[Reuters Endorses Socialist] Economist Stiglitz Rips Clinton, Wall St., Himself

Reuters ^ | 10/13/03 | Pedro Nicolaci da Costa

[Mark Felton]

NEW YORK (Reuters) - Nobel-winning economist Joseph Stiglitz is best known for his scathing critique of globalization's effect on the world's poor, but now he has turned his ire on an unlikely new target -- himself.

Last year, Stiglitz's book "Globalization and its Discontents" took aim at the World Bank and International Monetary Fund's policies, making him something of a celebrity economist in places like Latin America.

But some in Washington complained that he accepted too little blame for how the bank's policies were shaped when he served as its chief economist.

Now the Columbia University professor's new book "The Roaring Nineties" says President Bill Clinton's economic team, in which he played a key role, doomed the very recovery they had tried to engender by equating the interests of Wall Street with those of the nation at large.

"It was an overly zealous, even naive faith in the market," Stiglitz told Reuters in an interview.

"We had a chance to try to shape globalization, to shape the new economic order, on a new set of principles. Instead, we wound up trying to shape it reflecting our commercial and financial interests."

Worse yet, the United States exported a harsher, more extreme version of its policy mistakes to developing countries, with disastrous consequences, said Stiglitz, who was chairman of Clinton's Council of Economic Advisers from 1995 to 1997.

"We in the Clinton administration did not have a vision of a new post-Cold War international order, but the business community did. They saw new opportunities for profits," he writes in the book.

PEACE CORPS VS WALL STREET

For the 60-year-old Stiglitz, the question of which philosophy should underpin the global economy goes way beyond the theoretical tug-of-war between unfettered markets and government regulation.

"The battle is deeper than that. It has to do with what kind of society we want to live in," Stiglitz said. "Twenty years ago, my best students went into the Peace Corps. In the '90s they all went into Wall Street."

As tough as the new book may appear on Clinton and his economic advisers, President Bush's tax cuts and defense-heavy fiscal profligacy were not exactly the sort of deficit spending Stiglitz had in mind.

"I grade on a curve and while I'm harsh on Clinton, he deserves an A-plus compared with what came after," he said.

Stiglitz said Federal Reserve officials, rather than curb the dangerous excesses that characterized the happy-go-lucky '90s, were too caught up in its glory to step in at the right time to restrain markets.

Alan Greenspan's "irrational exuberance" speech in 1996, when he famously warned that stock prices might be rising too fast, was in fact an unwitting testament to the Fed chief's inflated vision of his own powers, Stiglitz wrote: "It seemed he had hoped to tame the bubble -- and save the nation from a bubble-bursting -- by words alone. Greenspan had overestimated his influence."

The coup de grace for the roaring 1990s was big-time investors' ability to bring the average Joe into the fold.

Middle-class and poor Americans were told that they too could get a piece of the New Economy pie, if only they were willing to risk it all -- including their retirement savings and pensions -- in the stock market.

The result was a multi-trillion dollar crash from which the economy has yet to fully recover.

As an antidote to free-market exuberance, Stiglitz closes by outlining what he calls a "New Democratic Idealism," which he defends as a humanist alternative to the zealotry of economic purists.

His proposal foresees a continued reliance on markets but also an active government role in health, education and job creation. "There is an alternative vision, one based on global social justice, and a balanced role for the government and the market," Stiglitz writes. "It is for that vision that we should be striving."

[Mark Felton]

. "There is an alternative vision, one based on global social justice, and a balanced role for the government and the market,"

He advocates a balance betwen socialism and capitalism. They will accept free markets only as a means to fund socialist ambitions.

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[wizardoz]

"It was an overly zealous, even naive faith in the market,"

Awww... taking one for the team, how sweet. Commie.

[giotto]

The odious phrase "social justice" (code for socialism, meaning that the producers feed the slackers) has now become "global social justice," which would have our country's producers feeding all the slackers in the world.