Summary
Nobel laureate economist Joseph Stiglitz warned that Trump’s policies risk causing stagflation—high inflation, rising unemployment, and slow growth—by cutting public spending and imposing tariffs.
In an interview with The Guardian, he said these measures make the U.S. a risky place to invest, as tariffs on imports from Canada, Mexico, and China are expected to raise prices and hurt the global economy.
Economists like Paul Krugman share his concerns. Many Trump voters will be “brutally scammed,” he warned.
Not enough people listen to Joseph Stiglitz. Even many economists don’t listen to Stiglitz. That’s the thing about economics: it’s more philosophy than science, and like philosophy there are different schools of thought. If an economist doesn’t like what Stiglitz has to say, that economist can just choose to listen to someone from a different school within economics.
For instance, Stiglitz has been quite critical of what he calls “free market evangelism,” the popular idea that free markets are the most efficient method for distributing scarce resources, and so there should be minimal interference with markets from “outside” entities like the state. Economists like Stiglitz have pointed out that markets are not as efficient as the evangelists believe, but, obviously, they don’t listen.
Free markets exist only for the simplest of goods and services with the least barriers to entry and most competition. Everything else goes out the window.
Restaurants in large cities are a decent example of the free market
All the free market evangelists always conveniently forget the original definition of what constitutes a free market. The paper that coined the term free market specifically referred to them as “well regulated”. From the very beginning it was recognized that a functioning market requires government regulation, if for nothing else at least for contract enforcement and dispute resolution. Without regulation what you’re left with is just “might makes right”.
Realistically though there are two distinctly different groups that use the term “free market” and they mean two distinctly different things when they do so. We have economists who mean theoretical free markets and have a very specific concept in mind. Right or wrong they are at least arguing in good faith. Then we have politicians and the general public who are using the term purely as an excuse to justify their policies designed to benefit massive corporations and the rich. For the later group the former group are just tools to be used. Even if all the economists got together and declared free markets a bad idea they would just keep referencing the old economic papers, just like they do for trickle down economics.
The paper that coined the term free market specifically referred to them as “well regulated”. From the very beginning it was recognized that a functioning market requires government regulation, if for nothing else at least for contract enforcement and dispute resolution. Without regulation what you’re left with is just “might makes right”.
Not saying I don’t believe it, it’s stupid/ironic enough for it to be true. But do you have a source?
The paper that coined the term free market specifically referred to them as “well regulated”. From the very beginning it was recognized that a functioning market requires government regulation, if for nothing else at least for contract enforcement and dispute resolution.
Many free market evangelists would agree that some state is likely necessary, to, as you point out, enforce contracts and mediate dispute resolution, as well as enforce private property rights. However, whether they would admit it or not, they only want said state to work for them, but never against them. They want all the protections that a state might offer, but none of the restrictions. They want laws that protect them but never bind them.
most efficient method for distributing scarce resources
Efficient in what measure?
They very efficiently concentrate those resources in the hands of the wealthy.
I’m not sure what measurement they would use to justify their position, or if they would try to justify it at all. I suppose that’s what makes them evangelists: belief is the basis of their conviction.
No dis on Stiglitz, but it really doesn’t take a well educated economist to see reasons why Trumps policies will cause disaster. I mean for one thing, it’s an intentional result. The more destruction he causes, the more he and his friends can buy up in the fire sale.
I mean look at the biggest billionaires in the US, they’re all sitting on mountains of cash because they can’t figure out what to buy. Destroying the economy, makes it a buyers market for billionaires. Problem solved as far as they’re concerned.
One caveat is that billionaires don’t just have 10+ figure checking accounts. The majority of their networth is in unrealized gains and real-estate.
The biggest issue is that they are allowed to take out loans against those non-liquid assets, but if they were to try to liquidate everything to get that 10 figure checking account, they’d only get a fraction of it.
Normally that’s true, but tech companies and investment firms that are completely controlled by billionaires, are holding stupid amounts of liquid assets right now. They literally can’t find enough to buy, so it’s just piling up in various liquid assets.
You don’t need to be a Nobel laurist to see this coming from a mile away. And “May” is very optimistic here, it already has been spectacularly breaking stuff, just expect more
Yup and when that happens we need to remind the stupid electorate that they did this.
Not could, will
Really getting sick and tired of presumably otherwise smart people warning about Trump’s “failure” as if they think he’s well-intentioned but making a mistake instead of destroying everything on purpose.
An important point not mentioned here, they might not. Things might not collapse. Smaller institutions, court victories, and good ol’ American ingenuity might stave off the worst of the crisis, and things may not be entirely bad.
This should NOT be construed as validation for Trump’s path of destruction. It doesn’t mean he isn’t as bad as the Nobel laureates have claimed.
Yup. The market can stay irrational longer than you can stay solvent, or however that saying goes.
Back in the day, I heard the late Rush Limbaugh call for Obama to fail. At that time I thought Rush had to really hate America, because there was no way for a President to fail without taking the rest of the people with him.
So, I don’t hope Trump fails, because I don’t want Americans, even his voters to suffer.
On the other hand, it’s not looking good for him…
I want him to fail, because I don’t have any reason to believe his goals are aligned with America and there are many ways he is already directly harming us.
Him failing hard may be the only chance to get bipartisan movement against him
The FAA fiasco alone should be enough for people to decide to throw him out.
I am praying everything crashes and burns. It feels like 50% of the country won’t learn otherwise. Yes, I will suffer short term, but it will be worth the short term suffering if everybody can be elevated long term. We need everything to be reduced to ashes so something new can be born.
