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Continue to Remember the Poor

Posted by admin at 4:31 PM on Oct 19, 2016

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The Greek debt crisis rumbles on. Its economy is at a crossroads – another crossroads – and the second audit of their internationally set austerity agenda takes place as I write (October 2016). Yanis Varoufakis writes passionately about this from his unique position as an insider (see “And the Weak Suffer What They Must?). Joseph Stiglitz addresses the problems of Greece and the whole Eurozone from a more objective but penetrating, often critical, and ultimately constructive position. A final “Afterword” enables him to examine the reasons for, and the consequences of, both the UK’s “Brexit” vote and the emergence of Donald Trump as a presidential candidate in the USA.

Others will be far better qualified than I to review his work as a piece of economic scholarship. I recommend, for example, Simon Wren-Lewis in: http://www.newstatesman.com/politics/economy/2016/...

My interest is in the way that Stiglitz continually relates his analysis to the plight of the poor and disadvantaged. He is genuinely concerned about the effects of economic decisions on those lower in the economic spectrum. He notes that they “…are more dependent on public services, and especially in the worst affected countries … public expenditures have suffered from enormous cutbacks.” These effects have far reaching consequences, throughout the lifetimes of those who currently struggle. “In their twenties, individuals accumulate skills that increase their productivity over a lifetime. But those skills are gained largely through on the job training. When there are no jobs - and youth unemployment in the worse-afflicted countries exceeded 50 per cent - there is no on-the-job learning.” When it comes to Brexit and the American presidential election process: “A common theme contributed to the outcome of both the American primaries and the British EU referendum: large portions of the population have not been doing well. … I have long predicted that this stagnation- actually worse than stagnation for those who have not gone to college - would eventually have political consequences. That day now appears to have arrived.”

As he remarks succinctly, “Too often it seemed as if saving the banks, or even just the euro, was given precedence over human welfare.”

Stiglitz is an academic economist who addresses questions of distribution and, as he does so, shows that he cares about the welfare of the poor. There is a utilitarian argument: when the poor do well, the whole economy benefits. But throughout the book, I trace a genuine concern for people. He writes of the interests of workers and notes that it was both a loss of hope, as well as poor economic circumstances, which contributed to the Brexit vote.

I was first attracted to Stiglitz’ writing by “The Price of Inequality”. He brings the book to a conclusion by remarking that, “Paying attention to everyone else’s self-interest – in other words the common welfare – is in fact a precondition for one’s own ultimate well-being.” St Paul was there nearly two thousand years ago, “Rather, in humility value others above yourselves, not looking to your own interests but each of you to the interests of the others.” (Philippians 2: 3, 4) This ideal is continued in the book under review.

Reading Stiglitz would be rewarding for any who seek to bring an informed faith-based perspective to the economy and the growing levels of inequality in many countries. There is a place for recapturing the voice of the Old Testament prophet. This should be alongside the strenuous efforts being made by many agencies, including churches and other faith groups, to help people in need. As we feed the poor, we must ask why they are poor and be ready to speak truth to power.

Time and time again Stiglitz castigates the pursuit of austerity. Elsewhere he compares it to medieval blood-letting. Is the intellectual tide turning his way? It would certainly be difficult to find an economist of similar standing who would make a reasoned defence of austerity.

What is more important is that those who make decisions – the “Troika” of the IMF, European Commission and the European Central Bank, for example – take note of his arguments. President Obama, in a recent Economist piece, writes, “Involuntary joblessness takes a toll on life satisfaction, self-esteem, physical health and mortality.” I hope that whoever assumes his mantle in January is able to shape policies which address these issues. Theresa May has promised to govern for all. The reset of the British economy necessitated by Brexit would be a good opportunity to remember the poor, but early indications are that accelerating inflation may have the opposite effect.

As the world’s fifth biggest national economy prepares to leave the EU, Stiglitz’ writing sounds a wakeup call for both Europe and the USA. He proposes ways in which the euro might be saved and alongside his practical economic measures he urges that nations deal with “a growing divide, a political elite out of touch, economic stagnation experienced by large portions of the population, and an economic system that has not delivered for many - in some places, even for the majority.”

Stiglitz is someone of great wisdom, who writes in an accessible style and who continues to remember the poor.