Dear Editor,
Reading Joseph E. Stiglitz’s Globalization and Its Discontents Revisited – Anti-Globalization in the Era of Trump [2018] was a challenging endeavor. Trying to gauge the influence this Nobel Prize-winning economist may have had on US and world economic policies and practices over the last quarter of a century, particularly as it relates to the push towards globalization, was a most frustrating undertaking. It was an unpleasant Google venture amid the fawning of sycophants until I chanced upon Libertarian Gene Epstein’s article: “Continually Mistaken, Chronically Admired – The Work of Nobel Prize-Winning Economist Joseph Stiglitz Is a Study in Elite Myopia (City Journal, September 20, 2018).” I was elated: the assessment of this professional economist has confirmed my very novice takeaways, my non-specialized reading of Stiglitz and his book.
Gene Epstein (B.A. in History and M.A. in Economics is the author of Econospinning: How to Read between the Lines when the Media Manipulate the Numbers (2006). He is a former Senior Economist for the New York Stock Exchange, and later Economics Editor at Baron’s (26 years) from where he recently retired. Epstein is now the director of “The Soho Forum” (A debate series). He refers to himself as an “Austrian,” that is, a follower of the Austrian School of Economics, and is particularly fond of the writings of Murray Rothbard (1926-1995).
In this twelve-page article, and in a recent interview on “The Woods Show (September 27, 2018),” Epstein politely eviscerates Joseph Stiglitz: “a figure to be reckoned with, not just for his past impact on policy but for the influence that he might wield in future Democratic administrations;” this, given Stiglitz’s closeness to Progressive politicians Mayor Bill de Blasio of New York and Senator Elizabeth Warren of Massachusetts; “both of whom might bring him along if they win higher office (p. 1/12).” In this critical review Stiglitz’s words and actions are closely analyzed; those he acknowledges, and some others he appears to downplay, conceal or suppress. Epstein’s verdict is brutal: “Stiglitz’s worst may be yet to come.”
Of particular import are the views of some of Professor Stiglitz’s colleagues and critics who “see [his] stubbornness as a key flaw (...) He doesn’t learn from his mistakes (...) His ‘Initiative for Policy Dialogue’ [A Non Governmental Organization (NGO) Stiglitz founded at Columbia University] should more accurately be called ‘Initiative for Policy Monologue’ (...)” And there is this “harsh judgment” from one of Stiglitz’s colleagues at Columbia who spoke to Epstein “on condition of anonymity”: “Joe’s career tragically demonstrates that if one combines legitimate credentials as a clever and creative theorist with extreme left-wing bias and a colossal ignorance of history, one can accomplish a great deal of harm in the world (p. 11).”
This is a devastating appraisal of Stiglitz and his “work.” Epstein highlights several “inconsistencies (Blind spots, contradictions) in the career (The writings and actions) of this Columbia University professor, former chairman of President Bill Clinton’s Council of Economic Advisors [1993], former chief economist at the World Bank [1997], and author of more than 30 books...” Epstein explains that in 2002 Stiglitz failed to diagnose the problems [In the making] related to the government-sponsored enterprises (GSEs) Fanny Mac, and Fanny Mae; that Stiglitz and the Orszag brothers (Jonathan and Peter*) submitted a report to Fanny Mac and Fanny Mae, for which they were most likely paid handsomely, stating that the “probability of default by the GSEs” was “extremely small,” and that “the risk to government from a potential default on GSE debt “was effective zero.” Epstein adds: “Washington’s GSE bailout has been estimated at about $200 billion [!] (p. 5).”
*Peter Orszag was later named Director of the Office of Management and Budget under President Obama.
Epstein correctly points out that in “Globalization and Its Discontents Revisited” published in 2017, Stiglitz “analyses economic successes and failures in Asia and Latin America, but except for brief references, he makes no mention of the calamity in Venezuela (p. 8).” Epstein adds that in 2006 and 2007, after an “amicable meeting” with President Hugo Chávez, Stiglitz described Venezuela’s economic growth as “very impressive,” and that he praised the “success President Chávez appears to have had in health and education (pp. 7—9).” Epstein’s criticism of Stiglitz is particularly detailed with reference to Venezuela.
According to Epstein, “Chávez wasn’t the only economic strongman and human rights abuser who won Stiglitz’s endorsement (p. 9).” Meles Zenawi, Ethiopia’s dictator (From 1991 to his death in 2012) hosted the Nobel Prize winner in September 2007. Writing in the New York Times that same month, Stiglitz praised Zenawi for the way he was using the aid he was receiving from Western countries (pp. 9—10). As a corrective to Stiglitz’s above appreciation, Epstein cites Professor William Easterly’s “The Tyranny of Experts,” a book in which human rights abuses in Ethiopia are documented for the period in question.
Gene Epstein did not address Stiglitz’s embrace of “Climate change/Global warming” that the Nobel laureate describes as “increased concentration of global warming gases [that] results in global climate change” (“Globalization and the New Discontents (2018: p. 80).” Therefore, Epstein does not consider the policies that Stiglitz prescribes to combat “Climate change” in order to help “save Globalization (Stiglitz, 2018: pp. 75—97).” In his review of Stiglitz, Epstein may have elected to limit his appraisal to economics, to market failures and policy makers, and to eschew atmospheric sciences.
There is much more instructive and edifying information in Epstein’s insightful article, but we must stop here. According to this Libertarian, Stiglitz has been “grotesquely wrong both economically and morally (The Woods Show, Sept.27, 2018).” Gene Epstein’s essay on Joseph E. Stiglitz and his “work” is a devastating exercise in constructive demolition. Anyone interested in this crucially important topic would do well to read Mr. Epstein’s article, and to listen to his interview, both of them available online.
Gérard M. Hunt
