As the chairman of Bill Clinton’s Council of Economic Advisers, and subsequently as the chief economist of the World Bank during the East Asian financial crisis, Joseph Sitglitz was deeply involved in many of the economic-policy debates of the past ten years. What did this experience tell him? That much of what we think we know about the prosperity of the 1990s is wrong. Here is a revised history of the decade, by the winner of the 2001 Nobel Prize in Economics
Editor’s Note: This otherwise excellent article needlessly interjects many political slings against Republican administrations so if you lean toward that tendency you may find the article less than appealing (though that doesn’t in fact disprove the economic points made).
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“The fact that the New Economy is real, however, doesn’t mean that we’ve understood it. In explaining our success in the nineties to ourselves and the world we have largely drawn on a set of myths that desperately need debunking: that deficit reduction by itself led to the economic recovery of the 1990s; that the brilliance of our economic leaders created our newfound prosperity; that deregulation and self-regulated markets are the key to sustaining that prosperity, and should thus be exported to the rest of the world; and that American-style globalization is based on high-minded principles of equality and social justice and will inevitably lead to global prosperity, benefiting not only financial markets in America but also the poor in the developing world.”
“Economies are like large ships: they cannot be turned around quickly. Moreover, they change so slowly that cause and effect are not always clear…Our economic system has enormous merit, but it is not the only system that works; other systems may work better for others.”