The Economy We Need
by Joseph E. Stiglitz – May 3, 2019
After 40 years of market fundamentalism, America and like-minded European countries are failing the vast majority of their citizens. At this point, only a new social contract – guaranteeing citizens health care, education, retirement security, affordable housing, and decent work for decent pay – can save capitalism and liberal democracy.
NEW YORK – Three years ago, US President Donald Trump’s election and the United Kingdom’s Brexit referendum confirmed what those of us who have long studied income statistics already knew: in most advanced countries, the market economy has been failing large swaths of society.
Nowhere is this truer than in the United States. Long regarded as a poster child for the promise of free-market individualism, America today has higher inequality and less upward social mobility than most other developed countries. After rising for a century, average life expectancy in the US is now declining. And for those in the bottom 90% of the income distribution, real (inflation-adjusted) wages have stagnated: the income of a typical male worker today is around where it was 40 years ago.
Meanwhile, many European countries have sought to emulate America, and those that succeeded, particularly the UK, are now suffering similar political and social consequences. The US may have been the first country to create a middle-class society, but Europe was never far behind. After World War II, in many ways it outperformed the US in creating opportunities for its citizens. Through a variety of policies, European countries created the modern welfare state to provide social protection and pursue important investments in areas where the market on its own would underspend.