When things go wrong, everyone looks for someone to blame. And when the economy goes wrong, eyes start falling on politicians and bankers. At least in the case of bankers we should not have been surprised by their actions and inactions in the financial crisis—they just acted how they have always acted. That is what Joseph Stiglitz thinks, anyway—a Nobel Laureate and former chief economist at the World Bank. WRS’s Tony Ganzer reports.
Sometimes the simplest questions illicit the simplest, and clearest answers. So when I asked Joseph Stiglitz how bad the economy is for the working-class all over the world, he kept it simple:
Well, he added that unemployment numbers were high, and the poverty rate in the US is up, but even without those qualifiers his view was clear. The financial crisis is still unsettling investors and markets worldwide, and at least some of the problems could have been solved earlier. Stiglitz says bankers have acted and reacted more or less in predictable ways through many crises, the great depression being one, but learning from the past cannot always overcome arrogance.
Regulation seems to be a necessary factor in stable markets, according to Stiglitz—a view opposed by many of the policy makers and regulators in the US preceding and following the housing bubble’s burst. Recent moves to add international regulatory measures, like those by the Basel committee, or talks of arbitration by the G20, hold promise, but are not enough to stem problems, especially when nations will ultimately write their own rules.
Regulatory reforms aside, Stiglitz does see promise in moving more into green technologies and green economies. He agrees with the common line from politicians equating good environmental policy to good economic policy, because he says we don’t yet know how expensive damaging the environment really is.
Stiglitz has been a staunch critic of the handling of the financial crisis, saying central banks were using models and theories that had little or no basis in economic reality. The best bet now, he says, is better and effective regulation.