Editors’ Note: Occasionally we come across ideas authored by other individuals that fundamentally represent a clear picture of the economic struggles and debates that embroil the current national dialogue. Recently (April 21, 2019), The New York Times published an OpEd article by Joseph Stiglitz, famed American economist and recipient of the Nobel Prize in Economic Sciences, that neatly summarized a number of economic phenomena within our nation’s history. The excerpts speak for themselves.
Standards of living began to improve in the late 18th century for two reasons: the development of science (we learned how to learn about nature and used that knowledge to increase productivity and longevity) and developments in social organization (as a society, we learned how to work together through institutions like the rule of law and democracies with checks and balances).
Key to both were systems of assessing and verifying the truth. The real and long-lasting danger of the Trump presidency is the risk it poses to these pillars of our economy and society, its attack on the very idea of knowledge and expertise, and its hostility to institutions that help us discover and assess the truth.
America arrived at this sorry state of affairs because we forgot that the true source of the wealth of a nation is the creativity and innovation of its people. One can get rich either by adding to the nation’s economic pie or by grabbing a larger share of the pie by exploiting others – abusing, for instance, market power or informational advantages. We confused the hard work of wealth creation with wealth-grabbing.
Last week, VoxFairfax offered an article with similar themes, noting that another confusion was plaguing economic discourse – between capitalism and socialism and the fallacious notion that contemporary political choices represented a binary option of them [Mythology in Economics and Politics, VoxFairfax, April 22, 2019; https://voxfairfax.com/2019/04/22/mythology-in-eco…ics-and-politics/]. Stiglitz’s insight moves the discussion past that fallacy and that of the “invisible hand” of Adam Smith as the force and rationale for economic prosperity. The conclusion to his article set out a paradigm with a different choice:
…our exploitive capitalism has shaped who we are as individuals and as a society. The rampant dishonesty we’ve seen from Wells Fargo and Volkwagen or from members of the Sackler family as they promoted drugs they knew were addictive – this is what is to be expected in a society that lauds the pursuit of profits as leading, to quote Adam smith, “as if by an invisible hand,” to the well-being of society, with no regard to whether those profits derive from exploitation or wealth creation.
This is a think piece well worth the few minutes it takes to read. Go to https://www.nytimes.com/2019/04/19/opinion/sunday/progressive-capitalism.html.