Joseph Stiglitz - An Agenda for Reforming Economic Theory

The Inaugural Conference @ King's, Institute for New Economic Thinking, Session 3.
Joseph Stiglitz, Professor of Economics at Columbia University and winner of Nobel Prize in Economics in 2001, gives a compelling presentation at the Inaugural Conference of the Institute for New Economic Thinking.

[@BakedBeanieSigel]

I always appreciate hearing Joseph Stiglitz speak.

[@brdmohamedali]

wonderful Pr Joseph Stiglitz. Your lecture is interesting for those who want to enhance their life long learning

[@1trafalger1]

Minsky predicted a periodic crisis scaling up over decades. Among Stiglitz's ideas: 1) wages. Supply and demand meet, and increasing labor supply via lower wages lowers demand. 2) equilibrium. History disproves it. Used because it makes calculus tractable. 3) stochasticity "Great economists" apply it, not rocket science. Driven by finance, wants faster economic activity. 4) micro as macro basis. Economics is a social science, needs to pay attention to social sciences for its theory.

[@nthperson]

This talk by Joseph Stiglitz is, obviously, still quite relevant to us in 2018. Our governments have almost universally failed to address the systemic issue he raises. Critics of mainstream economic theory have become increasingly vocal. Whether their alternative explanations for the causes and potential solutions to the boom-to-bust character of modern economies will result in systemic reforms is another matter. What we know is that politics (i.e., systems of law and taxation) dictate economic outcomes. Recently, I have developed a course to critically examine the history of economic theory and policy, taught to adults who are not economists but have a desire for a better understanding of how we have come to the systemic design generally referred to as "capitalism," but which the evidence indicates is a system where the primary externality is monopoly privileges of various sorts that benefit rent-seeking over the production of goods or delivery of services. The course uses PowerPoint slides as a visual tool. As I have completed each lecture, I have created a recorded video version of the lecture and uploaded it to a KZbin channel I created several years ago for this purpose. Anyone who might want to follow along as the course proceeds can search in KZbin on my name: "Edward Dodson." Comments and suggestions for improvement will be welcomed.

[@No_Avail]

Regarding your channel, do you have a "Top 5" or "Top 10" video recommendation? I ask because many of your uploads are fairly lengthy, and I doubt I'll get around to listening to more than a fraction of them, so it may as well be the top-tier as suggested by the uploader. Worth a shot.

[@newcomputer7]

you seriously want to see him win the 2nd Nobel Prize? Come on, he's laying the path for future researchers, perhaps 1 of them will win a Nobel Prize and credit Stiglitz for this talk

[@nthperson]

One of the people who -- early on -- forecasted the 2008 financial crisis and the subsequent recession was the British economist and author Fred Harrison. And, he sent alert after alert to Britain's senior officials in Treasury and elsewhere. What Fred Harrison recognized is the primary source of what we mistakenly call "business cycles." What triggers a crisis are the underlying stresses associated with a nation's land markets which are credit-fueled and speculation driven. Professor Stiglitz mentions that banks (and mortgage investors) could have mitigated the bubble by reducing loan-to-value ratios on lending. The reason the ratios were increased over time was to accommodate rising land prices. As the median price of residential properties increased in most metropolitan markets, household savings was insufficient to meet even modest down payment requirements. A sign that the situation had been serious was when not even a minimum 5 percent down payment could be met by an increasing number of people purchasing properties. Once the crash occurred, what regulators should have done was to prohibit any financial institution that accepted government insured deposits from extending credit for the purchase of land, or acceptance of land value as collateral for other borrowing. This step would have returned the residential property markets back to the days when a minimum 20 per cent cash down payment was required. What few economists take time to consider is that in the real world of capital goods there is no such thing as a capital gain. Capital goods depreciate, often rather quickly. They lose resale value and functional utility. A financial instrument is not a capital good. Gains on the sale of financial instruments occur because the markets for such instruments are highly influenced by externalities of all sorts. It is rare that a capital good loses 5 or 10 or more of its resale value in the span of a few hours. But, this is how the financial markets operate to come to resale values.

[@seriesrna3674]

+Edward Dodson in 1998 By David Wilkerson (source : www.amazon.com/Gods-Protect-People-Coming-Depression/dp/0883686163) America cannot avoid the full-blown depression that is about to come upon it. Soon the financial bubble will burst, and we will be shocked by the severity and suddenness of the storm. But God has a plan for His people-a plan that will preserve and provide for them in the worst of the chaos. Believers will not only overcome fear but also prosper in the hard times.

[@ProgressiveMovement200]

+Edward Dodson So did Keene from Sydney, Australia. I think he mentioned Harrison in one of his talks. Keene is in the Post Keynsian School I believe.

[@nthperson]

As an agnostic regarding the existence of a conscious creator, I am reminded of what Air Chief Marhall Sir Hugh Dowding said in 1940 as the Battle of Britain raged in the skies over Britain. A government officer observed that Winston Churchill had great faith in radar to help achieve victory. Dowding responded: "It's vital, but it won't shoot down aircraft. God willing we will hold out." He was then asked, "So, I tell the cabinet that you're trusting in radar and praying to God, is that right? To which Dowding responded: "More accurately, the other way round. Trusting in god and praying for radar." If God actually has a plan for "His people" that plan has certainly involved a great deal of suffering as well as an accelerating pattern of destruction of the life-giving and life-supporting capacities of the planet we inhabit.

[@nthperson]

I have read a good deal of what Steve Keene has written. Much of what he observes is the case. That said, I think that Fred Harrison grasps the dynamics and externalities more completely than does Professor Keene. My opinion only, of course. I would enjoy hearing the two of them at a table discussing the causes of so-called business cycles and what measures are needed to tame the cycles and stimulate economic nirvana: full employment without inflation.

[@AgendaFiles]

archive.org/details/mathematically-perfected-economy-audio

[@ochuodhozachary4189]

Its a good talk on economics

[@nightnavin]

Necessary for a good model: - Pecuniary externalities matter - Preventative medicine is good for economies - Price interventions aren't the best form of intervention - Agency problems are important when informations imperfect - Who makes decisions matters Modelling Challenges - Bankruptcy and Default need to be included in models - Heterogeneous agents are important because redistribution matters - Interlinkages are important to model in the boom and the bust - Control needs to be modelled

[@sandeeppandey4012]

respect!

[@Skylark_Jones]

Except when he said economists are largely to blame for the crash most of what he said went over my head. I will have to listen to him again.

[@chinacat9992]

A genius.

[@123axel123]

Academics respond if you talk their language and say something interesting to them. I suppose that is fair and goes for all of us. The problem is of course that most of them are not directly interested in the reality we are living in.

[@1trafalger1]

Such huge scale differences between behavior models, agent models, and macro models. Debt undergoes greatest scale change, since enforcing debt payment requires power. A large nation's gov't, with capacity to govern, makes and enforces laws of debt relationships. Government's own debt requires lenders relatively less powerful that it. No other debt market where lender less powerful. Lenders treat gov't debt as equity. Nothing like how banks treat households.

[@lunarmodule6419]

Interesting. Thx.

[@chetanasin9150]

Thanks

[@1trafalger1]

Rationality is a red herring. It doesn't explain anything either way. Instead, what drives decisions needs definition. Stig looks at info. Info is structural. But people learn. Learning takes time. Over more time they use learning. Using learning sounds productive, but might or might not be. People learn enough, then may coast. May not learn more until others catch up. It's process, not structure.

[@travisbrewer5391]

I predicted the 2008 crash. I knew it was going to happen, I knew why it would happen. I didn’t know when it would happen or how. I currently predict the economy is going to crash again, I know why it will crash, I just don’t know how it will play out or when.

[@dexterriley]

this is terriffic ty for posting.

[@soapbxprod]

Mises predicted the 1929 crash. Hayek predicted the 1973 Great Inflation/recession (impossible according to Keynes). Rothbard predicted the 1987 crash. Austrians predicted both the 1999 tech and 2008 housing bubbles and busts. At the root of it all is Government issued Fiat currency... debt monetization/inflation.

[@nier3218]

Keynes himself never said that stagflation was impossible, and very few people ever saw the Phillips curve as an unbreakable reality, it was merely an observation of empirical data that showed a strong correlation, that some took to be fact.And just because some Austrians predicted the dot-com bubble and housing bubble, that doesn't say anything. I don't think you could even find one that predicted both. And there have been many people like Shiller who predicted both bubbles (and actually had books about it ex ante, that actually explained how and why) and also advocated Keynesian type spending. There were even Marxists that predicted the bubbles bursting. It doesn't actually mean much unless like Shiller they were able to precisely go into detail about the precise causes.

[@soapbxprod]

And Shiller offered detailed, precise causes of stagflation in the 1970s? Please cite your evidence with a link. I'm 56 and lived though it. Did you?

[@soapbxprod]

Samuelson was wrong about almost everything. His textbook at Reed College in the late 1970s was the core of Econ 101 there. Krugman has gone off the reservation- he's borderline delusional. Le jeu est fermé. Hayek and Friedman and Mises and Rothbard have won.

[@AijazAlfaz]

Lol.

[@1trafalger1]

Creativity is key. Corporations sit on earnings. If they knew what people would & could buy, they'd invest in it. They don't know, because people's needs becoming more complex. Silly marketing subdivides products into tiny categories, which isn't creative solution, just rule-based. Look at IT. Web bubble, app bubble, tech bubble, useless biz's that claim creative breakthrough. Not. Instead a few big tech companies now monopolize basic services. Standardized education dulls minds.

[@123axel123]

and why this bloody flattering of the audience all the time?

[@saraahmad5236]

يعاني علمُ الاقتصادِ بشدةٍ من أنه العلمُ الذي يفتقدُ إلى الحمايةِ التي تُؤمنها الهَيبة المكتسبة من تقادم العمر، كما هو الحال مع علمِ الفيزياءِ الناتج عن ترسيخ التجربة المتكررة في كلِ مرة للأسس بطرقٍ مختلفةٍ، ومتنوعةٍ، و مدهشةٍ. وجميعها تعززُ مكانة ذلك العلمِ. وتناول المؤلف وليد أحمد كمال الحبابي، في كتابه" نظرية المخاطرة الاقتصادية" (النظام الاقتصادي الكلي الإسلامي) تحقيق المنفعة القصوى، إيراد تفاصيل النظام الاقتصادي الجديد ، والذي يسمى نظام "المخاطرة" والذي تتوزع فيه الثروة على الجميع ، باعتباره نظاماً مستقراً أكثر كفاءة من نظام السوق الحر. ويرى المؤلف في كتابه" نظرية المخاطرة الاقتصادية" (النظام الاقتصادي الكلي الإسلامي) تحقيق المنفعة القصوى، أن الفكرة الأساسية لهذا الكتاب تكمنْ في توضيح فكرة كيفية استخدام مبدأ التفضيل الزمني في فرض الضريبة، وذلك لتحفيز الجميع على الاستثمار ورفع الانتاجية من خلال الضريبة. كما تطرق الى واجبات الدولة بخصوص تطبيقه ومدى اشتراكها في الأسواق بدقه . وتحدث المؤلف عن أن مصارف الزكاة تعتبر هي موازنة الدولة، فيما تظل موازنة الدولة هي النقطة الاكثر جدلا بين صانعي السياسات في البلدان. وفي الوقت نفسه يرى الكاتب أنه فيما تندر الكتاباتُ الاقتصاديةِ من ناحيةٍ كلية، ولا يوجد كاتبٌ تحدث عن اقتصادٍ إسلامي كلي كنظام سابقًا؛ وبالتالي فهذه هي الكتابة الوحيدة، حتى اللحظة. ويضيف لا يمكنك تغيير نظام بمحاربة الحقيقة القائمة، كما يفعل ذلك الاقتصاديون المسلمون دوما ، ولكن لتغيير شيءٍ، يجب عليك وضع نموذج يجعل النظام الحالي نظام عفا عليه الزمان؛ فإذا علمنا أن هذا النظام يحقق أعلا معدل إنفاق في دولة بلا موارد اقتصادية_ دون اللجوء إلى ضرائبٍ، أو غيرها_ فحينها يمكن أن نرى أننا أمام كتاباتٍ فريدةٍ من نوعها؛ حيثُ أنها تضع للاقتصاد الإسلامي ملامحًا واضحةً تميزهُ تمامًا عن الاقتصادين الاشتراكين و الرأسمالين، وليس تلفيقًا ليشابه أحدهما. ويؤكد أنه بهذا النظام لنْ تتمكن الأنظمةُ الأخرى من اللحاقِ بتقدمنا الاقتصادي مهما بذلت من جهود سوى تطبيقه. وعلى الجانب الآخر يرى أننا لن نتمكن نحنُ من اللحاق بركب الغرب اقتصاديًا بالنظم الحالية مهما حاولنا. وأخيرًا يجزم المؤلف، إن الاقتصاد هو الشيء الوحيد الذي يوضح الغرض من العاداتِ والعباداتِ الإسلامية بعيدًا عن معناها التعبدي في حياة الإنسان؛ بحيث يثبت بما لا يدع للشكِ أنه لاغنى للإنسان عن القيام بها من حج، وزكاة، وصلاة... الخ. كما يؤكد أن كل ذلك نجدهُ في كتاب ( نظريةُ المخاطرةِ الاقتصاديةِ) في هذا الكتاب الصادر عن دار "الكتب اليمنية" للطباعة والنشر والتوزيع ضمن 305 صفحة وموزع على ثلاثة أبواب رئيسية ، أن هذا النظام الاقتصادي الكلي الإسلامي؛ هو الذي سيحققُ لنا المنفعة القصوى.. .. ,,لتنزيل نسخة مجانية من الكتاب www.mediafire.com/file/tvpyra7ojgvocbc/الاقتصاد+الكلي+الاسلامي.pdf/file لمشاهدة لقاء مع المؤلف حول موضوع الكتاب يرجى زيارة الرابط التالي kzbin.info/www/bejne/fZ-piJp6od-KqpI And then we dont need to fix the theory because we have one that is ready

[@MakeSomeNoiseAgencyPlaylists]

watching this in 2023 its very scary to see that Wallstreet is still doing their thing and soon will get us all buried....even before climate will get us....sad and dump.

[@neilanderson891]

Anyone can correctly predict the timing or scope of a crisis, but base it on the wrong reason that convinces no one. Or, base it on the right reasons, but no one believes, because "He is not a recognized expert" or the analysis is too complex, or radical, or seen as based in the "wrong" ideology. Or, he decides to remain quiet, in hopes to profit on his insights. Debt has always a factor in every crisis, because debt enables lots of people to speculate, which drives prices much further above (or below) the prevailing market price.

[@whomonkyoulus]

Google these two sets: "real estate" OR land cycle 18 years gaffney foldvary Award for Calling the Crash

[@AlisteirCrowley]

This video is more effective than any sort of sleeping meds ever made.

[@123axel123]

if you're so smart, stiglitz, go out and build that model that you would like to see. don't waste your time on the lecture and television studio circuit.

[@doko2nd]

The biggest of all assumptions that you (the economists) got wrong is that you have enough knowledge to thinker with the economy. In all other sciences it is strictly restricted how and when you can experiment on humans. Same should apply to you too and stop with those experiments.

[@nathanswann1198]

I think there is enough history in capitalist systems to ATLEAST adjust for massive dislocation and adjust to avoid giant bubbles. Simply put, capitalist economies require financial involvement by labor; basically it fails to function when workers can't afford the products they make. This balance failed long ago when credit cards were introduced for workers to borrow against their future in the belief of constantly rising real wages. Of course, that hasn't happened for most people.

[@CyberspacedLoner]

American Reconstruction Administration

[@rolgorevene]

Just because he and his economist friends didnt see the crisis, doesnt mean noone did. the austrians where screaming from the rooftops many years before it happened. perhaps instead of changing economics, you could listen to some real economists?

[@yveslegault6825]

It is paramount to use the proper words at the proper place. The word "economy" should be banned from use when one deals with finance and/or commerce. It has been hijacked by the industrial revolution back in the XIX century.

[@1trafalger1]

Got to cleanse prior comments. Money created through bank loans and Fed's adjustments of bank reserves. Prior to Fed, impotent state-level "gov't" banks and banks of various qualities. Money increased only by credit to business, spent by workers+suppliers, spent again, 'till deposited, where it's re-loaned. The biz needs to sell enough, but how, if the only money is what it borrowed + a few deposits? To grow money supply required booms & busts. Ugly, painful, stupid.

[@MillionthUsername]

Austrian economists predicted the crisis. Why doesn't he mention that? Stiglitz should acquaint himself with Austrian business cycle theory. He should also learn what monopolies and cartels are and how they affect economies. He needs to scrap this fascist bull that he spews about the gov't and special interests and cartels rigging the economy and learn some real basic economics. Then he might actually be useful and say something meaningful about the raping of America & the world by banksters.

[@Zatzzo]

lol, they were the ones causing the crisis.