Visiting Nobel Laureate and global economist Professor Joseph Stiglitz believes Australia's good fortune in being sheltered from the worst of the GFC means we may not fully comprehend its impact internationally.
On his tour of Australia, he comments on the state of the Australian economy, particularly in context of the Global Financial Crisis, the role of natural resources within this economy, and Australia's response to global warming.
Professor Stiglitz travelled all over Australia for three weeks as the inaugural speaker for the Eminent Speaker Series, hosted by the Economic Society of Australia. The series has been initiated to provide an opportunity for industry professionals, government representatives and academics to hear from the world's leading economists in an open forum.
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.
Nobelist Joseph Stiglitz explains how "trickle up economics" created the credit bubble that triggered the recent economic crisis. "There was a party going on, and nobody wanted to be a party-pooper," says Stiglitz.
Downward trend in the business cycle characterized by a decline in production and employment, which in turn lowers household income and spending. Even though not all households and businesses experience actual declines in income, they become less certain about the future and consequently delay making large purchases or investments. Consumers buy fewer durable household goods, and businesses are less likely to purchase machinery and equipment and more likely to use up existing inventory instead of adding goods to their stock. This drop in demand leads to a corresponding fall in output and thus worsens the economic situation. Whether a recession develops into a severe and prolonged depression depends on a number of circumstances. Among them are the extent and quality of credit extended during the previous period of prosperity, the amount of speculation permitted, the ability of government monetary and fiscal policies to reverse (or minimize) the downward trend, and the amount of excess productive capacity. Comparedepression.
(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.
I don't see in any case why Stiglitz is selling himself to an " economic du jour " when he critics most of what's happening currently in the international areas, especially within trades. Now about China easy to blame as always but perhaps some are too quick in forgetting that first China was able to buy so much US bond because US was selling in order to manage their deficit, second hopefully it was China that buy that much as China is strong enough to bear the cost, and is now again growing up. If it was otherwise the consequences, in my opinion, would have been worse.
It's true that Stiglitz repeat himself, but as nothing change, there are not lot choice... US and EU still carry their heavy farm subsidies...and it's still regulator who don't believe in regulation in the head of the finance institution in private and public sectors. There been a shift but only a shift. Hence, it's hard to not repeat, I think this conference fit well with the film "inside job". Lets hope that we can learn from the past.
He is a true believer ----
Never let the facts get in the way of a big government--
Innovation; not do less with less beats small minded central planning.
Otherwise the USSR would be top dog and not a foot note---
So sad ---- All animals are equal!
Some are just more equal than others.
Seems to be: 'they knows better' mindset--
Stiglitz path to serfdom! VS Innovation and positive mindset!
This was not Stiglitz's best day. He's not particularly articulate and his style is hard on the ears. I stuck with the whole thing though.
More substantively, he comes across as someone who has turned off any notions of balance or objectivity a long time ago.
For instance, he makes the comment that the cheap money available during the boom was wasted on building houses when it could have been used to alleviate global poverty. Well, a very great deal WAS used to alleviate global poverty. Why does he think China was (and is) booming - largely thanks to the cheap money of the Greenspan years.
In short, he's seems to be a staunch leftist who is finally happy to have some evidence with which to bash free market types. But he simplifies and exaggerates his case. He presents it with so much emotion that he squanders credibility.
Viewed in the proper light it should be obvious that excessive wealth concentration alone... is actually a destroyer of wealth and erodes the field upon which the freedom of the individual is exercised.
A civilization is made of decisions... individual and group decisions in an incredibly complex interplay... and together these compose the social energy that makes it all go... or not.
*social energy: individual and collective decisions operating within the limits of available resources and natural law which (quite literally) result in the product you see as a civilization. A decision here is defined as an idea + an action. Decisions can be motivated by any number of factors. Technologies result from previous decisions thus becoming available resources. And decision here is defined broadly... everything from "Let's build a pyramid for the pharoah!" to "I've got a headache I think I'll lie down."
All we see that is a civilization can be most fundamentally defined as a product of decisions: ideas + actions.
Decision Technologies: Currencies and the Social Contract
Political and economic systems and designs are concerned with 'decision technologies'...
However, group decision in scaled social organisms must contend with biological drives that do not scale directly... especially the boundaries of biological altruism...
*that any social organism as a product of individual and group decisions
*that within a natural-human-community-size (Dunbar's Number) social organism, while some stratification exists, peer-to-peer interactions facilitated by proximity constrain excessive imbalances in power and decision rights
*that when the social organism extended beyond the size of a Dunbar's Number sized group the effects of biological altruism's boundaries (very real though very fuzzy and variable) drove and justified the rise of social classes and Authoritarianism... (hierarchical networks of networks)
*that representative systems employ designs to interrupt these hierarchies by introducing methods encouraging the mixing of personnel, their networks and their ideas.
*that other technologies (finance, marketing, communications, etc) and ideologies (Objectivism, neo-Conservatism, etc.) have worked simultaneously in the other direction... i.e. to justify and increase stratification
*that 'money' is a store of 'decision rights'... (imperfectly and regrettably) and that technologies are necessary to counter-balance the ability of concentrated money to distort collective decisions.
*that these 'decision rights' CAN be more equitably utilized in the political sphere by facilitating direct peer-to-peer capability for the co-ordination of very small amounts of money
*that this capability catalyzes a stable network and this network then offers additional opportunities for peer-to-peer empowered interaction fundamental for scaling decision and action
*that capability ENABLES responsibility (while necessity may demand it... only capability allows it)
On Creating Communities (Part 1)
An Essential Technology for Social Development:
The Individually-controlled/Commons-dedicated Account*
A self-supporting , Commons-owned neutral system of account for both political and charitable monetary contribution... which for fundamental reasons of scale must allow a viable micro-transaction (think x-box points for action in the Commons). The resultant network catalyzes additional functionality for co-ordination of other 'social energy' utilization. (If desired, also the most neutral and ultimately politically viable method for the public finance of elections.)
Empowering the Commons: The Dedicated Account
An Anthropologist with a focus on 'Technology and Social Innovation
for the Public Good'... and perhaps with something to offer...
Well informed and useful information for his audience.
However, I didn't really hear anything new, other than some technical details. Most of his presentation would be pretty much commonly known for anyone who reads and keeps up with current events here in the states, not counting extremists or Fox News only fans.
I happen to agree with him almost completely on his viewpoints.
Between legislated wages of poverty and the false market manipulation vis a vis illegal immigrants, America does not have a free market for labor. But that is what Americans should expect since America is a capitalist oligarchy, not a democracy.
Economists, even award winning economists, prostitute themselves for the economic du jour . It is more rewarding than being creative.