Stiglitz’s Gallic delusion

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Channeling Chaplin? (see photo below)

He’s been called “a ‘superstar’ of the Left” who “defaults to leftist ideologies at every turn,” who “offers an old-Keynesian approach to new problems,” who “has assumed the role of social-democratic public-intellectual-in-chief,” who “increasingly labels anyone disagreeing with him as a ‘market fundamentalist’ or a ‘conservative journalist,’” and who’s “essentially an economic crank.”

Charlie-Chaplin-The-Great-Dictator_thumbWe’re talking about Columbia University economist Joseph Stiglitz, who, as we’ve seen in the last few days, is a fierce critic of the free market, of “American-style capitalism,” and of “economic inequality,” and a zealous enthusiast for welfare states, for an international currency and international tax system, and for the financially irresponsible governments of Greece and Argentina (for both of which, it turns out, he’s been a paid “advisor”).

The absurdity of Stiglitz’s economic views is crystallized in his relatively recent comments on France. As financial analyst Pater Tenebrarum noted a year ago, Stiglitz has been an outspoken fan of France’s profligate government spending – because, in Stiglitz’s view, lowering state spending is the path to economic disaster. Yet as Tenebrarum pointed out, France’s neighbor to the south, Spain, had “been outperforming France for the past several quarters.”

Why? Because, unlike France, Spain cut government spending, reformed its labor laws, and “ma[de] life easier for businesses” in a number of other respects. In short, as Tenebrarum put it, “Spain has done precisely what Mr. Stiglitz believes is leading to failure, while France has done precisely what he believes to guarantee success.” Commenting on Stiglitz’s statements about the French economy – including the claim that France is business-friendly – Tenebrarum could not disguise his incredulity:

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At a 2010 Italian Trade Commission event in New York

He believes that a government that is spending a record 58% of GDP every year – more than any other government in the allegedly capitalist countries – and that is well-known for having instituted the highest tax rates in Europe and having put in place the most onerous business regulations imaginable, is a paragon of “pro business austerity”!

To say that this is utterly ridiculous is the understatement of the century. How can one make such an assertion and keep a straight face? Hundreds of thousands of young entrepreneurs have fled France for more business-friendly places such as the UK, because they simply felt they could not operate in France’s extremely hostile business climate….

Is Mr. Stiglitz unaware of the fact that France has introduced a 75% marginal tax rate for high income earners, which is in fact the highest in the world? Stiglitz should in fact explain to us why the sure-fire “success” of this policy in France is so conspicuous by its absence (since he asserts above that raising taxes on the rich will “boost the economy”!). 

While acknowledging that one can have an opinion on business matters without ever having run a business, Tenebrarum added that “anyone who has struggled with establishing a small business in hostile bastions of socialism in the EU such as France” would be stunned by Stiglitz’s statement that “the level of corporate taxation has little effect on investment.” Tenebrarum’s own take on this claim:

Detail of the facade of the Bank of France headquarters in Paris May 9, 2012. REUTERS/Charles Platiau

This is spoken like a life-long leftist academic and bureaucrat who has never created one iota of real wealth in his life, who has never taken any personal risk or ever had to worry about paying someone else’s wages. Anyone who has ever taken the risks about which Mr. Stiglitz evidently knows nothing will confirm how utterly misinformed this comment is. In Europe, the entrepreneurial spirit has been completely crushed in many places due to extremely high taxation and massive over-regulation. And yet, how does Stiglitz believe new wealth is going to be produced? It’s not going to drop from the sky, that much is certain.

And that, in the end, is perhaps the most important thing that needs to be said about the economic preferences, proposals, pretenses, and prognostications of Columbia University’s own Professor Stiglitz.

3 thoughts on “Stiglitz’s Gallic delusion

  1. It is a difficult situation that France has been in with business climate. On the one hand the popular demand is for justice and equality. On the other, the new regime agenda has driven out investments and entrepreneurs from the nation. You are correct that the best young minds in France are now inclined to leave for ventures elsewhere. So it is an evident truth that in practice, vilifying the wealthy does not work. It is not so simple as that.

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