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The Ideological Crisis of Western Capitalism - Joseph E. Stiglitz

The Ideological Crisis of Western Capitalism - Joseph E. Stiglitz
Exit from comment view mode. Click to hide this space NEW YORK – Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin. Moreover, output growth in the United States was not economically sustainable. I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government. In the US, this right-wing resurgence, whose adherents evidently seek to repeal the basic laws of math and economics, is threatening to force a default on the national debt. This leaves open the question of which expenditures get priority – and if expenditures to pay interest on the national debt do not, a default is inevitable. A decade ago, in the midst of an economic boom, the US faced a surplus so large that it threatened to eliminate the national debt. But matters are little better in Europe. Related:  EconomyWhat means neoliberalism

Rule by Rentiers Nor is the Federal Reserve riding to the rescue. On Tuesday, Ben Bernanke, the Fed chairman, acknowledged the grimness of the economic picture but indicated that he will do nothing about it. And debt relief for homeowners — which could have done a lot to promote overall economic recovery — has simply dropped off the agenda. The existing program for mortgage relief has been a bust, spending only a tiny fraction of the funds allocated, but there seems to be no interest in revamping and restarting the effort. The situation is similar in Europe, but arguably even worse. What lies behind this trans-Atlantic policy paralysis? Of course, that’s not the way what I call the Pain Caucus makes its case. And against these hypothetical risks one must set the reality of an economy that remains deeply depressed, at great cost both to today’s workers and to our nation’s future. Ask for a coherent theory behind the abandonment of the unemployed and you won’t get an answer.

Executive Excess 2011: The Massive CEO Rewards for Tax Dodging Guns don’t kill people, the old saw goes. People do. By the same token, corporations don’t dodge taxes. People do. The people who run corporations. And these people — America’s CEOs — are reaping awesomely lavish rewards for the tax dodging they have their corporations do. In fact, corporate tax dodging has gone so out of control that 25 major U.S. corporations last year paid their chief executives more than they paid Uncle Sam in federal income taxes. This year’s Institute for Policy Studies Executive Excess report, our 18th annual, explores the intersection between CEO pay and aggressive corporate tax dodging. We researched the 100 U.S. corporations that shelled out the most last year in CEO compensation. Corporate outlays for CEO compensation — despite the lingering Great Recession — are rising. This contrast shows up starkly in the 2010 ratio between average worker and average CEO compensation. What are America’s CEOs doing to deserve their latest bountiful rewards?

Ideoloogical Bias and Antitrust Law Apparently some judges refuse to enforce antritrust law because "Such judges just do not like antitrust laws for ideological reasons." That attitude -- which is not confined to judges -- explains a lot about detrimental the rise of economic and political power in recent decades. This is Shane Greenstein discussing the proposed merger between AT&T and T-Mobile: Lawyers invariably ... launch into comments about the uncertain state of antitrust law in the United States, observing that many judges today do not think there is any valid reason to enforce any antitrust law, irrespective of the facts of the case. Such judges just do not like antitrust laws for ideological reasons. Political analysts, in contrast,... invariably launch into comments about AT&T’s enormous powerful presence in Washington, observing that AT&T has gotten whatever it has wanted from the Obama and Bush administrations. The point he is making, however, is that in this particular instance economics did seem to matter:

The Meltdown According to Stiglitz Freefall:America, Free Markets, andthe Sinking of the World EconomyBy Joseph E. StiglitzW.W. Norton & Co., 361 pp; $27.95 Barack Obama ran for President on the promise of "change we can believe in." When it comes to the financial crisis, he has instead "only slightly rearranged the deck chairs on the Titanic," writes Joseph E. Stiglitz, a Nobel prize-winning economist, is perhaps the closest thing we have to John Maynard Keynes in both his theoretical outlook and his cogent kibitzing of policymakers. Although Stiglitz spends much of the book exploring what went wrong and why—"peeling back an onion," he calls it—his emphasis is on the future, not the past. The President did engender a sense of hope, he writes. Obama also brought in Lawrence Summers, who boasted of having ensured during his stint as Bill Clinton's Treasury Secretary that derivatives would stay unregulated. Stiglitz frames Freefall as a book about "a battle of ideas."

The Crisis of Global Capitalism: ten years on - 2009 Ralph Miliband Series on The Future of Global Capitalism Date: Wednesday 21 October 2009 Time: 6.30-8pm Venue: Old Theatre, Old Building Speaker: Professor John Gray Chair: Martin Jacques The financial upheavals of the past two years have occurred against the background of a decade of crisis in global capitalism. The neo-liberal model has collapsed. John Gray is emeritus professor at LSE and author of Gray's Anatomy: selected writings| and False Dawn: delusions of global capitalism|. This event is supported by the LSE Annual Fund. The event is free and open to all with no ticket required. Media queries: please contact the Press Office if you would like to reserve a press seat or have a media query about this event, email pressoffice@lse.ac.uk| Podcast A podcast of this event is available to download from the LSE Public Lectures and Events: podcasts and videos channel|.

Of the 1%, by the 1%, for the 1% | Society It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. Some people look at income inequality and shrug their shoulders. First, growing inequality is the flip side of something else: shrinking opportunity. None of this should come as a surprise—it is simply what happens when a society’s wealth distribution becomes lopsided.

Our Economic Ruin Means Freedom for the Super-Rich by George Monbiot The model is dead; long live the model. Austerity programmes are extending the crises they were meant to solve, yet governments refuse to abandon them. The United Kingdom provides a powerful example. The cuts, the coalition promised, would hurt but work. They hurt all right – and have pushed us into a double-dip recession. This result was widely predicted. Two questions arise. Surely the corporate class and the super-rich – the only people the government will listen to – can see that these policies are destroying the markets on which their wealth relies? To understand this conundrum we should first understand that what is presented as an economic programme is in fact a political programme. Neoliberals claim that we are best served by maximising market freedom and minimising the role of the state. As Colin Crouch shows in The Strange Non-Death of Neoliberalism, the state and the market are not, as neoliberals insist, in perpetual conflict. So where is the economic elite?

Hopeless but not Serious | Grover Norquist Norquist is just another opportunistic parasite in Washington, the host for so many parasites. Most of them don’t rise as high and have less influence, but they all have the same quality — an avaricious greed, which they claim to be an expression of ‘public interest’. And people like Norquist (or like Abramoff, Rove, Reed, DeLay, Gingrich) have worked to change the game in Washington. There’s always been “enlightened self-interest” and corruption in centers of power, but a certain amount of ‘People’s Business’ had to be conducted. Now, the game is more about seizing all the power, and money, that one can… all while loudly claiming your efforts are for the benefit of others. Liars and thieves love misdirection — except now, unlike the pre-Rupert era, they have an entire media empire ready to repeat their messages and throw sand in everyone’s eyes.

'Freefall' Excerpt: Too Late To Fix The Biggest Banking Blunder In History? Reprinted from Freefall by Joseph Stiglitz. Copyright (c) 2010 by Joseph E. Stiglitz. Used with permission of the publisher, W.W. Norton & Company, Inc. The entire series of efforts to rescue the banking system were so flawed, partly because those who were somewhat responsible for the mess--as advocates of deregulation, as failed regulators, or as investment bankers--were put in charge of the repair. Worse still were the implications for governance. The U.S. government did something worse than trying to re-create the financial system of the past: It strengthened the too-big-to-fail banks; it introduced a new concept--too-big-to-be- financially-resolved; it worsened the problems of moral hazard; it burdened future generations with a legacy of debt; it cast a pallor of the risk of inflation over the U.S. dollar; and it strengthened many Americans' doubts about the fundamental fairness of the system.

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