Indian Summer Festival: Nobel Prize winner Joseph Stiglitz delivers devastating critique of neoliberal economics

The Columbia University prof has linked unfettered capitalism to opioid deaths, financial swindling, rampant diabetes, and the climate crisis

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      Vancouver's Indian Summer Festival takes pride not only for its arts and cultural offerings, but also for dishing up big ideas.

      Last night, that was on display in the fourth installment of its 10-part series of virtual events being held in 2020.

      Nobel Prize–winning economist and Columbia University professor Joseph Stiglitz joined Indian economist Arjun Jayadev in a discussion entitled "People, Power, and Profits". That also happens to be the name of Stiglitz's most recent book.

      Stiglitz, a former chief economist with the World Bank, delivered a devastating denunciation of neoliberal economics.

      In fact, he insisted that there was never any economic theory supporting it.

      "The key was that unfettered markets would result in a more dynamic economic environment in which everybody would benefit, a kind of trickle-down economics,” Stiglitz said. "It was really saying that kind of market-driven society would be a better society."

      However, what neoliberal economics demonstrated over the past 40 years, according to the professor, is that higher profits did not meet human needs, nor did they even succeed in maximizing economic growth.

      And 90 percent of the world's population did not see their wealth increase as the people at the top of the economic pyramid became exceedingly rich.

      "Growth was actually slower than in the decades after World War II when we had a better balance," Stiglitz said.

      He noted that even during the Republican administration of Dwight Eisenhower in the 1950s, there were far higher marginal tax rates on high-income earners. In those years, both Democrats and Republicans supported infrastructure and technology programs.

      But that changed dramatically in the 1980s.

      "[Ronald] Reagan presented the break with history in that sense," Stiglitz said.

      Economists Arjun Jayadev and Joseph Stiglitz engaged in a wide-ranging online conversation that highlighted the shortcomings of neoliberalism.

      Information is king

      The Columbia University professor specializes in the economics of information—and ways in which the more informed can exploit the less informed.

      And he insisted that the onslaught of neoliberalism in the 1980s enabled this to occur on a grand scale.

      "Unfettered capitalism led the financial sector to being able to take advantage of so many people," Stiglitz declared.

      He explained that because the big banks knew that governments would bail them out, they could engage in reckless and predatory lending, which led to the financial crisis of 2008.

      That wasn't the only instance in which those with more information took advantage of the economic system.

      Stiglitz pointed out that they profited through manipulating markets and insider trading.

      In addition, he said, large drug companies took advantage of people's susceptibility to addiction—just like the tobacco companies did in the past. And that led to an opioid crisis with companies "profiting off the lives of other people".

      Stiglitz also said that the diabetes crisis resulted from companies selling addictive and unhealthy foods. Car companies lied about pollution. And oil companies tried to persuade the public that there was no such thing as climate change.

      "This underside of capitalism is not only that it didn't lead to a shared prosperity, it didn't lead to the well-being of citizens," Stiglitz said.

      Moreover, he emphasized that it also led to the destruction of trust. And this has made it difficult to respond to the challenge presented by the COVID-19 pandemic—as demonstrated by protests against measures taken to contain it.

      According to Joseph Stiglitz, Donald Trump has exploited the fallout from neoliberalism to gain power in the United States.

      Then he listed off various "authoritarian figures"—Donald Trump, India's Narendra Modi, Brazil's Jair Bolsonaro, and Hungary's Viktor Orbán—who've exploited this lack of trust created by neoliberalism.

      "Trump, in a sense, was anti-elitist, a very wealthy man, who made his money by scamming the system," Stiglitz said.

      The economist went on to say that societal problems, including COVID-19, can't be solved by "us fighting against each other". Instead, he maintained that there needs to be a sense of solidarity.

      And while he acknowledged that the World Health Organization and other international entities have their shortcomings, he made a case that they still offer substantial contributions to the betterment of humanity.

      "These authoritarian figures are using nativism to bolster their political base into blaming others for their failures," Stiglitz declared.

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