Joseph Stiglitz “The EU destroys the future of Spain”

The motto “We are the 99%”, hosted by global protest movements that criticize the concentration of most of the world capital in a microscopic minority, arises from the postulates of Joseph Stiglitz, winner of the Nobel Prize in Economics in 2001 for his contribution to the theories of asymmetric information. Former vice president of the World Bank, advisor to Bill Clinton, a professor at the universities of Yale, Oxford, Stanford, and Columbia, Stiglitz has stood out for his crusade against inequalities and austerity policies. That has made him one of the 100 most influential people on the planet, according to Time magazine.

On the occasion of the publication of his collection of articles and essays The Great Gap (Taurus), where he argues the costs for democracy of the growing distance between rich and poor, Stiglitz received Magazine. The appointment was in room 212 of the Uris Hall building of the University of Columbia, in New York, after attending one of the thousands of students that he has guided for half a century of teaching experience.

How did character shape the fact of being born (in 1943) in a city in the southern United States as Gary (Indiana)?

It exposed me to an America very different from that of someone grown up in a rich suburb. It was authentic America, in the sense that there converged the racial and social mix, had little to do with the idyllic postcard to be a huge discrimination. That reality so far from the much-vaunted American dream caused me commotion. The contrast between the idea that my country was the paradise of the middle class and what my eyes saw was disconcerting.

“The economic and racial injustices assaulted me from a young age. I led a group that went to the south, still under racial segregation, to build bridges. We were not aware of how dangerous it was “

Did your strong social conscience, then, have an early start?

Did your strong social conscience, then, have an early start?

 

The economic and racial injustices assaulted me from a young age. I was president of the student council at the University of Amherst and led a group that went to the south, still under racial segregation, to build bridges for integration. At that time we were not aware of the danger of the trip. Soon after, some members of a similar student expedition found their death.

To abandon the studies of Physics for those of Economy supposed to take a more committed way?
It is bound, in effect. Instead of using mathematics to understand physical systems, I did it to interpret social systems. It was also a way of being able to immerse myself in history, one of my favorite subjects, something that physics did not allow.

In one of his articles, he points out his mother, a teacher, as one of his main models to follow.
She was a woman with a wide range of values and points of view. When I entered the university, my mother, who until then had been dedicated to taking care of the family, decided to return to study, with almost 50 years, to obtain a degree of Teaching. After that, he began to teach classes in a public school of Gary whose students had gone from being almost completely white to 100% black. She was one of the only two white-skinned people among the teachers, the rest had fled in terror. She felt very close to those children and when she reached 67, she resisted tooth and nail to retire and got her assigned to teach young people with special needs.

He has highlighted how the international economic crisis that erupted in 2008 was mainly a matter of ideology and strategies. Can we say that the financial and political institutions allied to make it possible?

There is no doubt that they caused it, but the most surprising thing is that they did not see it coming. The whole thing is reminiscent of the story The Emperor’s New Clothes. The wise assumptions that never ceased to say that there were no risks, that they knew how to conduct the economy, that we trusted them, acted the same as the naked emperor. As an economist who had studied these issues, I knew for a fact that they did not know what they thought they knew. They did not plan it, they simply believed that a deregulated system would work.

“There is no doubt that the political and financial institutions caused the crisis, but the surprising thing is that they did not see it coming. Everything remembers the story ‘The Emperor’s new suit’ “

How could he detect that we were facing disaster?

I had an advantage because I had studied Real Economy, Mathematics, and History. When ignoring the first two, they were not familiar with concepts such as risk and probability. If they had been instructed in the third, they would have come across the financial panics and bubbles described by Charles P. Kindleberger. If they knew the story, they would have been aware that their recommendations were very likely to lead to a crisis. And surely I overtook their nonsense because, during my time at the World Bank, I witnessed what was coming, looking at the devastating case of East Asia.

The question would then be: why did nobody give the alarm signal?

We did it! Several of us shout “fire”! However, it fell on deaf ears. I remember meeting at an event in Davos in 2008, just after the recession and the bursting of the bubble, listening to a group of Wall Street luminaries and central bank presidents addressing the audience with the question: “Who Could I have predicted it? ” Five of those present in the first row raised their hands to answer what we all had in mind: “We, right here, in Davos, just a year ago, and did not pay us any attention”.

Why did the financial powers not listen to them?
Surely because they and their friends were making a lot of money and when you earn a lot of money you think you’re smart, it could not have been lucky that filled your pockets, right? Not only that, you also convince yourself that you have done the right thing.

Why did not the media echo their bad omens?

In part, it’s because the majority only interviewed the bankers, despising our opinion.

Where should we start to reduce the gigantic gap that continues to grow between the rich and poor?
There is no magic recipe. The inequality we are witnessing today is the result of a process that started more than three decades ago and that, consequently, has been built brick by brick. The first step should be to rewrite the rules of capitalism and the market economy in the opposite sense to that of Reagan and Thatcher, who in the 1980s rewrote them in return for the benefit of 1%. Markets do not exist in a vacuum and operate according to rules that distort and weaken them. When some banks concentrate an exorbitant power or companies like Microsoft challenge free competition you are destroying the markets.

“We gave the alarm signal that the crisis was coming, we shouted ‘fire’, but the scream fell on deaf ears. A year later, the luminaries of Wall Street asked who could predict it. We did it, but they did not listen “

And in the case of Spain, what first aid should be applied?

And in the case of Spain, what first aid should be applied?

 

There my recipe varies. They have to start by ending austerity, the main cause of inequality. Before the crisis, you were reducing your levels of inequality, but with its outbreak, they began to grow, and austerity policies have led them to be one of the European countries with the highest rates.

What power never tires of repeating is that there is no money, leading the one who does not understand the economy to ask himself: how do we finance the recovery?

The first step is to reform the European Union (EU). They have created a eurozone that has tied them hand and foot, depriving them of monetary and exchange rate policies. As if this were not enough, they have granted all power to Germany and a small group of people who do not understand economics, who also do not care enough about inequality.

So there are other ways, although the discourse from Brussels is that there is no alternative to austerity.

The EU has the machine to achieve the recovery of Spain, just as it has the machine to destroy Greece. They could start by raising the minimum wage, eliminating the privileges enjoyed by Germany, betting on a banking union that would prevent money from flowing from Spanish banks, issuing euro bonds to obtain low-cost loans- Purple has it too … There are many measures that the EU could take adopt in order to help Spain but has not taken any. The only thing that has served them has been inequality and unemployment. They are destroying their future.

Does the refugee crisis threaten to aggravate Europe’s crisis in the coming years?

Absorbing the speed with which refugees have arrived can be a challenge. If we were in front of a drip, it would be very different. Another problem is that most of them want to settle in Germany because it is one of the few countries that can offer employment. In the event that the rest of Europe could offer the same, that is, if they had not fallen victim to economic policies headed by Germany, another rooster would sing, a much more equitable distribution would be feasible.

In Germany, you will not be the economist with the highest popularity rating.
Well, look where, just two weeks ago I was invited there to promote my book and gave a talk at one of its most important foundations, in front of an audience of 700 people, including the general secretary of the Social Democratic Party (SPD), and More surprising is that almost everyone agreed with my view that austerity is bleeding Europe. It is a political problem, leaders who cling to economic guidelines that at this point are completely discredited. Also in the United States, we have Republicans who believe in austerity, to whom I attribute part of the fault that things do not go better for us.

“Absorbing the speed with which refugees have arrived can be a challenge; if we were in front of a drip, it would be very different “

This last sentence leaves implicit that the situation in your country is not negative either.
In recent years there has finally been a wave of support for ideas that we could call progressives. Almost all candidates of the Democratic Party to the next presidential election believe in them. 70% of Americans support the rise in the minimum wage, despite which their federal implementation has not obtained the green light in Congress. Yes, it has been achieved, however, in Los Angeles, New York, and Seattle with the consequent triumph for democracy. The message is that, with a Congress broken mainly by the Tea Party’s performance, the only way to expand the limits of that is on a local scale.

In La, gran breach a reiterates that the 1% of individuals who amass 99% of capital would also live better in more egalitarian societies. What is your strongest argument to convince them?
The first thing they should do is take their jet and go to some of the Latin American countries where the inequalities are acuter and observe their peers living in fortified urbanizations and taken by private security teams, with the lives of their children in daily danger on my way to school. Would they want these bunker communities for them? Many economic and political studies have coincided in pointing out that the degree of violence in a society increases in parallel with the degree of its inequality. In the United States we have witnessed that if this collides in turn with the racial conflict, revolts like those of Ferguson or Baltimore are unleashed. But we must not imagine such extremes to wish that inequalities diminish. The simple fact that they exist is an affront to democracy.

How did you avoid the puffiness that the Nobel could have caused?

You usually receive the Nobel Prize in Economics when your ideas have long exerted a strong influence, so, fortunately, you do not suddenly become a spoiled adult. My postulates had been taught in the universities for a long time, so it was not as if things suffered a big change overnight. In addition, we economists love to discuss, so being decorated in Stockholm is not a guarantee that your colleagues will listen to you more.

“For my ideas
I’m inspired by biology,
epidemiology, in how diseases are dispersed, in the visual arts … “

Where do you find inspiration for your economic ideas?

Where do you find inspiration for your economic ideas?

 

Exploring other scientific fields, such as biology. Epidemiology, for example, has thoroughly studied the spread of contagious diseases, and it is very stimulating to study the extent to which economic crises follow similar or divergent patterns. Also, the visual arts have helped me to go in search of different readings and impressions. It has inspired me in a special way to see how the same pictorial theme has been interpreted in very varied ways by artists.

This year he turns 50 as a university professor. What have been the guides that have governed their teaching?

One of the factors that I have emphasized the most has been in critical thinking, I have aspired that my students think for themselves. They should take the standard models and find out what went wrong, question everything they are taught. The second thing they must internalize is that economics does not work in the same way as physics: if in physics we handle the wrong formula, atoms will not behave badly, but if we do the same in the field of economics, we can generate instability and inequality . Consequently, responsibility rests on their shoulders and therefore they have to reflect on the social consequences of their work. Last but not least, I have tried to motivate them and help them grow as people.