February 9: Joseph Stiglitz and the Costs of Globalization

2001 Nobel laureate Joseph Stiglitz, an economist at Columbia University, was born in Gary, Indiana on this date in 1943. As chief economist of the World Bank during the decade of “shock therapy” that impoverished the Soviet Union and its allies in Eastern Europe, Stiglitz was pressured to resign from his post (by Lawrence Summers, the U.S. Treasury Secretary) and emerged as a harsh and erudite critic of economic globalization. The North American Free Trade Agreement, he argued, which lacked both labor and environmental protections, was the work of free-market fundamentalists and would benefit rich people in developed countries without bringing about global poverty alleviation. He made his argument In Globalization and Its Discontents (2002), which defended “desirable government interventions which, in principle, can improve upon the efficiency of the market.” In 2008, Stiglitz and Linda J. Bilmes identified the second Iraq War as a $3 trillion bloody boondoggle (George W. Bush was citing $60 billion as the total cost) — and they revised that estimate upwards in 2010, given the federal debt and the financial crisis. His other many books include Making Globalization Work (2006), which sold more than two million copies, Whither Socialism (1994), a collection of lectures, and Freefall: America, Free Markets, and the Sinking of the World Economy (2010), which identifies U.S. banking deregulation as responsible for the worldwide recession. “Globalization had succeeded in unifying people from around the world — against globalization. Factory workers in the United States saw their jobs being threatened by competition from China. Farmers in developing countries saw their jobs being threatened by the highly subsidized corn and other crops from the United States. Workers in Europe saw hard-fought-for job protections being assailed in the name of globalization. AIDS activists saw a new trade agreement raising the prices of drugs to levels that were unaffordable in much of the world. Environmentalists felt that globalization undermined their decade long struggle to establish regulations to preserve our natural heritage. Those who wanted to protect and develop their own cultural heritage saw too the intrusions of globalization.” —Joseph Stiglitz