Avoid mistakes of the West: Stiglitz
Online Publication Date: 28 March 2013
Avoid mistakes of the West: Stiglitz
The Nation on Sunday March 17, 2013 1:00 am
Emerging markets including Thailand, other Asean countries and China
should "decouple themselves from Western markets", Nobel laureate
economist Joseph Stiglitz said during a speech in Bangkok yesterday.
To be able to grow, emerging markets must be less dependent on exports,
boost domestic consumption and find their own model of sustainable
economic growth, the US economist said.
Stiglitz said the most serious questions facing the global and regional
economies were whether the euro zone would survive; whether the
European Union would drop the austerity policies that have caused
recession and switch to a policy of growth; and whether the US will be
able to move beyond its current gridlock. Stiglitz expected not more
than 3 per cent growth in the US in the near future, adding that the
country needs to reduce its significant unemployment level. But full
employment was not in sight this decade, he said.
"It's going to be a long time before we can get back to what I may call normal," he said.
He also expected emerging markets, China in particular, to be able to
decouple their economies from Western economies and develop in a
Stiglitz was speaking during an on-stage interview with Nation
Multimedia Group chairman Suthichai Yoon. He earlier gave a lecture on
the global economic outlook as part of an international academic seminar
at Dhurakij Pundit University.
The Nobel laureate opposes austerity measures, saying they had proven
to lead to recession and depression. To avoid repeating developed
countries' mistakes, newly emerging economies should invest in
education, technology, the environment and public health and find a
sustainable model of economic growth, he said.
"Focus on quality of growth, environment, living standards and how the benefits are shared," he said.
US innovations had contributed in part to the country's current
economic instability. The innovations were created to save labour costs,
but now unemployment rates are problematic, he said.
The US and European countries, as well as Japan, also need structural
and educational reforms, but implementing them was difficult now that
they were facing economic problems, Stiglitz said.
"From the point of view of the region and from the point of view of the
planet, it's going to be very important for China to develop a new
model of economic growth, because if it imitates the economic growth of
the United States based on [unchecked] consumption and material goods,
our planet won't survive," he said.
Discussing the problems in the euro zone, he voiced opposition to the
idea of a common currency - a direction in which Asean might be heading.
"If you go down the common currency [route], that is a bad idea. You
need to talk about Asian cooperation," he said. "Sharing a currency
takes away the ability to adapt, to adjust," he said.
"A common market is a good idea; while the issues of the market are
relatively small, they can still benefit from economy of scale."
Stiglitz said corporations' lobbying of politicians was standing in the way of resolving economic problems.
He also warned that the Trans-Pacific Strategic Economic Partnership
(TPP) that the US is trying to reach with other countries is dangerous.
"While negotiations are behind closed doors, cooperation [sic]* is on the table," he said.
Drug companies, for example, are among the corporations lobbying politicians in secret negotiations, he said.
"The objective [of drug companies] is to make profit. The way they do
this is to make you pay high prices even though the basic research is
paid for by the American government," he said.
"They are very bad for the development of generic drug industries.
Thailand is one of the good countries in this area. It would be a
mistake for you to give up on that. And if you join the TPP, you will
have to," he said.
During his visit to Thailand last year, US President Barack Obama tried to convince Thailand to join in the TPP.
* In another report, Mr Stiglitz was quoted as having 'urged Thai civil
society groups to protest if the government takes steps to join the
US-sponsored Trans-Pacific Partnership accord because negotiations were
taking place behind closed doors and corporate interests were at the
table.’ Please see http://www.bangkokpost.com/news/local/340910/economist-stiglitz-warns-not-to-expect-a-quick-global-recovery.