Joseph Stiglitz: 'Trickle Up Economics' to Blame for Crisis

Why Joseph Stiglitz isn't in the Administration is beyond me. In this lecture given at the University of Queensland in Brisbane, Australia in late July, Dr. Stiglitz puts the blame squarely for our economic meltdow squarely where it needs to be placed: on Ronald Reagan and his free market and low taxation policies that have redistributed wealth upwards. He argues that "trickle up economics" created the credit bubble that triggered the recent financial crisis. "There was a party going on, and nobody wanted to be a party-pooper," says Stiglitz.

Since 1976, 58 percent of all income gains have accrued to the top one percent of US households. Meanwhile, 25 percent of American workers earn a wage that puts them at or below the poverty level. If the redistribution upwards since 1981 had not taken place, if the average American family in the bottom 90 percent were today getting the same share of the nation's income as the average bottom 90 percent family received in 1973 when income distribution was much more egalitarian, this average family would now be taking home in income over $10,000 more per year. The wealth of the top tenth has come by impoverishing the bottom 90 percent. That's the legacy of Ronald Reagan.

Joseph Stiglitz was chief economist at the World Bank until January 2000. Before that, he was the chairman of President Clinton's Council of Economic Advisers. He was awarded the Nobel Prize in economics in 2001. He is currently a finance and economics professor at Columbia University. He is the author of Globalization and Its Discontents and The Roaring Nineties. The full hour long lecture plus a 30 minute Q&A session is available at Fora TV.

Tags: Joseph Stilgitz, Ronald Reagan, Free Market Ideology, Reaganomics (all tags)

Comments

1 Comment

Good question

And I have the answer, or rather Andrew Ross Sorkin did. This administration tried to have it both ways, placate the Wall Street elitists who identified with the President (Columbia, Harvard etc) with Summers and Geithner, and also appear populist by ratcheting up anti-Wall St rhetoric.

However, the time of reckoning is on hand. The president has to make a choice. McClatchy reports today that the so-called moderate Democrats want to extend all of the Bush tax cuts. Which brings up the important question, what are they for? If these people are serious about deficits, then extending tax-cuts with borrowed money will be the biggest fraud to be perpetrated on the American people. If they are serious about job creation in a bad economy then extending the same tax-cuts that did nothing to increase employment, while at the same time opposing a large stimulus which did increase employment and stop this economy from sliding into depression, will be an insult to all intelligent people.

Which then brings me to the President. If he is serious about pay-go then he will veto any bill that extends the Bush tax-cuts with borrowed money, because neither the Senate nor the House will have the votes to override the veto. He will gain the trust of his base, but more importantly he will be fiscally responsible. If however he decides to side with Robert Rubin (who incidentally wants to extend these tax-cuts) and his acolytes, the god help him, or rather god help all of us because this economy will be on fast track to disaster.

by tarheel74 2010-09-01 08:24PM | 0 recs

Diaries

Advertise Blogads