Web Assignment 13: Joe Stiglitz's International Anti-Neoliberalism: Chaubey Students

Of all those arguing that the world economy was being badly managed in the interests of the rich in the 1990s and early 2000s, the most articulate was Joseph Stiglitz.

Surf over to http://delong.typepad.com/pe101/virtual_discussions/ and then to http://delong.typepad.com/PE101/2007/08/web-assignme-13.html. Write a comment of at least 200 words on what you think of some aspect of Stiglitz's position on how the world should be governed. Contribute to the discussion that is ongoing at http://delong.typepad.com/PE101/2007/08/web-assignment-13.html--that is, react and respond to not just Stiglitz but, to the extent it is appropriate, the earlier posters and commenters on the webpage.

Due by 5 PM on November 27

Comments

[Vera Bersudskaya]

I have understood a lot from this week’s readings. Stiglitz does a very good job explaining complex issues pertaining to globalization and the World Bank and the IMF clearly and concisely. To me, his most important insight lies in his insistence upon details. According to Stiglitz, nuances are crucial to getting development right. This entails that the particular history, politics, culture are of immense importance in determining the way a developing country should proceed. In creating institutions for a market economy (which are indispensable components for sustainable growth in the future), one needs to pay special attention to the particulars, knowing that “one size fits all policies almost never work.” The details are vital to the design of pertinent institutions, which will work in a given country, and “because the details are so important, there are often unintended consequences of well-intentioned policies.”
I think that this emphasis on the detail helps us understand many developmental failures and many mistakes made by the World Bank and the IMF, especially. However, this insight does not make the job easier, if anything, it makes it harder; because designing specific policies that will work only in specific places will be much more difficult that writing up an umbrella strategy for all of Africa. The attention to detail will drive to and force the “much needed dialogue” within these organizations. Having many people at the table to discuss possible options and outcomes will necessarily result in more pertinent, insightful policy recommendations. In such setting, people will be able to suggest that in some cases inflation is not that bad, or that there are many possible property rights regulations (not just the one the US has). This, in turn, will lead to a more nuanced and specific policy that will be more effective in the targeted area. I think this is a great recommendation; the question is whether it is realistic in the context of existing international organizations. Determination to accomplish these changes is also desperately needed.

[Hye Jin Lee]

His solution is to for the developed and developing nations to cooperate and find balance and to deal with democratic deficit for well-being of all nations, not only for economic well-being but also for overall happiness in individuals. Out of all the solutions that he had provided, I felt the most compassion towards the opinion that the process needs to take place for the well-being of all individuals, not just economically but in overall happiness. Stiglitz highlights the tendency of focus towards economy and brings to the fact that economic satisfaction is not the end of human happiness.

His argument as to how there are more losers than winners in the system of globalization is similar to many thinkers we have studied such as Schumpeter who said that the feudal authority system has stayed with transition to capitalism with imperialism only benefiting a few at the top and Stiglitz’s argument partly points out the responsibility of the power above that influences the globalization process like a ripple effect internationally.

In his preface, he mentions an interesting survey of seventy-three countries over the world. The survey found that the unemployment rate has risen in every region of South Asia, United States, and European Union from 1990 to 2002. This shows the increase in inequality since while globalization is increasing the GDP of a nation, it is not helping the people within. This point has a very high impact because it is contrary to what many think of globalization. Globalization has led to increase in poor people in rich countries.

I think somewhat different than what Vera said about how it is more difficult to make specific policies for specific regions, compared to an umbrella strategy. Sometimes it is easier to focus on one region because in order to make an umbrella strategy that will accommodate as many regions as possible, there are more regions that need to be taken into consideration. Region-specific policies might be more effective and simplistic. Compared to the work that needs to be put into making detail-oriented policies, the increase in effectiveness will be tremendous and at the end, the policies will do more good than umbrella strategies.

[Jennifer Miller]

I agree with Vera that Stiglitz is calling for a greater focus on context specific plans for development and trade policy, but I think his solution demands a lot more than just paying attention to details. An aspect of his position that I find interesting is his push for a drastic ideological shift away from the persistence of the neo-liberal Washington Consensus model in global development, which he describes as a failure. What is required of all nations, specifically the U.S., is a weaning from the institutionalized stronghold of this ideology that has perpetuated a legacy of unfair advantage, into a new ideology motivated more by global citizenship and goodwill rather than greed. Similar to what Hye mentioned, the most important point in regards to this new ideology is that economic growth needs to be redefined, so that it becomes more of a social and political development project, rather than just a mechanism to increase a nations GDP. As Stiglitz writes, “it is not just income that matters, but standard of living.” Politics and a social justice agenda become utmost important in his vision. He describes politics as historically operating in a separate sphere than economic development, and he believes it needs to become integrated into the process, fusing with market and social justice principles and ultimately guiding the process.
I find it interesting that although he calls for more state intervention, regulation and governance he does not want Socialism. He believes “Markets, governments and individuals are the pillars of successful development strategy.” But his vision also adds a new emphasis, the fourth pillar of community driven “collective action” that utilizes market and state forces but is not dictated by them. I see this as very similar to Polanyi’s vision of an embedded market.
Overall I think Stiglitz brilliantly captures our socioeconomic moment, yet he is writing a bit a ahead of his time. His solutions are both refreshingly practical and also incredibly optimistic given that competition for resources and cheap manufacturing, and developed nation's reliance on an unfair advantage, continue to guide globalization.

[Serena Yang]

Stiglitz articulately and intelligently outlines a framework upon which market capitalism and democracy can work for the benefit of not just the developed countries, but also the developing, who have been excluded from this global system. Throughout these three papers, Stiglitz places great importance on knowledge and the transfer of knowledge as requisites for development, so much of Stiglitz’s argument deals with asymmetric information as he calls for increased dialogue and puts greater emphasis on the importance of local information. As Jennifer points out, this kind of solution calls for greater state involvement and less neoliberal policies like that of the Washington Consensus. Stiglitz’s attitude toward the environment is another example of increased state involvement, as individual self-interest would instead see the environment further deteriorating. In this way, I think Stiglitz has much in common with Karl Polanyi, as he stresses the importance of other logics not just the market logic to make a functioning, equitable society. Indeed, Stiglitz’s arguments are mostly an attempt to reconcile the classical problem of liberalism, the tension between individual liberty and societal equality, and I think his advice is sound and important, as long as the goal is democracy and market capitalism.

So then I have to ask to what extent these developing countries do want to be included in this westernized brand of globalization, based on individual liberty and economic self-interest. As we see from Jessica Stern’s book on terrorism, there are many people who despite the instability and violence of their regimes, would still prefer to have nothing to do with western ideologies of government and economics. Therefore, Stiglitz’s recommendations would be less effective in overcoming these kinds of revulsion for western ideals.

[Zack Simon]

For me, none of Stiglitz’s prescriptions for bettering the increasing global economic gap are ‘new.’ Without any real economics background to speak of myself, his ‘ideas’ don’t seem so radical in comparison to anything we have been exposed to so far this semester. Stiglitz critiques that globalization has failed the world’s poor, but Stiglitz never offers a concise definition of what exactly this globalization is in light of some presumably malevolent agency he writes on. He has much to say on the prospects of ‘market failure,’ but government failure, corruption, and dictatorship he leaves alone.

He recognizes global inequities and offers freer trade and more open markets as a solution to international diplomacy. But how exactly does he plan to carry this out properly? He is probably right that the configuration of globalization is political, but any alternative he might offer inevitably ‘involves’ politics to bring about these institutions and to sustain them surely. He offers the idea of rich nations lending aid to poorer ones without reciprocity, to be enforced by a global tribunal. (I could swear that this sounds like the United Nations.) Developed countries will provide role models in their own governmental order to the developing countries. (How is this radically different from what already exists?)

Again, the notion of ‘metis’ comes into play as I think Vera has implied when Stiglitz writes against the ‘one size-fits-all’ policies generally implemented. I believe in this notion because it seems sound and common-sensical.

I agree with what Jennifer Miller points out, that Stiglitz recognizes that it’s not just income that matters but the standard of living that matters too – that Stiglitz says that the historical social and economic spheres need to be integrated. But I don’t see this as such a new concept either. I also agree with Jennifer that Stiglitz’s fourth pillar of successful development strategy recalls Polanyi’s theory of the “embedded market.”

As Serena recognizes, Stiglitz’s notion of successful development strategy is “mostly an attempt to reconcile the classical problem of liberalism, the tension between individual liberty and societal equality.” That’s a well-put summary in my mind. And I have no problem with this goal. It’s just the way that Stiglitz presents his entire book without presenting any concrete solution that gets to me. It’s that, or it’s the fact that we have been assigned writings just like this for weeks now – each of which are only minor deviations from one another. There is probably a point to this, I realize.

[Adriana Gomez]

So, I was at work the other day when one of the regular patrons comes in (I work at the recreational sports facility on campus). We were in a discussion about the terrorist attacks of September eleventh when he says, “You know, America is doing something wrong. I know people who knew Germans who survived World War II. These Germans said, ‘You know, I remember we were starving when the Americans dropped parachutes with bananas. We didn’t know what they were. We didn’t even know to peel them. We ate them whole, and for that, I will never forget the Americans regardless of sides.’ Now, the thing that America is doing wrong now is starving these people abroad.” – C. Browning

Indeed, this is a concern that Stiglitz would also probably find disturbing and he addresses it through a portion of his book. Stiglitz argues that America and other countries amongst the G7 nations opening their trading frontiers may not be the best way to help the third world countries prosper economically. The lack of resources, as noted by Stiglitz, that keep third world countries from easily exporting their goods and the lack of “skilled professionals” that are not able to handle trade negotiations make it difficult to trade or grow economically for a lot of these nations. The trade with the more advanced nations would, as a matter of fact, stall the economies of those developing nations. The policy that Stiglitz proposes about the “global greenbacks” that could aid these developing nations a lot better than foreign reserves can is a proposal that I think would, at the very least, partially arouse pro- United States sentiments such as the one mentioned by Mr. Browning above. In return for exchanging goods, the United States is stalling other economies without regard for the standard of living of this county that could grow into a potential ally. The mutual well-being of these countries rests on the other because, though some countries are very wealthy vis-à-vis other countries, there is yet a better trading partner and ally in each country that a developed nation helps, and this is just to mention the self-interested side of the developed world. As J. Miller points out in the previous posting, the standard of living, and not the amount of income, becomes important in Stiglitz’s view.

Overall, I agree with Stiglitz that this system of exchange would be of much greater use to developing nations. The “global greenbacks” that Stiglitz mentions are a gradual change, possibly some with which James C. Scott would agree with (as I assume from his book SEEING LIKE A STATE, which warns against attempted huge jumps in the development of a country). The gradual evolving of a state is what probably most developing nation calls for, and things such as vaccines or other basic resources would be the first starts to aid these countries.

[Nick Nejad]

I want to talk about something that I think is often missed in economics. In my opinion, there is a big difference between value and between the GDP economists look at. As is often the case in social sciences, people have a tendency to not look at the secondary effects, or tertiary effects, or so on. One example I thought of was with Stiglitz’s argument for protecting infant industries with tariffs. Let’s say for example a developing country was importing a consumer good for a price of X. Now, they decide to put a 20% tariff on it, and the company passes this on entirely to the consumer, making the new price 1.2 X. And let’s say at this price, a local company can compete with the multinational by producing this good for 1.15X and selling it at the 1.2X market price. Well Stiglitz would hail this arrangement- it taxes the consumer, but that money is going to the government coffers, so that is a net neutral. Meanwhile, it also created a new industry and can employ more people, adding to GDP figures. A Win? I would say no, because in reality all the government did was encourage inefficient use of resources. The labor and the capital in this business are not helping out society at all; the foreign multinational was already willing and able to supply everyone the good at a price of X. But, you’ve added transaction costs, and you’ve diverted away people and money from contributing to something new.

Of course, creating this local business has the added advantage of bringing knowledge and expertise with it. And this is why I think Reich’s point about increasing the skills of the people should be the most important goal. But the goal should be increasing education in developing countries, not encouraging wasteful behavior. And it is not a matter of protecting the poor and the unskilled- that will also just encourage wasteful behavior. The goal is to prevent people from growing up and becoming unskilled.

The one idea I did happen to like a lot from Stiglitz was the idea of an innovation fund for medical intellectual property. The problems with the current system are clear: pharmaceutical companies discover new drugs but keep the price elevated and have sole rights on the drug for twenty years. In this system, drugs are not sold to developing countries because pharmaceutical companies want to maintain their elevated pricing. It is a system that gives up a lot of value (needed drugs for the poor) in order to preserve traditional economic numbers. But an innovation fund can gives a lump-sum payment to the discoverer of a new drug and then let free competition take place for its production. In this system, innovation is still rewarded. In addition, it is in my opinion a just progressive tax. The innovation fund will be funded out of taxes, which will inevitably mostly come from the rich. It will go towards helping everyone in a matter that is usually beyond our control: diseases. Not only that, the incentive will then exist to sell these drugs cheaply to the developing world, adding value to the world society.

I think because this concept of real value is vague, many economists tend to ignore it for just market price methods. But I think this is a grave mistake, because it encourages a philosophy which sometimes misses the point. I think a real worthy role for government would be to intermediate in the capitalist system and make sure that the value added to society is maximized. This can take numerous forms. A progressive tax which takes away from conspicuous consumption is one example. This innovation fund would be another. A third example would be to prevent businesses from exploiting the lack of knowledge of its consumers. I think if politicians stopped to think about these things from a value added framework, it would change a lot of the policy debate in government.

[Jessica Chu]

Like most people said before me, Stiglitz writes about his disillusionment with globalization and how capitalist policies have intentionally put developing countries at a disadvantage. He openly accuses industrialized nations like the US and the European Union of refusing to liberalize import rules on sectors that Third World countries could excel in. On a side note, this intentional exclusion reminds me of Jessica Stern’s analysis of terrorists and their bitterness at capitalist society. If we had been unable to understand how capitalism could leave countries in the dust, Stiglitz should be able to clear it up. Back to the text assigned, Stiglitz calls for a reform on the way to deal with international policy. Instead of an umbrella, he proposes each situation should be treated as a different situation and should be approached as such.
Although this may end up making a happier, fairer world, it doesn’t seem realistic. I agree with Vera that it would be too time consuming and would increase the amount of red tape that is already abundant enough. Progress can’t take place if it’s stuck in bureaucratic red tape. Although the world might work smoother if there were enough resources to treat every region differently, it seems unrealistic. Instead of sticking with an umbrella strategy or going to the other extreme of treating every region as a new situation, we could fall somewhere in between. Maybe smaller umbrellas so more attention can be paid to those regions by the people holding their umbrella, instead of giving each state its own parasol, if the metaphor will stretch that far.

[Kinzie Kramer]

In the Chapter “Lifting the Resource Curse” Stiglitz outlines “An Action Agenda for the International Community,” which includes six main points: The Extractive Industries Transparency Initiative, Reducing Arms Sales, Certification, Targeting Financial Assistance, Setting Norms, Limiting Environmental Damage, and Enforcement. I must agree with Zack, that none of these prescriptions were ‘new’ to me, however, they are still important recommendations that should be utilized to make globalization work and I agree with them. But what I want to point out is that the Agenda is for the International Community. It is not simply an agenda for specific countries, or the UN or IMF or World Bank, but rather for the international civil society. I think that this transformation in favor of the governance of an international civil society rather than simply each country’s government is the trend for controllable the world and that in order for globalization to work it will have to remain the trend.

For example, take one of Stiglitz’s main points- certification schemes. One example that he discusses is certifying diamonds in Sierra Leone: The United Nations Security Council imposed a ban on the import of diamonds from Sierra Leone that were not accompanied by a certificate and now “uncertified Sierra Leone diamonds are now know as ‘conflict diamonds;’ this public recognition of the role of resources in financing a conflict, and the acknowledgement that it must be curtailed, is a move in the right direction” (156). Notice that the move in the right direction is not dependent on government action. Certainly the government must establish a certification scheme, but past that the responsibility of curtailing the illegal obtainment of diamonds is up to the international civil society. The international civil society is expected to not buy uncertified diamonds, to uphold humanitarian values and put their money towards those values. Stiglitz basically seems to be saying the world should be run via a combination of multiple actors, altogether interacting in this international civil society that supercedes states.

[Brendan Gluck]

Stiglitz’s work with the World Bank and under the Clinton Administration has provided him with profound insight into the intricacies and inner-workings of the international system. Stiglitz points out that the characteristics that we assume make up our current democratic society, like representation, toleration, and open-mindedness, are the very characteristics that are lacking in our society, leading to the failure to implement advantageous policies. Instead, the lack of dialogue, diverse opinions, and communication between nations has led us into a path of impartiality towards the well-being of our fellow human beings and the environment. In his articles, Stiglitz makes it apparent that although globalization has led to unprecedented growth and levels of wealth, there are many changes that need to be made in order to ensure that the benefits of globalization are more equally distributed and that the negative effects are curtailed. One issue that Stiglitz repeatedly addresses in his articles is the dire need to create measures to protect our environment. While this issue has become very prevalent in current politics, Stiglitz highlights the importance of simply discussing the pros and cons in an open setting. Although this seems obvious, I think our current political system could learn a lot from this suggestion. The American people are currently more in the dark, in the sense that we are oblivious as to the actions of our government, as ever before and therefore, an open debate about such a hot topic would not only procure a possible solution to the problem but would also instill us with confidence in our government.

Another topic that interests me in Stiglitz’s article is his suggestion that international policy be formulated by a case-by-case basis. China has proven that there are multiple ways to develop effectively and it is important to understand that each nation is unique in their make up. Adapting to each nation’s needs and specific situation will prevent catastrophic effects from occurring as a result of ill-advised policies. Although I agree with Jessica Chiu in her belief that this will add some time to the development of said policy, I think it is key in providing the right fitting policy. In the long run, the successful growth will more than offset the time lost. Rather than international organizations being forced to develop policies for each nation individually, they should give the nations a general road map for how they think growth and modernization can be achieved. This way, it becomes the task of the respective nation to adapt this general road map to their specific case by using their ‘metis,’ (as China has done so effectively) which will greatly decrease the bureaucratic red-tape experienced by international organizations.

[William Chen]

Joseph Stiglitz points out the huge disparity between industrialized countries and developing countries. Although globalization has allowed countries such as the United States to experience great economic growth, it has left other countries in the dust. Furthermore, Stiglitz suggests that the growth of our country is not as good as it seems because we are destroying our environment along the way. Like the above posters mentioned, Stiglitz points out the importance of environmental preservation and believes in the need for the government to implement policies to alleviate that issue. The main argument that Stiglitz puts forth is that the Washington Consensus does not work for every country. Although it has worked relatively well for the U.S., it assumes that other countries can operate under a market economy that has perfect competition and information. But realistically, no country does. Moreover, those countries do not have the same fundamentals that the U.S. has to ensure the success of the Washington Consensus. Those developing countries lack the organizations that would ensure a free market economy. So I agree with a few of my classmates that the best solution is to not use a one-for-all strategy, but rather, to look at each country differently and to solve their problems individually.

[Thomas York]

What I found most interesting in Joseph E. Stiglitz's writing were his policy recommendations for China. In his speech, he makes comments that espouse his domestic policy recommendations. Rather then simply look at output growth and decide that China's policies have been successful, he provides a model for a fair system of growth that encourages increases in the standard of living and fair economic distribution.

From “Toward a New Model of Development,” he writes: “But the major barrier to increasing consumption is not a lack of credit, but the lack of an effective social safety net, a strong public health system, an effective social security system,and a good publicly provided education. Precautionary savings depresses consumption.”

Rather than the continued focus on increasing exports, Stiglitz recommends encouraging in-country consumption growth through policies that would increase the living standards of all Chinese. Social safety nets and public health systems both would help hundreds of millions in China.

Stiglitz even provides something the Kyoto protocol did not – an effective solution for stemming carbon emissions in developing countries like China: ... "Making firms pay the full marginal social cost of their activities - the cost, say, of carbon emissions - would enhance incentives for pollution reducing innovation ... A carbon tax would have, in addition, one further important advantage. It could break the global impasse on what to do about global warming. The scientific evidence about the risks of this impending calamity has been mounting."

Kyoto's “economic leakages” -> incentivizing 1st tier nations to lower their consumption and in effect lowering prices for developing countries and incentivizing them to consume more -> entailed a serious problem. This system would encourage a global incentive-based system that doesn't simply redistribute pollution.

Stiglitz's writing on the American Intellectual Property system seemed most interesting to me. As an ex-High School debater, I often heard the political consensus response an intellectual property system is necessary to support long run growth. It simply didn't occur to me that, especially for developing nations like China, a stringent intellectual property system like the USA has simply makes no sense. These false monopolies, especially in medicine, do actually let thousands needlessly die while stifling a good that cannot be taken from someone else: knowledge.

[Kenichiro Nakahara]

This week’s reading was quite fascinating to me because it felt like Joseph Stiglitz is the first author in a while who I can agree with from the PEIS 101 readings. (Although I feel this way because his work is relatively recent and relates to issue that has gone on during my life…) Even so, I would like to focus on Stiglitz’s critique on “neoliberalism” and his model of China.

On the topic of neoliberalism, Stiglitz, along with MANY authors (when I looked up “neoliberalism” on Amazon.com) had critical views towards neoliberalism. What rung my bell when I was looking down the list of books was about, “A Brief History of Neoliberalism” by David Harvey which I read in a previous class. Harvey, along with Stiglitz had a critical view towards the contradictions we see today between “democracy” and the economic gap created by “neoliberalism”. This can be seen in real life today in the case of the United States. United States is considered a “democracy” with freedom and liberty but is also a monster economy that is called “neoliberal”. Democracy is supposed to create economic wealth among all but in reality, only the wealthy in the United States are gaining and the economic gap between the poor are getting bigger everyday.

Stiglitz continues attacking neoliberalism (and the United States) on the fact that it forces particular models upon developing countries. He mentions that “a larger overall organization” is needed in order to govern so this sort of “economic imperialism” would not occur between those who are developed and developing. Stiglitz is quite impressed by China’s case and the fact that it has made economic development using its distinctive characteristics of cheap labor and number of labor instead of trying and failing by imitating models like the United States or EU. Julia’s posting is similar to this and it is quite clear that there are systems that work for certain countries and there are ones that would simply ruin the country by factors such as politics and religion. (As seen in the examples of trying to bring democracy to the Middle East)

Many members along with Stiglitz feel that the World Bank, IMF, or the WTO are the “governors” of international trade and economy and have issued in tact. However, I would have to disagree with this point. In reality, the World Bank is known for simply ignoring social or cultural aspects of the country and just by looking at numbers, they decide their economic rescue strategy. This can create the “dependency” issue and the country would never able to be able to grow on its own. Examples can be seen in once successful Latin American countries who are struggling today because the economy had been depending on countries from Europe in previous centuries. Another example could be in Africa, where the enormous financial supports by the World Bank have gone to the hands of corrupt governments and creating endless political mess… Stiglitz fails to give a blueprint of how to solve these issues but I feel that he is trying to say organizations such as the World Bank must recognize the characteristics of different countries and also consider factors such as cultural and political in order to take on a strategy of international economic growth.

[Anthony Yates]

Joseph Stiglitz speaks to me much as a seasoned veteran of a thousand battles; his first-hand experience with the troubles of the IMF allows him to adopt the blunt, authoritative town with which he conveys his message. This message, with regard to the development of economic policy, I believe, clearly identifies two key components which are:

1) Necessity of a unique economic solution for each individual country
2) How to create this unique solution

First and foremost, as Vera has pointed out, is his resonant refrain that “one size fits all” policies do not work. The entire body of “Towards a New Model for Development” is dedicated to custom tailoring the beginnings of a solution for China’s individual circumstances. It seeks to understand why previous economic models were effective, in what way the country has evolved since their implementation, and how they were lacking so that these issues might be addressed. It discusses a number of paths down which China might proceed, offering as examples United States’ policies (about which he is particularly critical, in one instance recommending that perhaps they should not even be used “as a template”) as well as those of other industrialized nations who attempt to achieve similar economic success and the general well-being of state for all the citizenry which Stiglitz advocates. And just as the particular conditions in China demand a solution which will work for them, the recipe for China’s success applied to a developing African nation will probably not yield such positive result; more likely, it will have disastrous consequences.

The quest, then, for this unique solution begins and ends in dialogue. One of Stiglitz’s chief complaints during his tenure at the IMF was that the organization did not just fail to encourage debate and discussion regarding many discussions, but actively discouraged it, maintaining a veil of secrecy in important decisions. The result was often ineffective or even debilitating policies. Thus it is for its continuous engagement in dialogue that he praises the Clinton administration, and he attributes many policy successes to the reconciliation of the diverse views existing among the members. The approach to economic policy he advocates for developing countries is the same. A successful policy must minimize asymmetries in information, and only achieves this by incorporating local knowledge (similar, or perhaps equivalent, to James C. Scott’s mētis, government ignorance of which bears much of the responsibility for its policy failures) and third-party, outside institutions (like World Bank) who have “interpretations of what has succeeded and what has failed, based partly on an enormous number of experiments.” A dialogue integrating the mētis of the local people and the “wealth of knowledge” of outside parties is a beginning to the formulation of any policy. But because of the significance of even the slightest details in the policy, either in its creation or in its implementation, it must also end in dialogue, as the policy is constantly adapted and tweaked to fit the ever-changing situation of the nation internally and on the world stage.

In advocating this policy of dialogue, one which is unthreateningly open and supports not a hard-line view, but rather a flexible way of thinking, Stiglitz is very hard to oppose. Because of this, I think it is particularly effective. Stiglitz writes that “open dialogue is essential for democracy,” in his speech to the Carter Center. But it is more than that; it is an implicitly democratic process. In developing countries, it involves participation of independent third-parties and international institutions, but requires by its very definition participation by the members of a nation. If it does not reflect their opinions, feelings, or beliefs, it is not a truly open dialogue. Dialogue is thus a small step in the larger process of democratization, and yet because it is so hard to reject (cf. Stiglitz’s anecdote of fellow economist Gary Becker), can become part of the policy of a country which would otherwise turn aside more explicitly democratic ideas.

[Vaclav Burger]

In reading Joseph Stiglitz I saw many good points just as my peers had and saw the importance of his attention to detail. This is supposed to be crucial to the development of global issues like the IMF. A part of this plan is the swing away from neoliberal development. What Stiglitz conveys as a more drastic substitute has to be the US and European Union moving toward more unfair ideologies. I am reminded at times of the imperialism of the past and how greed seems to potentially play a role in the US and its decisions on Iraq. I believe that one of Stiglitz most powerful notions talks about the development of society, instead of just monetary wealth of a nation. I can’t quite say if political development has been in the shadows of economic development as opposed to being more equal. Should the political developments be affected by the economy, or should these be integrated in a more complex fashion. I see how Stiglitz sees the world to be more unified, which sees global powers swaying their policies to help excel industrializing in smaller nations. I think he wants to see more divergence of the world economies, so the global market is affected better by joint action as opposed to being ruled by few superpowers. With regards to the application of Stiglitz position today, I have a hard time believing in such a collective effort even though it sounds quite nice. Further, I feel Stiglitz could have looked at the future his ideas cast and be somewhat critical to make his argument stronger because such policies would take time to be accepted and put into practice.

[Shane Barclay]

Yes, it’s true that Stiglitz does not offer many “new” ideas, but I think that his overall outlook is something that ought to be seriously considered. By “overall outlook” I mean the means by which he comes up with his ideas, outlined in his piece on dialogue. If the model of his dialogue-led thought process were followed more prevalently then we would start seeing some more ends like those of the European Union.

Joseph Stiglitz would be a proponent of the PEIS major because of how it encourages dialogue between different schools of thought. PEIS encourages one to look through many lenses to formulate more thorough ideas. Stiglitz realizes the same problem that the creators of PEIS realized: economics and politics are infinitely intertwined but there are few economists who are well-versed in political science and vice-versa. Stiglitz rightfully puts the EU on a pedestal because they succeeded in harmonizing the economy and political landscape of Europe.

This way of making decisions—taking into account all aspects of an idea by way of open dialogue between people in differing positions—is one that should be emulated. China is in the unique position where this decision making process could shape their rapidly approaching future in a similar way that it affected Europe a half-century ago. Too much focus on the economy or too much focus on the politics could be detrimental to a country with so much potential power.

[Danielle Mahan]

For the most part, I did not especially enjoy Stiglitz’s writings. However, I have to praise, as many of my classmates do, his emphasis on shifting some of our focus away from economic values and toward political and social values. He repeatedly highlights the importance of increasing democracy, dialogue, participation, decreasing inequality within and among nations, and protection of the environment.
Beyond this, I find him boring, uncreative, cynical and making insubstantial suggestions. Both his long and short term goals seem meaningless or unrealizable. Everyone knows that international financial institutions have to increase transparency and be accountable to its member nations and its citizenry. But why accountable to the U.N., a body whose purpose and composition are very different from those of financial institutions? His speech marking the 50th anniversary of the European Community is especially boring (and a bit sycophant) – who doesn’t value democracy, social justice and solidarity, human dignity, the environment, and a propensity to reform?
His main argument – no one prescription works for all developing countries – is weak because even when Making Globalization Work was published this was already a much diffused and widely accepted principle. He criticizes the principles of the Washington Consensus; however, it is important because it does try to address essential economic values. I think it is important to establish some set of values as an umbrella for all specialized development schemes (more along the lines of Rodrik’s argument). Along the same lines, I find his rejection of conditionality of funds lent by the World Bank and the IMF irresponsible and a little scary. Maybe the conditions need to be changed, but without them, leaders of developed countries have too much discretion.
We really need solutions to the problems Stiglitz described that are just, responsible, and consistent. However, his suggestions fail to not only meet these criteria but are also to provide any incentive for advanced countries.

[Christy Fox]

I agree with Jennifer that Stiglitz is ahead of his time, but not by much. His work might be more useful in 10 years, but it is still powerful now. In an age where globalization is seen as a positive movement for absolute prosperity, Stiglitz illustrates how the current method of managing the economy on a global level can actually widen the gap between rich and poor.
Stiglitz blames institutions, like the IMF and World Bank, for applying prescriptions like the Washington Consensus, to every country despite the preexisting social, economic and cultural differences within the countries. But how can everyone else catch up?
Stiglitz asserts that the world needs a new way to look at the economy. It should not be a tool to enrich countries or individuals, but an inclusive international society with global governance authority. This seems like an ideal prescription to the problem of the increasing income and employment gaps in the world. It seems like international societies are emerging, but are underdeveloped. They lack definitive power over countries, which Stiglitz seems to suggest that they should have. As of now, international societies are just lobbying groups and applying pressure to governments is their most powerful tool. For this reason, Stiglitz might be better place in a time when these institutions have more influence in power over global governance.

[Cindy Yu-Hsin Chou]

I’d like to respond to some thoughts regarding the case of China.

In “Towards a New Model for Development,” Stiglitz recognizes the rapid pace at which China is changing and stresses the need to move from an export-led growth economy to one with an independent innovation system. I am not sure I agree with this.

Stiglitz stresses the need to encourage in-country consumption growth. While I may agree with this, I am not sure how plausible this is.

Stiglitz proposes a carbon tax through which the revenue can be applied towards social benefits and maximizing the greater good, while reducing carbon emissions like the Kyoto Protocol didn’t (if only it were that easy…). Again, I find contradictions in this proposal.

Thomas York writes that “Rather than simply look at output growth and decide that China's policies have been successful, [Stiglitz] provides a model for a fair system of growth that encourages increases in the standard of living and fair economic distribution.”

I have my doubts.

While I applaud Stiglitz for his attempts at bettering the whole of society, his solutions are too myopic, too focused on economic theory and the idealized world, and not enough on the influences of culture and society. Yes, China is on its 11th 5-year plan, and yes, consumption is increasing, but there are several faults I find in Stiglitz’ argument. First, China’s export-led growth economy has allowed it to develop much of the technological knowledge as well as other forms – organizational behavior, management, language, theory. At present, though it is increasingly becoming the base manufacturer for many electronics and computers, much of the highest technology is still not made in China, but in Japan or the United States or Russia. Furthermore, from China’s view, its present role in world trade as an exporter allows it to not only benefit from new knowledge, but also to hang on to those driving investment and innovation in China—often foreigners—and reap in the benefits. In other words, moving from an export-based economy to a self-innovator would drive out foreign investment and focus on local talent (which is not yet fully developed), therefore not benefitting China at the moment, but the United States.

Another issue I have is in Stiglitz’ stressed need to increase domestic consumption. Saving is not just due to the five reasons Stiglitz mentioned, but one thing he does not take into account is the issue of culture. As a Chinese, I have observed within my culture the engrained need for conservative investment and definitely savings. While Americans are up to their arms in debt, this is not as common in Asian countries. Yes, this is a generalization, and while I do not have the statistics to back up my theory, I feel that Stiglitz’s proposal to encourage consumption is not as easy as simple marketing and production to get Chinese people to spend.

A third issue I have with Stiglitz’ argument is in the carbon tax. I’m not sure how the effective carbon tax if the goal is to use the revenue from the tax towards the greater good, as the tax would increase costs, which may lead companies to have a smaller scale of production and less job opportunities. This could lead to high unemployment and decrease consumption as well as savings, thus countering his proposed need to increase domestic consumption.

Stiglitz, then, attempt to appear knowledgeable and gain legitimacy by examining individual countries and stressing the need to not force a “one-size-fits-all” solution, but to me, he exemplifies the classic American mindset: attempting to think about the best interests of another country, but not truly understanding all the factors (particularly the social and cultural factors), and ultimately coming to a conclusion that will benefit itself the most.

[Chun Chung Chan]

Development is complex, and there is no one-size-fit-all policy to all the developing countries. World Bank, IMF are set up to try to help the difficulties that face by the developing countries , but as Stiglitz points out, failures are sometimes hard to escape. Stiglitz says a comprehensive plan that pay attention to details can help the success rate, however there is still other problem. Neoliberal economist believe in privatization, market liberalization, less state intervention. But such policy is not welcomed by all of the countries, and even many countries have disproved Neoliberal policy is the only way to achieve prosperity. Japan, being the second largest contributor to the World Bank, does not agree with the United States’s jurisdiction over the aid pattern and aid restriction: namely the Washington Consensus. Japanese economists know that Japan did not follow the neoliberal policy to make the post-war Japan a successful story. There was tremendous government intervention, state-led economic activities, and it worked. Stiglitz also comes to the same epiphany when he realizes a standardized globalization will not work. Spreading capitalism or market economy is not the only solution to a globalized era.

[Nadia Barhoum]

Stiglitz offers a refreshing look at globalization and its impending impact on the world from an economic, social, and political angle. He addresses many hindrances to global development, of which developed nations are his primary target.

He points to the self-interested avarice of developed nations as a key factor in the underdevelopment we see around the world. Trade and intellectual property, multinational corporations, and global environmental concerns are all issues that Stiglitz speaks to in his book, hailing them as proponents for both good and evil. The currents state of international policy and decision-making largely favor developed nations and undermine or ignore the interests of developing states. For example, in the world of agriculture, Stiglitz points to those US farming subsidies that boost our own economy but simultaneously sink the local economies of many other states that export the same agricultural goods such as cotton and corn.

He often calls on the effects of negative externalities on a global scale to really illustrate the impact of state policy on other nations and also the impact of international organization’s decision-making policies on the global market and individual players. His writings are important I think mostly because they bring to the table many issues which demand urgency from the public, especially the public that has governing power to change the status quo and trajectory of such embedded institutions.

[Stephen Deng]

Stiglitz claims that the developed nations, along with the emergence of multinational corporations have molded the globalization to their benefit while ignoring the poorer majority of the world. He in turn wishes to see global manipulation transform into a more equal management of the world economy.
As Anthony pointed out, Stiglitz’s development recommendations have a bit of James Scott in them. Like the idea of a local, adaptable metis, Stiglitz firmly believes in policy that is custom-tailored for its respective state as well as constantly adapting to the changing world situation. However, he does outline the foundation of this framework with a strong role for governments and international institutions.

Though it may be easy, even natural, to dismiss Stiglitz’s ideas based on the idealism of it all, I think he points us in a good direction. He oftentimes believes in using the market as a tool to enforce or regulate those who have something to gain by exploiting the current world market. As someone who is involved with corporate social responsibility projects, I have seen firsthand how a restructuring of social needs into a controlled market framework can work wonders (even if it is difficult to do so). Though I may not agree completely with his exact methods, I do believe that things like market punishments for pollution allow for the social, political and economic spheres of development to move forward together.

If anything, Stiglitz gives us another perspective on globalization. He has set it up as a great opportunity for humanity. Even though we all know the neat package he has produced is not how it will pan out exactly, I do believe he has minds thinking in the right places. He recognizes that governments should have a large role in development and points to many successful examples like China, Botswana and Norway. International intuitions also have a great role to play as enforcers and norm creators which have the opportunity to append the right values to trade. Finally, the market is essential. It is a very strong tool and incentive to reinforce these goals and curb exploitation by multinational corporations.

Stiglitz gives us a streamlining of economics with social and political concerns. Each can be used as a tool by the other but in the end; weight is placed upon the absolute good. Idealistic as it may be, he places globalization as the great window opportunity of our generation to what good we can. I hope we take it.

[pierre mouillon]

Reading Stiglitz i think was really interesting. Indeed, in his book, he talks with a great ability about the failures of Globalization to satisfy its promises of increasing “everybody’s” wealth while at the same time insisting on its essantial aspect. He argues that globalization is not a bad thing but the way it is managed is unfair. For Stiglitz, globalization which really started in the early 90’s generates huge economic differences and inequalities not only in developping countries (because they do not really beneficiate from globalization) but also in developped ones (because only a minority already rich beneficiates to get even richer). Thus, he proposes a different view on globalization using Asia as a model where state’s intervention would be rehabilitated and where trade would be fair with a special treatments for poor countries. He also suggests a reform of the international monetary system where developping countries could be granted lower inetrest rates. I think that there is not much to disagree with it as i agree with Hye Jin that specific policies for specific regions will be more efficient than umbrella strategy. Indeed, I think specific regions should be treated differently in order to solve and satisfy their specific problems and needs. But what i think is even more important in the problem of globalization and Stiglitz mentioned it well is that leaders should be more concerned about international global welfare and not only be willing to seek advantages for their own country; poor countries should be taking advantages of every decisions made. Thus, international institutions (like IMF where the US is the only country to have a veto) should be democratized, poor countries should be more represented in order to clear the negative extarnalities that affect them and establish a sentiment of international identity.

[John Keh]

Joseph Stiglitz does a good job at analyzing the effects of globalization. His insights are not only full of detail, but they brought me to think about the occurrences of the 1990’s and early 2000’s in a new light. Having lived through this era at a young age, I was never able to see overarching globalizing factors that had contributed to the development and growth of the age. Stiglitz provides a different and a more encompassing view of what has come to pass in the last decade or so. Each individual country develops in its own unique way. Stiglitz makes that a lot more apparent to me throughout his essays. Developing countries have a hard time trying to emulate the developed countries. In many ways, developed countries even prey upon the developing nations for more economic prosperity. Stiglitz is able to set out a framework for these developing countries and even those countries not yet fully integrated into the global market. Increased government involvement is a necessary step in order to provide to push and guidance in the underdeveloped country. Reading through Stiglitz’s mainly helped me gain incite as to the situation that these developing nations are faced with and possible solutions.

[Amitha Harichandran]

Stiglitz main message is, as others have stated, that there is no one solution for the economic problems of developing countries. Policies, such as the Washington Consensus, are simply too broad and therefore ignore the local details of each country. Danielle argues that this criticism has already been made, and that Stiglitz adds nothing of substantial value, however, I feel that by providing such a detailed example through China, Stiglitz is able to backup his criticism. Despite the fact that other countries had simply tried to imitate the economic institutions of successful companies, China was able to recognize, that even though a market economy may perhaps be the answer, it needs to be modified in order to succeed.

As we discussed in section, I believe that one of the main problems in policies such as the Washington Consensus, is that you have people that are not familiar with the details of the situation trying to offer the solution without taking into consideration what those who are living through it think. While there are basic measures that need to be taken in all countries, much of it needs to be customized. There is a reason, why Africa is struggling more than other developing nations in the struggle against poverty; and this needs to be addressed by a solution that specifically addresses the needs in Africa. But it is impossible for those in the World Bank and IMF to understand the exact problems that plague Africa. Again, I agree with Stiglitz that economic success is intertwined with political and social policies. No economy can succeed with a corrupt government or with severe education and healthcare problems. This is why one solution cannot work, there are too many differences in not only economies but societies.

Lastly, I am glad that Stiglitz addressed the environmental problems caused by globalization. Most often, this is because developing countries lack proper environmental regulations. Therefore, wealthier nations take advantage of this in order to make a profit. However, what they often fail to realize is that this is something the whole world will eventually have to pay the price for. It is important that instead of trying to exploit the faults of these developing nations, developed countries must help raise standards in all areas, whether it is environmental, social or political.