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A lot we can learn
Joseph Stiglitz speaks with Richard Eskow about his new book.
Nobel prize-winning economist Joseph Stiglitz has a new book out entitled The Euro: How a Common Currency Threatens the Future of Europe. On The Zero Hour, we spoke with Professor Stiglitz about the tension between globalization and democracy, the mistaken thinking that gave rise to the euro experiment, and what that experience can tell us about the need to resist bad trade deals like the Trans-Pacific Partnership, renegotiate older ones like NAFTA, and invest in jobs and growth in the United States. He also expressed opposition to a tax giveaway that’s reportedly in the works for corporations like Apple.
Stiglitz described the euro as ‘a fascinating experiment from an economist’s perspective,’ adding that ‘it’s a failed experiment’ but ‘there’s a lot we can learn.’ As with globalization overall, he said, ‘the economics advanced faster than the political institutions that would make it work.’
Stiglitz noted that 62 percent of the voters in Spain, Portugal and Greece have voted against the draconian austerity policies imposed upon them by the Germans and the European Central Bank. He shared the concern that these policies are undermining European democracy and giving rise to extremist parties and movements on the far right.
In the era of Trump, is that a lesson for the United States? ‘Very much so,’ said Stiglitz, ‘and it’s precisely that sort of connection that provided some of my motivation for writing the book. It’s often easier to see what’s gone wrong by looking at other countries than by looking at one’s own country.’
‘In the United States we’ve had similar promises about how NAFTA [the North American Free Trade Agreement] and other trade agreements would bring greater prosperity, and for large fractions of America that is not been the case. Even now, President Obama is … pushing forward on a trade agreement, TPP, the Trans Pacific Partnership… that benefits corporate interests, not ordinary Americans.’
Stiglitz is, however, optimistic that the current political mood will help defeat the TPP. ‘I’m hopeful,’ he said, ‘that there is the beginning of a realization that blindly going forward globalization is not going to bring the country prosperity – at least, not to the bottom 90 per cent.’
But why did centre-left parties in Europe, and the Democratic Party leadership here, support these deals and the thinking behind them for so long? In Stiglitz’s view, that may have been a defensible position 20 or 25 years ago but is not today, given the experience of the last two decades.
Then why so many policymakers in Europe and the United States continued to push globalization, despite the evidence? ‘In American politics,’ Stiglitz replied, ‘part of the reason is of course the influence of money.’ He pointed out that both presidential candidates now say they oppose the TPP, which he takes as a hopeful sign.
Stiglitz laid the blame for some of the trade agreements’ most harmful policies on our own government:
‘Occasionally you’ll hear somebody say “we bargained badly” in these trade agreements. Well, the fact of the matter is, it wasn’t our trading partners that were demanding many of the provisions that have been so painful to ordinary Americans – the kinds of provisions that make it more difficult to protect our environment, the economy, our health, our safety, raising drug prices, and so forth. It’s actually America’s trade negotiators or TPP negotiators reflecting corporate interests …’
Stiglitz said that, if the next president wants to renegotiate past deals like NAFTA, ‘I believe we could make significant progress.’
While Stiglitz sounded an optimistic note on trade, he expressed greater concern about bank regulation. On taxation, he said, ‘there’s a real worry that multinationals like Apple will get tax relief. They’re supposed to be paying taxes of 35 percent; they’ve taken advantage of this special loophole, shipping money abroad. Now there’s lots of discussion that … we’ll pass a special bill that allows them to bring it back at very low rate.’
‘We’ll be rewarding them for not investing in America,’ Stiglitz concluded, ‘which is just wrong.’
Stiglitz is a strong advocate for infrastructure investment, but expressed concern about backroom negotiations.
‘The danger right now is that discussion is going on behind closed doors to support (infrastructure spending), but to get the revenues they’re going to do a tax deal with the big corporations,’ he said. ‘And so we may get the investment, but the price of that investment will be to let multinationals like Apple off the hook, to pay less taxes while ordinary citizens will have to continue to pay their taxes like we’ve always done.’
Added Stiglitz: ‘To me, that’s a bad deal.’
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