From Cairo to Wall Street by Anya Schiffrin Eamon Kircher-Allen Joseph E Stiglitz Jeffrey D. Sachs

From Cairo to Wall Street by Anya Schiffrin Eamon Kircher-Allen Joseph E Stiglitz Jeffrey D. Sachs

Author:Anya Schiffrin, Eamon Kircher-Allen, Joseph E Stiglitz, Jeffrey D. Sachs
Language: eng
Format: epub
Published: 2019-05-11T00:00:00+00:00


MARKET FAILURES

The scenario of the banker who justifies his selfish actions is but one example of the dissonance between what the youth had been told about our society and what they saw, a gap that could no longer be ignored. They had been told about the virtues of a market economy, and yet the market economy was not even delivering on the one thing that it seemed to be good at, growth and job creation. Rather, it was showing in an almost unprecedented way its weaker side.

The list of grievances against corporations was long, and longstanding. For instance, cigarette companies stealthily made their dangerous products more addictive, and even as they tried to persuade Americans that there was no scientific evidence of the dangers of their products, their files were filled with evidence to the contrary. Exxon had similarly used its money to try to persuade Americans that the evidence on global warming was weak, even though the National Academy of Sciences had joined with every other scientific body in saying that the evidence was strong. Chemical companies had poisoned the water, and when their plants blew up, they refused to take responsibility for the death and destruction that followed. Drug companies used their monopoly power to charge prices that were a multiple of their costs of production, condemning to death those who could not afford to pay.

The financial crisis itself had brought out more abuses. While the poor suffered from predatory lending practices, almost every American suffered from deceptive credit card practices. And while the economy was still reeling from the misdeeds of the financial sector, the BP oil spill showed another aspect of the recklessness: lack of care in drilling had endangered the environment and threatened jobs of thousands of people depending on fishing and tourism.

No one had ever claimed that the market would result in a fair, or even acceptable, distribution of income, only that it would produce more goods than any other system, and so, in principle, everybody could be made better off than in any alternative. Some economists even argued for “trickle-down economics.” In short, the promise was that the benefits of growth would eventually be shared by all. Markets provided incentives to avoid waste. Demand would equal supply, and that meant that there would be jobs for anyone willing to work at the going wage.

If markets had actually delivered on these promises, then all of the sins of corporations, all the seeming social injustices—the insults to our environment, the exploitation of the poor—might have been forgiven. But the financial crisis raised questions about the capacity of the market economy to deliver on these promises. Indeed, the 2008 collapse of the global economy, originating from the United States, had undermined confidence in market capitalism and its seemingly most vibrant form, American-style capitalism.

But even before the crisis, the evidence was that the market economy was not delivering for most Americans. GDP was going up but most citizens were worse off. Not even the laws of economics long championed by the political right seemed to hold.



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