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Joseph E. Stiglitz
Published: Sunday 9 December 2012
The Republicans should not have been caught off-guard by Americans’ interest in issues like disenfranchisement and gender equality

America’s Hope Against Hope

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After a hard-fought election campaign, costing well in excess of $2 billion, it seems to many observers that not much has changed in American politics: Barack Obama is still President, the Republicans still control the House of Representatives, and the Democrats still have a majority in the Senate. With America facing a “fiscal cliff” – automatic tax increases and spending cuts at the start of 2013 that will most likely drive the economy into recession unless bipartisan agreement on an alternative fiscal path is reached – could there be anything worse than continued political gridlock?{C}{C}{C}{C}{C}{C}

In fact, the election had several salutary effects – beyond showing that unbridled corporate spending could not buy an election, and that demographic changes in the United States may doom Republican extremism. The Republicans’ explicit campaign of disenfranchisement in some states – like Pennsylvania, where they tried to make it more difficult for African-Americans and Latinos to register to vote – backfired: those whose rights were threatened were motivated to turn out and exercise them. In Massachusetts, Elizabeth Warren, a Harvard law professor and tireless warrior for reforms to protect ordinary citizens from banks’ abusive practices, won a seat in the Senate.

Some of Mitt Romney’s advisers seemed taken aback by Obama’s victory: Wasn’t the election supposed to be about economics? They were confident that Americans would forget how the Republicans’ deregulatory zeal had brought the economy to the brink of ruin, and that voters had not noticed how their intransigence in Congress had prevented more effective policies from being pursued in the wake of the 2008 crisis. Voters, they assumed, would focus only on the current economic malaise.

“Follow Project Syndicate on Facebook or Twitter. For more from Joseph E. Stiglitzclick here.”

The Republicans should not have been caught off-guard by Americans’ interest in issues like disenfranchisement and gender equality. While these issues strike at the core of a country’s values – of what we mean by democracy and limits on government intrusion into individuals’ lives – they are also economic issues. As I explain in my book The Price of Inequality,much of the rise in US economic inequality is attributable to a government in which the rich have disproportionate influence –& and use that influence to entrench themselves. Obviously, issues like reproductive rights and gay marriage have large economic consequences as well.

In terms of economic policy for the next four years, the main cause for post-election celebration is that the US has avoided measures that would have pushed it closer to recession, increased inequality, imposed further hardship on the elderly, and impeded access to health care for millions of Americans. Beyond that, here is what Americans should hope for: a strong “jobs” bill – based on investments in education, health care, technology, and infrastructure – that would stimulate the economy, restore growth, reduce unemployment, and generate tax revenues far in excess of its costs, thus improving the country’s fiscal position. They might also hope for a housing program that finally addresses America’s foreclosure crisis.

A comprehensive program to increase economic opportunity and reduce inequality is also needed – its goal being to remove, within the next decade, America’s distinction as the advanced country with the highest inequality and the least social mobility. This implies, among other things, a fair tax system that is more progressive and eliminates the distortions and loopholes that allow speculators to pay taxes at a lower effective rate than those who work for a living, and that enable the rich to use the Cayman Islands to avoid paying their fair share.

America – and the world – would also benefit from a US energy policy that reduces reliance on imports not just by increasing domestic production, but also by cutting consumption, and that recognizes the risks posed by global warming. Moreover, America’s science and technology policy must reflect an understanding that long-term increases in living standards depend upon productivity growth, which reflects technological progress that assumes a solid foundation of basic research.

Finally, the US needs a financial system that serves all of society, rather than operating as if it were an end in itself. That means that the system’s focus must shift from speculative and proprietary trading to lending and job creation, which implies reforms of financial-sector regulation, and of anti-trust and corporate-governance laws, together with adequate enforcement to ensure that markets do not become rigged casinos.

Globalization has made all countries more interdependent, in turn requiring greater global cooperation. We might hopethat America will show more leadership in reforming the global financial system by advocating for stronger international regulation, a global reserve system, and better ways to restructure sovereign debt; in addressing global warming; in democratizing the international economic institutions; and in providing assistance to poorer countries.

Americans should hope for all of this, though I am not sanguine that they will get much of it.& More likely, America will muddle through – here another little program for struggling students and homeowners, there the end of the Bush tax cuts for millionaires, but no wholesale tax reform, serious cutbacks in defense spending, or significant progress on global warming.

With the euro crisis likely to continue unabated, America’s continuing malaise does not bode well for global growth. Even worse, in the absence of strong American leadership, longstanding global problems – from climate change to urgently needed reforms of the international monetary system – will continue to fester. Nonetheless, we should be grateful: it is better to be standing still than it is to be heading in the wrong direction.



Author pic
ABOUT Joseph E. Stiglitz

Joseph E. Stiglitz is University Professor at Columbia University, a Nobel laureate in economics, and the author of Freefall: Free Markets and the Sinking of the Global Economy.

Woot. Nitpicking aside, no

Woot.
Nitpicking aside, no one could say it better.
Thanks be that we have great minds who can & do speak up. Hope (no pun intended) this finds it's way to the eyes and minds and hearts of all senators, representatives and our nation's administration.

ETNIKS's picture

Dr Stiglitz you are an

Dr Stiglitz you are an honest, sincere man. I've seen you in many interviews and read many of your articles where your good intentions are well expressed.

There is one problem.
Notwithstanding all the wide recognition in your carrier as an economist, your advice is misplaced, because it is based on the wrong assumptions.
You started by repeating the "fiscal cliff" slogan that has been so effective in diverting the attention from the real issue.

George Lakeoff, the linguist, says the "framing" of the issues, (the words used) decides the direction of the mind. Using your opponents slogans is bad enough, but what is worse is the fact there is NO "fiscal cliff" at all. It is an illusion created to cause panic and a response from the brainwashed voters in order to accept the theft of their wealth, once again.
The "debts" are in fact FAKE because governments didn't need to borrow them in the first place.

There is an interesting proposal by none else than the IMF itself, where they surprisingly say..... the truth.
The following Telegraph of London article explains what is finally being heard in the mainstream Media, namely"
GOVERNMENTS DON'T HAVE TO BORROW, because they can create their own currency INTEREST-FREE.

IMF's epic plan to conjure away debt and dethrone bankers
http://www.telegraph.co.uk/finance/comment/9623863/IMFs-
epic-plan-to-conjure-away-debt-and-dethrone-bankers.html

HERE IS the IMF original Working Paper
http://www.imf.org/external/pubs/ft/wp/2012/wp12202.pdf

Everything Mr Stiglitz suggests to solve the problem is correct, except if we try to do it, it will be meaningless because as long as we keep on using DEBT-BASED Money, NOTHING will change, and we'll be caught in a Web of Debt for ever .

In only 9 minutes you can get the whole enchilada and learn what you have been lied to for a whole life time.
Debunking Money - Myth and Machiavelli
http://www.youtube.com/watch?v=5iBSBVew-3Y

WE NEED TO FORBID BANKS THE CREATION OF DEBT-BASED MONEY and instruct the Treasury Department to issue ASSET-BASED Fiat currency the same way Lincoln did with the GREENBACKS.

=======
"If you want to remain slaves of the bankers and pay for the costs of
your own slavery, let them continue to create money and control the nation's credit"
Sir Josiah Stamp
1880-1941 Former Director Bank of England
========
"There are two ways to conquer and enslave a nation,
One is by the sword. The other is by Debt"
John Adams
========
"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."
Henry Ford
==========
"Until the control of the issue of currency and credit is restored to government and recognized as it's most conspicuous and sacred responsibility, all talk of sovereignty of Parliament and of democracy is idle and futile...Once a nation parts with the control of it's credit it matters not who makes the laws...Usury once in control will wreck any nation."
MacKenzie King,
Canadian Prime Minister

@Anono 8:51~ For many

@Anono 8:51~
For many decades, no President of the United States has been in charge of anything of significant consequence to the citizens, except for ordering military violence. This one does that, too. Why believe that this one could take charge of anything else?

@the article~
Drawing the conclusion from the results of the election that it showed "that unbridled corporate spending could not buy an election" is not only faulty logic, it is dangerous. It did not buy this election, but why?

One thing we do know is that the amount of campaign contributions collected by the Democrats was also record. And it was done primarily under the cry: "The likes of the Koches and Adelson are contributing enormous sums to produce false-fact ads slamming Democrats! If you don't send us money we will lose!"

In other words, maybe the reason it did not work was because the Democrats spent a boatload of money, too. Maybe the election confirmed that money does buy elections. Maybe not the most money wins, but the most money spent smartly. Maybe if Dem supporters had not opened their wallets the unbridled corporate spending WOULD have purchased the election for them.

Maybe we need a Constitutional amendment that severely limits the total per-capita campaign expenditures of any given candidate, different for each type of office -- limits so low that almost no serious contender could fail to raise that much. Then it would become a matter of how well each spent, not how much.

and then there is the

and then there is the possibility that the steal was "Annonymous"ly prevented without which it would have succeeded:

http://www.thomhartmann.com/bigpicture/did-anonymous-save-election-karl-...

When it comes to economics,

When it comes to economics, there are two voices to be listened to. One is Paul Krugman, the other is Joseph Stiglitz. So why is no one liseing? This is not home decorating, opinions of the uninformed are worse than no opinion at all.
And by the way, there is no such thing as standing still. If you are not moving forward, you are falling behind.

"Salutary effects" ??? What

"Salutary effects" ???

What like the get-out-of-jail free (and I do mean free) card Obama gave to BP, JPMorgan and Credit Suisse less than one week AFTER re-election?

Or was it his "obdurate bullying" at Doha, guaranteeing that for at least one more year there will be no progress on climate change?

Or maybe the fact that he's about to grant Rupert Murdoch chokeholds over the media in Chicago and LA?

Or maybe the fact that he's about to appoint yet another Robert Rubin trained bank mobster to head up the SEC?

The politicians both Rethug and DemCraps have had much much more than enough time to do what needs to be done. They have failed, and as long as we allow them to they are going to continue to fail.

It's way past time to take matters into our own hands.

Occupy!

"Some of Mitt Romney’s

"Some of Mitt Romney’s advisers seemed taken aback by Obama’s victory: Wasn’t the election supposed to be about economics? They were confident that Americans would forget how the Republicans’ deregulatory zeal had brought the economy to the brink of ruin, and that voters had not noticed how their intransigence in Congress had prevented more effective policies from being pursued in the wake of the 2008 crisis. Voters, they assumed, would focus only on the current economic malaise."

In other words, the Republicans think you are stupid. And they are right, Republicans are stupid. Democrats, not so much. Or, not nearly as much.

As for global warming, there

As for global warming, there is no such thing as "standing still." Time is running out. And mountaintop removal is not "standing still" either, under this president.

The hope is that wallstreet's

The hope is that wallstreet's boy Hobama get's the cahoonas to emancipate himself from doing what he's told and be The President of the United States.

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