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‘The problem isn’t that we’ve been slaves to free markets’: Joseph Stiglitz interview

30 May 2015

9:00 AM

30 May 2015

9:00 AM

‘How do you feel when you go back to Gary?’ I ask Joe Stiglitz. ‘Well, frankly, I get depressed,’ he replies. ‘The American middle class was created in places like my home town and is now struggling badly — which makes me sad.’

Stiglitz, a Nobel prize-winning economist and the closest thing the left has to an intellectual superstar, grew up in Gary, Indiana, during the 1950s, when it was the heart of the booming US steel industry. His father sold insurance and his mother was a teacher. ‘We had a modest detached brick house, with a lawn all around — it was safe and secure,’ he recalls. ‘Back then, if you worked hard and played by the rules in America, you’d make it — you could get ahead.’

Gary’s steel mills closed in the 1970s and thousands of skilled workers were laid off; the population has since halved, and Stiglitz says parts of his old neighbourhood ‘look like a war zone’. Countless cities have suffered the same fate, he says. ‘Gary is emblematic of the American Dream and that dream no longer exists.’

For Stiglitz, Gary’s demise isn’t so much due to globalisation — foreign competition for the US steel industry — as to the response in subsequent decades of Reaganite and Thatcherite ‘supply-siders’ preaching light intervention and low state spending. ‘There’s a large church in Gary that was once very beautiful but now lies ruined — in utter disrepair,’ he says. ‘It’s a symbol of what America does to its people and cities — you’ve worked for us, served us well and now you’re going in the garbage.’

Stiglitz’s career passed through Yale, Oxford and Princeton before a relatively smooth mid-1990s spell as chief economic adviser to Bill Clinton’s White House. But after joining the World Bank, he surprised many Ivy League colleagues by becoming, in his own words, ‘the rebel within’. He launched a fierce critique on the International Monetary Fund, his employer’s sister institution, for mishandling the late-1990s Asian financial crisis — condemning adjustment policies imposed on bailed-out nations as ‘brutal’. Eventually, he was sacked.

Since then, having been awarded the Nobel in 2001 for earlier academic work, he has written a string of hard-hitting books and commentaries on western economic policy. When the Occupy Wall Street protest movement emerged, its rallying cry — ‘We are the 99 per cent’ — was an explicit tribute to one of Stiglitz’s articles, a jeremiad about inequality and the US financial system titled ‘Of the 1 per cent, by the 1 per cent, for the 1 per cent’.


Stiglitz’s latest book, The Great Divide, is peppered with factoids about America’s growing inequality that the author recites on autopilot. The top 1 per cent commands a quarter of US income, he says, with one in five US schoolchildren now living in poverty. The average real wage of male non-graduates has dropped 12 per cent over the past 25 years, and American chief executives are now paid 300 times the average wage; it was 30 times in the early 1990s.

Unlike Thomas Piketty, whose recent bestseller Capital in the 21st Century argues that capitalism makes rising inequality inevitable, Stiglitz insists the system can be fixed. ‘Widening and deepening inequality isn’t driven by immutable economic laws,’ he says. ‘A well-functioning market economy doesn’t only create jobs, but should also generate increases in income that are shared.’

So Stiglitz is no anti-capitalist. He stresses that ‘getting markets to work like markets’ is the core message of his book. The problem ‘isn’t that we’ve been slaves to free markets, but that we’ve usurped them… Too-big-to-fail banks that extort government bailouts and big monopoly corporations that use their power to restrict competition are anathema to the free-market model — and are a lot of the reason inequality has risen so fast.’

In some senses, Stiglitz is a ‘big-state liberal’ in the Democratic tradition. When he argues that the US should have borrowed more after the 2008 collapse, I think he’s dead wrong. America has borrowed vast amounts. Since the crisis, its national debt has risen from $9,000 billion to $17,000 billion. The Stiglitz critique of inequality, though, is timely, as is his attack on the failure of western financial regulation.

Accepting that some inequality is ‘necessary to maintain economic incentives’, Stiglitz argues that wide income disparities eventually lead to a slowdown. ‘The US economy is in bad shape, with negative growth in the first quarter of this year and possibly the second quarter — so we may be in technical recession,’ he says.

‘One reason,’ he argues, ‘is that there’s so much inequality and people at the top spend a much lower share of their income than those at the bottom — so that kills aggregate demand.’ It’s a new twist on the traditional Keynesian case for government spending. ‘Inequality is both a symptom and a cause of a slowing economy.’

When I ask about the ‘extraordinary measures’ — $4,500 billion of quantitative easing — enacted by America’s Federal Reserve, Stiglitz steers the discussion to-wards Wall Street: ‘QE was necessary, if not on that massive scale, but the main point is that it was a massive bank bailout, a hidden subsidy of vast magnitude.’ It let insolvent banks across the western world to ‘get free money, then lend it back to their governments at 2 per cent or more — which clearly couldn’t have been done through an open and transparent political process’.

When it comes to criticising financial regulation, Stiglitz has form. In the mid-1990s, he watched powerless as Clinton’s Treasury Secretary Robert Rubin repealed the 1933 Glass-Steagall Act, which separated investment and commercial banking. Many observers, including Stiglitz, view this change — and the too-big-to-fail banks that resulted — as a central cause of the heightened market volatility that followed, including the 2008 crash. ‘We need Glass-Steagall, or something like it, but we need measures to tackle investment short-termism,’ he says. ‘But our financial lobbyists are so powerfulthat Glass-Steagall isn’t even on the table.’ Indeed, he says they’re trying to reverse Dodd-Frank, the much weaker set of regulatory measures imposed in 2010.

Since then, he says, ‘Unimaginable ghastly practices have been revealed, including the Libor scandal, which means we should actually be going beyond Dodd-Frank … the western banking sector, particularly in the US and UK, is giving capitalism a very bad name.’

I ask Stiglitz what kind of presidency we could expect under Hillary Clinton — someone he knows well. ‘I’m not yet sure which way Hillary will jump in terms of her closeness to Wall Street,’ he says. Maybe she’ll pick consumer-champion Elizabeth Warren as her running mate? He smiles.

Does Stiglitz himself want to return to the White House? ‘Maybe,’ he says. ‘But one of the great aspects of democracy is that influence can be exercised in many ways, and I may have more influence outside Washington.’

Liam Halligan writes the ‘Economic Agenda’ column in the Sunday Telegraph.

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Show comments
  • Dr. Heath

    It was suggested to Stiglitz, says the Observer’s Andrew Anthony in an interview published on the weekend, that the general election was ‘fought on the understanding that no one should do or say anything that frightened big business’. Whether Stiglitz, as Mr. Anthony wrote, agreed with this is beside the point. We’re told that we must stay in EU or – yes! – we’ll frighten big business. Ever since the arch-phoney, Clinton, repealed the Glass-Steagall Act nearly a generation ago, governments in the West have bravely avoided re-introducing tighter controls on the banking system as – yes! – this would frighten big business. Nation states are, we’re told by almost all our politicians, bad and outdated structures for maintaining civilisation because – yes!- their governments do things that frighten big business.

    I asked a [very right of centre] young history student what citizens of the West [the idiots in China and many of our competitor nations clinging foolishly to their protectionist ways], can expect from a brave new world without robust national governments and with globalisation and fearless ‘big business’ increasingly able to do whatever it likes, such avoid taxes ance and create McJob economies in nation’s which once possessed real economies.

    “Chaos. It’s the result of this End of History ideology. Our politicians pretend to be clever and they tell us that the economy will run itself. But this is because they’re useless and they know they’re useless.”

    • Jean-Claude Cameron

      And then the Anglo-American banking system backed by Anglo-American rating agents and Anglo-American accountants imploded. Squadrons of economists have since attempted to unwind the humongous distortions that abstract capital (CDS, derivatives and other insurance-related products) have created in the markets. Glad to help.

      • The monetary expansion of the Federal Reserve and the Banking of England was indeed terrible (and it is still going on). Lending should be from REAL SAVINGS – not credit-money expansion.
        However, the Bank of Japan and the European Union Central Bank are not better – they are all addicted to the same fallacies.

    • Abie Vee

      The “idiots in China” single-handedly dragged the West out of recession in 2008/09/10. The “idiots in China” will surpass the USA in a few years (they also have enough US$ holdings to collapse the US economy at will).

      Those “idiots in China” are not so idiotic as we are… they haven’t fallen for voodoo economics, they are not at all interested in rolling back the frontiers of the state. Far from it.

      • There has been a massive roll back of the state in China since 1978 (when everything was owned by the state).
        The companies that export to the West are privately owned, and Chinese taxation and government spending is actually lower than in the United States – the Chinese lack the vast “entitlement programs” that are crippling the American government with debt.

      • By the way the Chinese have also copied a central Western mistake – monetary expansion (credit bubble finance). That, in the end, may undermine the good that private farming and private manufacturing have done in China.
        Still at least Mao, the largest scale mass murderer in human history, is gone (1976) and his socialist economic system has been overturned in China in a series of steps from 1978 onwards.

        • Verbatim

          The Chinese “mistake” has been to remove millions from poverty.

          • Andrew Gebhardt

            But it cost the life of 70-110 million Chinese, since the start of the people’s revolution.

        • Abie Vee

          Mao may be gone. He is still revered in China. Do you actually know any Chinese people? You should, I recommend it. The eastern mindset no way resembles ours.

          Of course China is progressing. But they’re doing it their own way… which owes little or nothing to the “Voodoo economics” of the Anglo-American system (which has stumbled mightily once, and will fall again, probably for good, shortly*) or to western notions of democracy; multi-national corporations are anathema to them, their own corporations are either state-owned or family owned (under state over-view).

          *historically the USA has always been protectionist… the current free market experiment is something of an aberration for them (which isn’t working out for them as they imagined) and they will revet to type when the st hits the fan. Either that or they will self-destruct. And can’t you hear the cries of “sovereignty” rising???

    • davidofkent

      In general, the economy runs well despite government. Government interference in business is usually counter-productive. Government’s role in business should only be to ensure a ‘level playing field’ and limit any social evils resulting from it. Most of the latter was accomplished by Victorian Intellectuals, though we will always have minor levels of exploitation to deal with.

      • Dr. Heath

        A US national debt running into the trillions of dollars. A government in the UK that spends more on debt interest every year than it does on education. The hollowing out of the middle-classes across the developed world. Rather than a real economy, a banking and finance based alternative capable of disappearing up its own a*shole inside of a week but more likely, of course, to expect hundreds of billions more in bailouts [from impoverished middle-class taxpayers, natch] the next time this magic act is staged. Signs that another asset-bubble is growing, and that the stock markets of the world along with it, are likely to implode again – soon. The world’s economic problems are catastrophic, not ‘minor’, as optimists from the School of the Light Touch are convinced is the case.

        Yes, I’d continue to assert that our politicians are beyond useless and that the problems they’ve been enthusiastically complicit in encouraging are hardly going to be remedied by any Victorian-era approach.

        • Surely it is the rejection of Victorian principles of sound money and honest finance (rather than deficits and credit bubbles) that is at the root of the problem.

  • UnionJihack

    In France they have different ‘favourite’ economists as the FT will know full well.

    PS. why is Adam Smith coming off the £20 note only to be replaced by a lefty social commentator/artiste? I mean, you know, the bells are ringing.

  • Terence Hale

    Hi,
    “‘The problem isn’t that we’ve been slave to free markets’”. Mr. Stiglitz is making a
    mistake of logic. The free market does not exist, it’s a controlled market.

    • Fraser Bailey

      Exactly – rule by the banks is not a ‘free market’. It is a giant stitch up, the banks having bought and/or somehow brainwashed the politicians. And this week we had the sickening sight of Goldman Sachs complaining that ‘the world is drowning in debt’. This is rather like ISIS complaining that Iraq is drowning in blood.

      • “Rule by the bankers” – not so. I am no friend of fractional reserve banking (in fact I despise it – lending should be 100% from real savings not credit expansion), but it is government monetary policy that is the real problem. For example the monetary expansion of Benjamin Strong in the late 1920s or of Alan Greenspan in the run up to 2008. Or the one that is occurring right now. All with the same intent – to “maintain the price level” (exactly the policy Stiglitz has always supported).

    • James

      He doesn’t make a mistake at all. Literally the second part of the sentence you quoted goes on to say the markets aren’t free under the banks.

      • Government spending makes up about half of the economy in most Western nations and the economy (including banking) is saturated by thousands of regulations – and private bankers are the problem? No doubt you will claim that the Federal Reserve is really private – even though it is controlled by the government.

        • ArashUK

          cannot agree more. it is a funny and laughable myth that the bankers bankrupted the economy and controlling everything. It is the big and welfare states which is becoming a big brother and still people want more power to it and accuse private sector for their failures and mistakes. All economic crisis are direct result of government regulations and interventions.

          • mohdanga

            Yeah, because all the private banks gave lavish pensions and salaries to Greek gov’t workers. My wife’s friend gave me one of his books a couple of years ago, got about 10 pages in before I ditched it…it was all “gov’ts should borrow, tax and spend more”, “Reagan was an idiot”, blah, blah, blah. And yet he was awarded a Nobel Prize.

  • Paul B

    I read The Spectator. It is generally well written and has a point of view with which I am often sympathetic but, more usefully, sometimes I disagree. One should expose oneself to contrary opinion. But to those of you who simply read that with which chimes with your prejudices, and of course to Liam Halligan, author of the article, I quote this snippet from the introduction:

    “[Stiglitz is] the closest thing the left has to an intellectual superstar.”

    Get a grip! Those who don’t think like you are not stupid. They are not less clever than you. They have simply come to different conclusions about the way world works and the way it can be made better. Disagree with them, argue with them, but when you write them off without due consideration you fail properly to challenge your own position. In so regarding the Left (or any other group with which you disagree, however profoundly) you establish your own orthodoxy. You become a believer, not a thinker.

    • Verbatim

      I think you are totally misguided in your comments. Stiglitz is surely a ‘superstar’ of the Left; he defaults to leftist ideologies at every turn. This doesn’t make him unintelligent, but it makes him uncritical of rusted on ideologies and unwilling to engage with a dissenting view. He came to Australia and appeared on a TV Question and Answer discussion program and, frankly, a lot of what he spruiked was straight out of the Marxist hymn sheet. One of our Economists (a female) actually shot him down in flames. So, when intellectual rigour is compromised by dogma and ideology we have a right to call that person out. He is, in fact, a believer more than he is a thinker. I suspect that when he studied he wanted scholarship to reinforce his pre-existing philosophy and views. Nothing wrong with that as long as you don’t pretend you’re writing and thinking and speaking without prejudice. He most definitely has an agenda.

      • spot on. Do you know where I can find the Question and Answer program?

        • Verbatim

          I’ll see if I can find it for you and come back!!

      • Paul B

        You seem to have completely misunderstood my thrust. It isn’t whether Stiglitz is or is not correct about anything, or whether or not he is an intellectual superstar. My point is this: When the author writes “[Stiglitz is] the closest thing the left has to an intellectual superstar” he is saying the Left has no intellectual superstars.

        And that exposes the article’s author as being a believer rather than a thinker.

        • Verbatim

          I understand precisely what you’re saying. My point is that the Left has no intellectual superstars. They are mostly conformists who sing from the same song-sheet, mostly come from rusted-on ideologies from universities and have little to say by way of engagement with the wider issues and ideologies. In short, if they cannot speak without prejudice or agenda then they don’t deserve the moniker of “intellectual superstar”. I would regard, say, a theoretical physicist like Stephen Hawking as an “intellectual superstar”.

          I was having a conversation with somebody today about why universities are mostly hotbeds of group-think and it became perfectly apparent in the discussion; people get into universities precisely because they CONFORM right through the school system, do exactly what they have to do and then achieve marks. It is, therefore, not such a short step thereafter to ‘conform’ to institutionalized conformity because they’ll spend much of their lives living under that regime. I’ve always regarded universities like the centrifuge; things spin around and around, but ideas never (or seldom) come into it from outside. Not really. (I must qualify this and state that this is not the case in relation to science, mathematics and medicine!!)

          • Paul B

            You too – a believer, not a thinker. You’ll be aware that some on the Left consider all those on the Right to be morons. They too are wrong, of course.

          • Liam Murray

            Totally with you Paul. That sentence was particularly distracting and I think it’s for the reasons you first stated. Apart from that, a good article I think.

          • It was a terrible article – as it offered no criticism of any of the positions that Stiglitz advances (no matter how absurd they are). Stiglitz might as well have written the article himself.

          • Liam Murray

            I suppose it didn’t, but I simply judged it not being that kind of article. It was quite nice for The Spectator to simply outline his case sans commentaire and leave it for the reader. If that was the intent it could have been made clearer in the beginning though – especially without that daft sentence.

          • WarriorPrincess111111

            In what way did you find the statements absurd? I have studied much about the economy from the UK’s point of view, and I find that Joe Stiglitz is correct in most of his claims. I would be interested to know why you disagree.

          • Verbatim

            That’s your opinion but this doesn’t make it right. Extremes of Left and Right are not good for any country, but dogged adherence to out-moded ideologies – like Marxism – are just stupid. And so is the culture of victimhood; it keeps people precisely where they are not meant to remain. Do you see the irony? I thought not.

          • Paul B

            Does not parse.

          • Bill N

            Projection.

          • On the contrary Sir – the left control both the schools and the universities, so it is possible for a collectivist to gain high positions simply by conforming. This is not possible for someone who opposes collectivism – to use Verbatim’s language for someone who is not on the “left” (although the terms “left” and “right” are used for so many contradictory positions that I am not sure they are useful).

          • Verbatim

            I don’t think “left” and “right” contradictory at all. But if you do please provide specific examples.

          • Verbatim

            Cognitive dissonance.

          • Cognitive dissonance.

  • The_greyhound

    Stiglitz, the man who assured the US Government that Freddy Mac and Fanny Mae didn’t represent any risk to the US tax payer, shortly before it took £145,000,000,000 to stablise them?

    Or the Stiglitz that contributed to MacMugabe’s notorious White Paper, a tissue of conjecture, bald lies, unsupported opinion and invention?

    Or another joker of the same name?

  • It is rather hard to see how Ronald Reagan or Mrs Thatcher could be blamed for the closing of the steel mills in Gary Indiana before either of them were in office. Nor did either person cut government spending. Stiglitz would be wiser to blame the United Steel Worker’s Union and the Federal government legislation that gave them such power – and the repealing of the Indiana Right to Work law in 1965.
    As for banking and the crash – the article does not even mention the policy of the Federal Reserve and other government controlled entities (whether nominally “private” or not – they are government controlled and use powers granted by Federal legislation). For a better view of the actual cause of the boom-and-bust (which had nothing to do with the repeal of Glass-S.) Read Thomas Sowell’s “Housing: Boom and Bust” (for the government interventions that caused the specific housing problems) and Thomas Wood’s “Meltdown” for the general Federal Reserve antics (fully supported by Stiglitz) to “maintain the price level” – i.e. the massive expansion of the money supply in the years up to 2008 (destructive policies that have continued – and will lead to the next crash).
    J. Stiglitz is an interesting example of how someone can gain very senior positions in economics departments and be given the “Nobel” (Alfred Nobel actually did not create such a prize) for economics – whilst not even having a basic grasp of the subject. Sadly he is not an isolated example – the standard of knowledge of economics among the establishment elite is incredibly low. They believe that investment can be financed by monetary expansion (rather than real savings) and that supply and demand should not decide prices and wages – they do not understand even the most basic principles of economics.

    • Verbatim

      See my earlier posting on academic conformity within universities.

      Science, engineering, mathematics, medicine – all these things thrive in a university and contribute vastly to society. The creative people are in those fields. The rest are talkers and theorists and it’s very easy to adopt a party line and stay with it, then be subject only to ‘peer review’!! Yep, that’s really letting in the fresh air.

      The other really creative people are out there running successful and innovative businesses!!

      • V I don’t call those so called innovators exploiting labor in china and the 3rd world creative or successful….I call that morally reprehensible.

      • justejudexultionis

        British universities have been co-opted by the capitalist state and are dominated within the humanities by conservative ideologies of subservience, deference, ‘scholarship’ (really just a form of self-indulgent navel gazing), respectability, conformity and moral cowardice. The humanities really serve no purpose at present other than to buttress the British Establishment and its nepotistic power structures.

    • At least we agree on the fact that there will be another crash… and I put the last crash squarely on wage disintegration over time which causes ever increasing borrowing to keep up with the Matrix being broadcasted on TV. Incomes have lost 5%+ in all categories of education in the last seven years. Master Degreed people within the US since 2007, have actually maintained incomes at 2007 levels for an increase of 0% through 2014.Nothing changes if nothing changes.

  • I grew up about 90 miles from Stiglitz in the 60’s and 70’s and seen the utter destruction of the Economy by Reaganite and Thatcherite ‘supply-side’ preachers and their union busting and deregulating lieutenants. Now my children get to enjoy working twice as hard for the same wages I made in 1979 and certainly without any legal employment status within a company Bandaid policy changes and an extra few hundred dollars a year for child care is not going to suffice…This economic structure will come down on its head eventually… and it will not be pretty when it does.

    • I have just pointed out how it is hard to see how Ronald Reagan and Mrs Thatcher can be to blame for a decline in Gary Indiana that happened before either of them took office.

      By “union bashing” – do you mean the repeal (not establishment – repeal) of the Indiana Right to Work law in 1965 (only recently re-established – too late to save Gary Indiana). Actually the union had a stranglehold on the American steel industry – a stranglehold given to it by the government (by the Wagner Act and so on).

      And to what “deregulation” do you refer? Perhaps you will now start to talk of “cutting government spending” – something that neither Ronald Reagan or Mrs Thatcher actually did.

      If you want to know why Gary Indiana, or Chicago Illinois, or Baltimore Maryland, or Cleveland Ohio, or Detroit Michigan or…. (and on and on) are such a mess – I suggest you look in the mirror.
      The problem is yourself Sir, you are the problem – and Democrats like you.

      • mohdanga

        Just look at the UAW. For years they were awarded premium wages and benefits (management offered them this in order to buy labour peace because they would also hold the companies ransom by rotating the strike threats among the Big 3 ) while the companies made scads of money because they had virtually no quality competition. Then when the Japanese and Germans got around to kicking their *sses and the layoffs came they blamed everyone but themselves. No sympathy here. I didn’t get any raises and bonuses were cut in the late 2000s at my company yet the Canadian federal and provincial gov’ts thought it wise to prop up failing auto companies to the tune of about $170K per worker. Madness.

    • Verbatim

      I would have thought it already had come down on its head!! And I don’t think you can blame Reagan or Thatcher for that. They were trying to reverse institutionalized economic torpor. It’s like saying chemotherapy is the reason why cancer sufferers are ill.

      The USA has no centralized wage-fixing mechanism and this is one of their endemic, ongoing problems – that and the fact they’ve played hard ball so long on the international trade field and now they complete (like the rest of us) with nations prepared to do the same thing for nothing. Not rocket science.

      One of the solutions is to empower people to make better choices knowing what the landscape looks like now. Pointing the finger no longer cuts it.

      Another ‘solution’ is to provide a first class education to people of all socio-economic backgrounds at no cost to them. Oh, wait……….

      • Education does not seem to be doing any good V… see my reply to Paul Marks below… Driving a forklift at Food Banks and at Used Clothing store warehouses seems to be booming however. 😉

      • V I don’t think its Marxist to have Government enforce at least a minimum wage (or through tax structure changes) that can feed, clothe, and provide shelter to a human. God knows that they have provided Billions upon Trillions in tax relief to the very wealthy… and continue to do so!

        • mohdanga

          Would that be the billions poured into GM and Chrysler to fund thousands of UAW jobs? Just curious.

    • American industry was not create by government (or union) mandated “child care”, or by the rest of the stuff you believe in Sir.
      Nor are people such as Mr Knight (Nike), or Jon Huntsman senior (Huntsman Chemical), or the boo-hiss “Koch Brothers” (Charles and David – yes they have first names, they are human beings) the monsters you have been taught to believe they are.
      There has been no “deregulation” of American manufacturing – the EPA and all the other Executive Agencies have massively INCREASED regulations over the years.
      Nor have business taxes been reduced – in fact business taxes are very high in the United States (you are now screaming that “the rich” and “big business” dodge taxes – as you have been taught by the crude Hollywood Marxism that passes for thought among American collectivists).
      You believe, quite falsely, that the “capitalists” who pay your children’s wages are their enemies – and that even more government spending, taxes and regulations (all at record highs – yes highs) will help your children.
      You are utterly mistaken – your whole world view is wrong, in fact the opposite of the truth
      However, you are quite correct that things “will not be pretty” when the current system collapses – oh yes, I agree with you it will collapse.
      We disagree on the causes of the collapse and we disagree on what should replace it.
      You would replace it with the “Social Justice” policies that Stiglitz supports.
      You believe that the policies of Brazil, Venezuela (and so on) would make your children better off.
      I disagree – but neither of us is going to convince the other.
      That is the real reason that things will “not be pretty”.

      • Verbatim

        “Social justice” policies? It’s called having a job, working very hard and taking personal responsibility. Also, participating in the polity instead of refusing to vote. Can’t get off the hook anymore on that one.

        • justejudexultionis

          There is little or no purpose in voting within a bankrupt political and economic system.

      • Great Change is a coming Paul… either its accepted that we are going to feed, clothe, and shelter people with ‘adequate’ wages or there will be shots fired across the bow… and perhaps into the bow.

    • justejudexultionis

      Yes, rising inequality merely increases the chances of social and political instability and, ultimately, violent revolution. Having been anaesthetised by the pabula of the mass entertainment industry the workers are currently asleep, but when they wake up the greed system of the Rothschilds, Bransons et al. will receive its final judgement.

  • “Deregulation” – as if American manufacturing was not far more (more – not less) regulated than it used to be (the Federal government Executive Agencies are totally out of control). One might as well blame “government spending cuts” – when government spending is incredibly high (not low) and taxes on American manufacturing are actually very high (again not low). “But Stiglitz means banking” – again banking is dominated by thousands of pages of regulations that twist everything into knots. The real problem is the long standing policy of monetary expansion (to “maintain the price level”) by the Federal Reserve – the real source of the boom-busts (and a policy that Stiglitz has always supported – and still does).

  • Asking Stiglitz how capitalism can be fixed is a bit like asking a footballer about how to fix the problems in Syria.

    As Stiglitz is utterly hostile to capitalism (obvious to anyone who is not on the left) why would anyone who is not a leftie true believer think he has anything useful to say?

    • justejudexultionis

      Who wants capitalism, anyway? There are far better alternatives such as Social Utopianism and mutual credit clearance. Capitalism is a crude attempt to provide a moral and intellectual gloss to what is essentially human greed.

      • Who needs gloss? I am very much with Gordon Gekko on that: Greed, for want of a better word, is good.

        When you look at all the alternatives it always ends up regressing to people pointing guns at other people to make them hand over their stuff in ways they never agreed to.

  • justejudexultionis

    So-called ‘free markets’ are never free. Free markets eventually destroy themselves by creating monopolies. These monopolies undermine competition and make a mockery of the neoliberal claim that markets are ‘free’. Only those at the apex of the social and economic pyramid are free. The rest of us are slaves to their idiocy and mendacity. Socialist intervention is required to restore the freedom of rational actors within a genuinely free market and act as a bulwark against the natural tendency of corporations and other ‘successful’ capitalist profit entities to undermine democratic choice for the vast majority of the population.

    • BoiledCabbage

      No, rigged markets are destroyed by the ‘free market’ – witness the outrage of London cabbies at being undercut by Uber. But try investing in Uber – you can’t.

  • Ivan Ewan

    He had some good points there, but lost me at the argument about income inequality. We’ve seen income equality, and it is universal poverty.

  • BoiledCabbage

    The anti-Capitalists have failed to notice that Capitalism – a term invented by Marx to desribe the application of money to buy Labour and Commodities to produce goods at a profit – is all but obsolete in a world dominated by the internet which needs neither Labour, nor Capital or commodities other than infrastructure. The new model is based on ideas, well-rewarded staff and instant and unlimited global distribution. The downside is permanent deflation. QE, the antidote to deflation, is needed in permanent and unlimited quantities. The Greens’ idea for a basic state wage is not as daft as some suspected – it would turn everyone into a consumer and break the Picasso problem – rich people only buy expensive things e.g. Art, which does nothing for employment other than for porters.

  • Verbatim

    He’s been out in Australia spruiking “Ine-kwawity” – again and again and again. Those bastards in the amorphous ‘market’; it’s all their fault. Turning whole nations into victims is worthy of a Nobel Prize? Gotta question their credentials. Not to mention their motives.

  • Andrew Gebhardt

    ” but we need measures to tackle investment short-termism”

    The moment you see this you know that he fundamentally doesn’t understand
    the purpose of a free market economy. Luckily the markets punish these
    people approximately every 7 years.

    Fact: If you count inflation, so “real returns” the stock markets in the long term have
    NEVER made money. A long term investor has a 90% expectation of loss.

  • Andrew Gebhardt

    ” but we need measures to tackle investment short-termism”

    The moment you see this you know that he fundamentally doesn’t understand
    the purpose of a free market economy. Luckily the markets punish these
    people approximately every 7 years.

    Fact: If you count inflation, so “real returns” the stock markets in the long term have
    NEVER made money. A long term investor has a 90% expectation of loss.

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