Roundtable Examination of The Stiglitz Report

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					A Roundtable Examination
   of The Stiglitz Report
   Held at the annual Council of Georgist
  Organizations conference, Minneapolis,
                  Minnesota
                5 August, 2011




 Edward J. Dodson, Moderator
                   Participants




Mary (Polly) Cleveland   Fred       Nic Tideman
                         Harrison
                Participants




Fred Foldvary      Mase Gaffney   Adele Wick
 Major Conclusions Reached
• The financial and
  economic crisis was
  caused by a combination
  of private sector activities
  and flawed public
  policies.
• Changes in law and
  policy were driven by an
  ideological bias that
  markets are self-
  correcting.
• Movement to market-
  oriented economics
  systems has benefited
  many in some countries
  but worsened life for
  many in others where the
  primary economic
  activities are natural
  resource exploitation
• In many developing
  countries environmental
  degradation has been a
  serious consequence of
  the global financial
  structure
• Globalization has been
  accompanied by high levels
  of instability, particularly in
  developing countries
• Massive rescue packages
  have thus far staved off
  global depression, to a
  certain degree positively by
  stimulating spending to
  address long-term
  environmental problems
• Global discussions
  have been taken over
  by the G-20 nations, but
  too many nations
  remain excluded from
  such discussions
• The need for financial reform is
  broadly recognized, but there
  is yet no consensus over
  needed changes in laws and
  regulation affecting corporate
  governance, competition and
  bankruptcy
• There remains significant
  concerns over protectionist
  steps adopted by some
  governments
• Reforms must reflect a
  board view of social
  justice, poverty
  reduction and
  protection of the
  environment
• Current institutional
  arrangements must be
  greatly strengthened,
  reformed and made
  independent of political
  considerations to be
  effective
• The need for a
  new global
  reserve system
  is critical to
  resolve
  problems of
  shrinking
  aggregate
  demand
Last words from Joseph Stiglitz
THE ROUNDTABLE DISCUSSION
    Is the Stiglitz
    team correct
1   that financial
    markets are
    not self-
    correcting?
    There is no
    mention of a need
    to return to a
    distinct separation
2   between
    commercial banks
    and investment
    banks. Is this a
    serious oversight
    by the Stiglitz
    Team?
    The Stiglitz Team has
    nothing to say about the
    responsibility of the bond
    rating agencies for the
    proliferation of private
3   placement mortgage-
    backed securities
    collateralized by “no doc”
    subprime mortgage loans.
    What should be done
    about the rating agencies?
    Is there anything in the
    report that would seriously
4   restrict the ability of the
    United States government
    to continue to accumulate
    debt?
    Do you concur with the Stiglitz
    team’s conclusion that the sub-
    prime mortgage crisis was an
    outgrowth of a dramatic
    increase in the supply of credit
    generated by the “global capital
5   markets,” a widespread failure
    of central banks to “dampen the
    speculative increases in
    housing and other asset prices,”
    and “lax financial regulation” in
    the United States and several
    other countries?
    Is there any merit in
    the Stiglitz team’s
    called for “a new bank
    or banks operating
    without the bad debts
6   of the failed
    institutions” but
    without “a competitive
    advantage over
    existing banks?
    The Stiglitz team writes
    that environmental
    resources must be
7   appropriately priced in
    order to lessen global
    warming. Is charging
    market rents the right
    policy choice, or the only
    effective policy choice?
    Do you share the Stiglitz
    team’s view that the
    “quarter century
8   following World War II is
    noteworthy for its
    absence of financial
    crisis” because of the
    measures adopted by
    governments during and
    after the Great
    Depression?
    To curb the abuse in
    banking, the report
    calls for strengthening
    of antitrust law,
9   increased premiums for
    deposit insurance,
    stronger regulation and
    authority to break-up
    large institutions. Are
    these measures
    significant enough?
     The report notes that the
     poor in developing
     countries have suffered
     severely by globalization,
10   with increased food and
     energy costs but is short
     on solutions. What would
     be your advice to the
     governments of
     developing countries on
     these problems?
     The Stiglitz team calls for
     replacement of the U.S.
     dollar with a
     “supranational
11   international reserve
     currency.” Is “this is an
     idea whose time has
     come?”
     Regarding tax policies,
     the Stiglitz team
     advocates “taxes on
     pollution,” noting: “It is
     more efficient to tax bad
12   things (like pollution)
     than good things (like
     work and savings).” Is
     there justification for
     such taxation to be
     imposed by a global
     governmental body?
     Land ownership and
     taxation issues are not
     addressed in the
13   report, even indirectly.
     Why do you think the
     Stiglitz team fails to
     see the central role of
     credit-driven
     speculation in land?
     Fred Foldvary argues that the
     Stiglitz team misdiagnoses the
     reasons for the financial crisis.
     He writes: “There was a small
     amount of deregulation
     combined with a vast increase
14   in subsidies, chiefly to real
     estate, which inflated the land
     values upon with the structure
     of mortgages, mortgage-based
     securities, and mortgage-
     based derivatives were
     erected.” Do you concur with
     Fred?
     Adele Wick finds reason to be
     optimistic that Joseph Stiglitz
     can be brought over to Georgist
     perspectives. Adele writes: “He
     speaks of the importance of
     getting incentives right, in and
15   out of government. …When he
     talks about taxing bad things, he
     just needs to add ‘privilege’ to
     ‘pollution’. And he’s that near-
     oxymoronic individual, an
     economist interested in equity,
     most notably in addressing
     poverty.” Has Adele read Stiglitz
     correctly?
     The Stiglitz
     team?
16
     The Stiglitz
     team?
17
     The Stiglitz
     team?
18
     The Stiglitz
     team?
19
     The Stiglitz
     team?
20

				
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posted:4/24/2012
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