Economist preaches unified solution to world problems

By Ian Fraser and Ken Symon

Sunday Herald

September 3rd, 2006


Professor Joseph StiglitzTHERE is something in Joseph Stiglitz’s mannerisms that reminds you of George W Bush. A similar intonation in the voice perhaps, and a pause and smile for approval after he speaks a sentence or two.

But, with that, the similarity ends: Stiglitz is a Nobel economics prize winner and Bush is slightly less noted for intellectual achievement.

The economist, a former chairman of the council of economic advisers to president Bill Clinton, is also a major critic of the Bush administration. In two talks in Scotland last week – at the Edinburgh Book Festival and at the University of Edinburgh – Stiglitz proved again why he is a noted thinker with influence around the world, particularly on issues such as globalisation and the way the developed world deals with developing nations.

In the university lecture, part of its high-profile series on the Enlightenment, Stiglitz was once again an eloquent critic of the Bush government, pointing out that the administration’s flouting of the Geneva Convention and rules of torture undermined much of the ideas of a civilised world which stemmed from the Enlightenment thinkers.

He suggests that “extreme free market thinking” is effectively a religion which the “Washington consensus” bodies like the International Monetary Fund and the World Bank are imposing on the developing world. Unlike in America itself, where the “free market religion” is restricted by the workings of democracy – such as the opposition to the privatisation of social security – it is imposed in an “unadulterated” form on developing countries. He is getting this message over not just in lectures but also through his books, the latest of which is Making Globalization Work.

In an interview with the Sunday Herald, Stiglitz said: “What I’ve tried to argue in the new book is that what makes the market economy work is that we’ve learned how to temper capitalism, and to ensure that the benefits are brought to a wider span of people. “The problem of globalisation is that these democratic processes are not in place. Globalisation is undermining the ability of the nation state to deal with problems: workers are told you’re going to have to have weaker job protection and lower taxes in order to compete.” Stiglitz, who is now professor of economics at Columbia University in New York, describes this process as a “race to the bottom”.

Stiglitz is also keen to shock the US out of its complacency over global warming. He believes this can be done through the unlikely agency of steel producers and other heavy industries in the European Union. “Because America did not join the Kyoto protocol and its firms are under no obligation to reduce carbon emissions, they are in effect being subsidised to the tune of $60 per tonne of steel. Once British and European industry become aware of the extent of that unfair advantage, they will fight back.”

He believes European metallurgical industries should be lobbying the EU to impose a tax of $60 per tonne on US steel imports. “If we can get civil society aligned with European producers, you would have a very strong political coalition to say this is unfair, and it’s destroying our planet.”

He also questions the ethics of leading oil companies. “In the US you have good institutions and yet the oil companies still manage to take advantage of the American people in a massive way – Exxon has become almost a poster child of irresponsibility, not only over the way they handled the Exxon Valdez oil spill but in claiming there is no credible evidence about global warning.”

Despite his critique, Stiglitz seems optimistic about the future. “The US’s failure to accomplish what it set out to achieve in Iraq on its own has highlighted to many Americans the importance of co-operation, and that unilateralism is not working. If there is a Democratic victory at the next election – which I think is highly likely – there will be a big effort to repair the damage in relations around the world. A Democratic administration would hopefully say ‘we have to regain our moral leadership by trying to figure out what the right decisions are for the world, not just for Wall Street.”

Stiglitz has made it clear that if he was called upon to serve in another Clinton administration – Hillary rather than Bill’s – it would be hard to refuse. But he says: “I enjoy being an academic, and I like doing what I’m doing now, which is to be an activist academic. These are issues I care about very strongly and it’s as much through the power of ideas that one hopes to bring about change.”

Making Globalization Work is published by Penguin on September 7th, 2006.

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