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JOSEPH E. STIGLITZ: THE ROAD TO FREEDOM  
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Joseph E. Stiglitz
July 9, 2024
Project Syndicate
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_ Reimaging our existing economic and legal systems and embracing
forms of collective action, including regulation and investment, if we
are to create an innovative society in which everyone can flourish. _

, Ben Roberts

 

_This week in Say More, _PS_ talks with __JOSEPH E. STIGLITZ__, a
Nobel laureate in economics and University Professor at Columbia
University._

_PROJECT SYNDICATE:__ A year and a half ago, you __criticized_
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US Federal Reserve’s __response_
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inflation in the United States, __arguing_
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if anything, “disinflation has happened despite central banks’
actions, not because of them.” Now, many observers are highlighting
the inflation risks of second Donald Trump administration, which would
likely double down on import tariffs and seek a weaker dollar. Do you
see other inflation risks on the horizon, and what should US
policymakers be doing now to support continued price stability?_

JOSEPH E. STIGLITZ: There are four additional inflation risks
associated with another Trump administration. The first is a
tightening of immigration rules: as the US population ages, the labor
force shrinks – a trend that, in the context of a tight labor
market, will put further upward pressure on wages. Second, a second
Trump administration would likely exercise little fiscal discipline
– implementing, for example, unfunded tax cuts for corporations and
billionaires; this could raise inflationary expectations and possibly
even lead to an excess of aggregate demand. Third, a Trump
administration would almost certainly abandon Joe Biden
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policy
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effectively giving corporations free reign to increase prices. Lastly,
Trump’s likely interference with the US Federal Reserve might spook
the markets, again leading to higher inflationary expectations.

_PS:__ You have repeatedly __highlighted_
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role of flawed and manipulative narratives in fueling the __rise_
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authoritarian populism in the United States. One crucial principle
that the American right has distorted and weaponized is __freedom_
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the focus of your new book, _The Road to Freedom: Economics and the
Good Society [[link removed]]_. What do US
Republicans get wrong about freedom?_

JES: Freedom is about what you can _choose_ to do. But a very poor
person – someone who is unable to secure food or housing and has
little to no economic opportunity – has no real choices; they must
do whatever they have to do to survive. US Republicans disregard this
reality, touting instead the myth that, no matter your situation, you
can simply “pull yourself up by your bootstraps.” They
conveniently forget that you can’t do that if you have no boots to
begin with.

Moreover, many Republicans forget that one person’s freedom can
impinge on someone else’s. Freedom for some is unfreedom for others,
or as Isaiah Berlin put it, “Freedom for the wolves has often meant
death for the sheep.” A society must carefully balance the freedoms
of different people or groups.

Likewise, imposing some constraint on some people can sometimes expand
freedom for all. Consider traffic lights: by enabling us to avoid
gridlock, this constraint (or “regulation”) on our movement
actually expands the freedom to move for everyone, including those who
might feel that traffic lights represent a deprivation of individual
freedom.

_PS:__ You have __praised_
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antitrust authorities for their recent efforts to tackle rising market
concentration. Combating market power, you argue in your book, is also
a potent means of addressing “coercion” by an increasingly
oligopolistic media, which, by __shaping people’s beliefs, limits
their choices. What else is needed to ensure that news media in
particular, including social-media platforms, fulfill their crucial
role in well-functioning democracies?_

JES: There has to be some accountability; giving social-media
platforms immunity from liability was a big mistake. At the time, the
argument was that social media was a “nascent” industry and needed
room to grow without excessive restrictions or even adequate
accountability. That is no longer defensible.

We will also need regulation. Europe’s Digital Services Act
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a step in the right direction, but even that is insufficient.

At the same time, government should provide support to news media.
After all, news media provide a public good, and public goods are
inevitably undersupplied in private markets.

BY THE WAY . . .

_PS: __Not all coercion is bad, you explain in _The Road to
Freedom_, nor should it be viewed as the antithesis of freedom. In
fact, there are many cases where “government actions that appear
coercive actually increase the set of options for all or most
people,” including delivering public goods and enabling
coordination. How does coercion support the coordination of the
economic system within countries, and how should it be used to advance
global coordination?_

JES: The traffic-light example offers a simple way of understanding
such coordination, but there are countless other examples of this
general principle, including on the global scale.

I might not be here today were it not for the mRNA COVID-19 vaccines
that were rapidly developed during the pandemic. Government money
financed not only the platform for these vaccines, but also a
substantial share of the work it took to bring them to market. But for
governments to be able to finance such public goods, they have to
collect taxes.

Taxes are, by definition, coercive, but the money that I and others
have been forced to pay supported government research that has
enhanced our freedom in perhaps the most fundamental way possible: it
gave us the freedom to live.

_PS: __Your book’s “ultimate objective” is to “describe an
economic and political system that delivers not only on efficiency,
equity, and sustainability, but also on moral values.” But, first,
you examine the reasons why neoliberal capitalism failed, including
its advocates’ blind belief in “self-correcting forces.” Has the
belief in the magic of the market become less tenable now than in the
past?_

JES: I believe so – at least among a large share of the population.

Neoliberalism failed
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We know that, because growth has been lower, and inequality higher,
during its reign. A large (and growing) share of people seem to
understand that this ideology bears much of the blame for our current
travails.

But, regrettably, political processes are also not necessarily
self-correcting. Voters in many places (including the US) have reacted
to the failure of “center-right” policies by turning toward the
extreme right, which will only exacerbate our problems by giving
corporations more power – more freedom – at the expense of workers
and consumers.

_PS:__ You argue in _The Road to Freedom_ that “slight tweaks”
to the neoliberal framework “won’t suffice,” but that
revolutions “typically don’t end well.” Instead, we must “push
for as large a change as our democratic system will permit” – a
change as radical as, say, the New Deal in the US. What would such an
agenda entail, and how would it differ from the reforms enacted under
President Franklin Delano Roosevelt and his successors?_

JES: FDR set the US on a fundamentally new course, with government
taking on greater responsibility for macroeconomic stability and the
well-being of citizens (such as through social security). But that was
almost a century ago, and the world has clearly changed. What was once
an agrarian economy, before becoming a manufacturing economy, is now a
services- and knowledge-based economy. The global economic balance of
power has shifted, and the geopolitical environment is different from
what it was even a few years ago. Meanwhile, we are facing a climate
crisis as we confront our planetary boundaries. And, crucially, we now
have a better understanding of what human well-being requires and what
makes for a better-functioning economy.

A new policy agenda should be guided by a few key principles. First,
we need a rich ecology of institutional arrangements, including
for-profit firms and non-profits (including NGOs), and mechanisms for
collective action – for example, unions, cooperatives, and
class-action lawsuits. Governments, at multiple levels, must be
engaged in regulation, taxation, and public investment.

The agenda must reflect a keen awareness of how these institutions
shape us and their broader societal consequences. It must demonstrate
sensitivity to power relations, to the ways different institutions can
serve as part of a system of societal checks and balances, and to how
wealth inequality is translated into political inequality.

Finally, we must recognize that what matters is not GDP – that is,
the production and accumulation of goods and services – but
individual and societal well-being, broadly defined. An understanding
of the ways different economic, social, and political arrangements
affect well-being is thus essential.

_JOSEPH E. STIGLITZ, a Nobel laureate in economics and University
Professor at Columbia University, is a former chief economist of the
World Bank (1997-2000), chair of the US President’s Council of
Economic Advisers, and co-chair of the High-Level Commission on Carbon
Prices. He is Co-Chair of the Independent Commission for the Reform of
International Corporate Taxation and was lead author of the 1995 IPCC
Climate Assessment. He is the author, most recently, of The Road to
Freedom: Economics and the Good Society (W. W. Norton & Company
[[link removed]], Allen
Lane
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2024)._

_PROJECT SYNDICATE produces and delivers original, high-quality
commentaries to a global audience. Featuring exclusive contributions
by prominent political leaders, policymakers, scholars, business
leaders, and civic activists from around the world, we provide news
media and their readers with cutting-edge analysis and
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* Joseph Stiglitz
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* Book Review
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* economics
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* freedom
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* Inequality
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* capitalism
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* Neoliberalism
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* collective action
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