Nobel Prize-winning economist Joseph Stiglitz is in Australia at the moment, and a couple of us from Per Capita were lucky enough to attend a forum with him in Canberra last week. He started by talking about his childhood growing up in Gary, Indiana, a company town named after the CEO of a steel company. Its still a steel town, and the company still produces the same amount of steel, but with only one-sixth of the workers. The demise of his hometown is an example, he says, of a lack of industrial policy, or rather, an industrial policy that is passive and lacks vision. That town and all that infrastructure is left to rot, at a massive social cost, instead of developing an alternative industry. He cites Germany as a country who has had a more proactive industrial policy, and as manufacturing has changed, has developed niche manufacturing markets that maintain competitiveness and keeps employing people. He is highly critical of the US system in general, arguing that it hasnt delivered – median household income is lower than a quarter-century ago; the minimum wage is lower than a half-century ago. He says the market economy has failed to work for most citizens. Cautioning against some of the measures proposed in the Australian Budget, he argues that truly innovative economies need good systems of social protection. Social protection allows risk taking which encourages innovation. Stiglitz says one of his biggest concerns, shared by many economists, is that the tech industry wont produce enough jobs. He gives the example of Apple, which has 49,000 workers; all but 19,000 of these are low paid jobs, mostly in sales. He also says its not clear how the business models of companies like Google and Facebook, which are based on advertising, can be productive in the long term. Getting someone to buy one product over another doesnt grow an economy and doesnt increase productivity. It was great to be able to attend the forum, and hear Stiglitz interact with others who are also experts – a very lively discussion. It was a boost to hear about the things Australia has done well. Largely, Stiglitz says, our economic story is one of great success and its good to sometimes stop and reflect on that.
Posted on: Mon, 07 Jul 2014 03:11:59 +0000
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