Thursday, June 6, 2019

Nobel Prize Winning Economist Attacks Free Markets

Joseph E. Stiglitz
By Robert Wenzel

Joseph E. Stiglitz, a Nobel laureate crackpot, who is University Professor at Columbia University and Chief Economist at the Roosevelt Institute, is now out with an attack on free markets at Project Syndicate.

He writes:

The neoliberal experiment – lower taxes on the rich, deregulation of labor and product markets, financialization, and globalization – has been a spectacular failure. 
Of course, he leaves out the government minimum wage laws and horrific inner-city government-run public schools that make it impossible for urban youth to get into the capitalist system.

And he ignores the government central bank, the Federal Reserve Board, whose money manipulations result in the business cycle.

In other words, Stiglitz ignores the non-free market sector which is at the heart of suffocating a general increase in a country's standard of living. And attempts to lay blame for a sluggish economy on the limited moves in the direction of  freedom. For example, he blames the limited lower taxes and limited deregulation that have been made in recent years.

He is promoting an anti-capitalist program and misleadingly labelling it progressive capitalism.

He tells us that progressive capitalism calls for the restoration of the balance between markets, the state, and civil society. Of course, what this means is intervention against capitalism.

He tells us that it is "also the government’s job to do what the market cannot or will not do, like actively investing in basic research, technology, education, and the health of its constituents."

This is a stunning technocratic claim.

Where the hell does he get the idea that market entities don't invest in basic research or technology? Does this guy have any idea how many billions of dollars have been invested in Silicon Valley startups in artificial intelligence, the health sector and sectors beyond, most of which are not producing any immediate income? Does he have any idea as to how much money has been spent on biotechnology or the technology for driverless cars?

Stiglitz than babbles about the wealthy:
[I]ndividuals can get rich by exploiting others, extracting wealth through rent-seeking rather than creating wealth through genuine ingenuity. Many of today’s wealthy took the exploitation route to get where they are. They have been well served by Trump’s policies, which have encouraged rent-seeking while destroying the underlying sources of wealth creation. Progressive capitalism seeks to do precisely the opposite.
But what he is talking about here is crony capitalism, not free market capitalism.

With free market capitalism, there is no central power one can go to bend the rules in one's favor. That can only happen under crony capitalism where there is a central power that sets the rules. And Stiglitz's progressive capitalism is about creating more points of cental power that can be captured by the wealthy and powerful!

He knows he is talking in circles, otherwise, he wouldn't write at the close:
Progressive capitalism is not an oxymoron.
It is an oxymoron. It is a push away from capitalism and toward central planning with plans for various new pockets of central power.

In short, Stiglitz is a government technocrat promoting a new and more powerful way for government to gain more control or the economy.

That is, he is either ignoring or never learned the warnings of Ludwig von Mises and Freidrich Hayek that an ever-changing economy can never be planned if the goal is a generally advancing standard of living for all. Central planning by definition cannot be fluid and also sprout flowers in the most surprising corners. It is about stagnation, bureaucracy and suffocation.

This is what Stiglitz's plan is about.

Robert Wenzel is Editor & Publisher of and Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank and most recently Foundations of Private Property Society Theory: Anarchism for the Civilized Person Follow him on twitter:@wenzeleconomics and on LinkedIn. His youtube series is here: Robert Wenzel Talks Economics. More about Wenzel here.


  1. It's all the rage these days. If you caught Tucker Carlson last night, you'll see that he's gone stark-raving mad, and full-on, populist, economic-nationalism.

  2. Stiglitz is also ignoring that on average the tax revenue as a share of GDP form 1950 through 2017 has averaged about 17%, with the year 1950 the lowest at 14% when both individual (17.4% to 84.4%) and corporate (over 50% when including the “Excess Profit Tax”) rates were near their highest.

    2000 had the highest tax revenue as a share of GDP at 20%. Individual rates were between 15% and 39.6%. Corporate rates were between 15% and 35%.

    Tax revenue as a share of GDP steadily declined from 1953 to 1959 during the period when individual rates (17.4% to 91%) and corporate rates (30% for first $25K and 52% over $25K) were at their highest from 1953 through 1963 and averaged 17.06% for that period.

    If Stiglitz means “lower taxes on the rich has … been a failure” because it generated more revenue for the government, I agree. I doubt that is what he means and he either does not know the facts or is obscuring them for political purposes.