[Read] ➳ The Euro By Joseph E. Stiglitz – Saudionline.co.uk


  • Hardcover
  • 448 pages
  • The Euro
  • Joseph E. Stiglitz
  • English
  • 22 April 2019
  • 9780393254020

10 thoughts on “The Euro

  1. says:

    Long, impassioned analysis claiming that the euro is fatally flawed and doomed to fail, causing anemic growth before the 2008 crisis, and stifling recovery after it even Germany, the darling of the Eurozone, is experiencing dismal growth compared to the rest of the world, and its own previous growth rates before adopting of the Euro in 2001 Stiglitz rightly claims that the Euro was instituted partly as a political deal France agitated in favor of it after German reunification , and partly from a lack of understanding of its future effects The Euro, for all of its convenience in travel and cross border trade, has put European economies in a straight jacket by taking away a crucial tool to manage the economy where central banks can adjust the value of a currency to deal with variations of import and export, or devalue currency during periods of economic recession But now that this tool is taken out of the hands of many governments, monetary policy is stretched to its limit, with almost 0% bond yields and a fiscal policy of austerity only worsens the pain for workers who depend on social programs Another intriguing proposal is instituting welfare programs as automatic stabilizers Stiglitz argues for to be spent and assigned to those countries which are doing worse than others, like how the U.S federal government spends to address issues in the states For comparison, 1% of the EU s common budget to be spent on welfare, compared to 20% for the U.S.For the most part, Stiglitz s analysis is sensible Occasionally, when he lets himself get charged, the book veers off course When he discusses debt repayment, he is right to describe how it hurts the Greeks even so than doing nothing When he calls the troika bloodletters , or evokes Hannah Arendt by calling bureaucrats little Eichmanns just following orders , the book gains less traction Maybe if I was an unemployed Greek or Spaniard I would feel differently Some of this is a reaction to German self aggrandizing, which he claims has profited at Greece s expense, but the rest of it takes away from an economist s hope of objectivity Yet the basic structure and facts of his argument are sound Stiglitz still believes in the European project, in Enlightenment values and the hope of having Europe move past the centuries of bloodshed But for that to happen, the Euro must fall away I think of the United States Articles of Confederation, which was discarded in favor of the new Constitution.


  2. says:

    There either has to be Europe or less Working as an English teacher in Spain gives you a certain insight into its economy Immediately noticeable is the huge demand seemingly everybody adults, children, babies, retirees wants to learn English Finding work is less than effortless you need to fend jobs off The obvious explanation for this is the paucity of the available domestic jobs, and the undesirability of the jobs that do exist, leading many people to seek work elsewhere More concerning are the large numbers of highly skilled workers who cannot find work Unemployed doctors, lawyers, computer programmers, and engineers have come to my classes, hoping to improve their chances of getting hired Added to this, young people in my high school complain bitterly about the prospects of finding a job upon graduating Clearly something is amiss And according to Stiglitz, that something is the euro.Introduced into circulation in 1999, the euro was the optimistic sign of a coming age of European integration Nowadays, after a recession, a Greek debt crisis, a Brexit, a refugee crisis, and the resurgence of several nationalist and regionalist parties, things look somewhat less bright in the continent Unemployment remains high in many parts of the eurozone, especially in the crisis countries Spain, Portugal, Greece, Ireland and especially among the young More than that, the much anticipated European solidarity and common European identity have largely failed to materialize or, at least, not nearly to the hoped for degree Stiglitz believes that one of the main culprits for these failures is the common currency.Aside from fostering solidarity, the euro was, of course, expected to aide prosperity The absence of economic borders, the free movement of labor and goods, and the elimination of conversions and exchange rates was expected to boost the economy and reduce the differences in wealth between countries But contrary to predictions the economy did not grow notably faster than it had been pre euro and after the 2007 8 crisis, the economy sank into a prolonged recession from which is has yet to completely recover.The explanation for this, according to Stiglitz, is that the introduction of a common currency took away a crucial flexibility the ability to adjust inflation and interest rates without replacing it with any compensating institutions Specifically, this inflexibility makes it difficult to deal with trade deficits when a country is importing than it is exporting Normally, when there is a trade deficit a country can inflate its currency to correct the imbalance But when the currency is essential pegged leading to a situation similar to a gold standard than this adjustment cannot happen, and the deficit can persist long term.If a country is buying foreign products than it is selling, then clearly the money must come from somewhere If the money comes from banks borrowing money from abroad and lending it to domestic consumers then this leaves the country vulnerable to a financial crisis, should too many borrowers demand their money at once If, conversely, the government absorbs the deficit in the form of debt then this leads to another vulnerability if the debt mounts so high that investors lose confidence that it can be repaid, then lending might suddenly stop, leading to a debt crisis And since the debt is, essentially, in a foreign currency one that cannot be devalued by the country it will require some sort of foreign assistance to deal with.Debt and financial crises can easily lead to general economic crises high unemployment coupled with low aggregate demand so running a persistent trade deficit is something that most countries would like to avoid But how In order to work properly, common currency areas normally require that its member states be sufficiently similar This is clearly not the case in Europe and this disparity allows Germany to persistently runs a trade surplus a surplus that virtually requires other countries to run a deficit since all surpluses and deficits add to zero.Indeed, the crafters of the euro were aware of the problem of a too differentiated economy, which is why they created convergence criteria that the countries had to satisfy in order to join the eurozone Unfortunately, according to Stiglitz, these criteria were poorly conceived, focusing exclusively on currency stability and fiscal deficit a narrow minded focus that characterizes the entire project, it seems It was hoped that the common currency would aide further convergence between the countries but the reverse has happened Rather, the common currency has turned some countries into debtors and others into creditors, further dividing their economies But the United States is a common currency area that is highly differentiated by state Why, then, does a common currency work there and not in Europe Well, for one it is far easier for Americans to move to different states than for Europeans to move to different countries A Spaniard in Germany is not like a Mainer in New York And even if people in Europe could easily move from country to country, it would be alarming if, say, Slovenia became depopulated what would happen to its culture On the institutional level, Washington has far funds to spend either on countercyclical investment, social safety net programs, or bailing out banks than does Brussels In short, culturally, linguistically, and institutionally, the United States is far integrated.The situation created by the euro, then, left many countries vulnerable to crises And when a crisis hit a very big crisis, admittedly not of their own making the institutions of the eurozone made it much worse than it had to be As either the government as in Greece or the banks as in Spain succumbed, the European Troika imposed austerity as conditions of their bailouts This, of course, led to still further economic recession, since raising taxes and cutting spending is the reverse of what governments ought to do in a downturn The increased unemployment should, in theory, have led to wage reduction, and thus to decreased prices and increased exports, which would restore the economy to equilibrium Certain market rigidities, however such as resistance to wage cuts and a reluctance to lower prices in a downturn impede this adjustment, leading to a prolonged recession.This, in a very simplified form, is Stiglitz s diagnosis of the problem And behind all of these institutional failings from the eurozone s flawed architecture to the incompetent response to the crisis Stiglitz sees one culprit neoliberalism, or market fundamentalism as he calls it.But he does not merely set out to criticize This book is also full of potential solutions, many of which I found quite creative To correct the trade imbalance, for example, chits can be introduced a type of credit that can be bought and sold, and which allows its possessor to import or export Controlling the chit supply would thus control the deficit or surplus More prosaically, he suggests common deposit insurance, institutions to invest in small businesses, a broader mandate for the ECB European Central Bank , large investments in infrastructure and research, a procedure for country level debt restructuring, and financial reforms to encourage productive investments rather than speculation, to name just a few ideas.In short, he believes that greater European solidarity leading to common institutions that focus on a common prosperity is needed if the euro is to work And if that is not possible, Stiglitz believes that the cost of exiting the eurozone is less than the cost of remaining inside and pushing doggedly onward He even provides a detailed plan of action should Greece decide to leave the eurozone Of course every country need not return to its old currency there could, for example, be a northern euro and a southern euro Merely having Germany leave would go a long way in restoring balance to Europe s economy For such a short and quick read, this book is impressively rich in ideas and penetrating in its analysis But of course there are shortcomings While easy enough to read, I found the writing to be stiff and lifeless the book is written with the impersonal tone of an academic article More seriously, I fear that many will find the book too partisan specifically, too leftist to be convincing It is intrinsically unsatisfying for Stiglitz to dismiss his theoretical opponents as market fundamentalists, since this leads me to wonder why so many people could hold such contrary views about how the economy works Admittedly, as Stiglitz himself argues, all economic decisions are, at bottom, political decisions, since they are aimed at pushing society in a certain direction Even so, Stiglitz makes too little of an attempt to reach out to those not of his ideological persuasion.Though I am far too ignorant to evaluate his economic arguments, I found the book quite convincing This pains me Personally I like the euro very much The ability to use my pocket money in Italy, Ireland, or Germany is extraordinarily convenient But if the euro leads to a prolonged underperformance in some countries then it must be reformed or replaced It is, after all, only a currency The really important issue is European solidarity the belief that Europeans are stronger together than apart And when some countries are debtors and some are creditors, and both are economically stagnant, and when voters have little sway over important economic decisions this is no recipe for harmonious coexistence The euro was, in any case, only intended to be a halfway house one step on the road to greater European consolidation Clearly this process must continue, and must be crafted to ensure prosperity for all In the meantime, I suppose I ll just keep on teaching English.


  3. says:

    Stiglitz might be a bit too left leaning for mainstream economic books consumers, and I have to say, I found his style to be a bit on the dry side, especially parts I to III Europe in Crisis, Flawed from the Start and Misconceived Policies Having said that however, the book is demand side economics at its finest, and it would be a challange for the best of them to find flault in Stigltiz s analysis in these three parts His critique of neoliberalism and his arguments that at it s root, the Eurozone s woes were the result of misguided neoliberal ideologies on which the Eurozone s structure was built and that troubles naturally arise when economic integration outpaces political integration are really insightful I certainly enjoyed his bashing of market fundamentalism and concepts such as Expansionary Contraction I feel that these criticisms would play a key role in propelling economic policy debate towards a stronger embrace of the healthy role that big government and fiscal policy can play in the management of the macroeconomy.I should add however, that his views on the free mobility of labour within the EU and intra Europe migration might be a tad surprising given his left leanings, but one should note that his critique is that of the relevant policies and their negative consequences rather than the validity of arguing for free mobility.The best part of the book is saved to last, Part IV A Way Forwad, and in particular chapter 9 is a must read for all and any who are interested in currency unions and the recent European crises His key proposals for fixing the Euro include a comprehensive Eurozone banking union, mutilisation of debt, an expanded ECB mandate, and a European Solidarity Fund, all seem sensible and implementable.I think an offshoot of one of his proposals, the one about establishing mechanisms to direct lending to European SME s comes head to head with the Basel Accord and its tenets of of risk weighing of assets, however, this is in line with modern concepts such as the Credit Surface, and given that family and small businesses play a larger role in Europe than in the US, one would assume that the proportion of SME s in the Credit Surface is larger in Europe than it is in the USA, and by asssigning high risk weighing to lending to SME s, the Basel criteria might be placing a stranglehold on potential growth in Europe by discouraging banks from lending to them and increasing the decoupling of US and EU economies.His proposals for a flexible Euro, how to make an amicable divorce work, including the introduction of Credit Auctions and Trade Chits might be a bit rough and ready and easily challanged by reality but their uniqueness and novelty gives them value and merits their inclusion.


  4. says:

    There are two Joseph Stiglitzes the brilliant economist and the repetitive polemicist.Unlike The Price of Inequality, a book wrapped by Stiglitz the rambling, Nobel flashing celebrity blogger around the nucleus of a very incisive article written by Stiglitz the brilliant economist, this forward planned, structured book is 100% the work of the brilliant economist To be sure, he is starting to sound a lot like his alter ego, but the transformation is far from complete and what we have here is a genuinely exhaustive, if not amazingly deep, treatise that has a beginning, a middle and an end.The book is divided in five sections that are however grouped in four parts First a you are here section that lays out the author s views of where we stand and how we got here Second, a three part expo on i how currency unions are meant to work, ii where the Euro diverges from this ideal and iii the negative role of the ECB Third, a long whine against the Troika s work in Greece and less so Ireland Fourth, the Stiglitz manifesto of how to semi centrally, you have been warned run an economy, mischievously mis branded Creating a Eurozone that works Fifth, a daring and provocative what next sectionA quick read through chapter 9 the manifesto may be the best starting point for the reader Read that and you will calibrate how much to the right you are of the author or to the left for the 5% of the human population who are thus inclined Agree or disagree, you are now reading the book with the author s ideal world in mind and that s how you will get the most out of it.The bits I thought were unparalleled in the literature were the section entitled Internal devaluations and external imbalances pp 97 to 110 that nestles inside the already very strong chapter on When can a single currency ever work, the entire chapter on how the ECB was conceived, how it thinks and whom it serves brilliant, brilliant and the final section of the book that takes you through how we can go about executing on Europe or less Europe, as opposed to muddling through to assured destruction.That said, the final section will make your stomach turn if you are German, and you will be right to object If Europe was the only economy on earth, I can see how perhaps Germany could pay its workers restrict its trade surplus whatever I m not saying I buy it, I m just saying I can see it But it s competing with Japan, China and South Korea, to say nothing of the US Not Italy Not Spain Not even France any Most certainly not Greece I d say it has the most luxurious setup for its workers from all of its competitors Hell, Angie picked up 20% of workers wage bills at the depths of the crisis to keep them employed And the unions have board seats in most major employers, as often does the state Stiglitz knows all this and it bothers him when it comes to German companies buying Greek state assets, for example but is selective about when he remembers it.Also, the book sets the ambitious goal of explaining that Europe is suffering from poor policy design rather than from having muddled through too long without engaging in structural reform This the author fails to do, entirely The treatment of structural reforms is not worthy of a high school essay I won t even bother going into the arguments, just count the number of pages dedicated to looking at structural reforms and draw your conclusions.But I ll cite two examples where the author s judgement on specifics is almost as awful as his judgement on macroeconomics is brilliant 1 The author sides with the pharmacists in my country full disclosure, my mom s a Greek pharmacist who are plainly one of many extractive agents in an economy that is full of extractive agents Suffice it to say Greek pharmacists went on strike, citing the Hipporcratic oath, when the troika threatened to break their stranglehold on baby formula You heard that right, it was and may still be, I ve stopped following illegal for a supermarket in Greece to sell baby formula You ve got to pay up and buy it at the pharmacist Just an example.2 The author mentions than once that George Papandreou was crusading against the press owning oligarchs Point of information George Papandreou was a third generation prime minister Both his grandfather George and his father Andreas have served as prime minister, multiple times Look it up on Wikipedia, some crazy percentage of the time since WWII the prime minister or the head of the opposition in my country was called Papandreou If you think a political clan can maintain that position and not be in cahoots with the oligarchs you know nothing about Greece You probably know nothing about planet earth Or you are blinded a bit by your views, perhaps So this book is not without its foibles Overall, however, it does a tremendous job of laying out a view and it is the only book currently in print that covers so many facets And it is not afraid to shout from the rooftops that the emperor has no clothes.It makes excellent background reading for my favorite book on the Euro, the one by the FT s Martin Sandbu Sandbu goes deep, and if you want the skinny on his straw man you ve got it right here


  5. says:

    4 Stars Great bookThis is an absolutely fascinating book that delves into the Euro and all the issues surround it and, according to Stiglitz, have encompassed the currency since day one I know it doesn t sound like it, but this was an easy read I ve read one other book by Stiglitz and numerous articles excerpts and none have disappointed Here he writes in an intelligent, well thought out language but in an accessible way for someone who, like myself, is not an expert in the Euro and or economics I wouldn t be intimated by the book because he wrote this book for mass consumption rather than an academic audience The title reads a little depressing and hopeless, but Stiglitz states that the Euro and Eurozone can be saved He discusses the initial flaws in the system, the 2008 crisis, post 2008 recovery or really lack thereof , a comparison to the U.S in the 2008 crisis and recovery, as well as the current situation He provides a lot of information but I felt that I could digest it all His suggestions to save the Euro is interesting and appears to require major structural changes It ll be interesting to see what the Eurozone countries and the EU choose to do.If the subject interests you, I definitely recommend it


  6. says:

    Argh, I fooled myself again with a Stiglitz book Only after getting it and going a bit through it did the deja vu hit me to remember just how much I disliked the previous one The subject matter was so interesting to me that I might ve gotten it anyway but yeah, this one was a pain to go through The boredom of some plane trips helped, though only to some extent as the problem I found with the book was not bad presentation or anything like that, just a particularly devious agenda hidden behind otherwise quite smart rhetoric Seemed to me like the author from beginning to end praised his own generous heart with other people s money while condemning the unfeelingness of others he invents names I haven t heard these describe themselves by such as market fundamentalists It is quite ironic and illogical how he keeps arguing he wants to help the poor when as far as I could see the main main message of his book was that he d like to give governments power so they can weaken dilute the money an act which logically and AFAIK historically tends to hurt in particular the poor to whom thus basic necessities become expensive, while helping the big players who can afford to run continuous debts like governments and state favored corporations and of course the banking sector which serves to enable the governments generosity Random memories from the book the idea how interestingly enough to the southern EU countries the Euro acted with the budgetary constraints of hard currency, which as we know the big spenders don t like the he criticized the ECB in comparison to the FED the I was happy to be long term in the EU as the criticism was based on the fact that the FED has a dual mandate, inflation and employment while the ECB just inflation In fact, of course, that has been eroded a lot, but that together with the parties involved I think long term gives it a statistical advantage for the population that in the next crisis they won t just print like hell to solve all problems thin hope, of course, but maybe still slightly better among the devious agenda of the author he does put out there some interesting stats about different countries and events I wholly disagree with his implied causation, but data is always nice something really made sense when in the acknowledgements he mentions Krugman as an influence, while I find much rational and plausible the perspective of Tom Woods and Bob Murphy in the entertaining episodes of the Contra Krugman podcast overall I got the impression that Stiglitz has found himself a great niche as the economist defender of the spender nations providing economic justification for the statist powergrabbing moves they wanted to make anyway That must be a pretty big spot with quite some nice profits coming Of course he I m sure would argue he does it all out of the goodness of his heart mind, unlike the evil corporate people who do it for profits I can understand both side s motivations and don t blame them for that, but profits generosity of course are no substitute for reason he invents and uses quite skillfully from a propaganda PR perspective terms such as blame the victims to attack his intellectual opponents, while he himself constantly blaming the creditors for the spend happiness of the debtors, and envisioning a government as advised by him, of course solution to protect the victims from their own foolishness a lot of criticism of the whole Euro project, stuff I actually agree with, I mean how Europe has been going down, I just happen to disagree on the causation and the solutions the proposes he constantly advocates devaluation of the currency and criticizes what he calls internal devaluation Through this he takes the morally manipulative position that people are stupid and should be kept in ignorance by their leaders, that they can be endlessly tricked, because they wouldn t be by themselves capable of realizing they re living beyond their means so the politicians in order to stay in power should keep selling the lie that they re just as rich and are okay all the while impoverishing them, so that things can run smoothly eg with no danger to those in power he still loves the word regulations by which as Mises might put it he of course means the regulations HE proposes, not the many other types that others might, the usual problem with a centrally planned economy everybody likes it, but everybody envisions his own plans taking precedence over the others in his repeated support of regulation he never really addresses the idea killing problems of the fact that regulators are not impersonal objective all knowing gods but rather either come from the fields being regulated or know too little about them, either way resulting in serious problems like many he keeps talking about government investments , and he makes it imply that they re just as good as private ones, that despite the long horrible historical track record and even generally the logically predictable incentive problems For some reason he seems to continuously assume that government can be as responsible in investing without the profit method of giving them feedback for calculation of weather they re doing a good or wasteful thing Seems quite unrealistic to assume that they can thus take decisions not just matching but even competitive with investors which actually have personal skin in the game, thus being strongly and personally incentivized to avoid waste and pride driven projects and to strive for profitable projects eg actually useful to consumers, eg people Instead this investment rhetoric is a great fuel for politicians to encourage their own vote winning pet projects neglecting that they re the parasites siphoning off useful resources for political waste purposes so they can stay be in power.All in all the book annoyed me from beginning to end, taking an aura of moral superiority all the while doing some very diabolic mental juggling to play a devil s advocate for the powers that be to exercise control over the lives of people I found it all not just morally but intellectually dishonest and rationally inconsistent, the kind of juggling that only very smart people can do while throwing around all sorts of selective data statistics for the aura of realism In the future hopefully I ll do a better job at avoiding future Stiglitz books though I did appreciate him for tackling this interesting subject matter and I m looking for books on it.


  7. says:

    If you can get through the 70% of this book that is a rambling polemic, there is some good stuff here, but you will have to persevere.On the one hand, Stiglitz presents a clear account of why currency areas don t work without preferably created first political and economic union what Mundell famously posited in 1961 as A Theory of Optimum Currency Areas The main thrust of Stiglitz s conclusion is that you either need union in particular, automatic fiscal transfer or less union either separating the Eurozone into two or currency zones, or dissolving the Euro altogether What will absolutely not work is for the Euro to continue as it is That way lies anaemic growth at best for the Eurozone as a whole, with some countries within mired in deep recession possibly for decades whilst they try to claw their way back to competitiveness through enforced wage deflation Which is agonisingly painful when you are also massively indebted and a huge amount of your tax take is used simply to keep your creditors whole debtor s prison springs to mind, here So far, so good This element of the book works.On the other hand, Stiglitz is a dyed in the wool advocate of the high tax, high spend, government is best school of thinking and that, really, is what makes this book such a disappointment ultimately, it just doesn t come across as being very balanced even if he is, rightly, passionate about the misfortunes now being visited upon Greece It is also far, far too long The problems with this book are many here are some examples 1 Stylistically, this book is a pastiche of the tell them what you re going to say, say it, then say what you ve said In this case, Stiglitz uses this as a lazy device to pad out the plot in a way that is unjustified by the actual content He loves to refer back to what he has proved in previous chapters when really what he has done is attempt to browbeat the reader into submission by writing at sufficient length that the reader hopefully won t spot the thinness of many of the arguments.2 I really object when an author refers to things having been conclusively demonstrated or some such like expression with a footnote reference that directs you to a citation that is a previous article written by themself This book is simply awash with self referential praise The real problem here is that Stiglitz s use of this device ultimately gets in the way of the core themes of the book why couldn t he have stuck to these that a single currency won t work without political and economic union oops, repeating myself there that it has caused the crashes in the peripheral countries and that once you re bust Greece, especially , you can t resuscitate yourself without significant debt forgiveness for the avoidance of doubt, these are themes with which I think Stiglitz is spot on.3 Stiglitz lets his political views overwhelm what would otherwise be considered a cogent explanation of the problems in the Eurozone The challenge, I think, is that Stiglitz will leave no opportunity unpassed to declare the free market terminally defective, so justifying extensive tax n spend government His solution for Greece is essentially for the government, after a massive debt write off, to take control with full on government led, demand side, reflation The problem is that Stiglitz gives no indication of where his version of government intervention would stop Or perhaps, that s the point it wouldn t Yet we know where command economics has led if you re looking to score the free market vs the command economy avoiding the use of socialism, because that would be a bit too pejorative , command economics hasn t really fared too well in the long run Put another way, there really aren t too many serious economists left in the world or anyone, for that matter, besides dictators and oligarchs , who can mount any convincing arguments for full on government led control of tax n spend This includes promoting what Stiglitz ominously describes as spending in areas like basic research because the market just can t be trusted to invest enough of this if left to its own devices Perhaps Stiglitz is thinking of the Soviet Union s fabulous track record of resource allocation to its automotive industry Or doesn t this matter, so long as people have jobs, whatever their nature While Stiglitz does have a point when he decries the huge disparity in wealth in a modern capitalist world, you can t help thinking that his preferred solution is not to have a free market at all, but he knows he can t say that, because it would be universally shot down So, what we end up with is a politically biased false syllogism of the first order a the Euro has caused the economic collapse of some countries in the Eurozone and created huge economic disparities as a result I ll buy that b free market economics leads to disparities in wealth I ll buy that too thereforec the failure of the Euro is a failure of free market economics that s arguable , sod what you need is for government control over just about everything until it s all sorted out, including the restoration of a fairly shared economic cake nope not buying that.I think Stiglitz s underlying premise is both simpler and easier to understand and I ll repeat it for the third time monetary unions don t work without political and economic union you have to have the former in order to have automatic fiscal transfer which is a fundamental construct of the latter And if you do set up a monetary union without these and you end up like the Eurozone, trying to deflate your way back to competitiveness, it won t work without significant debt write downs In summary, if Stiglitz really wanted to make this book work, he would have had the courage to state clearly what he thinks a is the right steady state balance between the state and the private sector b is in scope for an enhanced government led solution and, as importantly, what he would leave to the market to fix what does he think is the right balance between automatic stabilisation and active intervention and why c is the length of time his enhanced solution would need to be in place and d is the measure of success for his solution critically, what does he actually mean by fairness A uniformly divided cake , or do some people still merit a bigger slice than others Could we have some numbers with supporting evidence, please, rather than grandiloquent statements Of course, Stiglitz doesn t provide any of this rather we get an enormous dose of polemic claptrap 4 It s at this point that I should perhaps declare my interest I spend a lot of time working in Government and I can only say that Stiglitz s faith in government to run the market is touchingly na ve He seems not to understand that government is made up of individual people, most of who behave in exactly the same way as those people whom he so despises who are in the market Amusingly, he cites confirmation bias as the reason for why so many Euro decision makers have persisted in making so many bad decisions, yet in his faith in the power of government to achieve economic prosperity for all, he is just as blind to his own confirmation bias.A few other things 5 The book rightly picks up on Mundell s seminal work on Optimal Currency Areas Stiglitz s analysis would have been much interesting if he had looked at the conditions for a currency area per se and not just used the other most well trodden examples the USA which has broadly worked and the Gold Standard which failed What I mean here is that rather than looking at how large a currency area might be, he should start with how small a currency area can be So, for example, what makes London a currency area Or the South East of England, or the UK The fact is, no one ever really challenges whether a sovereign state is an optimal currency area and an explanation of why that is generally the case is Italy an exception would have made the book much better grounded The problem is, that sort of analysis would not have fitted at all well with the political narrative of the book, which was all about proving that the free market doesn t work It feels to me like lazy thinking.6 It s all the fault of those nasty Germans for trying to be productive Stiglitz calls this running trade surpluses while the poor Greeks are simply victims who have done nothing wrong The truth, I m sure, is a bit nuanced than that, but why let this get in the way of a good story No mention, of course, of the Greek s allegedly challenged tax system.7 Almost no mention of the UK Stiglitz declares austerity as dead and buried and a solution to over indebtedness that cannot work Austerity is contractionary Which is interesting insofar as that is exactly the approach the UK has deployed for the last six years, during which time we have seen continuous growth the triple dip was revised back to a single dip , a declining public sector debt growth rate, whilst also transferring a massive number of jobs from the public to the private sector and what is now in recent times record employment and very low 4.9% in August 2016 unemployment economically, we can t be far off full employment So why, exactly, has austerity failed Stiglitz loves to talk about counterfactuals it seems to me that he is somewhat selective in the ones he chooses He does manage to contradict himself on pages 335 and 344 where he describes the UK as having a long term unemployment problem 1.2%, I think, in August 2016 and then says the UK is a high employment economy As an alternative, he might try to make the case that a austerity in the UK is not all it seems Paul Krugman has elaborated on this in April 2015 b that the UK would have achieved higher sustainable growth had it not had austerity and c that the austerity that has been applied has led to a unequal sharing of the economic cake than had it not been applied Then we would have a real debate, especially if he could cite examples where government investment has generated genuinely sustainable growth Personally, I find the austerity is dead claim just a bit too simplistic Interestingly, Krugman s 2015 analysis stops in 2013 when Germany was showing higher growth than the UK and since Germany wasn t applying austerity, QED, austerity doesn t work Yet, in a low interest and low inflation environment where we are still benefiting from imported Chinese deflation , it is self evident that increased public sector spending will lead to increased growth What Krugman doesn t show and what Stiglitz doesn t talk about is what has happened since 2013 in the UK and Germany, where I believe the UK s growth has increased whilst the debt growth rate has continued to come down while Germany s growth has stagnated Make of this what you will Much interesting, I think, would be an analysis of what Stiglitz s proposed spending actually buys you The problem is that, in the UK at least, we kept on shovelling money into the public sector while the sun was shining, without stopping to check whether we were actually getting value for money back again I say this not because I think that public sector spending is wrong, per se, rather that much of the money was lavished on services and projects that were woefully inefficient effectively, much of our much trumpeted growth in the run up to 2008 was basically borrowed And that, I m afraid, is simply a manifestation of governments generally poor track record everywhere both to allocate resources wisely and, when they do, to hold the recipients to account for the money to be spent efficiently Call me old fashioned, but who gave the government a license to waste my money In the Stiglitzian world, all of this is simply ignored because it is important to have growth when growth can buy equality and government spending can buy you growth In this world, mountains of debt don t really matter because low inflation and hence low interest rates are here to stay for ever And Governments are somehow infallibly capable of cost free efficient resource allocation Let s keep those hopes.8 No mention of the one great example of a currency union of modern times besides the Euro that of West and East Germany In this case, parity was achieved through exactly the classical medicine Stiglitz alludes to elsewhere political and fiscal union to accompany the single currency and an eye watering amount of fiscal transfer something approaching 1.7 trillion, with 70bn still being transferred every year for nearly another decadeor something like that With numbers like that, is it really any surprise that Germany doesn t want to bankroll the rest of Europe through fiscal transfer They ve done it once and once is enough Again, it s a pity that Stiglitz didn t use this readily available case study I won t call it a counterfactual, because it doesn t really support Stiglitz s arguments.9 When Stiglitz talks of the need to write off massive amounts of debt, he claims this hasn t happened because the political establishment is I paraphrase in the pockets of the financial sector This is just too simplistic, because there is no pain free solution here Not one mention of contagion being the reason why Greece hasn t been let off the hook surely this deserved some discussion Unfortunately, many financial services institutions are both publicly listed and in the top 100 of their respective stock exchanges, which means they have to be held in many tracker funds which, in turn, form the basis of many people s savings and pensions A wholesale debt write down causes losses to the banks, which hits their shares and so on So, all debt write down does is to cause a transfer of the economic pain from one set of people for example, Greek citizens to another set of people which may include Greeks with private sector pensions This book would have been much convincing if Stizlitz had addressed this issue and also set out his personal belief if he thinks one party or another should bear pain, then so be it he should at least address the issue in the first place.10 Stiglitz tells us that credit creation cannot be left in the hands of a discredited private sector regulated by authorities who are in hock to the private sector His solution is to give credit creation to the public sector As if the public sector hasn t been utterly discredited in this arena too But then again, in the Stiglitzian universe, the government is perfect.11 Somewhere in the book, Stiglitz states that it is the purpose of banks to create jobs Really You could write a book on this statement alone Here, it is simply glib Or just a part of the political narrative, which you either get, or you don t I think it shows yet incredibly lazy thinking.12 Just what does Stiglitz define as inequality, or what his command n control government will attempt to achieve One suspects that there is no answer to this in a Stiglitzian world, because there is always levelling to be done Of course, to create a level playing field, you also have to explain the consequences of this on behavioural incentives, which really forces you to start setting out what are your criteria for fairness Which surely requires deeper analysis than Germany BAD Greece poor Greeks A pity he didn t think it worth exploring this topic, as it would have helped to ground the book And reflect what most people think that Greece should never have joined the Euro through no fault of their own, they misled themselves about their national statistics etc and that they do bear some responsibility for where they are now it may not be a lot, but it is not zero.13 And in his efforts to make sure that the new world economy does nothing unethical, will Stiglitz be the one to tell the Greeks that they must now shut down their tobacco industry I mean, it s only another few thousand job losses and millions of dollars of tax revenue a rounding difference really.14 Finally, as others have pointed out, the Euro was the creation of Jacques Delors Hardly the poster child for neo classical liberalism Oh well.A book for students of economicshmmm I m glad I didn t read this when I studied economics at university over 20 years ago and yes, I did write my dissertation on the Euro I was, frankly, still very green, but I think I would have spotted this treatise for what it is some good economics smothered with political polemic.


  8. says:

    Joseph Stiglitz is in the pantheon of twentieth century economists a superlative academic who earned the Nobel Prize in Economics, a top level practitioner who served as chief economist for the World Bank Stiglitz has taken and successfully defended positions outside the mainstream, including effective criticism of the concept and implementation of free trade the bulwark of modern international trade policy This is all to say that when Stiglitz speaks, we should listen.His 2016 book The Euro How a Common Currency Threatens the Future of Europe addresses the current economic malaise in Europe and the role played by the 1999 creation of a common currency the Euro to replace the fourteen different currencies that had long existed in the new euro zone countries that number has increased to twenty two This made the Euro zone a Common Currency Area CCA , just like the United States where we once had different currencies issued by both states and individual banks.All in all, this is a book worth reading if you are interested in the consequences of the Euro for European health and welfare An unattractive aspect is Stiglitz s animus toward important European economic institutions, particularly the EU and the European Central Bank, that promoted austerity as an answer to financial distress It s not that the criticisms are unwarranted my problem with it is that its too strident Stiglitz asks why has the U S experienced such economic growth under a common currency while Europe has stagnated since the Euro s introduction He lays much of the blame on the failure to adopt the legal, political, and institutional arrangements necessary to a successful CCA He also credits the neoliberal philosophy that markets always work, a philosophy that demands austerity when a country s finances become unstable, and the sheer politics of the Euro zone These issues are all neatly addressed in his book Stiglitz s take is political as well as economic he will probably appeal to the left end of the spectrum This is not a warning being left doesn t mean being wrong but it is an FYI.This review will focus on the differences between European and U.S economic and legal institutions, on the necessary conditions for a Common Currency Area CCA to work, and on the absence of those conditions in Europe The details of the actual experience with the Euro are well covered by Stiglitz.Success of a CCA in the Long Run It s a given in economic theory that a CCA is always successful in the long run when there is convergence, that is, when all the member states are growing at similar rates with similar inflation rates, unemployment rates and other underlying conditions here convergence means full employment and a general equilibrium Regrettably, convergence occurs only in long run equilibrium, a condition seen rarely if ever The notion of long run equilibrium identifies a tendency of an economy a tendency to move toward that position It does not identify the actual position of an economy In fact, no economy is ever at its long run equilibrium economies are always away from it even though they might have internal forces that move them toward it A failure of modern economics is its neglect of the disequilibrium that we observe every day and its overemphasis on the equilibrium that we never see.So the notion of long run equilibrium is of little use is assessing the consequences of a CCA To see this, we first consider how international economies are linked in a multiple currency world MCA , as in the pre Euro Europe Economic Adjustment in a Multiple Currency Area MCA The fundamental problem posed for any regional or world economy is instability in the relative positions of the separate economies, that is, some economies expanding rapidly or experiencing say inflationary pressures while others stagnate and experience deflationary pressures If this is a world of multiple currencies an MCA then divergence among economies can be moderated by the adoption of consistent governmental policies own monetary policies, wage and labor market policies, international trade policies, and fiscal policies In adition, there are natural forces that will moderate divergence, examples are flexible exchange rates or the flexibility of wages and prices. For example, if Spain is in depression with high relative unemployment and falling relative wage rates and prices, while France is experiencing a boom with low relative unemployment and rising wages and prices, there will be a natural shift in the international trade mix France will buy Spanish products because they are now relatively cheaper, so French imports Spanish exports will increase similarly French exports Spanish imports will fall because they are now expensive This shift in demand toward Spanish goods moves both economies toward convergence both the French boom and the Spanish depression moderate If the two countries have formed an MCA the foreign currency markets will assist this convergence the peseta will appreciate relative to the franc because now demand has shifted toward the pesos needed to buy Spanish goods and away from francs that the Spanish need to buy French goods the movement of exchange rates assists convergence as it further promotes French imports from Spain and discourages Spanish imports from Germany In an MCA world the move toward convergence can also be assisted by domestic monetary policies at each nation s central bank France can raise interest rates to reduce domestic demand for its own goods Spain can reduce interest rates to encourage domestic demand for its goods The net demand for pesetas, hence the peseta franc exchange rate, will rise and the peseta s appreciation will cheapen Spanish exports and make French exports pricier the result is a shift in demand toward Spanish goods Another governmental policy option is fiscal policy France can say raise domestic taxes to tamp down demand for Spanish goods, using the additional tax revenues to retire government debt while keeping its spending unchanged Spain can reduce taxes to increase demand for its goods, issuing government debt to pay for government spending The point is that with separate currencies there are both natural forces shifts in patterns of international trade, exchange rate adjustments and policies monetary and fiscal policies that can reduce divergence and induce convergence Yet another policy response is international trade policy tariffs, quotas, subsidies The Spanish government might subsidize French purchases of Spanish goods, making Spanish goods cheaper and promoting increased production in Spain to encourage hiring and reduce unemployment the French government might tax exports of French goods, thereby making them expensive in Spain and taking some heat out of the French economy.The major point is that in an MCA there are domestic policies available to governments to assist movement from divergence to convergence, that is, to correct international trade imbalances that are unsustainable.Economic Adjustment in a Common Currency Area CCA In contrast, in a CCA these government policy options are severely restricted, if not completely eliminated Suppose that Spain and France form a CCA by substituting a single currency called the Fraso for the peseta and franc All the natural mechanisms of adjustment described above are then unavailable the exchange rate mechanism is now unavailable because a Fraso is a Fraso wherever it is, the exchange rate between the French and Spanish currencies always set at 1 1 This means that the prices of similar goods in Frasos must be the same in both countries and, therefore inflation rates must also be the same a bottle of wine assumed to be identical in France and Germany I know must have the same Fraso price in each country Any discrepancies between Fraso prices of wine are ephemeral they will be quickly eliminated by arbitrage as wine is bought in the cheap country and sold to the expensive country Monetary policy is also unavailable in a CCA because interest rates will be the same in both countries a loan in Frasos in Spain is equivalent to a loan in Frasos in France, so it must carry the same terms If not, arbitrage will quickly ensure that the two are equalized loans will be made in the highest rate country and not made in the lowest rate country, bringing interest rates to equality In short, a CCA eliminates monetary policy and exchange rate policies there are fewer arrows in the quiver of economic policies Note that this is one of the serious shortcomings of any CCA from the International Gold Standard of the late 19th and early 20th centuries to the Gold Exchange Standard that replace the Gold Standard in the mid 20th century a CCA supplants monetary policy and other policies as ways of fighting internal booms and busts In an historical context, Stiglitz notes that William Jennings Bryan was on the mark when he gave his Cross of Gold speech during the 1896 Presidential campaign.So what policies options are left to induce convergence The answer is government international trade policy or fiscal policies, but these have their own problems Trade policy, like taxes or subsidies on exports and imports, might be useful, just as trade policies continued to exist in the U.S after the U S dollar was created states still taxed or subsidized imports and exports But the rationale of a CCA is that it reduces impediments to trade, in part by eliminating uncertainty about future exchange rates Trade policies conflict with that goal by adding impediments to trade and by creating uncertainty about future tariff rates Further, they can easily fail because of competitive reactions by the other nations that adopt offsetting trade policies All that is left is fiscal policy changes in government spending, taxation, and debt issuance as a viable instrument to use to assist convergence If each nation is sovereign in its tax and spending policies, independent fiscal policies can be used But this is a two edged sword the use of fiscal policy can moderate divergence, but it can also exacerbate it If Spain encourages demand by a combination of tax cuts and spending increases issuing debt to cover the gap while France does the opposite, it would assist convergence But if, as happened in Greece, the adoption of the Euro creates better access to international loans and the government uses that to borrow and increase its nonproductive spending wage subsidies, increased worker benefits, and so on then fiscal policy can be misused to create divergence Indeed, when the Euro zone was formed trust in fiscal policy management seemed low the rules of the Euro zone prohibited any country from running a government deficit excess of spending over tax receipts equal to than three percent of its GDP except as an emergency measure Countries like Greece quickly found emergencies and flagrantly violated the rule indeed, no Euro zone country adhered to the rule except Ireland and Spain.The Requirements of a Successful CCASo what will make a CCA work as well as it does in the U.S where the only currency is the U.S dollar and individual state currencies are long gone The answer is an institutional and political framework that establishes appropriate binding rules, and underlying economic conditions that support convergence One is an open border policy in all CCA countries, designed to take advantage of labor market mobility, that is, workers in each country must be able and willing to relocate to where the jobs are workers in Spain will relocate to France if Spain is in a bust and France is in a boom This will shift the supply of products from Spain, where there is insufficient demand, to France where there is insufficient supply Of course, mobility of capital meaning machines and related overhead items will help, but in the absence of capital export or capital import restrictions capital is already very mobile the money required to relocate factories and equipment can be readily found.The U S does not have complete mobility of either capital or labor people want to stay in their communities and are loath to relocate for jobs still, labor and capital are sufficiently mobile, though it still takes time to transfer both from one state to another In the U S labor mobility has been assisted by a common language and by open border policies Europe, on the other hand, even with its open borders under the Schengen Agreement which excludes the UK and Ireland , has had less labor mobility than the U S much of this is due to differences in language, education, and customs This has not been on the plus side for the Euro zone while people can travel easily across borders, too many workers tend not to be so flexible.Still another helpful institutional arrangement is a system for internal redistribution within the CCA to address imbalances France in a boom shifts money to Spain to mitigate its bust it can do this via lending or simple transfers gifts This calls for political union, creation of a central government that can tax some countries and subsidize others Another institutional arrangement that helps convergence is a common system of laws about labor markets, security markets, property rights, and other economic choices The creation of common laws assists in factor mobility by ensuring that relocation does not mean a total disruption of methods and practices, and by reducing the costs of resource transfers In the U S there is political union in the form of a federal government that collects taxes from all states and uses a portion as long term assistance to states, and another portion as assistance to states in temporary need It also establishes laws by which each state must abide But in Europe there is no such institution each country continues as a sovereign nation with its own fiscal policies and laws, though subject to some limits Each government maintains its own taxation and spending, its own laws for the most part , and its own control over the distribution of aid to other nations Further, the rules are widely ignored the later example of restrictions on budget deficits is sufficient evidence.The absence of any political union has been apparent in the way the southern European countries, the PIGS Portugal, Italy, Greece, and Spain often accompanied by the clearly northern country of Ireland have sunk low Each had a slightly different situation, but most of the high interest rate countries took advantage of the new Euro s effect on convergence of interest rates to exploit public borrowing up to the point where their credit worthiness was damaged, new loans to refinance debt became scarce, and defaults loomed likely Whether that borrowing was private Spain and Ireland or public Greece is of secondary importance interest rate convergence created divergence across economies With no political union the Euro zone s only recourse to assist the PIGS was to solicit donations from member countries or to engage in additional lending to allow the PIGS to repay old debt with new debt The only sources of those loans and donations were the richer Eurozone countries and the European Central Bank The public display of self protection by these entities particularly Germany, the main instigator of the Euro was an unseemly display.Introducing the Euro The TransitionThe Euro, long a European dream, was approved by the 1992 Mastricht Treaty and created on December 31, 1998 when the currencies of each of the fourteen original members were fixed to the new currency called the Euro this was a virtual currency a unit of account used to price things but not to pay for them payments were made in the individual currencies The physical Euro was not issued until 2002, when the individual currencies were retired The transition to a common currency depends in part on the initial exchange rates incorporated in the common currency if they are wrong, the start will have problems At its inception the exchange rates were determined by the close of currency markets on December 31, 1998 For example, at year end 1998 the French and Spanish exchange rates relative to the mark were 3.3539 francs per mark and 85.0718 pesetas per mark the peseta franc exchange rate was, therefore, 25.265 pesetas per franc This calculation was made for each of the 13 non German nations, and the resulting Euro exchange rates were 1.95583 German marks per Euro, 6.55957 French francs per Euro, 166.386 Spanish pesetas per Euro, and so on for each Euro zone country These exchange rates were built into the Euro at the outset and they remained in effect forever after This meant that any future changes in exchange rates that would have occurred could not, forcing economic adjustments to be made via the few remaining policies available to the governments especially depression of wages and prices in the resulting weak economies.If those exchange rates had reflected the proper long run relationships between the currencies the starting point of the Euro would have been propitious But it appears that this was not the case The German mark and French franc were undervalued relative to the other countries This promoted a boom in German and French production to meet increased demand for their export goods from the rest of the Euro zone, and it created a corresponding weakness in the other economies The separation between the northern and southern European economies began and the income distribution across Euro zone countries widened In short, the transition to a Euro created rather than mitigated divergence That Germany and France were the main instigators and managers of the Euro might have been mere coincidence Four stars.RATING SYSTEM 5 I would certainly read another work by this author4 I would probably read another work by this author3 I might read another work by this author2 I probably would NOT read another work by this author1 Never Never Never


  9. says:

    In the wake of Brexit, the preservation of the European project has become the current cause celebre among the continent s and to a lesser extent the world s center left You know, people like my parents What Stiglitz argues is that the EU was indeed constructed with noble aims, and that European integration is indeed a project worth pursuing, but the architecture of EU merely reproduces the desires and ideology of the ruling class, any real economic evidence be damned, and run in complete obedience to neoliberal dictates.This isn t a screed against the Euro per se as much as it is an analysis of how the EU has failed if you deprive long established nations of the ability to print their own money or set their own interest rates, you re setting yourself up for disaster, for example , and a whole litany of suggestions for how to rebuild it from a empirical, left leaning perspective Strongly recommended for anyone interested in monetary policy, but also for those who don t know much Because as much as Stiglitz s primary goal is rigorous analysis, he also knows how to argue his case persuasively and elegantly.


  10. says:

    Un grande vaffa ai grandissimi figli di Troika del non ci sono alternative e del ce lo chiede l europa l a storia dell eurozona un morality play che illustra come dei leader che hanno perso il contatto con l elettorato possano arrivare a creare sistemi incapaci di salvaguardare gli interessi dei loro cittadini e come, molto spesso, gli interessi finanziari siano stati anteposti all integrazione economica e all ideologia, oltre a insegnare che quando l ideologia e gli interessi sfuggono al controllo possono dare vita a strutture economiche che, pur vantaggiose per alcuni, rappresentano un rischio per la maggior parte dei cittadini anche una storia di luoghi comuni, usciti dalla bocca di politici senza alcuna preparazione economica Sebbene quasi ovunque nel mondo il fondamentalismo di mercato sia caduto in discredito, specie all indomani della crisi finanziaria del 2008, queste idee sopravvivono e continuano a trovare propugnatori in Germania, potenza dominante dell eurozona Immuni a qualsiasi prova contraria, e portate avanti con sicurezza e convinzione, hanno assunto i contorni di un ideologia Sempre e dovunque nel mondo, il rigore ha avuto gli effetti controproducenti osservati in Europa quanto pi severa l austerit tanto maggiore la contrazione economica Resta un mistero capire il perch la Troika abbia potuto pensare che questa volta, in Europa, le cose sarebbero andate diversamente.Le politiche salariali come quella tedesca sono una versione riveduta e corretta della svalutazione competitiva, ossia le cosiddette politiche volte a scaricare le difficolt sugli altri beggar thy neighbour, impoverisci il tuo vicino che tanti danni fecero durante la Grande depressione La crescita della Germania in parte dovuta a ingenti eccedenze commerciali che non tutti i paesi possono accumulare Se un paese ha un eccedenza della bilancia dei pagamenti, significa per forza che un altro ha un deficit.Qualsiasi criterio standard si adotti per misurare i risultati economici, l eurozona ha fallito La sua performance stata deludente rispetto agli Stati Uniti, da cui partita la crisi, e anche rispetto ai paesi d Europa che non hanno adottato l euro Neppure la Germania si salvata.


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The Euro characters The Euro , audiobook The Euro , files book The Euro , today The Euro , The Euro 61776 In , The Global Financial Crisis Morphed Into The Eurocrisis It Has Not Abated The Countries Of Europe That Share The Euro Currency The Eurozone Have Been Rocked By Economic Stagnation And Debt Crises Some Countries Have Been In Depression For Years While The Governing Powers Of The Eurozone Have Careened From Emergency To Emergency, Most Notably In GreeceIn The Euro, Nobel Prize Winning Economist And Best Selling Author Joseph E Stiglitz Dismantles The Prevailing Consensus Around What Ails Europe, Demolishing The Champions Of Austerity While Offering A Series Of Plans That Can Rescue The Continent And The World From Further DevastationHailed By Its Architects As A Lever That Would Bring Europe Together And Promote Prosperity, The Euro Has Done The Opposite As Stiglitz Persuasively Argues, The Crises Revealed The Shortcomings Of The Euro Europe S Stagnation And Bleak Outlook Are A Direct Result Of The Fundamental Challenges In Having A Diverse Group Of Countries Share A Common Currency The Euro Was Flawed At Birth, With Economic Integration Outpacing Political Integration Stiglitz Shows How The Current Structure Promotes Divergence Rather Than Convergence The Question Then Is Can The Euro Be Saved After Laying Bare The European Central Bank S Misguided Inflation Only Mandate And Explaining How Eurozone Policies, Especially Toward The Crisis Countries, Have Further Exposed The Zone S Flawed Design, Stiglitz Outlines Three Possible Ways Forward Fundamental Reforms In The Structure Of The Eurozone And The Policies Imposed On The Member Countries A Well Managed End To The Single Currency Euro Experiment Or A Bold, New System Dubbed The Flexible Euro With Its Lessons For Globalization In A World Economy Ever Deeply Connected, The Euro Is Urgent And Essential Reading


About the Author: Joseph E. Stiglitz

Joseph Eugene Stiglitz, ForMemRS, FBA, is an American economist and a professor at Columbia University He is a recipient of the Nobel Memorial Prize in Economic Sciences 2001 and the John Bates Clark Medal 1979 He is also the former Senior Vice President and Chief Economist of the World Bank He is known for his critical view of the management of globalization, free market economists whom h