Nobel Prize-winning economist Joseph Stiglitz warned yesterday that the election of Mitt Romney would signifcantly raise the risk of the economy going back into recession because it would mean cutting spending rather than stimulating the economy:
Nobel Prize-winning economist Joseph Stiglitz said the election of Mitt Romney as president in November would “significantly” raise the odds of a recession because it would herald a shift to a much tighter budget.
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“The Romney plan is going to slow down the economy, worsen the jobs deficit and significantly increase the likelihood of a recession,” said Stiglitz, who served as chairman of President Bill Clinton’s Council of Economic Advisers from 1995 to 1997.
In contrast, President Barack Obama “recognizes the need to stimulate the economy,” Stiglitz said.
He listed two other “very big differences” between the Democratic and Republican presidential candidates: Obama sees inequality as a “significant problem” for the country and is committed to raising taxes on the rich to help address it. Romney does not, according to Stiglitz, author of a new book entitled, “The Price of Inequality: How Today’s Divided Society Endangers Our Future.”
Bloomberg
Joe Stiglitz is no cheerleader for the Obama adminstration. He has been critical in the past regarding the original stimulus, advocating for a larger amount. He also was critical of the Washington Consensus during his time in the Clinton administration and eventually was forced out of the World Bank by Rubin and/or Summers.
I think he lays out the choice well here:
Romney = Recession, higher unemployment
Obama = Growth, more stimulative polices for the economy.
Romney = Greater Inequality
Obama = Some Efforts to Reduce Inequality
Romney = Lower Taxes on Wealth
Obama = Raise Taxes on Wealth
For those unfamiliar with his (non-academic) work, here is a link to and a snippet from an article from May 2011 titled "Of the 1%, by the 1%, for the 1%."
It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.
He's written several good books. One I read a decade or so ago is Globalization and Its Discontents
Globalization and Its Discontents is a concise, devastating, and relentless indictment of the global economic policies of the International Monetary Fund, World Trade Organization, and World Bank. The book draws on Stiglitz's personal experience as chairman of the Council of Economic Advisers under Bill Clinton from 1993 and chief economist at the World Bank from 1997. During this period Stiglitz became disillusioned with the IMF and other international institutions, which he came to believe acted against the interests of impoverished developing countries.[1] Stiglitz argues that the policies pursued by the IMF are based on neoliberal assumptions that are fundamentally unsound:
Behind the free market ideology there is a model, often attributed to Adam Smith, which argues that market forces--the profit motive--drive the economy to efficient outcomes as if by an invisible hand. One of the great achievements of modern economics is to show the sense in which, and the conditions under which, Smith's conclusion is correct. It turns out that these conditions are highly restrictive. Indeed, more recent advances in economic theory --ironically occurring precisely during the period of the most relentless pursuit of the Washington Consensus policies--have shown that whenever information is imperfect and markets incomplete, which is to say always, and especially in developing countries, then the invisible hand works most imperfectly. Significantly, there are desirable government interventions which, in principle, can improve upon the efficiency of the market. These restrictions on the conditions under which markets result in efficiency are important--many of the key activities of government can be understood as responses to the resulting market failures.[2]
Stiglitz argues that IMF policies contributed to bringing about the East Asian financial crisis, as well as the Argentine economic crisis. Also noted was the failure of Russia's conversion to a market economy and low levels of development in Sub-Saharan Africa. Specific policies criticised by Stiglitz include fiscal austerity, high interest rates, trade liberalization, and the liberalization of capital markets and insistence on the privatization of state assets.
Wikepedia: Globalization and Its Discontents
I listen to economists like Krugman and Stiglitz in order to understand events.
If you want to lose your job, vote for Romney.