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Thursday, July 07, 2011

Stiglitz: The Ideological Crisis of Western Capitalism

Joe Stiglitz is disappointed in the resurgence of "ideas that have failed repeatedly":

The Ideological Crisis of Western Capitalism, by Joseph E. Stiglitz, Commentary, Project Syndicate: 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... Moreover, output growth ... was not economically sustainable. With so much of US national income going to so few, growth could continue only through consumption financed by a mounting pile of debt.
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. Alas, that has not been the case. On the contrary, a resurgence of right-wing economics, driven, as always, by ideology and special interests, once again threatens the ... economies of Europe and America, where these ideas continue to flourish. ...
The remedies to the US deficit...: put America back to work by stimulating the economy; end the mindless wars; rein in military and drug costs; and raise taxes, at least on the very rich. But the right will have none of this, and instead is pushing for even more tax cuts for corporations and the wealthy, together with expenditure cuts in investments and social protection...
Regrettably,... right-wing economists have gotten the problem exactly backwards: they believe that austerity produces confidence, and that confidence will produce growth. But austerity undermines growth, worsening the government’s fiscal position, or at least yielding less improvement than austerity’s advocates promise. On both counts, confidence is undermined, and a downward spiral is set in motion.
Do we really need another costly experiment with ideas that have failed repeatedly? We shouldn’t, but increasingly it appears that we will have to endure another one nonetheless. ...


    Posted by on Thursday, July 7, 2011 at 10:44 AM in Budget Deficit, Economics, Income Distribution, Market Failure | Permalink  Comments (73)


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