Joseph E. Stiglitz: “It is a critical moment for the future of Europe” | Business

Joseph Stiglitz, in an image from 2018. CARLOS ROSILLO
Joseph Stiglitz, in an image from 2018. CARLOS ROSILLO

Joseph E. Stiglitz (Indiana, USA, 1943) says that some of the US economic measures against the coronavirus are imported. As the initiative of some European countries to keep employees formally linked to the company during temporary work suspensions, “something especially relevant in the US, where most workers have health insurance through the employer.” Unfortunately, Europe is not finding it so easy to replicate the great advantage of the United States to face this crisis: to issue debt with which to finance the rescue measures. “We must issue the eurobonds, I really think so, but for now there is not enough solidarity in Europe to support such a measure,” explains the Nobel Prize in Economics to EL PAÍS during a telephone interview.

Confined to his New York home, Stiglitz warns that European indecision can lead to a deeper economic downturn if it involves a “too late and too small” reaction: “There is much concern about the viability of the common project if, in this crisis, Europe is incapable of demonstrating the necessary solidarity ”.

Question. Is the European project at stake?

Answer. This is a time to create or break. The union will solidify if it is perceived that, in the moment of need for a nation, European citizens helped. But the opposite can also happen if some remain as selfish as ever and there are only words of comfort but not what is really needed, which is money. This is a critical moment for the future of Europe.

P. In Germany there is a fear of giving votes to the extreme right if the government shares the financial cost of the crisis with the southern countries …

R. This is something that refers to Angela Merkel’s great mistake in 2010 and 2011. At that time, she did not say that the Greeks worked even more hours than the Germans, or that a European partner had to be helped in a very difficult stage, not only out of solidarity. but for helping the German banks … What they did was save the banks, leave the account on the shoulders of the Greek people and brand the Greeks lazy. What we are seeing a decade later is the consequence of that Manichaean discourse to pass on to the Greeks the blame for money loaned by French and German banks. But having said that, the fundamental question is what will be the future of Europe. If there is no adequate response from Europe, anti-EU sentiment in countries like Italy will grow.

Q. Are we in a moment of rupture with the doctrine of economic liberalism?

R. I hope so. The fundamental error of liberalism is being demonstrated, and that is that the markets alone cannot handle this crisis, that is why we are going to the Government. The markets did not prepare us either because they always have an incomplete view of risks. In 2008 it was seen that they had taken too much financial risk and this crisis is another demonstration of excess risk. In the US, hospitals did not have extra beds and companies operated with inventory systems just in time. All good until you have a problem. Then it is a disaster. It is like taking the car without a spare wheel. If you click, the costs are enormous. Donald Trump has proposed one-third cuts in scientific research each year and has reduced funding from the Centers for Disease Control … This mindless cut from the public sector has left us unprotected and unprepared. I think people have realized that the reason the US had no ability to test is the dismantling of the public sector. South Korea was in a much better position than the United States. Here in New York, we are feeling the cost in a dramatic way.

P. In the crisis of 2008 there was also talk of exhaustion of the neoliberal model and, nevertheless, here we are …

R. That is going to be the great challenge of politics. In the midst of this crisis, Republicans incredibly proposed a $ 500 billion fund for businesses and very little aid for people who are going to suffer the most. It took decisive action from the Democratic Party to get a law that in fact will be the probable salvation of the economy. So one of the two parties has clearly learned nothing, but my hope is that a majority of American voters have learned the lesson and consequences of having an underfunded public sector. But it is going to be a political battle as polarized as any other debate we have had in the last three years.

Q. Does this crisis help Bernie Sanders’ candidacy or is he already out of the race?

R. It is practically out, but it will help whoever the Democratic candidate is who points out that the state defended by Trump and the Republican Party has left us with no resources to handle the pandemic, protect Americans and prepare for risks like this. This crisis illustrates the fundamental difference in the values ​​of the two parties.

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