From the AFR, at a conference today Jo Stiglitz,
…listed as weaknesses the US’s poor educational performance, financial deregulation, a slump in work-force participation, an economy that “socialises losses and privatises gains” and several decades of wage stagnation for low income earners.
…“You have to say that’s a failed economic model.”
Warwick McKibbin wouldn’t have a bar of it:
“I don’t think the US model has failed. I agree that the income distributional issues are really serious and they will undermine the aggregate story, but the US is still a well-functioning, innovative society,” he said.
“And if they fix the politics, they will fix the economics.”
I think you’ve got to define your terms here. “Failure” will mean something different to an American with certain expectations than it will to an Australian surrounded by rent-seeking parasites.
It is clear that the US is broadly functional and vastly more innovative than here. But it is also the case that it’s been royally screwed by Wall St and financialisation, especially in its income distribution. On that score, the political problem is also a manifestation of the economic in that certain free-market orthodoxies that Warwick McKibbin would likely endorse have empowered Wall St only for it to then buy more favourable policy. In short, McKibbin is dodging the real question.
Does that make it a failure? Within the framework of the US holding the “light on the hill” for capitalism in the world I’d say yes.
Though from the perspective of rent-seeker central Downunder it probably still glows!
