Joseph Stiglitz, winner of the 2001 Nobel Prize Winner for Economics and author of Freefall sits down with Andrew Leonard, Senior Technology and Business Writer for Salon.
Stiglitz argues that America exported bad economics, bad policies and bad behavior to the rest of the world. Stiglitz outlines a way forward building on ideas that he has championed his entire career: restoring the balance between markets and government; addressing the inequalities of the global financial system; and demanding more good ideas (and less ideology) from economists.
Andrew Leonard is a freelance writer based in Berkeley, Calif. He is a contributing writer for Wired Magazine. His work has also appeared in the Far Eastern Economic Review, the Nation, British Esquire, the New York Times Book Review, the Columbia Journalism Review, Asia Inc., the San Francisco Bay Guardian and numerous other publications.
He has been technology editor for the online magazine Web Review, Packet culture columnist for HotWired, and was the writer of the ill-fated Secret Files of Bill Gates for America Online. His first book, Bots: Origin of New Species, is scheduled for publication in June from HardWired.
Joseph E. Stiglitz
Joseph E. Stiglitz was born in Gary, Indiana in 1943. A graduate of Amherst College, he received his PHD from MIT in 1967, became a full professor at Yale in 1970, and in 1979 was awarded the John Bates Clark Award, given biennially by the American Economic Association to the economist under 40 who has made the most significant contribution to the field. He has taught at Princeton, Stanford, MIT and was the Drummond Professor and a fellow of All Souls College, Oxford. He is now University Professor at Columbia University in New York and Chair of Columbia University's Committee on Global Thought. He is also the co-founder and Executive Director of the Initiative for Policy Dialogue at Columbia. In 2001, he was awarded the Nobel Prize in economics for his analyses of markets with asymmetric information, and he was a lead author of the 1995 Report of the Intergovernmental Panel on Climate Change, which shared the 2007 Nobel Peace Prize.
Stiglitz was a member of the Council of Economic Advisers from 1993-95, during the Clinton administration, and served as CEA chairman from 1995-97. He then became Chief Economist and Senior Vice-President of the World Bank from 1997-2000. In 2008 he was asked by the French President Nicolas Sarkozy to chair the Commission on the Measurement of Economic Performance and Social Progress, which released its final report in September 2009. In 2009 he was appointed by the President of the United Nations General Assembly as chair of the Commission of Experts on Reform of the International Financial and Monetary System, which also released its report in September 2009.
Stiglitz holds a part-time appointment at the University of Manchester as Chair of the Management Board and Director of Graduate Summer Programs at the Brooks World Poverty Institute. He serves on numerous other boards, including Amherst College's Board of Trustees and Resources for the Future.
Stiglitz helped create a new branch of economics, "The Economics of Information," exploring the consequences of information asymmetries and pioneering such pivotal concepts as adverse selection and moral hazard, which have now become standard tools not only of theorists, but of policy analysts. He has made major contributions to macro-economics and monetary theory, to development economics and trade theory, to public and corporate finance, to the theories of industrial organization and rural organization, and to the theories of welfare economics and of income and wealth distribution. In the 1980s, he helped revive interest in the economics of R&D.
His work has helped explain the circumstances in which markets do not work well, and how selective government intervention can improve their performance.
Recognized around the world as a leading economic educator, he has written textbooks that have been translated into more than a dozen languages. He founded one of the leading economics journals, The Journal of Economic Perspectives. His book Globalization and Its Discontents (W.W. Norton June 2001) has been translated into 35 languages, besides at least two pirated editions, and in the non-pirated editions has sold more than one million copies worldwide. Other recent books include The Roaring Nineties (W.W. Norton); Towards a New Paradigm in Monetary Economics (Cambridge University Press) with Bruce Greenwald; Fair Trade for All (Oxford University Press), with Andrew Charlton; Making Globalization Work, (W.W. Norton and Penguin/ Allen Lane, 2006); and The Three Trillion Dollar War: The True Cost of the Iraq Conflict, (W.W. Norton and Penguin/ Allen Lane, 2008), with Linda Bilmes of Harvard University. His newest book, Freefall: America, Free Markets, and the Sinking of the World Economy, was published in January 2010 by WW Norton and Penguin/ Allen Lane.
(born Feb. 9, 1943, Gary, Ind., U.S.) U.S. economist. He received a Ph.D. (1967) from the Massachusetts Institute of Technology and taught at several universities, including Yale, Harvard, Stanford, and Columbia. From 1997 to 2000 he was the World Bank's chief economist but often disagreed with the organization's policies. Stiglitz helped found modern development economics, and he changed how economists think about the way markets work. His studies on asymmetric information in the marketplace showed that the poorly informed can obtain information from the better informed through a screening process, for example, when insurance companies determine the risk factors of their clients. He shared the 2001 Nobel Prize in Economic Sciences with George A. Akerlof and A. Michael Spence.
The problems with the statist government pundits - people such as Dean Baker, Paul Krugman, Joe Stiglitz, Christina Romer, etc. - is that their cheering for economic "stimulus" and how it "saved" us from depression are multifold:
I'll name two:
1) They all seem to suggest that we are "out of the woods" when in fact this is just the beginning. Americans are only halfway down a generations long decline in standard of living that started in the mid 1960's. We have at least several decades of decline left in front of us. The 100 Trillion in unfunded debt, aging demographics, and declining. The american economy has been hollowed out. There is virtually no job that hasn't be outsourced overseas. Most top level financial analysts - people such as Sprott, Schiff, Arnott, King, Puplava, Faber, Prechter, and others beleive, and correctly so that we are actually 10 years into a secular bear market that started in 2000. Everything since then as basically been credit and stimulus, yet priced in gold, we are actually much worse off than we were 10 years ago.
2) These pundits all ignore the dollar's inevitable decline which will ultimately transition us to a global currency, with the IMF's SDR serving as an intermediary to get us there. The purchasing power of our money has already declined over 95% in the time my surviving family members have been on this earth. The government programs under Obama and Bush (it's all the same) have not saved us at all. In fact, they've GUARANTEED our irreversible decline.
In a few years from now, when we no longer have the world's reserve currency, when we no longer have the worlds largest economy, the carbon taxes and the rest of the global governing architecture are in place regulating the hell out of us, nobody will remember any of these people.
I'm studying Chinese and getting the hell out of here, once i get my degree.
The democracy is not working well with this so called "free marked". We have now a the rising of China, à communiste country with a one-party system. 80 percent of economy of China is controled by the central government and it is working! So, we need to think about the contradiction between capitalism and democracy and we have to chose between this two different systems at the end.This is the only real question we have to put on the table.
At around 00:16 :15 into this, Stiglitz claims the reason the Great Depression lasted so long was that in 1937 (yes '37!), federal stimulus was reduced causing states that were doing poorly - like CA - cut back spending. He totally misses the fact that they were still in recession after nearly 8 years.
He should have replaced Greenspan. But we do not have a Progressive President.
Obama, like Clinton is just another moderate republican.
They are giving slaps on the wrist to powerful criminal rackets that succeeded in threatening the security of the United States.
The 'unsurveyable pattern' aka invisible hand is faith based hocus pocus. It is BS to baffel the non-inquisitive. Just more evidence how brain washed even economic sector professionals are by their own employers business propaganda.
@Howard_Roark, "Greed" and "self-interest" have been around since the days when our ancestors, Thag and Oog first started walking upright on two feet.
So one should just accept that investing in a gun and robbing a bank (gaining profit) is a valid expression of capitalism, in fact it may perhaps be capitalism at its highest form, and is justifiable through the actions of your ancestors, Thag and Oog, and your genetic and familial adherence thereto.
My ancestors, aware of greed and self-interest, also understood the benefits of cooperation of effort, the value of redundancy and the commonwealth of group as well as of nations.
Consider, There is a sufficiency in the world for man's need but not for man's greed. - Gandhi.
@Eric25001, "' Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless. '
Yes, the Congress (Democrats and Republicans in a bi-partisan effort) did give the Federal Reserve Bank the authority to call the Treasury, tell them to print some money, and then lend that money to the government, making the government an instant debtor nation.
Just incidentally, "A major source of objection to a free economy" is not an objection but the glaring legislation which authorizes a wage of poverty and sets the minimum wage as the lowest wage of poverty (in lieu of slavery) and history. That legislation prohibits a free labor market, as do the laws which limit agency bargaining and the history of government interference in labor actions with troops.
A moment of quietude for the dead coal miners and their families and to reflect on family values, the obligation of the officers of Massey to the corporation and its stockholders and profit as superior to the expense of the safety of their personnel, and to thank the SCOTUS for making that fiduciary responsibility clear.
It can be argued that promoting the general welfare of the nation requires strict regulation of capitalism, an anti-democratic economic, in order for the democratic republic which is the nation to survive as a nation. In addition to the stated purpose of government which is the Preamble, Article 1, Section 8, "The Congress shall have Power ... To regulate Commerce ..."
The Democrats and Republicans, i.e. The Congress, are capitalists (what senator is not a millionaire) who represent capitalists and not the people. Economists are the capitalists hired hands whose job is to distract from political reality.
Democracy lost long before the headline at the fall of the Soviet Union declared that capitalism won.