Nobel prize-winning economist Joseph Stiglitz says Abbott government budget changes are 'a crime'

Date
    July 3, 2014


"Trying to pretend that universities are like private markets is absurd" : Nobel prize-winning economist Joseph Stiglitz.

The government's plan to deregulate universities is "a crime" and the move for co-payments for medical services is "absurd" in the view of visiting Nobel prize-winning economist Joseph Stiglitz.      :(

Asked by Fairfax Media to nominate the two biggest mistakes the government could make that would take it down the American path of widening inequality and economic stagnation, Professor Stiglitz chose the budget changes to university fees and Medicare. Each would make Australia more like the US.

    Why would anybody … try to make your system like the American system? The US is at the bottom.

"Countries that imitate the American model are kidding themselves," he said. "It seems that some people here would like to emulate the American model. I don't fully understand the logic."

In the lead-up to the budget Education Minister Christopher Pyne said Australia had much to learn about universities from overseas, "not least … from our friends in the United States".
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Professor Stiglitz said Australia had "a system that is really a model for the rest of the world", and deregulating fees would move the entire system in the wrong direction.

"Trying to pretend that universities are like private markets is absurd. The worst-functioning part of the US educational market at the tertiary level is the private for-profit system,'' he said. ''It is a disaster. It excels in one area, exploiting poor children.

"If you're rich your parents can pay the fees, but if you are poor you are going to worry about how much debt you're undertaking.

"It is a way of closing off opportunity and that's why the US doesn't have educational opportunity.

"While we in the US are trying to re-regulate universities, you are talking about deregulating them. It really is a crime."

Professor Stiglitz said Australia also had one of the best healthcare systems in the world.

"Your outcome per dollar is probably the best or one of the best. Your equality of access is one of the best.

"Why would anybody … try to make your system like the American system? The US is at the bottom.      :(

"As for talk about a price signal, people don't make decisions about medical tests and procedures based on price. Maybe for cosmetic surgery they do, but for poor people, price signals price them out."      :(

He said the typical inflation-adjusted income of a US household was lower than it was 25 years ago. The typical inflation-adjusted income of a male full-time worker was its lowest in 40 years.

"You have to say that the American market model has failed. It's a very strong statement for someone who believes in a market economy. But at the bottom it's even worse. The minimum wage is about where it was almost a half century ago."

Asked what Australia had done right that the US had not, he said: "unions".      

"You have been able to maintain stronger trade unions than the US. The absence of any protection for workers, any bargaining power, has had adverse effects in the US.''

Read more: http://www.smh.com.au/federal-politics/political-news/nobel-prizewinning-economist-joseph-stiglitz-says-abbott-government-budget-changes-are-a-crime-20140702-3b8vb.html#ixzz36LVYgHpJ

Nobel prize-winning economist Joseph Stiglitz says Abbott government budget changes are 'a crime'

Good on Mr Stiglitz for speaking out, but I'm sure anyone with a half a brain knows the Abbott budget is criminal.

Saw him n the ABC the other night.

Apart from the fact that I find his manner of speech to be extremely
irritating, he had a lot of sensible things to say.

None reflected well on The Simian or his cohorts.

Do you need a degree and a Nobel Prize to figure that out?

Shite, I must be a lot smarter than I give myself credit for.  ;D

Oh, and mark my other unqualified economic prediction; this budget is recessionary  >:(.

Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top.

crocodile wrote on Jul 3^rd, 2014 at 7:52am:

Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top.

That might be true but you can't argue with the stats he runs out.

But you know what they say; put 12 economists in a room and you'll get 13 different answers.  ;D

crocodile wrote on Jul 3^rd, 2014 at 7:52am:

Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top.

They may indeed.

But they'd almost certainly be wrong.

Kat wrote on Jul 3^rd, 2014 at 8:52am:

crocodile wrote on Jul 3rd, 2014 at 7:52am: Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top. They may indeed. But they'd almost certainly be wrong.

Leftism and economics are mutually exclusive..... ;D

Swagman wrote on Jul 3^rd, 2014 at 9:09am:

Kat wrote on Jul 3rd, 2014 at 8:52am: crocodile wrote on Jul 3rd, 2014 at 7:52am: Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top. They may indeed. But they'd almost certainly be wrong. Leftism and economics are mutually exclusive..... ;D

Where's your Nobel prize swagman?

This should be fun.

It will go 1 of 2 ways

A) be totally ignored by all Tony followers except for Swaggies little foray

Or

B) Suddenly a Nobel Prize will be sub par to a key ring in a cereal packet, but of course a "Rhodes" will still be an outstanding achievement.

I'm sure they'll all argue that Judith Sloan knows better  ;D ;D

MOTR wrote on Jul 3^rd, 2014 at 9:57am:

Swagman wrote on Jul 3rd, 2014 at 9:09am: Kat wrote on Jul 3rd, 2014 at 8:52am: crocodile wrote on Jul 3rd, 2014 at 7:52am: Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top. They may indeed. But they'd almost certainly be wrong. Leftism and economics are mutually exclusive..... ;D Where's your Nobel prize swagman?

Hanging in my dunny.......in the in the correct underhand fashion

crocodile wrote on Jul 3^rd, 2014 at 7:52am:

Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top.

The factual acuracy of his comments are all 'some people' should worry about.

The economic Stig has some interesting theories on wages

http://en.wikipedia.org/wiki/Joseph_Stiglitz


Quote:

1.Wages do not fall enough during recessions  :o to prevent unemployment from rising. If the demand for labour falls, this lowers wages. But because wages have fallen, the probability of 'shirking' (workers not exerting effort) has risen. If employment levels are to be maintained, through a sufficient lowering of wages, workers will be less productive than before through the shirking effect. As a consequence, in the model, wages do not fall enough to maintain employment levels at the previous state, because firms want to avoid excessive shirking by their workers. So, unemployment must rise during recessions, because wages are kept 'too high'  :o.

'the shirking effect'   ;D he may be on to something there....no wonder he got the Nobel prize... ;)

What do you think of that Mr Crook?

Winston Smith wrote on Jul 3^rd, 2014 at 10:32am:

crocodile wrote on Jul 3rd, 2014 at 7:52am: Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top. The factual acuracy of his comments are all 'some people' should worry about.

Away you go, Winston, the floor is all yours.

Fancy a discussion on externalities.

MOTR wrote on Jul 3^rd, 2014 at 10:39am:

Winston Smith wrote on Jul 3rd, 2014 at 10:32am: crocodile wrote on Jul 3rd, 2014 at 7:52am: Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top. The factual acuracy of his comments are all 'some people' should worry about. Away you go, Winston, the floor is all yours. Fancy a discussion on externalities.

Are you asking me something? Can you please clarify?

OldnCrusty wrote on Jul 3^rd, 2014 at 7:52am:

Do you need a degree and a Nobel Prize to figure that out? Shite, I must be a lot smarter than I give myself credit for.  ;D Oh, and mark my other unqualified economic prediction; this budget is recessionary  >:(.

Thing is, Old, the old common sense is never accepted unless it has the stamp of approval of a high-flying professor or similar.   One reason I devised The Learned Professor of the Bleedingly Obvious Stated in High-sounding Terms (BOSHT), Thaddeus Grimoire, as a teaching tool.

Winston Smith wrote on Jul 3^rd, 2014 at 10:43am:

MOTR wrote on Jul 3rd, 2014 at 10:39am: Winston Smith wrote on Jul 3rd, 2014 at 10:32am: crocodile wrote on Jul 3rd, 2014 at 7:52am: Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top. The factual acuracy of his comments are all 'some people' should worry about. Away you go, Winston, the floor is all yours. Fancy a discussion on externalities. Are you asking me something? Can you please clarify?

I was inviting you to comment on the factual accuracy of Stiglitz's comments.

It sounds like his conclusions must come from an externality argument.

MOTR wrote on Jul 3^rd, 2014 at 11:05am:

Winston Smith wrote on Jul 3rd, 2014 at 10:43am: MOTR wrote on Jul 3rd, 2014 at 10:39am: Winston Smith wrote on Jul 3rd, 2014 at 10:32am: crocodile wrote on Jul 3rd, 2014 at 7:52am: Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top. The factual acuracy of his comments are all 'some people' should worry about. Away you go, Winston, the floor is all yours. Fancy a discussion on externalities. Are you asking me something? Can you please clarify? I was inviting you to comment on the factual accuracy of Stiglitz's comments. It sounds like his conclusions must come from an externality argument.

I like his idea about reducing wages to reduce unemployment.

I wonder how the 'Stig' feels on 'penalty rates'. 

Swagman wrote on Jul 3^rd, 2014 at 12:57pm:

MOTR wrote on Jul 3rd, 2014 at 11:05am: Winston Smith wrote on Jul 3rd, 2014 at 10:43am: MOTR wrote on Jul 3rd, 2014 at 10:39am: Winston Smith wrote on Jul 3rd, 2014 at 10:32am: crocodile wrote on Jul 3rd, 2014 at 7:52am: Many around here would regard Stiglitz as a little too far to the left for their liking. Some would also regard his love affair with Keynes to be a tad over the top. The factual acuracy of his comments are all 'some people' should worry about. Away you go, Winston, the floor is all yours. Fancy a discussion on externalities. Are you asking me something? Can you please clarify? I was inviting you to comment on the factual accuracy of Stiglitz's comments. It sounds like his conclusions must come from an externality argument. I like his idea about reducing wages to reduce unemployment. I wonder how the 'Stig' feels on 'penalty rates'.

Both wages and profit are artificially propped up by the law, welfare and other legal stratagems.

Dsmithy70 wrote on Jul 3^rd, 2014 at 10:13am:

Suddenly a Nobel Prize will be sub par to a key ring in a cereal packet, but of course a "Rhodes" will still be an outstanding achievement.

I agree. Thank heavens the grown-ups are back in charge.

Swagman wrote on Jul 3^rd, 2014 at 10:38am:

The economic Stig has some interesting theories on wages http://en.wikipedia.org/wiki/Joseph_Stiglitz Quote: 1.Wages do not fall enough during recessions  :o to prevent unemployment from rising. If the demand for labour falls, this lowers wages. But because wages have fallen, the probability of 'shirking' (workers not exerting effort) has risen. If employment levels are to be maintained, through a sufficient lowering of wages, workers will be less productive than before through the shirking effect. As a consequence, in the model, wages do not fall enough to maintain employment levels at the previous state, because firms want to avoid excessive shirking by their workers. So, unemployment must rise during recessions, because wages are kept 'too high'  :o. 'the shirking effect'   ;D he may be on to something there....no wonder he got the Nobel prize... ;) What do you think of that Mr Crook?

He didn't say that wages had any effect on a recession. Not to mention the minor detail that we're NOT in a recession as yet, although the Canetoad is doing his best to remedy that.
Nor did he comment on profit margins, which the Canetoad and his buddies seem to think should be maintained during any recession by undercutting wages and conditions, an obvious fallacy and self-destructive for all concerned.
You really need to take some more lessons from your Canetoad God if you want to be able to twist reality at his level, you're rather inept at it I'm afraid.
;D

Fact 1 -
Both major Economic theories (Keynesian & Austrian) have been applied & applied successfully, during the modern Economic era, at the appropriate time/s during the Economic cycle/s!

Fact 2 -
Both major Economic theories (Keynesian & Austrian) are now failing & both will continue to FAIL in the near to medium term future, BECAUSE the underlying Factors which have driven Economic Growth over much of the last 200 years or so, are now in Decline and there is nothing that either Economic theory can do to alter the outcomes, which are now set in concrete, for at least the next 2 to 3 decades!

perceptions_now wrote on Jul 3^rd, 2014 at 2:26pm:

Fact 1 - Both major Economic theories (Keynesian & Austrian) have been applied & applied successfully, during the modern Economic era, at the appropriate time/s during the Economic cycle/s! Fact 2 - Both major Economic theories (Keynesian & Austrian) are now failing & both will continue to FAIL in the near to medium term future, BECAUSE the underlying Factors which have driven Economic Growth over much of the last 200 years or so, are now in Decline and there is nothing that either Economic theory can do to alter the outcomes, which are now set in concrete, for at least the next 2 to 3 decades!

Yep, I would agree with that but I think our situation is transitional and 'new thinking' should be applied more to the middle and long term rather than the immediate - this budget is recessionary, taking away spending power and knocking the stuffing out of consumer confidence.

austranger wrote on Jul 3^rd, 2014 at 2:08pm:

He didn't say that wages had any effect on a recession

..his view is that artificially priced wages increase unemployment and I agree with him on that one.

Mr Crook would be horrified his poster boy is anti-penalty rates

Swagman wrote on Jul 3^rd, 2014 at 8:47pm:

austranger wrote on Jul 3rd, 2014 at 2:08pm: He didn't say that wages had any effect on a recession ..his view is that artificially priced wages increase unemployment and I agree with him on that one. Mr Crook would be horrified his poster boy is anti-penalty rates

Stiglitz has that view. It is true if the floor price of the wages in question is above the market clearing rate. Almost axiomatic in a downturn. The rise in unemployment becomes a matter of public policy as to what level is reasonably tolerated.

As an economist, Stiglitz's major work is in studying and modelling the historical data related to past economic events. He doesn't really predict future outcomes or offer solutions very often. His Nobel prize is for his work in analysis and modelling. I don't know him at all but I suspect his admiration for Keynes stems from their strict adherence to modelling and mathematical rigour. The Austrians dismiss this type of analysis.

Quote:

Fact 1 - Both major Economic theories (Keynesian & Austrian) have been applied & applied successfully, during the modern Economic era, at the appropriate time/s during the Economic cycle/s!

It seems more likely that administrators simply cherry pick the bits they like from both schools and implement them at the same time. I really see no evidence of a strict Austrian implementation anywhere in recent times. Certainly not a successful one. The same goes for Keynes but perhaps to a lesser extent but with the same success.

Obama won a nobel prize and he is the biggest war monger of them all.

The nobel prizes are only there to uplift the ratbag lefties who know and do squat for society.