Globalization's Discontents [Joe Stiglitz]

The neoliberal agenda is one of the biggest obstacles we face this century to achieving broad-based prosperity and social and environmental harmony and the greatest challenge to democracy.

The background music drowned out the speaker.

If only the Americans had understood free trade, they would have seen China’s rise and its own decline. How did the UK prepare to compete in a free trade world in the 19th century? It was all about the cost of living, and they needed to get that down so they could pay internationally competitive wages. UK labour would cost the same as labour anywhere else in the world. Disposable income = wages – (taxes + the cost of living) Employees get their money from wages and the employers pay the cost of living through wages, reducing profit. Ricardo supported the Repeal of the Corn Laws to get the price of bread down. They housed workers in slums to get housing costs down. Employers could then pay internationally competitive wages and were ready to compete in a free trade world. Classical economics is rather different to neoclassical economics. Ricardo was part of the new capitalist class, and the old landowning class were a huge problem with their rents that had to be paid both directly and through wages. “The interest of the landlords is always opposed to the interest of every other class in the community” Ricardo 1815 / Classical Economist What does our man on free trade, Ricardo, mean? Disposable income = wages – (taxes + the cost of living) Employees get their money from wages and the employers pay the cost of living through wages, reducing profit. Employees get less disposable income after the landlords rent has gone. Employers have to cover the landlord’s rents in wages reducing profit. Ricardo is just talking about housing costs, employees all rented in those days. Low housing costs work best for employers and employees. Let’s look at the US cost of living. The cost of living = housing costs + healthcare costs + student loan costs + food + other costs of living No wonder US firms off-shore to maximise profit. Those jobs ain’t coming back Mr. Trump. What sort of employer would be mad enough to pay the US cost of living in wages? There are loads of better alternatives. US firms couldn’t wait to get out of the US to places where they could make more profit. They then imported back into the US, to add to the trade deficit Trump keeps worrying about. Let’s look at China. Maximising profit is all about reducing costs. China had coal fired power stations to provide cheap energy. China had lax regulations reducing environmental and health and safety costs. China had a low cost of living so employers could pay low wages. China had low taxes and a minimal welfare state. China had all the advantages in an open globalised world. It did have, but now China has become more expensive and developed Eastern economies are off-shoring to places like Vietnam, Bangladesh and the Philippines. The West was never going to do well. The classical economists could observe small state, unregulated capitalism in the world around them. Today’s economists worked up from micro foundations and got very confused. William White (BIS, OECD) talks about how economics really changed over one hundred years ago as classical economics was replaced by neoclassical economics. https://www.youtube.com/watch?v=g6iXBQ33pBo&t=2485s He thinks we have been on the wrong path for one hundred years. Small state, unregulated capitalism was where it all started and it’s rather different to today’s expectations. Everyone pays their own way. Employees get their money from wages. The employer pays the way for all their employees in wages. Off-shore from the US, ASAP. China became a superpower and US influence in the world declined.

Many thanks for these short video clips ! Excellent concise analysis to add to public understanding. Nobel laureate Stiglitz, is spot on!!

This video is very well made.

We stepped onto an old path that still leads to the same place. 1920s/2000s – neoclassical economics, high inequality, high banker pay, low regulation, low taxes for the wealthy, robber barons (CEOs), reckless bankers, globalisation phase 1929/2008 – Wall Street crash 1930s/2010s – Global recession, currency wars, trade wars, austerity, rising nationalism and extremism 1940s – World war. We forgot we had been down that path before.

Joe Stiglitz is a legend

Could you please tone down the background music a bit?

The speech is good. However the videodesign makes me feel very uncomfortable, like I am 5 years old and I must trust those shiny cute letters and effects.

Economists abound on Youtube but none that I have looked at, talk about the impact of population growth, evident by India and China surpassing America as the biggest carbon emitters. There has been a 6 fold African, 5 fold Islamic and 3 fold Americas increase in population since 1950. The global community cannot sustain this level of growth without destroying the environment. Economic ideologies need to include these issues.

1:42 They did? They created the IMF whose sole goal is to protect the international financial system by aiding countries undergoing crisis with loans and policy advice.

The huge problem with this video is that it has just a little bit more than 4 thousand viewers.

And yet he doesn´t make "The UBI connection". A Universal Basic Income is the first step towards adressing the problems Joseph is discussing among many many more! #AndrewYang #TheFreedomDividend #UBI #BIG

I think this is misinforming; you are advertising for higher taxes, more government control, and banning international trade, plus, you are cynical about the free market economy. Do you honestly think your views lead to less risk? or more?

this is a criticism of capitalism without say capitalism :)

This is just word vomit with no reasoning

Incredibly dishonest use of terminology and the actual state of trade and markets (which were not free, but cronyist.)