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Joseph Stiglitz

67 quotes

“The global financial system is not working well, and it is especially not working well for developing countries. Money is flowing uphill, from the poor to the rich. [...] With nearly two-thirds of reserves being held in dollars, the United States is, in this sense, the major recipient of these benefits. If the interest rate America has to pay is just one percentage point lower than it otherwise would be on these $3 trillion of loans from poor countries, what America received from the developing countries via the global reserve system is more than it gives to the developing countries in aid.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“The IMF has been encouraging, sometimes even forcing (as condition of assistance), countries to have their central banks focus only on inflation. Europe succumbed to these doctrines. Today, throughout Euroland, there is unhappiness as the European Central Bank pursues a monetary policy that, while it may do wonders for bond markets by keeping inflation low and bond prices high, has left Europe's growth and employment in shambles.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“In the long run, the most important changes required to make globalization work are reforms to reduce the democratic deficit.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“There is little doubt that the observation that quality may depend on price (productivity on wages; default probability on interest rates) has provided a rich mine for economic theorists: A simple modification of the basic assumptions results in a profound alteration of many of the basic conclusions of the standard paradigm. The Law of Supply and Demand has been repealed. The Law of the Single Price has been repealed. The Fundamental Theorem of Welfare Economics has been shown not to be valid. More than that, the theories that we describe here provide the basis of progress toward a unification of macroeconomics and microeconomics. They pro vide an explanation of unemployment and credit rationing, derived from basic microeconomic principles. It is a theory in which the extensive idleness that periodically confronts society's resources, human and capital, is seen as but the most obvious example of market failures that prevasively and persistently distort the allocation of resources.”
Joseph Stiglitz (born 1943) first seen 1987 wikiquote, CC BY-SA 4.0 source
Recorded in: The Causes and Consequences of The Dependence of Quality on Price", Journal of Economic Literature, Vol. 25, No. 1 (Mar., 1987)
“The theories that I (and others) helped develop explained why unfettered markets often not only do not lead to social justice, but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to the refutation of Adam Smith’s invisible hand: individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency. The only question that has been raised concerns the ability of government to remedy the deficiencies of the market. Within academia, a significant fraction of economists are involved with developing and expanding on the ideas of imperfect information (and imperfect markets) that I explored. For instance, Edmund Phelps, this year’s Nobel Prize winner, belongs to this "school" of thought. But in political discourse, simplistic “market fundamentalism” continues to exert enormous influence.”
Joseph Stiglitz (born 1943) first seen 2007 wikiquote, CC BY-SA 4.0 source
Recorded in: Interview on Bebbe Grillo's Blog, January 2007.
“The central economic issues go beyond the traditional three questions posed at the beginning of every introductory text: What is to be produced? How is it to be produced? And for whom is it to be produced? Among the broader set of questions are: How should these resource allocation decisions be made? Who should make these decisions? How can those who are responsible for making these decisions be induced to make the right decisions? How are they to know what and how much information to acquire before making the decisions? How can the separate decisions of the millions of actors decision makers in the economy be coordinated?”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“At the core of the success of market economies are competition, markets, and decentralization. It is possible to have these, and for the government to still play a large role in the economy; indeed it may be necessary for the government to play a large role if competition is to be preserved. There has recently been extensive confusion over to what to attribute the East Asian miracle, the amazingly rapid growth in countries of this region during the past decade or two. Countries like Korea did make use of markets; they were very export oriented. And because markets played such an important role, some observers concluded that their success was convincing evidence of the power of markets alone. Yet in almost every case, government played a major role in these economies. While Wade may have put it too strongly when he entitled his book on the Taiwan success Governing the Market, there is little doubt that government intervened in the economy through the market.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“At the core of the failure of the socialist experiment is not just the lack of property rights. Equally important were the problems arising from lack of incentives and competition, not only in the sphere of economics but also in politics. Even more important perhaps were problems of information. Hayek was right, of course, in emphasizing that the information problems facing a central planner were overwhelming. I am not sure that Hayek fully appreciated the range of information problems. If they were limited to the kinds of information problems that are at the center of the Arrow-Debreu model consumers conveying their preferences to firms, and scarcity values being communicated both to firms and consumers then market socialism would have worked. Lange would have been correct that by using prices, the socialist economy could "solve" the information problem just as well as the market could. But problems of information are broader.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“In short, whether for the obvious reason that in the absence of futures markets the price system cannot perform its essential coordinating role with respect to future-oriented activities, such as investments, or for the more subtle reasons just discussed, that in the absence of futures markets, extending infinitely far into the future, the market economy is likely to exhibit dynamic instabilities there is no reason to believe that even with rational expectations it will converge to the steady state; there is no presumption that markets, left to themselves, will be efficient. For advocates of market socialism, the implication of this analysis seems clear: There is a need for the kind of government control of the allocation of investment envisaged in market socialism.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“But while Keynes as well as the subsequent research in new Keynesian economics has provided an explanation for both unemployment and economic volatility while it has attempted to identify precisely what is wrong with the Arrow-Debreu model that can account for these observations there was another message of Keynes that was clearly heard: The macroeconomic ills of capitalism were curable. One didn't need to institute fundamental reforms in the economic system. One only needed selective government intervention. It is in this sense that Keynesian economics greatly weakened the case for market socialism.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“Advocates of the Austrian tradition often defend the lack of formal modeling and the corresponding absence of formal efficiency theorems: The market economy is an organic process, too complicated to be reduced to the simplistic formal models. The job of the economists is to describe this organic process and to see the kinds of impediments that the absence of a legal structure, on the one hand, or excessive government intervention, on the other, might impose for it. But while they may not resort to, or even like, the standard welfare criterion of Pareto optimality, there are strong normative overtones in their discussions. Darwin may have thought that he was simply describing the evolutionary process when he asserted that it resulted in the survival of the fittest, but such statements require a definition of the "fittest" and an analysis of the general equilibrium, dynamic properties of the system. Today we recognize that evolutionary processes, under a wide variety of circumstances, may not possess "efficiency" properties.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“It should be clear of course that for traders to have incentives to gather information required that information not be perfectly disseminated in the market. If, simply by looking at market prices, those who do not spend money to acquire information can glean all the information that the informed traders who have spent money to acquire information have, then the informed traders will not have any informational advantage; they will not be able to obtain any return to their expenditures on information acquisition. Accordingly, if there were a complete set of markets, information would be so well conveyed that investors would have no incentives to gather information. (Of course with all participants having the same [zero] information, incentives to trade would be greatly reduced.) To put the matter differently, the assumptions of "informed" markets and "a complete set of markets" may be mutually exclusive.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“Informational constraints not only limit the ability of shareholders to control rent-seeking behavior on the part of top managers, they also limit the ability of top managers to control rent-seeking behavior on the part of their subordinates. How much of the time spent by a middle-level manager to prepare a report was absolutely necessary? To what extent was it devoted to acquiring information, of marginal value to the firm, but which would make that manager look relatively good compared to other managers? To what extent are the efforts and resources spent by a manager to cultivate a client really being directed to enhance that manager's job opportunities? Private and organizational objectives are intricately intertwined, and in many cases they are not conflicting. But at the margin they frequently are, and there seems little reason to doubt that private objectives frequently, perhaps usually, win out.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“At the same time I have noted that some of the differences between the public and private sector may have been exaggerated they are differences among the activities being pursued, not differences of the sector within which they are pursued. Private sector organizations face incentive (principal-agent) problems no less than do public organizations. Some of the differences are not innate but are more a consequence of common practice. The most important of these is the absence of competition and the high degree of centralization. Government organizations no less than private organizations dislike competition. The difference is the government has the power to forbid competition, which private organizations do not and indeed government sees one of its roles as curbing unfair practices aimed at reducing competition.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“Competition is important, not only because of its ability to promote economic efficiency but also because of the zest that it gives to life. Here we encounter one of the many ambivalences that characterizes our views about market economies: Competition is good, but we have our doubts about excessive competition. We encourage cooperation within teams but competition among them. We frown upon people who are excessively competitive. Yet the competitive market environment may encourage and bring out these aspects of individuals' personalities. If ruthlessly competitive people are successful, such behavior may be imitated. At the same time those who are (excessively) cooperative may be taken advantage of, derogated as pansies. Accordingly such behavior will be discouraged.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“Growing up in Gary Indiana gave me, I think, a distinct advantage over many of my classmates who had grown up in affluent suburbs. They could read articles that argued that in competitive equilibrium, there could not be discrimination, so long as there are some non-discriminatory individuals or firms, since it would pay any such firm to hire the lower wage discriminated-against individuals, and take them seriously. I knew that discrimination existed, even though there were many individuals who were not prejudiced. To me, the theorem simply proved that one or more of the assumptions that went into the theory was wrong.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source
“For much of the world, globalization as it has been managed seems like a pact with the devil. A few people in the country become wealthier; GDP statistics, for what they are worth, look better, but ways of life and basic values are threatened. For some parts of the world the gains are even more tenuous, the costs more palpable. Closer integration into the global economy has brought greater volatility and insecurity, and more inequality. It has even threatened fundamental values. This is not how it has to be. We can make globalization work, not just for the rich and powerful but for all people, including those in the poorest countries. The task will be long and arduous, We have already waited far too long. the time to begin is now.”
Joseph Stiglitz (born 1943) wikiquote, CC BY-SA 4.0 source