“On both sides of the Atlantic, failed policies threaten to doom people to years of slow economic growth and stagnant incomes, asserts Columbia University professor Joseph Stiglitz.
“There are alternatives,” writes the Nobel laureate in an article for Project Syndicate, published just days ahead of new Federal Reserve Chair Janet Yellen’s widely anticipated testimony to Congress on monetary policy and the economy. “But we will not find them in the self-satisfied complacency of the elites, whose incomes and stock portfolios are once again soaring. Only some people, it seems, must adjust to a permanently lower standard of living. Unfortunately, those people happen to be most people.”
Stiglitz warned of entrenched Japanese-style sluggish growth in 2008. Leaders on both sides of the Atlantic claimed they had learned lessons from Japan, and then promptly repeated the same mistakes.
The U.S. economy was sick even before the 2008 financial crisis, he writes. It wasn’t just the housing bubble. Problems festering beneath the surface included growing inequality, global imbalances and rampant speculation that was doing nothing to spur productivity or create jobs.
Policymakers not only failed to address those problems, they actually made them worse and created news ones, Stiglitz charges. Austerity polices made the downturn deeper and longer than necessary — and “with long-lasting consequences.”
Many countries became more indebted as the downturn diminished tax revenues. Because of public and private underinvestment, a generation of young people who should have been improving their skills have become idle and increasingly alienated.
Inflation-adjusted GDP per capita is lower in most Western countries than in 2007. Median real income in the U.S. is less than it was in 1989…..”
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