What's Next for the Global Economy?
The current global financial crisis carries a "made in America" label, but thus far our solutions have been weak and misguided, writes Nobel laureate Joseph Stiglitz in his new book Freefall: America, Free Markets, and the Sinking of the World Economy.
In Freefall, Stiglitz explains exactly how America exported bad economies, bad policies, and bad behavior to the rest of the world, only to cobble together a haphazard and ineffective response when the markets finally seized up. It is a damning read that conveys the true magnitude of the events of the past two years as it outlines the flawed responses of the Bush and Obama administrations. While peeling back the layers of problems, a sobering picture emerges: a financial system gone awry and a bailout without a clear purpose that is only reinforcing the problems it should be fixing.
Drawing on his academic expertise, his years spent shaping policy in the Clinton administration and at the World Bank, and his more recent role as head of the UN Commission charged with reforming the global financial system, Prof. Stiglitz also outlines a way forward, building on ideas that he has championed his entire career: restoring the balance between markets and government; addressing the inequalities of the global financial system; and demanding more good ideas (and less ideology) from economists.
"The question is, will we seize the opportunity to restore our sense of balance between the market and the state, between individualism and the community, between man and nature, between means and ends?" Stiglitz writes. "We now have the opportunity to create a new financial system that will do what human beings need a financial system to do: to create a new economic system that will create meaningful jobs, decent work for all those who want it, one in which the divide between the haves and have-nots is narrowing, rather than widening; and, most importantly of all, to create a new society in which each individual is able to fulfill his aspirations and live up to his potential."