11/20/2015 Economist's View: Joseph Stiglitz Q & A Economist's View « Sharpe Rethinks CAPM | Main | Health Care Reform » Wednesday, October 11, 2006 Joseph Stiglitz Q & A Google Search Web This Site RSS Feed A Q&A with Joseph Stiglitz: Follow on Twitter Friend on Facebook Q & A with Joseph Stiglitz, by Daniel Altman, Managing Globalization: Recent Posts We’re truly fortunate to have Joseph Stiglitz’s responses to readers’ Paul Krugman: The Farce questions today. Awakens (60) Email, Web Pages 'Rebooting the Eurozone: Mark Thoma I sent Professor Stiglitz nine representative questions and asked him to Step 1 – Agreeing a answer five or six. He answered them all ‐ thoroughly... Crisis Narrative' (37) Professor of Economics University of Oregon Links for 11­20­15 (64) Q. Since the beginning, economics has sought to perfect “economic well‐ Explaining Inequality Email being” as in, lay down the conditions to maximize well‐being and (Piketty, Murphy, Web Page Durlauf Video) (5) explain faltering well‐being. What does this well‐being entail? There Columns 'The Effects of Stimulus CBS News Articles should be a definition of economic well being that functions Spending on independently of capitalist or socialist classifications. Would you care to Surrounding Areas' (9) Subscribe by Email explain your definition of the one entity that guides all economic 'How Workers Exit the Kindle Subscription Labor Market after theories: “economic well‐being”? Himanshu Kothari United States Local Economic Downturns' (28) New Links A. There is no simple measure of economic well‐being, and Links for 11­19­15 (150) unfortunately, the standard measure, gross domestic product per capita, 'Regional Inequality is Out EZ Crisis: A consensus is misleading. This is important, because ... if we try to “maximize” the of Control' (43) narrative ­ Vox EU wrong thing, there can be serious adverse consequences. I stress the 'A More Inflexible Fed A new historical database Would Cause More on world human importance of equitable and sustainable development and growth. GDP Crises' (8) development ­ Vox EU can be going up, yet most individuals can be worse off (as has been Links for 11­18­15 (229) Do we still need happening in the United States during the past 5 years). microfoundations? ­ An Essential Part of Job Understanding Society Creation Policy is Similarly, GDP can be going up, yet standards of living going down, as Missing (117) More unpopular economic opinions ­ Fresh the environment becomes degraded... When I was chairman of the 'Where Have all the economic thinking Workers Gone?' (32) Council of Economic Advisers, I pushed for the use of Green GDP, where Externalities and Public ‘Chicagonomics’ and Goods: Theory OR ‘Economics Rules’ (10) account is taken both of the depletion of natural resources and the Society? ­ INET degradation of the environment. ... Links for 11­17­15 (178) Emerging Asia in Transition 'Inflation and Activity – ­ Stanley Fischer Neither will growth be sustained if it is based on borrowing—when debt Two Explorations and their Monetary Policy Understanding FDI is used to finance consumption, not investment. ... Today, many are Implications' (44) spillover mechanisms ­ Brookings Institution worried about America, whose growth is based on borrowing more than 'Uber Is Not the Future of Work' (25) Industrial clusters: Who $3 billion a day from abroad. benefits? ­ Brookings 'Clinton is Both Right and Institution GDP may be a misleading measure for another reason: it measures the Wrong about Glass­ Steagall' (31) When central bankers value of what is produced in the country, not the income of the citizens should keep quiet ­ Paul Krugman: Fearing mainly macro of the country. When a developing country opens up a mine, with low Fear Itself (74) Going All Natural at the Fed royalties, most of the value of what is produced may accrue to the Links for 11­16­15 (163) ­ David Beckworth foreign owners; and when account is taken of the environmental 'America is Exceptional … Regulatory arbitrage in degradation and resource depletion, the country may actually be worse and Ordinary' (30) action ­ Bank Underground off. Links for 11­15­15 (219) IMF programmes: Greece 'The Silver Lining of vs Iceland ­ Vox EU Q. What I find difficult to imagine is why a “superior authority,” such as Unemployment Benefits' (35) Distance to frontier, the government or an international organization, would be able to Links for 11­14­15 (162) productivity regulate/decide what is the best trading strategy for any given distribution and 'Where Fed's Critics Got it travelling waves ­ Vox country/region/community. Why shouldn’t we let the free market forces Wrong in GOP EU Debate' (65) determine what is the best for the world? What is your opinion on the What really matters in the issue on free worldwide market forces vs. regulation? Guillermo Bona 'When Economics Works Fed's rate moves ­ CBS and When it News Switzerland Doesn’t' (16) Interview of Esther Duflo ­ Paul Krugman: FT Alphaville A. Adam Smith, the father of modern economics, is often cited as Republicans’ Lust for Gold (72) Minutes of the Federal arguing for the “invisible hand” and free markets: firms... But unlike his Open Market followers, Adam Smith was aware of some of the limitations of free Links for 11­13­15 (120) Committee, October 27­28 ­ FRB Obama: How to Achieve http://economistsview.typepad.com/economistsview/2006/10/joseph_stiglitz.html 1/15 11/20/2015 Economist's View: Joseph Stiglitz Q & A markets, and research since then has further clarified why free markets, 'New Jobs, Stronger Inequality: a fact, an Growth, and Lasting interpretation, and a by themselves, often do not lead to what is best. ...[T]he reason that the Prosperity' (54) policy recommendation ­ Miles Corak invisible hand often seems invisible is that it is often not there. 'Being An Inflation Hawk Means Never Having To Crowdfunding or Whenever there are “externalities”... markets will not work well. Some Say You’re Sorry' (29) Crowdphishing? ­ Robert J. Shiller of the important instances have been long understood—environmental Links for 11­12­15 (89) externalities. Markets, by themselves, will produce too much pollution. 'A Debate With Bernanke Over the Fed’s Easy Markets, by themselves, will also produce too little basic research... Money Policies' (66) NBER Working Papers Trickle Down, Starve the But recent research has shown that these externalities are pervasive, Beast, Supply­Side, and Business Groups in Canada: Sound Money Their Rise and Fall, and whenever there is imperfect information or imperfect risk markets—that Fantasies (46) Rise and Fall Again ­­ is always. Government plays an important role in banking and securities by Randall Morck, 'Friction is Now Between Gloria Y. Tian regulation, and a host of other areas: some regulation is required to Global Financial Elite and the Rest of Us' (14) Work Incentives in the make markets work. Government is needed, almost all would agree, at a Social Security 'Even Famous Female minimum to enforce contracts and property rights. Disability Benefit Economists Get No Formula ­­ by Gopi Respect' (11) Shah Goda, John B. The real debate today is about finding the right balance between the Links for 11­11­15 (183) Shoven, Sita Slavov market and government (and the third “sector”—non‐governmental non‐ 'To Understand Climbing Discretion in Hiring ­­ by Mitchell Hoffman, Lisa profit organizations.) Both are needed. They can each complement each Death Rates Among Whites, Look To B. Kahn, Danielle Li other. This balance will differ from time to time and place to place. Women Of Childbearing Central bank Credibility Age' (9) Before and After the Q. What is the future of globalization where there is an increasingly Crisis ­­ by Michael D. Bordo, Pierre L. Siklos greater disproportion between the movements of capital and goods and Climate Engineering that of people? Nabil El Aid El Othmani Morocco New Comments Economics ­­ by Garth Heutel, Juan Moreno­ A. This disparity in the liberalization of capital and labor is a major im1dc on Links for 11­20­ Cruz, Katharine Ricke 15 problem. Enormous energy has been focused on facilitating the flows of Host­MNC Relations in im1dc on Links for 11­20­ Resource­Rich investment and capital, while movements of labor remain highly 15 Countries ­­ by Natasha Chichilnisky­Heal, restricted. This is so, even though the gains to global economic Julio on Links for 11­20­15 Geoffrey Heal efficiency from liberalizing labor flows are an order of magnitude djb on Links for 11­20­15 Work and Consumption in an Era of Unbalanced greater than the gains from liberalizing capital flows. Indeed, mulp on Paul Krugman: The Technological Advance Farce Awakens liberalizing movements of short term speculative capital has been ­­ by Benjamin M. associated with increased instability, but does not bring enhanced bane on Paul Krugman: The Friedman Farce Awakens economic growth... Prescription Drug im1dc on Links for 11­20­ Advertising and Drug 15 Utilization: The Role of This disparity has large distributional consequences. Because capital can Medicare Part D ­­ by mulp on Paul Krugman: The move easily, it threatens to leave a country if it is taxed, or if wages are Abby Alpert, Darius Farce Awakens Lakdawalla, Neeraj not tamed, or worker benefits are not cut. The disparity in liberalization Sanjait on Paul Krugman: Sood is one of the reasons for the growing inequality in incomes that have The Farce Awakens How Strong are Ethnic Preferences? ­­ by Lars marked most countries around the world. It is one of the reasons that mulp on Paul Krugman: The Farce Awakens Ivar Oppedal Berge, even when globalization has brought increases in GDP, it has led to the Kjetil Bjorvatn, Simon Sanjait on Paul Krugman: Galle, Edward Miguel, lowering of incomes of many workers. The Farce Awakens Daniel N.