advanced industrialized countries around the world. Part III will explain why increased wealthy inequality is a problem and should concern policymakers. Part IV will detail the causes of the problem as identified by Stiglitz, with special emphasis on the political factors that shape the economic landscape. Part V will apply Stiglitz’s theories to analyze the sweeping amendments to the United States bankruptcy laws in 2005. Finally, Section VI will briefly explore some of Stiglitz’s proposed solutions to the problem of wealthy inequality in America, while also suggesting additional recommendations.
Commentary:
It is frustrating when the larger theses in this article, viz. that passage of BAPCPA was an example of rent seeking, monopolization, the application of assymetrical information and lobbying as investment by the financial services industry, get undercut by the author repeating the same uninformed mistakes and misstatements about bankruptcy that seem to come from law school bankruptcy courses and text books. For example the article states that taxes are not dischargeable in Chapter 7, which is incorrect, or that under a Chapter 13 proceeding, unsecured creditors, such as credit card lenders, are better off through the court appointed scheduled repayment than through a liquidation filing”, when in fact Chapter 13 plans often provide substantial benefits over Chapter 7, such as mean test deductions for retirement loans and contributions.
For a copy of the article, please see:
http://www.law.unc.edu/journals/ncbank/volumes/volume17/citation-17-nc-banking-inst-2013/the-price-of-inequality-and-the-2005-bankruptcy-abuse-prevention-and-consumer-act/
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