The Price of Inequality by Joseph E. Stiglitz

Author:Joseph E. Stiglitz [Stiglitz, Joseph E.]
Language: eng
Format: epub, mobi
Tags: non.fiction
ISBN: 9780393088694
Goodreads: 13698866
Publisher: W. W. Norton & Company
Published: 2011-06-04T00:00:00+00:00

The Right’s alternative

Europe’s crisis is not an accident, but it’s not caused by excessive long-term debts and deficits or by the “welfare” state. It’s caused by excessive austerity—cutbacks in government expenditures that predictably led to the recession of 2012—and a flawed monetary arrangement, the euro. When the euro was introduced, most disinterested economists were skeptical. Changes in exchange rates and interest rates are critical for helping economies adjust. If all of the European countries were buffeted by the same shocks, then a single adjustment of the exchange rate and interest rate would do for all. But different European economies are buffeted by markedly different shocks. The euro had taken away two adjustment mechanisms, and put nothing in its place. It was a political project; politicians thought that sharing a currency would move the countries closer together, but there wasn’t enough cohesion within Europe to do what needed to be done to make the euro work. All they agreed upon was not to have too large deficits and debts. But as Spain and Ireland so aptly showed, that wasn’t enough. There was hope that over the years, the political project would be finished. But when things were going well, there was no momentum to do anything further; and after the crisis, which affected different countries so differently, there was no will. The countries could agree only on further belt tightening, which forced Europe into a double-dip recession.

Looking across Europe, among the countries that are doing best are Sweden and Norway, with their strong welfare states and large governments, but they chose not to join the euro. Britain is not in crisis, though its economy is in a slump: it too chose not to join the euro, but it too decided to follow the austerity program.

Unfortunately, many members of Congress want the United States to join that same “austerity and small government” bandwagon—to cut back taxes and expenditures. We saw that balanced increases in taxes and expenditures stimulate the economy. By the same token, balanced cutbacks in expenditures and taxes will lead to a contraction in the economy. And if we go one step farther, as the Right wants to do, to cut back expenditures even more, in a valiant if possibly fruitless attempt to reduce the deficit, the contraction will be even greater.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.