Nobel Prize-winning economist Joseph Stiglitz
on academic economists and the current economic crisis:
 |
| Joe Stiglitz at Occupy Wall Street |
Academic economists played a big role in causing the crisis. Their models were overly simplified, distorted, and left out the most important aspects. Those faulty models then encouraged policy-makers to believe that the markets would solve all the problems.
Before the crisis, if I had been a narrow-minded economist, I would have been very pleased to see that academics had a big impact on policy. But unfortunately that was bad for the world. After the crisis, you would have hoped that the academic profession had changed and that policy-making had changed with it and would become more skeptical and cautious. You would have expected that after all the wrong predictions of the past, politics would have demanded from academics a rethinking of their theories. I am broadly disappointed on all accounts...
Within academia, those who believed in free markets before the crisis still do so today. A few people have shifted, and I want to give credit to them for saying: “We were wrong. We underestimated this or that aspect of our models.” But for the most part, the response was different. Believers in the free market have not revised their beliefs...
If my forecast about the consequences of austerity is correct, you will
see a new round of protest movements. We had a crisis in 2008. We are
now in the fifth year of crisis, and we haven’t solved it. There’s not
even a light at the end of the tunnel. When we come to that conclusion,
the discourse will change...
