Posts Tagged ‘libertarian theory’

Turn Left for Growth

by Joseph Stiglitz

Both the left and the right say they stand for economic growth. So should voters trying to decide between the two simply look at it as a matter of choosing alternative management teams?

If only matters were so easy! Part of the problem concerns the role of luck. America’s economy was blessed in the 1990s with low energy prices, a high pace of innovation, and a China increasingly offering high-quality goods at decreasing prices, all of which combined to produce low inflation and rapid growth.

President Clinton and then-Chairman of the US Federal Reserve Alan Greenspan deserve little credit for this – though, to be sure, bad policies could have messed things up. By contrast, the problems faced today – high energy and food prices and a crumbling financial system – have, to a large extent, been brought about by bad policies.

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A Financial System Adrift and Imperiled

by Lex Rieffel

“None of the mature democracies in the world have come close to a sovereign default in the Bretton Woods era.” —From Restructuring Sovereign Debt: The Case for Ad Hoc Machinery (Brookings Institution Press, 2003)
What was true then is not true now, and the world is worse off because of it. 

In the primer on sovereign debt restructuring that I wrote eight years ago, I gave three reasons for why mature democracies had become immune to default: they had deep domestic capital markets (allowing them to sell bonds denominated in their own currency to foreigners); they had political systems that facilitate smooth transitions from one government to another; and they had an abiding nation-wide commitment to macroeconomic stability.

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The Storm after the Calm

By Michel Rocard

Could the financial crisis of 2007-2008 happen again? Since the crisis erupted, there has been no shortage of opportunities – in the form of inadequate conclusions and decisions by officials – to nurture one’s anxiety about that prospect.

Over the course of the three G-20 summits held since the crisis, world leaders have agreed to tighten financial regulation slightly, but only for banks, while leaving other market players free of restrictions and scrutiny. As was true before the crisis, no one is monitoring the almost limitless “virtual” market for derivatives, where money moves freely without official rules or contact with the real economy.

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Lessons From Greed

by Dave Johnson

Conservatives say greed is a good thing. But the lessons of history, religion, philosophy, psychology and even biology say it is not.

I am visiting England this week.  Today I’m in York, and I toured the York Minstrel which is a huge 13th-century cathedral. Down in the crypt they have on display a 12th-century tablet, or “relief,” called the Doomstone. This is a limestone carving from the even-older Norman cathedral that previously stood on the same site. The Doomstone depicts demons constantly stirring a boiling cauldron, while damned souls are pushed into it from above. Two of the damned souls carry bags of money, symbolizing greed.

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The Ideological Crisis of Western Capitalism

by Joseph Stiglitz

 

 

 

 

Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin. Even in its hey-day, from the early 1980’s until 2007, American-style deregulated capitalism brought greater material well-being only to the very richest in the richest country of the world. Indeed, over the course of this ideology’s 30-year ascendance, most Americans saw their incomes decline or stagnate year after year.

Moreover, output growth in the United States was not economically sustainable. With so much of US national income going to so few, growth could continue only through consumption financed by a mounting pile of debt.

I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government. Alas, that has not been the case. On the contrary, a resurgence of right-wing economics, driven, as always, by ideology and special interests, once again threatens the global economy – or at least the economies of Europe and America, where these ideas continue to flourish.

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