Newsweek: Why Is Washington Ignoring "Economic Prophet" Stiglitz?

newsweek.com:

Such is the lot of Joe Stiglitz. Even in the contentious world of economics, he is considered somewhat prickly. And while he may be a Nobel laureate, in Washington he's seen as just another economic critic--and not always a welcome one. Few Americans recognize his name, and fewer still would recognize the man, who is short and stocky and bears a faint resemblance to Mel Brooks. Yet Stiglitz's work is cited by more economists than anyone else's in the world, according to data compiled by the University of Connecticut. And when he goes abroad--to Europe, Asia, and Latin America--he is received like a superstar, a modern-day oracle. "In Asia they treat him like a god," says Robert Johnson, a former chief economist for the Senate banking committee who has traveled with him. "People walk up to him on the streets."

Read the whole story: newsweek.com

Comments

[marthainmaine]

If Stiglitz were our Sec of Treasury..­.it would give other countries more confidence in the dollar.

Summers makes disaster happen everywhere he goes. Even Harvard University which used Summers financial advice , is now broke.

In 1995 as clinton's Under Sec of Treasury Summers arranged a bail out loan to Mexico...c­harged such sky high interest rates...th­e Mexicans were forced into the US to work...the­y could not pay off their mortgages , car loans etc. The US got a new slave labor class. This was done by Summers . Alan Greenspan was pleased because the loan was paid off early. Suffering and misery..no­t a problem.

[jekyll]

I agree with everything that you said except your first sentence. How can calling for a new global reserve currency create confidence in the dollar??? That is silly! Stiglitz is a globalist with a globaist agenda, which is very dangerous. If you want to read the truth....r­ead G. Edward Griffin's book "The Creature From Jekyll Island." It talks about what Summers and the FED did to Mexico and numerous other countries. It is shameful.

[Bernique]

We can also read The Shock Doctrine by Naomi Klein to see how the theory which devastated the foreign countries where it was applied is now devastating this country. Follow up with the book Confessions of an economic hitman by John Perkins for confirmation that ... capitalism carried to extremes is evil.

Now, Professor Stiglitz, I hope you will be called upon to advise the administration on the need for drastic reform (not the tinkering of "overhaul") of the health care mess. I would trust your advice over that of Mrss. Summers, Ortsag & Geithner.

[me again]

They answered their own question, he and Larry Summers do not get along. Summers is in favor at the moment at the White House.

[VMIGeneral]

"If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind?"— Frédéric Bastiat from The Law

[totaldisbelief]

amen...nic­e one.

[VMIGeneral]

"The American people will never knowingly adopt socialism. But, under the name of 'liberalism,' they will adopt every fragment of the socialist program, until one day America will be a socialist nation, without knowing how it happened." -- Norman Thomas, U.S. Socialist Party presidential candidate, 1940, 1944 and 1948

[ShakeYourComplacency]

And yet...we'r­e far from that, eh? How did we get closer to facism and a wealthy ruling class instead?

[LHoney]

Corporate socialism

[hark]

What is the point to this comment?

Oh yeah, evil socialism has insidiously taken over the United States without our knowing it. There is no top 1% that own 40% of the wealth in this country. No hedge fund managers make $2.5 billion in a year. Everybody makes a living wage. Everybody has health care, a guaranteed job, public education through four year colleges. There is no poverty in the United States. Nobody is a billionaire.

It's just horrible here. All that evil slimy socialism all around us, did that to us. Why just forty-four years ago we adopted that horrible Medicare for seniors that destroyed them - silly us, nobody told us that was socialism so we went along with it - and then right after that there was, there was that, there was that, . . . , um, there was that, oh yeah, the huge tax cuts for the rich in 1987, oh wait, that's not socialism is it? I'm getting confused.

[vega123]

Interesting guy, but he's flat out wrong about the mortgage meltdown -- it happened because of too much regulation, and not because there was not enough.

Here's why: The government compelled Freddie and Fannie to lower their credit quality standards, they compelled community banks to lend to lower credit quality people and they (the Fed) flooded the system with excess cash/credit that had to find a home and that home was in the mortgage markets. So the inevitable conclusion was that loans were made to people who never should've gotten them in the first place precisely because of regulators mis-guideded efforts.

With that said, we do need to regulate derivative transaction and we do need to ensure that those derivatives are all disclosed on balance sheets so the market can have full transparency.

[panchovilla]

You consume too much faith-based economic commentary and WSJ editorials. You can find pointers to factual replies to this silly myth wacko right-wing pundits are trying to perpetuate at:

http://delong.typepad.com/sdj/2008/11/fannie-and-fred.html

[jsarets]

BS. Foreign capital flew into America at an unsustainable rate due to the current account deficit and junk mortgages were written to satisfy the demand for investment products.

[jekyll]

That is just silly!! To say that the FED's policy of manipulating the interest rates and artificially increasing the money supply did not cause the housing bubble is outright laughable. Anyone who actually understand monetary policy knows that the FED is the ultimate culprit. And the FED is a private banking cartel that is government protected!

[DiogenesOfAlaska]

Actually, it would probably be of a lot of help if the lobbyists would read some of Stiglitz' papers.

It would help them avoid making asses of themselves.

[quantumspin]

Stiglitz is not carrying the party banner----I don't know what his history is though. But he strikes me as a straight talker. Also, most Americans have zero economic education so they can't discriminate between Mickey Mouse, Glenn Beck, Summers, Geithner, and the likes of Stiglitz and Kurgman. Americans hear for example 'free trade' and while they like it, they don't grasp what it means eventually working for a dollar a day with no benefits so that they can compete with Chinese teenagers in the global workforce. Americans don't realize that in the shanty towns, even those folks get satellite TV---so they think that in the US, having 'TV' is an elite thing. People making a dollar a day have TV, using umbrella frames for the satellite antenna. Therefore, what Stiglitz says seems like ephemeral b.s. But wait another decade or so.

[Beelzebufo]

This man *almost* makes sense, much as Chauncey Gardiner did.
He takes "the Dismal Science" excrementally one step higher.

[DiogenesOfAlaska]

sounds a bit defeatist to me. But you are free to entertain your pessimism.

[Prakosh]

Anyone who has been watching for the last 40 years should understand why Stiglitz is persona non grata in the media, and Washington. He is too often correct. That makes him anathema in the current economic climate. Power never willingly gives up power. And if power recognizes Stiglitz, things would have to change. No one at the top of the financial pyramid wants that,

In the current climate we only reward incompetence, error, and shysterism. Those who claimed that Saddam had weapons of mass destruction, that free markets would solve everything, and that we could fight two wars while reducing taxes on the top 10 percent of wage earners are still shilling for the rich and well heeled. Reagan is still the right's hero. While, those who think the current system rewards the fortunate few unfairly is out in the cold.

The article could have spent more time on Stiglitz's solutions and ignored why he isn't invited to the White House. The he said, she said or in this case he said, he said, journalistic model really has to go.

Homer's "The Iliad," contains one of the first recorded instances of political spin in the second book. And shows that the arguments for continuing a losing war effort haven't changed all that much since the sixth or seventh century B.C. either. For all their imaginative qualities, human beings still haven't thought too deeply about some of the most pressing problems in the world. Those who do are seldom rewarded.

[DiogenesOfAlaska]

At least Peggy Noonan has moved from 'intellectuals create all the problems in this world' to 'Palin is too dumb to be president'.

[Mogamboguru]

Every single dime the big investment banks at Wall Street have been claiming, claim and will be claiming in the future as their "profit", has in fact been taken out of the "real economy" where products are manufactured, people are employed and taxes are generated.

Investment banking has become THE organized crime of the 21st century.

And some day soon, it will be treated like it - in HAS TO be treated like it, because otherwise, the economy of this planet is entirely doomed.

[MadHeart]

As I said, only labor adds value to capital. Unions understand this (or used to before they became complicit in many cases) and which is why where unionization existed, workers fared much better in wages and benefits because they demanded their fair share of that value. But look where unions are today--less than 8% of the entire workforce, meaning those who favor capital over those who provide true value have pretty much won--Wall St. and their enablers in the US govt. All the rest is a giant casino (or, if you want, ponzi scheme), and one for which we workers (or former workers) are paying the price--always. Big Auto wasn't failing because of "union wages", they were failing because of their own greed, lack of foresight, dependence on their relationship with Big Oil, not consumers, and reliance on marketing to gin up a false "need" for gas guzzling, tricked out behemoths, which generated more profit than a sensible vehicle not dependent on fossil fuels.

[NYC123]

Economist, prognosticators etc. There are views in both side of the isle on the direction of the state of the economy. Think, if we did knowing, we could have been in a deep global depression right now. We cannot prove it because it did not happen.
What do you think would have happened if no one was spending or investing capital in the economy? That right, greater losses of jobs and closing down of companies. Obama, has his own prognosticators giving him advice. Let's remember, these prgnosticators are only backseat drivers not "the buck stops here guys!"

[MadHeart]

Jobs are still being lost; companies are still closing down (as are banks). Unfortunately, what most ordinary people don't understand (and what capitalists do all too well) is that labor itself is the only true factor that adds value to capital. What we have on Wall St. (and have had for decades now) are money manipulators, stock manipulators, and those who "value" air-laden derivatives--and all are operating on their pure profit schemes trying to produce profit from instruments that have little value but huge returns on speculating "slice and dice" schemes. These "something for nothing" speculator thieves have ruined the economy for hardworking Americans who simply want to make a decent life, not engage in stealing from each other. A pox on Wall St. thieves. They have bitten the hand that feeds them--working people, who no longer have the means to continue consuming much of any thing.

[astheworldturns]

Well, China is taking his advice regarding a stimulus.

[NYC123]

Economist, pragnosticators etc. There are views in both side of the isle on the direction to go on the state of the economy. If w did knowing we could have been in a deep global depression right now. We cannot prove it becasue it did not happen. What do you would have happenned is no one was spending or investing capital? Obama, has his own prognasticators giving him advise. These guys remember they are only backseat drivers not "the buck stops here guys!"

[TokyoStormWarning]

True prophets never get listened to, not usually until long after they're dead anyway.
Amother person that nobody listens to is Eamonn Fingleton, who has writtten a few books and numurous articles explaining exactly why the U.S. economy keeps sliding, while that of Far Eastern nations like Japan and China keep growing--a phenomenon that has gotten scant attention fom Washington and American economists.

http://www.squidoo.com/eamonn-fingleton

[Skeetshooter]

Those who say the markets are driven by emotion, say that as if it's unavoidable, or perhaps even a good thing. In fact, it can only mean that emotions are substituting for information, the clear implication being that well informed operators in the system are positioned to take advantage of that inequity of fact and expertise.

We need to go back to the definition of society itself. The concept of functional interdependence is predicated on free trade, which is predicated on the notion that the items being traded are indeed what they are portrayed to be.

Unfettered unregulated arbitrage has supplanted trade because it's easier to manipulate, and therefore, more profitable to those who can engineer a bubble, ie, a disparity of expertise, ie, an emotional market.
Unfortunately, it is not societal, but predatory.
CAVEAT EMPTOR is not a sustainable economic model. It destroys the foundation of trust on which society is based, and while most economists will admit this, Stiglitz is one of the few with the courage to openly arguing against it, having seen the consequences of a select few making a killing at the expense of everyone elses living.

Situational ethics have put us all in an unsustainable and unethical situation. They will not continue because they cannot, and those who continue to argue in favor of an elitist and antisocial agenda, drive society inevitably toward socialism. Heisenberg's uncertainty principle, it would seem, also applies to social justice.

[MadHeart]

Well said. Unfortunately, it seems we have the anti-Stiglitz types still running the corporatocracy, even within DC and I'm sure we're not even getting half a loaf of what we need as a society. Look at the backlash against what many of us perceive as only mild reform at this stage.

[DiogenesOfAlaska]

Very true. If you want to build an economy in your lab that moves forward like bubbles on wheels, assume that there are two segments of market participants: informed and uninformed ones.

You'll get a roller coaster that makes Disneyland blush.

In reality, there are tons of intervening effects - and hence, sometimes ... you don't see the bubbles.

Isn't that nice?

[mamacat]

Very interesting article. I hope that Obama includes Stiglitz in his discussions more often. It does seem that the stimulus is too small, and that there is still something very wrong with Wall St.