Excerpts from ''The Price of Inequality''

My current read is ''The Price of Inequality'' written by Joseph E. Stiglitz (winner of the Nobel prize for Economics). I am sharing some excerpts from the book that I believe will provide some food for thought on global markets, their impact on local economies and why there is so much inequality nowadays between rich and poor people, stemming from bad government policies or market regulations that favor the top 1%.

''The theory that came to dominate, begininning in the second half of the nineteenth century-and still does-was called ''marginal productivity theory'';those with higher productivities earned higher incomes that reflected their greater contribution to society. Competitive markets, working through the laws of supply and demand, determine the value of each individual's contributions. If someone has a scarce and valuable skill, the market will reward him amply, because of his greater contribution to output. If he has no skills, his income will be low. Technology, of course, determines the productivity of different skills: in a primitive agriculture economy, physical strength and endurance is what mattered; in a modern hi-tech economy, brainpower is more relevant.''

''Many of the individuals at the top of the wealth distribution are, in one way or another, geniuses at business. Some might clain, for instance, that Steve Jobs or the innovators of search engines or social media were, in their way, geniuses. Jobs was number 110 on the Forbes list of the world's wealthiest billionaires before his death, and Marck Zuckerberg was 52. But many of these ''geniuses'' built their business empires on the shoulders of giants, such as Tim Berners-Lee, the inventor of the World Wide Web, who has never appeared on the Forbes list. Berners-Lee could have become a billionaire but chose not to-he made his idea available freely, which greatly speeded up the development of the Internet.''

Another excerpt in which you can replace Spain with Greece to understand what has really happened to the latter's economy since 2007 and the institutional trap it has fallen into.

''As GDP decreases and unemployment increases, tax revenues fall, and expenditures on social programs rise. The deficit increases. Ordinarily, countries could lower their exchange rate and interest rates to make their economy more competitive; the resulting increase in exports would help boost the economy. Spain gave up these important tools when it joined the eurozone, but remarkably the eurozone didn't offer new policy intrsuments to take the place of these traditional adjustment mechanisms.''

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