Paul Krugman posted a relatively small blurb on his NY Times' blog on Sunday, entitled, "
Morning Joe." In it, Krugman speaks of the almost total lack of a "progressive-economist wing" in the White House. He specifically took notice of how fellow Nobel Prize-winning economist Joseph Stiglitz "should be playing a bigger role" there.
Morning Joe
Paul Krugman
July 19, 2009, 11:39 am
NY Times Blog
...he's an insanely great economist, in ways you can't really appreciate unless you're deep into the field. I'd say that he's more his generation's Paul Samuelson than its John Maynard Keynes: as with Great Paul, almost every time you dig into some sub-field of economics -- finance, imperfect competition, health care -- you find that much of the work rests on a seminal Stiglitz paper.
Krugman continued...
But the larger story is the absence of a progressive-economist wing. A lot of people supported Obama over Clinton in the primaries because they thought Clinton would bring back the Rubin team; and what Obama has done is ... bring back the Rubin team. Even the advisory council, which is supposed to bring in skeptical views, does so by bringing in, um, Marty Feldstein.
--SNIP--
Joe Stiglitz stands out because in addition to being on the progressive wing, he's also, as I said, a giant among academic economists. But I think the real story is more about excluded points of view than excluded people.
Bold type is diarist's emphasis.
Krugman tells us that even if you don't agree with the "leftish wing" of economic thought, one would hope that at least some folks from that wing would at least, infrequently, have the President's ear. But, as the Nobel laureate points it out to us, when it comes to progressive economic thinking at 1600 Pennsylvania Avenue, Vice President Joe Biden's economic advisor "Jared Bernstein is it."
Krugman also provides us with a link to a new piece by Michael Hirsh in the July 27th edition of Newsweek, The Most Misunderstood Man in America.
And, for all you folks out there that will remind us of that dinner Joe Stiglitz had with the President in early May, this latest Newsweek article makes note of the reality that while everyone else at the table that night, from Paul Krugman on down, had received an invitation to dine with President Obama days or weeks in advance, Joseph Stiglitz was called for the first time on the day of the event and invited as an afterthought.
That's just freakin' pathetic, IMHO!
Joseph Stiglitz is, perhaps, the single most important person on the planet, at least in terms of someone who should be providing sound policy advice to our President but who is not.
This is a guy who's as much about public policy and doing what's right for society (and our environment), as he is a true world leader when it comes to economics! In addition to a lengthy list of awards and appoints, from his Nobel Prize in Economics in 2001, to his stint as a chief economist at the World Bank, here's a little more from his Wikipedia bio:
...In addition to making numerous influential contributions to microeconomics, Stiglitz has played a number of policy roles. He served in the Clinton Administration as the chair of the President's Council of Economic Advisors (1995 - 1997). At the World Bank, he served as Senior Vice President and Chief Economist (1997 - 2000), in the time when unprecedented protest against international economic organizations started, most prominently with the Seattle WTO meeting of 1999. He was fired by the World Bank for expressing dissent with its policies.[4] He was a lead author for the Intergovernmental Panel on Climate Change.
He is a member of Collegium International, an organazation of leaders with political, scientific, and ethical expertise whose goal is to provide new approaches in overcoming the obstacles in the way of a peaceful, socially just and an economically sustainable world.
Stiglitz has advised American President Barack Obama, but has also been sharply critical of the Obama Administration's financial-industry rescue plan.[5] Stiglitz said that whoever designed the Obama administration's bank rescue plan is "either in the pocket of the banks or they're incompetent." [6]
But, once again, when I use the term, "the single most important person on the planet," it would appear that just about everyone else on the planet realizes this except for the other economic advisors around our own President.
The Most Misunderstood Man in America
By Michael Hirsh | NEWSWEEK
Published Jul 18, 2009
(from the July 27th, 2009 edition)
...Stiglitz's work is cited by more economists than anyone else's in the world, according to data compiled by the University of Connecticut. And when he goes abroad--to Europe, Asia, and Latin America--he is received like a superstar, a modern-day oracle. "In Asia they treat him like a god," says Robert Johnson, a former chief economist for the Senate banking committee who has traveled with him. "People walk up to him on the streets."
Stiglitz has won fans in China and other emerging G20 nations by arguing that the global economic system is stacked against poor nations, and by standing up to the World Bank and International Monetary Fund. He is also the most prominent American economist to propose a long-term solution to the imbalances in capital flows that have wreaked havoc, from the Asian contagion of the late '90s to the subprime-investment craze. Beijing has more or less endorsed Stiglitz's idea for a new global reserve system to replace the U.S. dollar as the world currency. Chinese Prime Minister Wen Jiabao has been influenced by Stiglitz's work, especially when "he talks about the economics of poor people," says Fang Xinghai, the head of Shanghai's financial-services office. But his stature is huge in Europe as well: French President Nicolas Sarkozy recently featured him at a conference on rethinking globalization. And earlier this month, while traveling to Europe and South Africa, Stiglitz received a call from British Prime Minister Gordon Brown's office: could he return through London and help the P.M. get ready for the G20 meeting in Pittsburgh?
Stiglitz is perhaps best known for his unrelenting assault on an idea that has dominated the global landscape since Ronald Reagan: that markets work well on their own and governments should stay out of the way. Since the days of Adam Smith, classical economic theory has held that free markets are always efficient, with rare exceptions. Stiglitz is the leader of a school of economics that, for the past 30 years, has developed complex mathematical models to disprove that idea. The subprime-mortgage disaster was almost tailor-made evidence that financial markets often fail without rigorous government supervision, Stiglitz and his allies say. The work that won Stiglitz the Nobel in 2001 showed how "imperfect" information that is unequally shared by participants in a transaction can make markets go haywire, giving unfair advantage to one party. The subprime scandal was all about people who knew a lot--like mortgage lenders and Wall Street derivatives traders--exploiting people who had less information, like global investors who bought up subprime- mortgage-backed securities. As Stiglitz puts it: "Globalization opened up opportunities to find new people to exploit their ignorance. And we found them."
--SNIP--
Stiglitz has warned for years that pro-market zeal would cause a global financial meltdown very much like the one that gripped the world last year. In the early '90s, as a member of Clinton's Council of Economic Advisers, Stiglitz argued (unsuccessfully) against opening up capital flows too rapidly to developing countries, saying those markets weren't ready to handle "hot money" from Wall Street. Later in the decade, he spoke out (without results) against repealing the Glass-Steagall Act, which regulated financial institutions and separated commercial from investment banking. Since at least 1990, Stiglitz has talked about the risks of securitizing mortgages, questioning whether markets and authorities would grow careless "about the importance of screening loan applicants." Malaysian economist Andrew Sheng says, "I think Stiglitz is the nearest thing there is to Keynes in this crisis."
And, here's something (from an earlier piece by Newsweek's Hirsh on Stiglitz from this past December) about how the "godfather" of neocon economics, Milton Friedman (the veritable founder of the Chicago "school" of right-wing economic thought), acknowledged that Stiglitz was right and he was wrong when it came to Stiglitz' sentiments with regard to international economics:
Chasing Stiglitz
by Michael Hirsh
Newsweek Magazine
December 4, 2009
...In a spate of books, essays and speeches dating from the early '90s, Stiglitz denounced Rubin's support for repeal of the Glass-Steagall Act, which separated commercial from investment banking for precisely the reasons we are now witnessing on Wall Street: new "full-service" banks would seek to hype companies that their stock-market side underwrote and issue loans to them even if they were not credit-worthy. "The ideas behind Glass-Steagall went back even further [than the 1929 crash] to Teddy Roosevelt and his efforts to break up the big trusts," he wrote presciently in "The Roaring Nineties" (2003). "When enterprises become too big, and interconnections too tight, there is a risk that the quality of economic decisions deteriorates, and the 'too big to fail' problem rears its ugly head." Unfortunately, Stiglitz wrote, his worries "were quickly shunted aside"' by the Clinton Treasury team. Earlier, in his book "Globalization and its Discontents" (2002), Stiglitz became the most prominent voice in Washington to say plainly that free-market absolutism, which began with the Reagan revolution and continued under Clinton (who upon being elected declared the era of "big government" was over), was ill-founded theoretically and disastrous practically. "In 1997 the IMF decided to change its charter to push capital market liberalization," he wrote. "And I said, where is the evidence this is going to be good for developing countries? Why haven't you produced some research showing it was going to be good? They said: we don't need research; we know it's true. They didn't say it in precisely those words, but clearly they took it as religion."
As far back as 1990, Stiglitz argued in a paper (it can be found on The Economist's Voice Web site at www.bppress.com) against securitizing mortgages and selling them because "when banks retained the mortgages which they issued, they had greater incentives to screen loan applicants." He asked, again with startling prescience: "Has securitization been a result of more efficient transactions technologies, or an unfounded reduction in concern about the importance of screening loan applicants?" None other than Milton Friedman, the founding father of the free-market era, told me in an interview before he died that Stiglitz also had been more correct than everyone else about how to transform Russia into a market economy when he argued that institution-building and creating regulatory authorities were an important preliminary step. "In the immediate aftermath of the fall of the Soviet Union, I kept being asked what the Russians should do," Friedman told me in 2002. "I said, 'Privatize, privatize, privatize. I was wrong. Joe was right. What we want is privatization, and the rule of law..."
The rule of law!
What a concept, huh?
In the middle of July 2009, in the midst of the worst economic downturn that this nation's seen since the Great Depression, while we fork over trillions upon trillions of dollars to Wall Street at the expense of a poverty-stricken Main Street, as we're being simultaneously told that unbearably high rates of middle and lower class unemployment may continue for many years, while we concurrently witness a massive explosion with regard to more Americans falling through the cracks of our woefully inadequate social safety net, we're also now being told that the one progressive economic genius of our time doesn't even get the time of day at the White House?
As someone I knew used to say, "They're not even giving Joe Stiglitz (let alone basic progressive economic thought) the steam off their piss!"
Yeah, Larry, that'll teach us non-Rubinists a lesson, right? Ya' screw with the "Larry the Bull," ya' get the horns!
Too bad just about every other major world leader--never mind every progressive-thinking Democrat in the U.S.--thinks you're out of your mind for giving Stiglitz such short shrift.
Who's that getting the horns again? (Main Street?)
And, you want to replace Bernanke over at the Fed? Like that place isn't politicized enough, right?
Since when does one person's ego preempt the best interests and the well-being of the rest of society?
Mr. President, please, before it's too late, wake-up and smell the coffee!