Joseph E. Stiglitz's Blog, page 4

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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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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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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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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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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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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Why Facebook's Libra currency gets the thumbs down | Joseph Stiglitz

Only a fool would trust Facebook with their financial wellbeing. But maybe that’s the point of the Libra currency

Facebook and some of its corporate allies have decided that what the world really needs is another cryptocurrency, and that launching one is the best way to use the vast talents at their disposal. The fact that Facebook thinks so reveals much about what is wrong with 21st-century American capitalism.

In some ways, it’s a curious time to be launching an alternative currency. In the past, the main complaint about traditional currencies was their instability, with rapid and uncertain inflation making them a poor store of value. But the dollar, the euro, the yen, and the renminbi have all been remarkably stable. If anything, the worry today is about deflation, not inflation.

Related: What is Libra? All you need to know about Facebook's new cryptocurrency

What is Libra?

Related: Cryptocurrencies have a mysterious allure – but are they just a fad? | Robert Shiller

Related: Libra cryptocurrency: dare you trust Facebook with your money? | John Naughton

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The climate crisis is our third world war. It needs a bold response | Joseph Stiglitz

Critics of the Green New Deal ask if we can afford it. But we can’t afford not to: our civilisation is at stake

Advocates of the Green New Deal say there is great urgency in dealing with the climate crisis and highlight the scale and scope of what is required to combat it. They are right. They use the term “New Deal” to evoke the massive response by Franklin Delano Roosevelt and the United States government to the Great Depression. An even better analogy would be the country’s mobilization to fight World War II.

Critics ask, “Can we afford it?” and complain that Green New Deal proponents confound the fight to preserve the planet, to which all right-minded individuals should agree, with a more controversial agenda for societal transformation. On both accounts the critics are wrong.

The war on the climate emergency, if correctly waged, would actually be good for the economy

Joseph E Stiglitz is a university professor at Columbia, the 2001 recipient of the Nobel Memorial Prize in Economics, a former chairman of the Council of Economic Advisers, a former chief economist of the World Bank and the author, most recently, of People, Power, and Profits: Progressive Capitalism for an Age of Discontent

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Neoliberalism must be pronounced dead and buried. Where next? | Joseph Stiglitz

For decades the US and others have pursued a free-market agenda which has failed spectacularly

What kind of economic system is most conducive to human wellbeing? That question has come to define the current era, because, after 40 years of neoliberalism in the United States and other advanced economies, we know what doesn’t work.

The neoliberal experiment – lower taxes on the rich, deregulation of labour and product markets, financialisation, and globalisation – has been a spectacular failure. Growth is lower than it was in the quarter-century after the second world war, and most of it has accrued to the very top of the income scale. After decades of stagnant or even falling incomes for those below them, neoliberalism must be pronounced dead and buried.

There is no magic bullet that can reverse the damage done by decades of neoliberalism

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Trump will leave a legacy of selfishness and dishonesty | Joseph Stiglitz

The president’s attack on every pillar of society jeopardises the US’s continued prosperity and ability to function as a democracy

Kirstjen Nielsen’s forced resignation as US secretary of homeland security is no reason to celebrate. Yes, she presided over the forced separation of families at the US border, notoriously housing young children in wire cages. But Nielsen’s departure is not likely to bring any improvement, as Donald Trump wants to replace her with someone who will carry out his anti-immigrant policies even more ruthlessly.

The president’s immigration policies are appalling in almost every aspect. And yet they may not be the worst feature of his administration. Indeed, identifying its foullest aspects has become a popular American parlour game. Yes, he has called immigrants criminals, rapists and animals. But what about his deep misogyny or his boundless vulgarity and cruelty? Or his winking support of white supremacists? Or his withdrawal from the Paris climate accord, the Iran nuclear deal, and the Intermediate-range Nuclear Forces treaty? And, of course, there is his war on the environment, on healthcare, and on the rules-based international system.

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