Small-bore reform won’t cut it: Joseph Stiglitz says it’s time to “rewrite the rules” of the U.S. economy

By Elias Isquith – November 4, 2015


Earlier this year, Hillary Rodham Clinton gave a clear signal to those who’d notice that her second presidential campaign’s economic policies would be what Vox’s Matt Yglesias has called “paleoliberalism.” And while the phrase may be too clever by half, it got the basic thrust of her policies right. Namely, Clinton would drift away from the market-first neoliberalism of her husband or President Obama and champion using government to fix an economy system she’s described as “rigged.”

It’s too early in the campaign to judge whether Clinton is truly moving back toward an unapologetic embrace of a New Deal-era vision of government. But the signs so far are pretty good; even Robert Kuttner, a frequent critic of Democratic timidity, described a speech on the economy she delivered in July as “exemplary.” Still, Clinton has not laid out a retinue of major economic reforms, choosing instead to address issues piece-by-piece.

That’s the safe move from a political standpoint; and it may be more in keeping with Clinton’s temperament. But if you want to get a sense of what that more-sweeping vision might look like, take a look at “Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity,” the new book from Joseph Stiglitz, the chief economist for the Roosevelt Institute and Nobel Prize winner, based in part on a report that the Institute released to great fanfare earlier this year.

Recently, Salon spoke with Stiglitz over the phone about the book, why he thinks this is such a special time for economic reform, and how he sees his role as an economist within the broader political movement against inequality. Our conversation is below and has been edited for clarity and length.

Why do you think now is the right time for activists and experts and policymakers to push for major changes to our economic system? Why is it better to go big now rather than focus on incremental reform?

I think it’s a good moment because, finally, the accumulation of the failures of the experiments that we describe beginning around 1980 [trickle-down economics] are becoming abundantly clear. And as a result, that is being picked up already by [presidential] political candidates, reflected by the dissatisfaction expressed on parts of the right.

So about that “experiment” — what do we now know about the economy that we didn’t know 30 years ago?

There are a couple of insights. One is about the view of a trade-off, where you could get more equality only at the expense of economic performance. The perspective today is actually that inequality can be very adverse to economic performance. And this view has moved from being the left-wing position to very much a mainstream position. The IMF, for example, is strongly pushing that view.

What’s another insight about the economy that we didn’t know before but know now?

There was once a belief … that there was a natural arc of history; that as economies [grew], they became more equal. A lot of people just assume the economy was going to be like it was in the decades after World War II; a kind of shared prosperity.

Now, we know that that is not inevitable; it really depends on the policies. If you pursue the wrong policies, you wind up with a small group getting all the benefits of economic growth. [John F.] Kennedy would say, “A rising tide lifts all boats.” No one would say that today.

Click here to read the full interview.