By Alexa Jenner
February 16, 2005 | Michigan Daily, USA
GN3 Editorial Comment: Much of economic
analysis that makes it to the mainstream press
emanates from a single mindset that has been schooled
in economic orthodoxy. Not so with the likes of Joseph
Stiglitz, the former World Bank Economist, who has
made a name for himself challenging mainstream views.
As the article below discusses, Stiglitz is much in
demand as a speaker who adds a respected voice to
those challenging an elite form of economic
globalization that drives unsustainable development.
By 4:00 p.m. yesterday, the 400-seat Hale Auditorium
was overflowing with people. Cramming into the aisles
and the doorways, students, professors and members of
the general public waited in anticipation to hear the
2001 Nobel Prize winner and famous economist, Joseph
"A lot of us have looked forward to this all month —
he's an amazingly sharp and intelligent guy," said
Economics graduate student Farzana Afridi.
Stiglitz's contributions to the field of economics
have allowed him to be recognized worldwide. He is
well known for helping create a new branch of
economics known as, the "Economics of Information"
which is used by policy analysts. Stiglitz has written
books that have been translated into many languages
for an international audience, including his
international bestseller "Globalization and its
Stiglitz addressed the ideas in these books as well
personal experiences in his speech on globalization
last night. Hosted by the Gerald R. Ford School of
Public Policy, Stiglitz's speech was part of a series
of lectures funded by the Citigroup Foundation,
honoring President Ford's long affiliation with
With opinionated rhetoric and good humor, Stiglitz
explained to an intrigued audience potential problems
with globalization and the free market.
"Economic theory predicted the capital free market
should lead to stabilization, but in reality it did
not lead to economic growth or stabilization," he
He said Third-World countries have instead been hurt
by the opening of free markets, because they receive
loans during good economic times and are forced to pay
back loans during recessions.
"The general preset of banking is never lend to anyone
who needs the money, so what happens is that when the
economy is in a boom the bankers are shoveling money
into the economy (of Third-World countries). But when
the economy goes down they say we're not sure you're
going to be able to repay us, we don't trust you." he
He went on to discuss problems with the International
Monetary Fund — the international organization that
manages global finances and gives loans to struggling
countries. Stiglitz's book "Globalization and its
Discontents" argues that the IMF puts the interests of
the United States over those of poorer countries, and
he discussed this in his speech.
"The last head of the IMF said poverty was not his
business," he said.
But he conceded that there had been a change in
attitude and the IMF was working more toward
Along with discussing debt relief, Stiglitz talked
about what he said are problems with opening up the
markets to trade. "It is one of the most pretentious
areas of globalization, but the theory is everyone
should be better off," he said.
"Instead, it created anxiety everywhere in the world.
Why were all these people better off and didn't know
it? Because in reality they were worse off," Stiglitz
Stiglitz explained the problem with the trade market
using cotton farmers. "The way you get subsidies is
you grow more, so as these American farmers produce
more, the price of cotton goes down and it hurts ten
million cotton farmers in Sub-Saharan Africa. So the
poorer are made poorer and the rich are made richer,"
he said. "In response, the U.S. Trade representative
says to the Africans: 'Why don't you go into some
other line of business?' This is an area where there
is no other line of business," he said.
Stiglitz continued by discussing the Clinton
administration's difficulties in improving access to
life-saving medicine and problems with the North
American Free Trade Agreement.
"The problem with NAFTA is it is hundreds of pages
that no one has time to read so bills get passed in
the agreement that would not normally make it through
legislation," he said.
Stiglitz also talked about global stability. "The U.S.
dollar is currently the most important reserve
currency, but the system is unstable."
The dollar, he explained, is no longer a secure store
of value. "The dollar continues to weaken, and
countries such as Japan are losing money by keeping
reserve in dollars," he said.
With a smile, he added, "We can convert our money to
Euros, and I advise you to do so."
Stiglitz concluded by stating, "I remain hopeful that
we will be able to make globalization work, and we
will be able to reform. It will not be quick, and it
will not be easy, and the process of reform may not in
every respect be pleasant, but the alternatives are
Responding to his speech, Rackham student Andrea
Jones-Rooy said, "I like his approach, and I think
he's exposing problems which people may not have
noticed before." She added, "If people read his books
and agree with them, then the changes he's proposing
may be realized."
LSA senior Amanda Altman, who is taking a class that
centers around Stiglitz's work, said, "I thought it
was very interesting when he was talking about access
to medication and trade. It's a really important
issue, and I was glad he discussed it."
RC freshman Jason Matney, who is also studying
Stiglitz, said, "He is criticizing the system, but he
is criticizing it from the perspective of someone who
has previously served in the administration, and I
think that makes it really effective."
Stiglitz was the Chairman of the U.S. Council of
Economic Advisors under the Clinton administration
from 1995 to 1997. He also served as the senior vice
president of the World Bank from 1997 to 2000.
Stiglitz has been a professor at universities such as
Yale, Princeton and the Massachusetts Institute of
Technology and currently holds joint professorships at
Columbia University's Business School, School of
International and Public Affairs and economics
Rebecca Blank, Dean of the Gerald R. Ford School of
Public Policy said, "Joe Stiglitz is always a
fascinating and provocative speaker, and we are
grateful to Citigroup for giving us the funds to bring
people like him to campus."