Joseph E. Stiglitz has been one of my all-time favourites for years. I know that the Prime Minister follows his writings avidly and if my memory serves me well, he had also met him during a US visit when still leader of the Opposition.
Writing this article on the eve of a new presidency of the Republic, when a social justice-driven new president will be at the helm of a country with an understandably business-driven agenda, I think that we – yours truly included – stand to gain much were we to revisit some of Stiglitz’s main recommendations…while giving him his due.
Most of Stiglitz’s ideas and observations reach out way beyond our shores’ confines and I am confident that with the new presidency the essential sense of balance will be kept and felt right across society and the whole political spectrum, even though Marie-Louise Coleiro Preca will not be having any executive powers as things stand today. Stiglitz made himself as many enemies as he had ‘friends’. Particularly on his own home ground.
His biggest lament was all about the unfairness of a situation in which so many lost their homes and their jobs while the bankers enjoyed large bonuses – something he considered grating.
He was also highly critical of those who saw growth in purely GDP terms, particularly in those instances when the GDP grew while most citizens saw their standards of living erode.
When he wrote about the price of inequality, his main argument was that this was a high price indeed, since it proved to be a symptom of an economic system that is less stable and less efficient, with less real growth and a democracy that has been put into peril.
Let me make myself clear. Any country that does not seek to turn threats into opportunities will end up being politically myopic and self -defeating.
Some even tend to blame globalization itself. I am not one of these.
The problem, according to Stiglitz, is not that globalization is bad or wrong but that governments are managing it so poorly – largely for the benefit of special interests.
Markets by themselves, even when they are stable, often lead to high levels of inequality, outcomes that are widely viewed as unfair.
I can understand Stiglitz’s sense of frustration because one aspect of fairness that is deeply ingrained in American values is opportunity. America has always thought of itself as a land of equal opportunity. There can be instances when no one can be accountable.
But if no individual can be blamed, then it will mean that the problem lies in the economic and political system. Apart from the fact that he always argued that politicians have to listen to citizens, rather than correcting the market’s failures, as the political system was reinforcing them.
He had found that in his own country politicians gave speeches about what was happening “to our values and our society”, but then they appointed to high office the CEOs and other corporate officials who were at the helm in the financial sector as the system was failing badly.
If there is a bottom line to Stiglitz’s line of thought, it is that the failures in politics and economics are related, and they reinforce each other.
Stiglitz was never a prophet of gloom and doom. There was always a message of hope in his writings even when he remarked that we are only just beginning to grasp how far his country might have deviated from its aspirations.
While until recently there were those in Malta who dismissed poverty as a mere perception and arguably a wrong one too, today we shall soon have a president who will put the fight against poverty at the top of her agenda.
This all makes much sense at a time when this administration inherited a situation where the middle was being hollowed out and the numbers in poverty were increasing.
Economic success and opportunity must always go hand in hand with social justice. The last time Stiglitz’s country saw inequality approach an alarming level as seen today was in the years before the Great Depression.
The economic instability they saw then and the instability that they have seen more recently are according to him closely related to this growing inequality.
A society that allows inequality to grow and poverty to increase can never be considered to be a society built on opportunity.
I cannot accept the argument that inequality’s apologists often bring to the fore, that giving more money to the top will benefit everyone
Those who know me well know that the politics of envy was never part of my agenda. But I cannot accept the argument that inequality’s apologists often bring to the fore, that giving more money to the top will benefit everyone, partly as it would lead to more growth.
When the riches accruing at the top come at the expense of those down below, then one can understand what Stiglitz had in mind when he recently wrote all about “the price of inequality”.
To be fair, this administration has been trying to strike a balance between trickle-down economics and trickle-up economics particularly with its focus on beefing up the middle segment of society.
This government definitely gets its priorities right when it focuses so much on the educational sector because education will always be the key to our future success.
Stiglitz’s lament is that his country gives its elite an education that is comparable to the best in the world but at the same time the average citizen gets just an average education.
In mathematics, key to success in many areas of modern life, it is, according to him, even sub par.
A country will have reached its nadir when alienation begins to replace motivation.
I am sure that this is a pitfall that this government will always avoid, through proactive, positive and forward-looking policies.
Others feel the rot seeping in when fear, uncertainty and doubt start creeping in. The general sentiment is that there are and should be no basis for such concerns.
Leo Brincat is Minister for Sustainable Development, the Environment and Climate Change.