This is why Rolling Stone is the only magazine I’ve subscribed to for the past three decades: the political coverage. Go read all of Jared Bernstein’s interview with Nobel Prize-winning economist Joe Stiglitz:
I was struck by the fact that all of the Republican candidates for President had as one of their primary platform positions to repeal Dodd-Frank.
It’s going back to 2007 to the kind of environment that created the crisis to me is amazing. I understand the criticism of Dodd-Frank that it didn’t go far enough.
That’s not where they’re coming from. They want to recreate the circumstances that allow for bubbles, exploited predatory lending, abusive credit card practices. How anybody can say after those experiences that that’s what make an economy good, strong, and that’s an economy that will benefit most citizens, I find incredible!
How do you explain it?
Ideology. This is economics being used to pursue a political agenda. I feel very intensely about that, because my own work over 30 years ago showed that whenever there’s “asymmetric information,” which just means some people know something others don’t, whenever there were incomplete risk markets which there always are, markets are not in general efficient, and there is an important role for government regulation, government providing goods like basic research or support of the internet, and that kind of thing. But the ideology totally ignores this.
Let’s talk for a second about current events. So much economic policy today both here and especially in Europe, seems like medieval medicine: bleed the patient, and when she gets worse, add more leeches. In other words, “austerity.”
Let me put it very forcefully: No large economy has ever recovered from an economic downturn through austerity. It’s not going to happen in the United States and it’s not going to happen in Europe.