Stiglitz: ‘Spend, Spend, Spend’ to Save Economy

Understanding how the global economy got into its present state, said economist Joseph Stiglitz, is key to coming up with a solution. That solution, he declared, is to “spend, spend, spend,” and he added that government must take the lead, since corporations won’t and private citizens can’t.

In a Monday opinion piece in Slate, Stiglitz said that three things led to the current state of financial crisis. While the financial sector’s “inexcusable recklessness, given free rein by mindless deregulation, was the obvious precipitating factor” in launching the crisis, the economy had problems before that, making it vulnerable to continued woes. In fact, declared Stiglitz, it was “very sick,” with the housing bubble masking its true ailments as people spent more than they made.

The economies in America and Europe were, he explained, “victims of their own success,” with increases in productivity outpacing increases in demand. Manufacturing slowed and jobs began to shift to the service sector. Since manufacturing jobs were also being outsourced to cheaper economies, fewer local jobs remained for the formerly employed.