Wednesday, March 26, 2008

The Roaring Nineties, by Joseph Stiglitz

Joseph Stiglitz has an impressive resume. He was Chief Economist at the World Bank and Chairman of President Clinton’s Council of Economic Advisers. In 2001 he won the Nobel Prize for Economics. With a CV like that you can see he’s no social or political radical. Stiglitz sees that what has come to be known as globalisation has done a lot of good for the world, yet he is also critical of this same phenomenon. The basic message of this book, and of Stiglitz himself you could say, is that markets cannot be left free. They must in some way be regulated.

In Stiglitz’s opinion, deregulation has led to nothing less than a rush to the bottom, with greedy CEO’s fattening themselves up at the expense of the public. Then when these companies go belly up, like Enron etc., it’s public money that’s called on bail the companies out.

While Stiglitz is calling for a turning away from the free market policies of the IMF and World Bank, his answer to what he sees as the present problems of the current globalisation model is basically a more balanced approach. More common sense, and a role for government. Essentially, government should be gently regulating markets so that their negative effects don’t wreak social and economic havoc. And government should be pressured to do this by vigilant voters in democratic polities.

I found Stiglitz’s approach to the problems he sees endemic in the ideology of globalisation and free markets deeply humane and refreshingly democratic. What he seeks is balance and fairness in international trade. He also demonstrates that it is in our best interests for poorer countries to become richer.

Stiglitz said he wrote this book out of a sense of duty to communicate what he knows about the subject of economics, mixed with his political experience, to a wider, non-specialist audience. I recommend you pick up a copy of this book if you want to try and learn more about how our financial system works, or doesn’t work, depending on your opinion.

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