Tuesday, January 20, 2015

Joseph E. Stiglitz — The Politics of Economic Stupidity

In 1992, Bill Clinton based his successful campaign for the US presidency on a simple slogan: “It’s the economy, stupid.” From today’s perspective, things then do not seem so bad; the typical American household’s income is now lower. But we can take inspiration from Clinton’s effort. The malaise afflicting today’s global economy might be best reflected in two simple slogans: “It’s the politics, stupid” and “Demand, demand, demand.” 
The near-global stagnation witnessed in 2014 is man-made. It is the result of politics and policies in several major economies – politics and policies that choked off demand. In the absence of demand, investment and jobs will fail to materialize. It is that simple.…
The big problem facing the world in 2015 is not economic. We know how to escape our current malaise. The problem is our stupid politics.
Hits the high points.

Project Syndicate
The Politics of Economic Stupidity
Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, was Chairman of President Bill Clinton’s Council of Economic Advisers and served as Senior Vice President and Chief Economist of the World Bank

2 comments:

Neil Wilson said...

I'm already getting fed up of the 'infrastructure spending' argument.

You should always be spending on the necessary infrastructure regardless of the cycle.

Infrastructure projects are not start/stop operations that can balance things out.

The auto stabilisers are not stabilising sufficiently and we need to ask why and fix them.

Otherwise very quickly we'll end up building roads to nowhere and overbidding capital equipment.

Tom Hickey said...

Right, the cyclical model of investment is led by neither demand nor need, which are the chief economic signals.

The model is to wait until the horses have left the barn and then lock the door.