Time: Wednesday March 20th, 2018
Location: Public Policy and Management Building Main Auditorium
Joseph E. Stiglitz is an American economist and professor at Columbia University. An honorary invitee, he visited Tsinghua University to explain some of the economic factors, both micro- and macro-economic, that have created and continue widening the income gap. During the talk Stiglitz discusses his most recent book, “The Great Divide” 《巨大的鸿沟》》, touching on how inequality in the U.S. was amplified after the 1980 Reagan administration’s policies which consisted of major tax cuts, the creation of the Eurozone in Europe and the failure of its singular currency, and the adverse effects of globalization and the challenge Trump brings forth.
Stiglitz believes that the idea of globalization has been oversold. The principle that trade makes everyone better off isn’t true in its entirety—there is only higher economic growth and better welfare under certain conditions he explains. The idea of globalization is based on the idea of a perfect risk (no risk) market, but in the world we live there is only imperfect risk markets. He argues since globalization began in the 1920s the U.S. has experienced higher unemployment and lower wages; there are now three Americans that have as much wealth as the bottom 50% of the American economy. Thus inequality is greater in the U.S. than in any other country.
Then Stiglitz brings up the entrance of China into the global markets in late 20th century and how, along with the immense growth it has experienced, wealth inequality has risen at a faster rate than in any other country in history. Even further he explains how real wages have decreased since before the reform and median income is lower than it was 80 years ago. The renowned professor claims China’s response should be firm, focusing on the improvement of domestic growth, remaining sensible while expanding growth and retaining responsible global leadership.
In “The Great Divide” 《巨大的鸿沟》》Stiglitz digs deeper into these issues and much more in great detail. Stieglitz stresses the importance of putting an emphasis on rule of law, not just in the domestic economy but in the global economy. The surge of China entering the market has worked to widen the income gap in the world. Eurozone was meant to stabilize the European markets with better integration, less barriers and so on, instead it’s experiencing about 25% unemployment. With all the benefits Globalization is said to have brought, Stiglitz believes more consequences have emerged such as Trump’s election and gains benefiting only the wealthy top 10%, further expanding the income gap. The professors talk was very insightful and eye-opening.
If you want to read more about a Nobel laureate, Columbia professor’s insights over the modern global economy and where he sees the global market going, pick up one of his books. “The Great Divide “is also available in Chinese and can be found online or at any book store near you.
By Matthew Nunez