Joseph E. Stiglitz's Blog, page 6

Harvey spells it out: markets alone won't protect you | Joseph Stiglitz

We should have learned the lessons of Hurricanes Katrina and Sandy – we need political action to help prevent disasters

Tropical Storm Harvey has left in its wake upended lives and enormous property damage, estimated by some at $150-$180bn. But the storm that pummelled the Texas coast for the better part of a week also raises deep questions about the United States’ economic system and politics.

It is ironic, of course, that an event so related to climate change would occur in a state that is home to so many climate-change deniers – and where the economy depends so heavily on the fossil fuels that drive global warming. Of course, no particular climate event can be directly related to the increase in greenhouse gases in the atmosphere. But scientists have long predicted that such increases would boost not only average temperatures, but also weather variability – and especially the occurrence of extreme events such as Harvey. As the Intergovernmental Panel on Climate Change concluded several years ago, “There is evidence that some extremes have changed as a result of anthropogenic influences, including increases in atmospheric concentrations of greenhouse gases.” Astrophysicist Adam Frank succinctly explained: “Greater warmth means more moisture in the air which means stronger precipitation.”

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Published on September 08, 2017 02:58

Donald Trump's tax cuts for the rich won't make America great again | Joseph Stiglitz

The president thinks lower taxes and deregulation will solve the US’s problems. They won’t work, because they never have

Although America’s rightwing plutocrats may disagree about how to rank the country’s major problems – for example, inequality, slow growth, low productivity, opioid addiction, poor schools, and deteriorating infrastructure – the solution is always the same: lower taxes and deregulation, to “incentivise” investors and “free up” the economy. Donald Trump is counting on this package to make America great again.

It won’t, because it never has. When Ronald Reagan tried it in the 1980s, he claimed that tax revenues would rise. Instead, growth slowed, tax revenues fell, and workers suffered. The big winners in relative terms were corporations and the rich, who benefited from dramatically reduced tax rates.

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Published on July 27, 2017 03:42

Tell Donald Trump: the Paris climate deal is very good for America | Joseph Stiglitz

Trump argues the treaty is unfair to the US but it is America that continues to impose an unfair burden on others

Under President Donald Trump’s leadership, the United States took another major step toward establishing itself as a rogue state on 1 June, when it withdrew from the Paris climate agreement. For years, Trump has indulged the strange conspiracy theory that, as he put it in 2012: “The concept of global warming was created by and for the Chinese in order to make US manufacturing non-competitive.” But this was not the reason Trump advanced for withdrawing the US from the Paris accord. Rather, the agreement, he alleged, was bad for the US and implicitly unfair to it.

While fairness, like beauty, is in the eye of the beholder, Trump’s claim is difficult to justify. On the contrary, the Paris accord is very good for America, and it is the US that continues to impose an unfair burden on others.

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Published on July 03, 2017 01:37

Austerity has strangled the British economy. Only Labour gets this | Joseph Stiglitz

Neoliberalism was a creature of the Reagan and Thatcher era. Austerity is its death rattle. Before it does any more damage, Britain needs a plan for growth

The choice facing the voters in this election is clear – between more failed austerity or a Labour party advancing an economic agenda that is right for the UK. To understand why Labour is right, we first need to look back to the 1980s.

Under Ronald Reagan in the United States and Margaret Thatcher in the UK, there was a rewriting of the basic rules of capitalism. These two governments changed the rules governing labour bargaining, weakening trade unions; and they weakened anti-trust enforcement, allowing more monopolies to be created. In our economy today we can see industries with one or two or three firms with market power. This gives them the power to raise prices – and as they raise prices, people’s incomes fall, in terms of what they can buy.

Austerity has not only damaged the European economies, including the UK, but actually threatens future growth

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Published on June 07, 2017 05:20

How to respond to Trump's America | Joseph Stiglitz

Action is needed to safeguard economic progress against a prejudiced White House that rejects science and enlightened values

Donald Trump has thrown a hand grenade into the global economic architecture that was so painstakingly constructed in the years after the end of the second world war. The attempted destruction of this rules-based system of global governance – now manifested in Trump’s withdrawal of the United States from the 2015 Paris climate agreement – is just the latest aspect of the US president’s assault on our basic system of values and institutions.

The world is only slowly coming fully to terms with the malevolence of the Trump administration’s agenda. He and his cronies have attacked the US press – a vital institution for preserving Americans’ freedoms, rights and democracy – as an “enemy of the people”. They have attempted to undermine the foundations of our knowledge and beliefs – our epistemology – by labelling as “fake” anything that challenges their aims and arguments, even rejecting science itself. Trump’s sham justifications for spurning the Paris climate agreement is only the most recent evidence of this.

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Published on June 02, 2017 06:29

Putin's illiberal stagnation in Russia offers up a valuable lesson | Joseph Stiglitz

The west’s post-cold war failures across the former Soviet bloc should not weaken its resolve to create democratic states

Today, a quarter-century after the cold war’s end, the west and Russia are again at odds. This time, at least on one side, the dispute is more transparently about geopolitical power, not ideology.

The west has supported in a variety of ways democratic movements in the post-Soviet region, hardly hiding its enthusiasm for the various “colour” revolutions that have replaced longstanding dictators with more responsive leaders – though not all have turned out to be the committed democrats they pretended to be.

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Published on April 03, 2017 02:56

Donald Trump, the master of unreality, must be resisted at every turn | Joseph Stiglitz

What the US president says and what he tweets can only be countered effectively if we take it seriously and resist it

In barely a month, the new US president has managed to spread chaos and uncertainty – and a degree of fear that would make any terrorist proud – at a dizzying pace. Not surprisingly, citizens and leaders in business, civil society, and government are struggling to respond appropriately and effectively.

Any view regarding the way forward is necessarily provisional, as Donald Trump has not yet proposed detailed legislation, and Congress and the courts have not fully responded to his barrage of executive orders. But recognition of uncertainty is not a justification for denial.

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Published on February 20, 2017 04:05

My new year forecast: Trumpian uncertainty, and lots of it

Which policies Trump will pursue remains unknown, to say nothing of which will succeed or what the consequences will be

Every January, I try to craft a forecast for the coming year. Economic forecasting is notoriously difficult but, notwithstanding the truth expressed in Harry Truman’s request for a one-armed economist (who wouldn’t be able to say “on the other hand”), my record has been credible.

In recent years, I correctly foresaw that, in the absence of stronger fiscal stimulus (which was not forthcoming in Europe or the US), recovery from the great recession of 2008 would be slow. In making these forecasts, I have relied more on analysis of underlying economic forces than on complex econometric models.

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Published on January 09, 2017 03:59

What the US economy doesn't need from Donald Trump | Joseph Stiglitz

The only way he can square higher infrastructure and defence spending with tax cuts is voodoo economics

As Donald Trump fills his cabinet, what have we learned about the likely direction and impact of his administration’s economic policy?

To be sure, enormous uncertainties remain. As in many other areas, Trump’s promises and statements on economic policy have been inconsistent. While he routinely accuses others of lying, many of his economic assertions and promises – indeed, his entire view of governance – seem worthy of Nazi Germany’s “big lie” propagandists.

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Published on December 19, 2016 03:19

Joseph Stiglitz: what the US economy needs from Donald Trump

Too many Americans feel left behind by globalisation. But Trump is unlikely to pursue the agenda his voters need. This is what he should do

Donald Trump’s astonishing victory in the US presidential election has made one thing abundantly clear: too many Americans – particularly white male Americans – feel left behind. It is not just a feeling, it can be seen in the data no less clearly than in their anger. And, as I have argued repeatedly, an economic system that doesn’t deliver for large parts of the population is a failed economic system. So what should President-elect Trump do about it?

Over the past third of a century, the rules of America’s economic system have been rewritten in ways that serve a few at the top, while harming the economy as a whole, and especially the bottom 80%. The irony of Trump’s victory is that it was the Republican party he now leads that pushed for extreme globalisation and against the policy frameworks that would have mitigated the trauma associated with it. But history matters: China and India are now integrated into the global economy. Besides, technology has been advancing so fast that the number of jobs globally in manufacturing is declining.

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Published on November 15, 2016 04:00