Can the Economy be Saved? The Los Angeles Times recently asked a number of economic experts about whether they thought the post-financial crisis economy can be saved, and if so, how.
Amidst some expected responses (John Cochrane from the University of Chicago predictibly argues against more stimulus), INET advisor and Nobel Laureate Joe Stiglitz had some interesting ideas about how he would fix the economy.
If, Stiglitz writes, “the spending is focused on high-return investments (in education, technology and infrastructure), the nation’s debt-to-GDP ratio will actually be lowered. The question isn’t whether we can afford to make these investments; we can’t afford not to.”
He goes on to note that recent stimulus efforts have been misguided:
“When Presidents George W. Bush and Obama went about pouring money into the banking system, they did it without a vision of what kind of financial system would best serve the country in the new century. Little of the stimulus money went to reshape the country, to make it more competitive, more dynamic, more respectful of the environment or less unequal. Had we had that vision, we could have structured what we did in the short run in a way that fostered a more robust recovery — with more jobs and in a better position for long-term growth with a lower debt. It’s still not too late, but we have wasted both valuable time and money.”
