The near-global stagnation witnessed in 2014 is man-made. It is the result of politics and policies in several major economies — politics and policies that choked off demand. In the absence of demand, investment and jobs will fail to materialize. It is that simple.
Pointer from Mark Thoma.
Several years ago, I noticed
Stiglitz always writes as the omniscient observer. He knows exactly what should have been done
The creed of the technocrat, particularly as believed by Stiglitz might be something like this:
I am infallible. I can solve any problem. Given the authority, I can optimize any situation. When bad outcomes occur, these invariably come from policies that deviate from what I know to be optimal. The only thing that stands between reality and economic nirvana is opposition to me, which comes from economists who are too blind to see the correct ideas or from politicians who are too evil to implement them.
When it comes to other mainstream economists, Stiglitz is capable of spotting weaknesses in their point of view. He can be quite insightful in that regard. But if he has ever admitted being wrong himself, or even in doubt, I have not seen it.
“One of the benefits of growing older is the growing recognition of others’ falibility.”
J. Stiglitz
Like most conservatives and libertarians then.
I am not a macroeconomist, although I am a PhD economist, and I sincerely do not understand these stories about insufficient demand. I have never seen a convincing story, never mind a model, regarding this assertion.
A much simpler and more plausible story is along the lines of “a series of collective bad decisions.” Good decisions (work, investment, expenditures) are welfare-improving, while bad decisions do the opposite and a recession results. Yes, politics and policy surely played a role, but what’s it got to do with demand?
Stiglitz wrote a couple best-seller type books in the late 1990s, early 2000s, and this intellectual posture shines through in both of them. Let’s stipulate he’s as close to an economic genius as there is alive; they are still somewhat pathological texts.
I think the problem you have with Stiglitz is that he has been mostly correct about the many bubbles and economic crashes during the past 30 years.
I’m catching up on your posts from the last few days. You are on fire.