Nobel Prize-Winning Economist Joseph Stiglitz says:

Discussion in 'Economics' started by olias, May 13, 2011.

  1. olias


    Stiglitz Warns Austerity Kills Jobs, Brings Decline
    By Frances Schwartzkopff - May 13, 2011 7:51 AM PT

    Austerity measures “don’t work” and prevent countries from creating jobs needed to generate economic growth, said Nobel-prize winning economist Joseph Stiglitz. Photographer: Derick E. Hingle/Bloomberg
    Nobel Prize-Winning Economist Joseph Stiglitz

    Nobel Prize-Winning Economist Joseph Stiglitz said while Greece and Ireland had “no choice” but to tighten fiscal policy, measures adopted by some other countries such as the U.K. aren’t justified. Photographer: Derick E. Hingle/Bloomberg

    Austerity measures “don’t work” and prevent countries from creating jobs needed to generate economic growth, said Nobel Prize winning economist Joseph Stiglitz.

    “Austerity is an experiment that has been tried before with the same results,” Stiglitz said today in a speech in Copenhagen. Cutting budgets in low-growth cycles leads to higher unemployment and hampers recovery, he said.

    Greece, Ireland and Portugal are under pressure to push through austerity measures that have sparked anti-government protests and general strikes as the three euro members struggle to comply with the terms of their bailout programs. The budget cuts have failed to persuade most investors the countries will avoid a default, a Bloomberg Global Poll published today showed.

    Europe’s leaders are gripped by “deficit fetishism,” Stiglitz said. Austerity “doesn’t work, it does not led to more efficient, faster growing economies,” said Stiglitz, a professor at Columbia University in New York who won the Nobel Prize for economics in 2001.

    The U.S. economic expansion will exceed European growth this year and the next, the European Commission in Brussels said today. U.S. gross domestic product will rise 2.6 percent this year and 2.7 percent in 2012, while the euro area will expand 1.6 percent in 2011 and 1.8 percent next year.

    The U.S. federal budget deficit is projected to reach $1.5 trillion, or 9.8 percent of gross domestic product, this year, according to the Congressional Budget Office. The 17- member euro region’s deficit is forecast to be 4.3 percent of GDP this year, the European Commission forecasts.

    A 2009 U.S. stimulus package increased the number of people employed by between 1.4 million and 3.3 million and cut unemployment by 0.7 percentage point to 1.8 percentage point, according to U.S. CBO.

    Eighty-five percent of those surveyed this week said Greece probably will default, with majorities predicting the same fate for Portugal and Ireland, which followed Greece in seeking European Union-led bailouts, the Bloomberg poll showed. The outlook for all three deteriorated since a January poll.

    To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at

    To contact the editor responsible for this story: Tasneem Brogger at
  2. olias


    agree or disagree, but don't jump in and call Stiglitz a fool (Tsing Tao) Stiglitz is pretty damn sharp
  3. toc


    no offense to the economist but then if financial matters are not tightened the debt levels soar and then government is paying a bigger chunk of the revenues to pay off the interest each month. this means spending in other areas is cut down which means fewer jobs.

    there are tons of jobs in the US that regular Americans do not want to do and hence illegal immigrants are all around.

    wonder why Germany has its books in stronger side of the sheets. Fiscal discipline or Austerity?

    :D :cool: :p
  4. rew


    It seem our Nobel prize winning economists like Stiglilz and Krugman believe we must all be made debt slaves to our governments.
  5. Tsing Tao

    Tsing Tao

    it is obvious that austerity causes a slowdown. but what keynesian economics ignore is that spending is supposed to be cut back when times are good. but instead, modern day economists like stiglitz just want to spend during both good and bad times.

    so while it is nice that stiglitz says austerity causes slowdown, and he's right, what does he propose we do when we cannot afford to pay the bills we have? borrow more? throw more debt on the pile?
  6. jem


    since raising taxes is an austerity measure and we know that spending should match income.

    He must be a saying that to fix a budget problem you have to lower taxes so the economy expands and revenues increase?

    Now if we could just cap spending.
  7. "economist", "metorolgist"...We have computer models, and they say.....I studied this exact pattern in history, and this is going to happen....
    Like a stopped clock they are right at some point, but are a waste of breath for the most part. As simplistic a time as I spent learning weather for my pilot licenses i am regulary more on the ball than our local moterologists, and I feel the same about the econidiots, ie Greenspan, who encouraged people to take out variable rate loans.
  8. jem


    Before you call someone out you should make sure you understand economics... otherwise you lower like a moron.

    within two years after reagan's tax cuts govt revenues were up and up permanently. check history, check the graphs... there were posted on et.

    along parts of the curve... lower taxes equal more investment, more jobs more revenue.
    along a large part of the tax vs revenue curve.
  9. toc


    there might be some truth to the pattern of higher revenues due to some degree of lower taxes as given american culture, the consumption levels go higher with more disposable income in pocket and government gets more tax revenues not from people but from businesses.

    however, when lowering taxes and gaining more revenues, equally important is to cut spending otherwise little ways to cut debt and interest payments. if the debt levels are rising faster than the inflation then government is running a deficit shop and increasing stress on the future generations.

    :D :cool: :p
    #10     May 13, 2011