Joseph E. Stiglitz's Blog

July 2, 2020

Invest in the green economy and we'll recover from the Covid-19 crisis | Joseph Stiglitz

We must target public spending on green, labour intensive projects which have far more bang for their bucks than tax cuts

Although it seems like ancient history, it hasn’t been that long since economies around the world began to close down in response to the Covid-19 pandemic. Early in the crisis, most people anticipated a quick V-shaped recovery, on the assumption that the economy merely needed a short timeout. After two months of tender loving care and heaps of money, it would pick up where it left off.

It was an appealing idea. But now it is July, and a V-shaped recovery is probably a fantasy. The post-pandemic economy is likely to be anaemic, not only in countries that have failed to manage the pandemic (namely, the US), but even in those that have acquitted themselves well. The International Monetary Fund projects that by the end of 2021 the global economy will be barely larger than it was at the end of 2019 and that the US and European economies will still be about 4% smaller.

Related: The post-coronavirus economic recovery must be led by the US | Mohamed El-Erian

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Published on July 02, 2020 02:09

April 6, 2020

World must combat looming debt meltdown in developing countries | Joseph Stiglitz

If international community wants to avoid wave of Covid-19 defaults it needs to start rescue plan

As it spread from one country to another, the coronavirus paid no attention to national frontiers or “big, beautiful” border walls. Nor were the ensuing economic effects contained. As has been obvious since the outset, the Covid-19 pandemic is a global problem that demands a global solution.

In the world’s advanced economies, compassion should be sufficient motivation to support a multilateral response. But global action is also a matter of self-interest. As long as the pandemic is still raging anywhere, it will pose a threat – both epidemiological and economic – everywhere.

Related: Now the world faces two pandemics – one medical, one financial | Robert Shiller

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Published on April 06, 2020 23:00

January 30, 2020

World leaders talked the talk at Davos but we need some real change | Joseph Stiglitz

Excessive faith in markets and scepticism of government won’t tackle the global crises we face

This year marked the 50th anniversary of the World Economic Forum’s flagship meeting of the world’s business and political elites in Davos, Switzerland. Much has changed since my first Davos in 1995. Back then, there was euphoria over globalisation, hope for ex-communist countries’ transition to the market, and confidence that new technologies would open up fresh vistas from which all would benefit. Businesses, working with government, would lead the way.

Today, with the world facing climate, environmental, and inequality crises, the mood is very different. Facebook, willing to provide a platform for mis-/disinformation and political manipulation, regardless of the consequences for democracy, has shown the dangers of a privately controlled monopolistic surveillance economy. Corporate leaders, and not just in the financial sector, have displayed remarkable moral turpitude.

Related: What did we learn from Davos 2020?

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Published on January 30, 2020 08:02

January 19, 2020

Donald Trump is a good president … but only for the top 1%

On all economic measures, from jobs to health to GDP to disposable income, the president has failed America

As the world’s business elites trek to Davos for their annual gathering, people should be asking a simple question: have they overcome their infatuation with the US president?

Two years ago, a few rare corporate leaders were concerned about climate change, or upset at Donald Trump’s misogyny and bigotry. Most, however, were celebrating the president’s tax cuts for billionaires and corporations and looking forward to his efforts to deregulate the economy. That would allow businesses to pollute the air more, get more Americans hooked on opioids, entice more children to eat their diabetes-inducing foods and engage in the sort of financial shenanigans that brought on the 2008 crisis.

Related: Is Donald Trump's Iran strategy working?

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Published on January 19, 2020 23:00

December 24, 2019

Argentina chooses right man at right time to reignite the economy | Joseph Stiglitz

Martín Guzmán is a leading expert on sovereign debt and the problems it can cause

Judging by his appointment of a first-rate economist to his cabinet as minister of economy, Argentina’s new president, Alberto Fernández, is off to a good start in confronting his country’s economic problems. Martín Guzmán, with whom I have frequently collaborated in recent years, is among the world’s leading experts on sovereign debt and the problems it can cause, making him the right person in the right place at the right time.

After completing his PhD at Brown University under Peter Howitt (co-author with Philippe Aghion of seminal work in modern growth theory), Guzmán obtained a coveted position at Columbia University, where he forged an academic career and became an influential expert on crucial policy debates at the domestic and global level. He has testified before the US Congress on Puerto Rico’s debt crisis and spoken at the United Nations about the need for a better international system for resolving sovereign debt crises. In recent years he has divided his time between New York and Argentina, where he is a professor of macroeconomics at the University of Buenos Aires.

Related: Trump's lack of strategic vision is going to make China great again | Nouriel Roubini

As Fernández has put it, one doesn’t solve a problem of excessive debt by taking on more debt

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Published on December 24, 2019 00:56

December 9, 2019

Fighting the climate crisis need not mean halting economic growth

The shift to a green economy can spur innovation and prosperity if we change the quality of growth

It is clear: we are living beyond our planet’s limits. Unless we change something, the consequences will be dire. Should that something be our focus on economic growth?

The climate emergency represents the most salient risk we face and we are already getting a glimpse of the costs. And in “we”, I include Americans. The US, where a major political party is dominated by climate-change deniers, is the highest per capita emitter of greenhouse gases and the only country refusing to adhere to the 2015 Paris climate agreement. So there is a certain irony in the fact that the US has also become one of the countries with the highest levels of property damage associated with extreme weather events such as floods, fires, hurricanes, droughts and bitter cold.

Related: Public borrowing is cheap but ramping up debt is not without risk | Kenneth Rogoff

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Published on December 09, 2019 06:52

November 24, 2019

It's time to retire metrics like GDP. They don't measure everything that matters | Joseph Stiglitz

The way we assess economic performance and social progress is fundamentally wrong, and the climate crisis has brought these concerns to the fore

The world is facing three existential crises: a climate crisis, an inequality crisis and a crisis in democracy. Will we be able to prosper within our planetary boundaries? Can a modern economy deliver shared prosperity? And can democracies thrive if our economies fail to deliver shared prosperity? These are critical questions, yet the accepted ways by which we measure economic performance give absolutely no hint that we might be facing a problem. Each of these crises has reinforced the fact that we need better tools to assess economic performance and social progress.

The standard measure of economic performance is gross domestic product (GDP), which is the sum of the value of goods and services produced within a country over a given period. GDP was humming along nicely, rising year after year, until the 2008 global financial crisis hit. The global financial crisis was the ultimate illustration of the deficiencies in commonly used metrics. None of those metrics gave policymakers or markets adequate warning that something was amiss. Though a few astute economists had sounded the alarm, the standard measures seemed to suggest everything was fine.

If our measures tell us everything is fine when it really isn’t, we will be complacent

Joseph E Stiglitz is a Nobel laureate in economics and the co-author of Measuring What Counts: The Global Movement for Well-Being

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Published on November 24, 2019 03:14

November 4, 2019

Decades of free-market orthodoxy have taken a toll on democracy | Joseph Stiglitz

After 40 years of neoliberalism, the verdict is in – the fruits of growth went to the few at the top

At the end of the cold war, the political scientist Francis Fukuyama wrote a celebrated essay called The End of History? Communism’s collapse, he argued, would clear the last obstacle separating the entire world from its destiny of liberal democracy and market economies. Many people agreed.

Related: When recession comes, expect central banks to rewrite the rules | Nouriel Roubini

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Published on November 04, 2019 23:01

October 7, 2019

Corporate tax avoidance: it's no longer enough to take half measures

Multinationals’ failure to pay is hitting governments’ ability to fight the climate crisis and inequality

Globalisation has gotten a bad rap in recent years, and often for good reason. But some critics, not least Donald Trump, place the blame in the wrong place, conjuring up a false image in which Europe, China, and developing countries have snookered America’s trade negotiators into bad deals, leading to Americans’ current woes. It’s an absurd claim: after all, it was America – or, rather, corporate America – that wrote the rules of globalisation in the first place.

That said, one particularly toxic aspect of globalisation has not received the attention it deserves: corporate tax avoidance. Multinationals can all too easily relocate their headquarters and production to whatever jurisdiction levies the lowest taxes. And in some cases, they need not even move their business activities, because they can merely alter how they “book” their income on paper.

Related: Will London's post-Brexit future be as gloomy as predicted?

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Published on October 07, 2019 02:51

August 28, 2019

Can we trust CEOs' shock conversion to corporate benevolence?

An apparent move by big business to maximise stakeholder value sounds too good to be true

For four decades, the prevailing doctrine in the US has been that corporations should maximise shareholder value – meaning profits and share prices – here and now, come what may, regardless of the consequences to workers, customers, suppliers and communities. So the statement endorsing stakeholder capitalism, signed earlier this month by virtually all the members of the US Business Roundtable, has caused quite a stir. After all, these are the CEOs of the US’s most powerful corporations, telling Americans and the world that business is about more than the bottom line. That is quite an about-face. Or is it?

The free-market ideologue and Nobel laureate economist Milton Friedman was influential not only in spreading the doctrine of shareholder primacy, but also in getting it written into US legislation. He went so far as to say: “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits.”

Related: Why central bankers' conventional tools are no longer working

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Published on August 28, 2019 23:00

Joseph E. Stiglitz's Blog

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