Joseph E. Stiglitz's Blog, page 5
February 13, 2019
How can we tax the footloose multinationals?
Apple and companies like it claim to be socially responsible, but that should mean paying your fair share of tax
In the last few years, globalisation has come under renewed attack. Some of the criticisms may be misplaced but one is spot on: globalisation has enabled large multinationals, such as Apple, Google and Starbucks, to avoid paying tax.
Apple has become the poster child for corporate tax avoidance, with its legal claim that a few hundred people working in Ireland were the real source of its profits, and then striking a deal with that country’s government that resulted in its paying a tax amounting to .005% of its profit. Apple, Google, Starbucks and companies like them all claim to be socially responsible, but the first element of social responsibility should be paying your fair share of tax. If everyone avoided and evaded taxes like these companies, society could not function, much less make the public investments that led to the internet, on which Apple and Google depend.
Related: Risk of global recession may be low but we are heading for slowdown
The objective for multinationals is reforms that continue the race to the bottom and maintain opportunities for tax avoidance
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December 3, 2018
GDP is not a good measure of wellbeing – it's too materialistic | Joseph Stiglitz
Why focus on production of goods, rather than on health, education and environment?
Just under 10 years ago, the international Commission on the Measurement of Economic Performance and Social Progress issued its report, Mismeasuring Our Lives: Why GDP Doesn’t Add Up. The title summed it up: GDP is not a good measure of wellbeing. What we measure affects what we do: if we measure the wrong thing, we will do the wrong thing. If we focus only on material wellbeing – on, say, the production of goods, rather than on health, education, and the environment – we become distorted in the same way that these measures are distorted; we become more materialistic.
We were more than pleased with the reception of our report, which spurred an international movement of academics, civil society, and governments to construct and employ metrics that reflected a broader conception of wellbeing. The OECD has constructed a better life index, containing a range of metrics that better reflect what constitutes and leads to wellbeing. It also supported a successor to the commission, the High Level Expert Group on the Measurement of Economic Performance and Social Progress. Last week, at the OECD’s sixth World Forum on Statistics, Knowledge, and Policy in Incheon, South Korea, the group issued its report, Beyond GDP: Measuring What Counts for Economic and Social Performance.
Related: Trump's trade wars and Brexit are making us all poorer | Jeffrey Frankel
Continue reading...September 6, 2018
Why all economists must learn lessons before next US downturn | Joseph Stiglitz
Secular stagnation advocates should agree on outcome if their preferred policies had been implemented
As Larry Summers rightly points out, the term “secular stagnation” became popular as the second world war was drawing to a close. Alvin Hansen (and many others) worried that, without the stimulation provided by the war, the economy would return to recession or depression. There was, it seemed, a fundamental malady.
But it didn’t happen. How did Hansen and others get it so wrong? Like some modern-day secular stagnation advocates, there were deep flaws in the underlying micro- and macroeconomic analysis – most importantly, in the analysis of the causes of the Great Depression itself.
Related: Weak economic recovery was down to flawed policies, not secular stagnation | Joseph Stiglitz
Inadequate financial regulation left Americans vulnerable to predatory banking behaviour and saddled with enormous debts
Continue reading...August 29, 2018
Weak economic recovery was down to flawed policies, not secular stagnation | Joseph Stiglitz
Lesson to be learned from 2008 financial crisis is that the challenge was – and is - political
In the aftermath of the 2008 financial crisis, some economists argued that the US, and perhaps the global economy, was suffering from “secular stagnation” – an idea first conceived in the aftermath of the Great Depression. Economies had always recovered from downturns, but the Great Depression had lasted an unprecedented length of time. Many believed the economy recovered only because of government spending on the second world war and many feared that with the end of the war, the economy would return to its doldrums.
Something, it was believed, had happened, such that even with low or zero interest rates, the economy would languish. For reasons now well understood, these dire predictions fortunately turned out to be wrong.
Related: US will lack fiscal space to respond when next recession comes
Policymakers failed to do enough even to prevent poor households from losing their homes
Continue reading...June 13, 2018
The euro could be nearing a crisis – can it be saved? | Joseph Stiglitz
It was supposed to bring shared prosperity, but instead it has slowed growth and sown discord
The euro may be approaching another crisis. Italy, the eurozone’s third largest economy, has chosen what can at best be described as a eurosceptic government. This should surprise no one. The backlash in Italy is another predictable (and predicted) episode in the long saga of a poorly designed currency arrangement, in which the dominant power, Germany, impedes the necessary reforms and insists on policies that exacerbate the inherent problems, using rhetoric seemingly intended to inflame passions.
Italy has been performing poorly since the euro’s launch. Its real (inflation-adjusted) GDP in 2016 was the same as it was in 2001. But the eurozone as a whole has not been doing well, either. From 2008 to 2016, its real GDP increased by just 3% in total. In 2000, a year after the euro was introduced, the US economy was only 13% larger than the eurozone; by 2016 it was 26% larger. After real growth of around 2.4% in 2017 – not enough to reverse the damage of a decade of malaise – the eurozone economy is faltering again.
Related: The EU v Italy’s new government: which will blink first?
Continue reading...May 9, 2018
How did Costa Rica get it so right? | Joseph Stiglitz
The country is a beacon of Enlightenment – a world leader in democratic, sustainable, and inclusive economic growth, writes Joseph Stiglitz
With authoritarianism and proto-fascism on the rise in so many corners of the world, it is heartening to see a country where citizens are still deeply committed to democratic principles. And now its people are trying to redefine their politics for the 21st century.
Over the years, Costa Rica, a country of fewer than 5 million people, has gained attention worldwide for its progressive leadership. In 1948, after a short civil war, President José Figueres Ferrer abolished the military. Since then, Costa Rica has made itself a centre for the study of conflict resolution and prevention, hosting the UN-mandated University for Peace.
Related: Globalisation: time to look at the past to plot the future | Joseph Stiglitz
Continue reading...December 5, 2017
Globalisation: time to look at the past to plot the future | Joseph Stiglitz
Trade deals were hammered out in secret by multinationals at the expense of workers and citizens. Benefits must be shared if the global economy is to work
Fifteen years ago, I published Globalisation and Its Discontents, a book that sought to explain why there was so much dissatisfaction with globalisation within the developing countries. Quite simply, many believed that the system was rigged against them, and global trade agreements were singled out for being particularly unfair.
Now discontent with globalisation has fuelled a wave of populism in the US and other advanced economies, led by politicians who claim that the system is unfair to their countries. In the US, President Donald Trump insists that America’s trade negotiators were snookered by those from Mexico and China.
Related: Globalisation is dented but not doomed
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Related: Joseph Stiglitz: 'Trump has fascist tendencies'
Continue reading...October 19, 2017
Wealth before health? Why intellectual property laws are facing a counterattack | Joseph Stiglitz
The current regime is unsustainable. Emerging economies are right to lead the pushback against patenting standards
When the South African government attempted to amend its laws in 1997 to avail itself of affordable generic medicines for the treatment of HIV/Aids, the full legal might of the global pharmaceutical industry bore down on the country, delaying implementation and extracting a high human cost. South Africa eventually won its case, but the government learned its lesson: it did not try again to put its citizens’ health and wellbeing into its own hands by challenging the conventional global intellectual property (IP) regime.
Until now. The South African cabinet is preparing to finalise an IP policy that promises to expand access to medicines substantially. South Africa will now undoubtedly face all manner of bilateral and multilateral pressure from wealthy countries. But the government is right, and other developing and emerging economies should follow in its footsteps.
Related: Protect the drug giants' patents - and harm the health of the poor?
Continue reading...October 18, 2017
Intellectual property laws demand a 21st-century solution
The health and wellbeing of people should be put before corporate profits
When the South African government attempted to amend its laws in 1997 to avail itself of affordable generic medicines for the treatment of HIV/Aids, the full legal might of the global pharmaceutical industry bore down on the country, delaying implementation and extracting a high human cost. South Africa eventually won its case, but the government learned its lesson: it did not try again to put its citizens’ health and wellbeing into its own hands by challenging the conventional global intellectual property (IP) regime.
Until now. The South African cabinet is preparing to finalise an IP policy that promises to expand access to medicines substantially. South Africa will now undoubtedly face all manner of bilateral and multilateral pressure from wealthy countries. But the government is right, and other developing and emerging economies should follow in its footsteps.
Related: Protect the drug giants' patents - and harm the health of the poor?
Continue reading...October 4, 2017
Trump's tax reforms are a bigger gift to business than most expected | Joseph Stiglitz
The Republicans’ proposals dodge necessary changes and will leave the country with a mountain of debt
Having failed to “repeal and replace” the 2010 Affordable Care Act (“Obamacare”), Donald Trump’s administration and the Republican congressional majority have now moved on to tax reform. Eight months after assuming office, the administration has been able to offer only an outline of what it has in mind. But what we know is enough to feel a deep sense of alarm.
Tax policy should reflect a country’s values and address its problems. And today, the United States – and much of the world – confronts four central problems: widening income inequality, growing job insecurity, climate change and anaemic productivity growth. America faces, in addition, the need to rebuild its decaying infrastructure and strengthen its underperforming primary and secondary education system.
Related: The great unwinding: Fed begins slow demise of its post-crash stimulus
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