Joseph Stiglitz was awarded the Nobel Prize in Economics in 2001 for his research on the market and asymmetric information. Although that is his specialty, Stiglitz is one of those economists who likes to comment on everything that has to do with that social science. Now, this expert calls to reconfigure the US economy, taking advantage of the consensus that has been generated during the covid crisis on some key issues such as global taxes on companies.
US economist Joseph Stiglitz believes that now is a good time to reshape the US economy: “We must not let a crisis go to waste.”
The former chief economist of the World Bank assured CNBC on Thursday that the coronavirus pandemic has highlighted how the economic system is not working , referring to inequality, the climate crisis and the lack of resilience of the market economy.
‘Kill two birds with one shot’
Still, Stiglitz has been optimistic and believes that many existing problems can be addressed simultaneously as they are related, which could make it easier to resolve many of the obstacles that prevent economies from growing in a sustainable and inclusive way. “You can get a two for one,” he tells CNBC at the annual Ambrosetti Forum on the shores of Lake Como in Italy.
The US should, for example, invest in building “green” infrastructure that creates jobs and helps reduce inequality, says Stiglitz. “Once you put your mind to it, you realize that we can attack two or three of these problems simultaneously.” In addition, the United States has the manpower and capital to launch these investments.
Stiglitz believes it would be “healthy” for the US economy to raise taxes “a little” to fund “some of the policies we need for the common good.”
A global tax on companies
In July, 130 countries supported a global Corporation Tax with a minimum rate of 15%. Stiglitz enthusiastically acknowledges that this measure could have ended the competitive race to lower taxes, and it is also important that the US, the world’s largest economy, is thinking of setting its type of Companies at 15%.
A successful economy is defined not only by tax rates, but also by other factors such as infrastructure and research and development efforts, Stiglitz says.
There is a growing consensus that the US needs to change outdated laws that have been in place for 125 years and address the excessive market power of some companies. “The concentration of market power has increased enormously in the last 35 years,” he explains.
Overregulation and overburden will not cause the West to lose its competitive edge against emerging powers and China, according to Stiglitz. “In fact, I am quite sure that this new agenda will strengthen us,” he says.
Conversely, regulating to improve competition makes market economies more innovative, while monopolies reduce innovation, Stiglitz notes. “We’ve seen the big giants really crush innovation.”