WASHINGTON, Oct. 11 (UPI) -- Nobel laureate though he may be, Joseph Stiglitz remains as eager as ever to risk the wrath of many policymakers in Washington. On Thursday, the day after winning the highly coveted Nobel Prize for economics, Stiglitz said he was troubled by the tendency of some governments to put business profits before the benefit of people.
"It disturbs me that some governments are much more sympathetic towards corporate welfare than they are to individual welfare," Stiglitz said. The prizewinning economist, currently a professor at New York's Columbia University, was speaking at the World Bank, where he was chief economist from 1997 until 2000.
Stiglitz was awarded economics prize by the Royal Swedish Academy together with fellow U.S. economists George Akerlof and Michael Spence for their analyses of markets with asymmetric information, which argues that markets operate with imperfect information, thus reducing their reliability.
During his tenure at the World Bank, he came under considerable criticism from within the organization for publicly attacking the institution's policy to salvage the economies stricken by the financial crisis in 1998. He has been a vocal opponent of the so-called "Washington consensus" which is based on the principles of a free market, and is at the crux of policies guiding the Bretton Woods institutions.
Stiglitz's criticisms of the World Bank and the International Monetary Fund from within led to heated publicized debates about the global agencies and also gave ammunition to those opposed to the Bretton Woods institutions. But World Bank President James Wolfensohn, for one, seemed happy to let bygones be bygones as he introduced Stiglitz to the Washington audience as an "outstanding" economist.
Discussing the impact of the terrorist attacks on New York and Washington on world growth prospects, Stiglitz acknowledged their adverse effect on the global economy, pointing out that the poorer countries and those in the lowest income bracket would suffer the most as a result.
"Economic downturns always hurt the poor the most," he said, adding that governments have a key role in establishing social safety nets and other measures to minimize the negative impact of such declines as much as possible. He also emphasized the need for the United States to be more proactive in promoting growth in developing countries, pointing out that European nations were far more advanced in acknowledging the benefit of growth in the poorest countries as a means to ensure global economic expansion.
Although he declined to comment specifically on U.S. economic policy following the Sept. 11 strikes, Stiglitz said neither corporate tax cuts nor bailout packages to salvage a particular industry would spur growth in the longer term.
"Bailouts, I'm always very suspicious of," Stiglitz said. He pointed out that all industries believe in competition and transparency except in their own field, particularly during this period of increasing unease about economic outlook.
As for tax cuts stimulating growth, Stiglitz said that the "best business climate is not found in the lowest tax environment." He went on to state that high unemployment and social unrest was particularly disruptive to economic growth, and it was in the government's interest to ensure political stability for the economy.
Meanwhile, the former chief economic adviser to U.S. President Bill Clinton said industrialized countries need to take into consideration the needs of developing countries in trade negotiations. In particular, he called for eliminating protectionist measures in agriculture in advanced nations, as agriculture is one of the few exports that developing countries could be competitive in.
