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The Financial Express

US professor delves into economic divide

| Updated: October 17, 2017 19:04:37


US professor delves into economic divide
Joseph E. Stiglitz left academia in 1993 to serve on the Council of Economic Advisers under President Bill Clinton. From there he moved to the World Bank in 1997. He served as its Chief Economist and Senior Vice President for almost three years, leaving in January, 2000. He is currently Professor of Finance and Economics at Columbia University. He won the Nobel Prize for Economics in 2001. 
Apart from the book under review, Stiglitz has authored a number of other books. Among these books, 'Globalization and Its Discontent' and 'The Price of Inequality' are best-sellers. In the 1980s, President Ronald Reagan of the USA and the first female Prime Minister of the UK Margaret Thatcher were the great advocates of the market economy and globalisation. Reagan threw his trickle-down theory in which, according to Reagan, the surplus wealth of the rich would trickle down to the poor. To both of them, the government is rather an obstruction to the economic development of a country as the market economy can take care of all these issues. They believe that the size of the government should be minimal. Meanwhile, the fall of the Soviet Union has rather intensified the speed of Reagan-Thatcher theory which virtually became 'the gospel'. In the global depression of 2007-08, the Reagan-Thatcher theory became illusive as the governments of the affected countries had to rescue their nations by offering money from the public exchequer.
Prof Stiglitz is not against capitalism. But he is not ready to accept it as the gospel. He has severely criticised the role of the World Bank and IMF, particularly in Southeast Asia which faced severe economic depression in the 1990s. The professor has elaborately discussed globalisation in his best-selling book, 'Globalization and Its Discontent'. He observes, "Globalization today is not working. It is not working for many of the world's poor. It is not working for much of the environment. It is not working for the stability of the global economy." 
'The Great Divide' has exclusively dealt with the great economic divide in the USA. In the introductory chapter the author says, "No one can deny that there is a great divide in America, separating the very richest sometimes described as the one percent, and the rest. Their lives are different, they have different worries, different aspirations and different lifestyles." He further states, "This book is mostly about the economics of the inequality. But as I have suggested one cannot neatly separate out politics and economics. In various essays in this volume and in my earlier book, 'The Price of Inequality', I describe the nexus between politics and economics, the vicious circle by which more economic inequality gets translated into political inequality, especially in American political system, which gives such unbridled power to money. Political inequality in turn increases economic inequality."
The book is quite voluminous - spread over more than 400 pages. In the book, the author has narrated his personal experiences about the American society in earlier days. Mr. Stiglitz is outspoken and straightforward and a severe critic. Probably eulogising these qualities, another great economist Paul Krugman has commented: "Mr. Stiglitz is an insanely great economist''. 
As mentioned earlier, Stiglitz is not against capitalism. But he also does not believe in pure capitalism. He observes: "We have always had a mixed economy relying on the government for investment in education, technology and infrastructure". With formidable and yet accessible economic insight, the author has urged embracing real solutions --- increasing taxes on corporations and the wealthy, offering more help to the children of the poor, investing in education and science, helping out homeowners, instead of banks.
As a matter of fact, 'The Great Divide - Unequal Societies and What We Can Do About Them' has not been singly written as a book. It is a collection of articles and essays for various periodicals and newspapers written over the years before the publication of the book in the present shape in 2015.
The final chapter of the book is an interview of Prof. Stiglitz by Cullin Murphy. In this interview the last question along with the answer is illuminating and is a matter of great importance globally.
Question: There must be voices among one per cent who make the same arguments you do about why inequality matters and why the wealthy have a stake in the welfare of everyone? Who are they? 
Answer: There are many including George Soros and Warren Buffet. Hundreds have signed on to a petition coordinated by a group called the patriotic millionaires to increase taxes on the rich, which can be found at patrioticmillionaires.org. They understand that a house divided cannot stand, they understand that their own long-term well-being and that of their children depends on there being a cohesive American society, one that invests adequately in education, infrastructure and technology. Many of these are individuals who lived the American dream, who did not inherit their fortunes and who want others to have the same opportunities that they enjoyed. Above all, I suspect that they believe strongly in certain values exemplified by Buffet's lifestyle and they worry that in an increasingly divided America these values will become an increasing rarity. As the Patriotic Millionaires wrote in their petition in support of Buffet rule, 'our country has been good to us. It provided a foundation through which we could succeed. Now we want to do our part to keep that foundation strong so that others can succeed as we have.'
Can we not expect in Bangladesh to see such a 'patriotic millionaire' organisation cherishing the same desire?
 

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