Friday, October 21, 2005

Asking Stiglitz to Guide Us to "Moral Growth"

Foreign Affairs Magazine has made the wise move of displacing one more piece about Kissinger and actually allows an economist to speak his piece. In reviewing Ben Friedman's new book, Joe Stiglitz reveals himself to be an ethical economist. As a Chicago Economist, I was impressed.

"In short, the debate should not be centered on whether one is in favor of growth or against it. The question should be, are there policies that can promote what might be called moral growth -- growth that is sustainable, that increases living standards not just today but for future generations as well, and that leads to a more tolerant, open society? Also, what can be done to ensure that the benefits of growth are shared equitably, creating a society with more social justice and solidarity rather than one with deep rifts and cleavages of the kind that became so apparent in New Orleans in the aftermath of Hurricane Katrina?"

I am not smart enough to answer Joe Stiglitz's challenge. But, Stiglitz is smart enough to answer his own riddle. I would like to ask Prof. Stiglitz; "If you were President of the United States, what micro and macro policies would you enact to achieve your goal of moral growth?"

Is Bill Gates, a profit maximizer who redistributes billions, contributing to moral growth?

Is the World Bank contributing to moral growth?

It seems to me that we would need a lot more information concerning how consumers and producers respond to incentive effects (such as taxes and subsidies) before one could justify that the "equity benefits" of certain proposals would be worth the efficiency costs.

I would like to ask Prof. Stiglitz whether there has ever been a time period in U.S history when we have achieved "moral growth". Is it the 1990s? Is it the 1960s? What was going right then that has changed today? Is it simply Republican Rule?

Will the Democrats in 2008 run on Stiglitz's platform?


ALJ said...

as economist have you contributed to the democratic parties' agenda? it occures to me the other day it might be worth the time for bloggers to save up all the good idea they've run into and propose them as the democrat's agenda. example: controling for economic class instead of race in the placement of students at public schools as they're doing in North Carolina etc.

knzn said...

According to Stiglitz, “American economists tend to have a strong aversion to advocating government intervention. Their basic presumption is often that markets generally work by themselves and that there are just a few limited instances in which government action is needed to correct market failure; government economic policy, the thinking goes, should include only minimal intervention to ensure economic efficiency.”

Apparently Stiglitz thinks the rest of us (including Ben Friedman) are a bunch of idiots. No sensible economist thinks that the model taught in the first semester of introductory economics is a close approximation of reality. Anyone can see that market failures are widespread and severe and that distribution issues are important. The reason to oppose government intervention is that the government often screws things up even worse than the market. Even the most conservative of American economists could justify intervention by an ideally enlightened, benevolent, and trustworthy government. The problem is that such an ideal government cannot possibly exist. Governments often face incentives that are even more perverse than the ones that produce market failure; their knowledge is necessarily limited; and they have been known (yes, even in the US) to fall into the hands of incompetent leaders on occasion. Like most economists, Ben Friedman realizes this.