Saturday, July 23, 2011

Is Joe Stiglitz Learning His Economics from Eliot Spitzer?

Nobel Prize winning economist Joe Stiglitz is out with a rant calling for higher taxes. He justifies the higher taxes based on the charge that the economy has been going through decades of "free and unfettered markets."
Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin. Even in its hey-day, from the early 1980’s until 2007, American-style deregulated capitalism brought greater material well-being only to the very richest in the richest country of the world. Indeed, over the course of this ideology’s 30-year ascendance, most Americans saw their incomes decline or stagnate year after year...

I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government.
 Is Stigliz developing his thinking based on the 54-pages of Spitzer's book, Government's Place in the Market? Spitzer makes the same absurd charge, that for the 30 years leading up to the financial crisis the economy was run based on libertarian principles.

Note to Stiglitz, he should read beyond the first 54-pages. In the pages following Spitzer's claims, Dean Baker completely punches out Spitzer's notion that we lived in a period of libertarianism over the last 30 years . The Baker attack was so on target that by page 80 of the book Spitzer recants his claim that it was a period of libertarianism gone wild. He retreats to the claim that it was only a period of libertarian rhetoric.
Dean Baker properly calls the libertarian ideology of the past 30 years a mere facade behind which government actively participated in the crafting of rules and priorities that benefited specific groups--banks, big pharma. certain land owners. 
Bottom line: At the end of the day, we have Spitzer punching out Stigltz's claim that the past 30 years have been a period of  "free and unfettered markets."  With the Federal Reserve manipulating interest rates, the housing market and the overall economy by adding trillions of dollars to the money supply and buying up trillions of dollars in Treasury securities, the United States looks as much like a free and unfettered market as Guantanamo looks like Hugh Hefner's Playboy Mansion.

No comments:

Post a Comment