A Nobel Prize-Winning Economist Explains How We’re Innovating in All the Wrong Ways
Speaking at the World Economic Forum in Davos, Switzerland, economists weighed in on the state of the European Union–and how to move forward in uncertain times.
Joseph Stiglitz is a Nobel Prize-winning economist.

Globalization is much maligned these days for job losses and wage stagnation. But technology bears some of the blame.

That was a key takeaway from a panel discussion at the World Economic Forum this week entitled “Fixing the European Disunion,” which featured prominent economist Joseph Stiglitz and Pierre Moscovisi, the head of European and Financial Affairs with the European Commission.

As some countries in Europe suffer from low economic growth, high unemployment, and mounting debt, it’s not surprising that the European Union is faltering–and economists are busy parsing the stakes. The so-called populist movement–in which people feel they aren’t being heard by their governments–has led Britain to vote to exit the E.U., or Brexit, while far-right political candidates in France and the Netherlands edge closer to winning their upcoming presidential elections.

“There is an economic anger, a cultural anger, and a social anger, where some people feel they are the losers of globalization,” said Moscovisi.

The U.S. Isn’t Immune

European troubles notwithstanding, Stiglitz added that the U.S. is actually worse off. The economist, who won the Nobel Prize for economics in 2001, points to income inequality as a key consequence for global social unrest.

“The surge in populism has everything to do with economics,” Stiglitz continued. “Let me emphasize how bad things are in the U.S. Things are much worse than they are in Europe. Real wages are as low as they were 60 years ago.”

What’s more, Stiglitz lays the blame–at least in part–on technology companies.

“Globalization is playing a role, but it’s only part,” he said. “Technology is playing a role, and it’s very hard to think about how you’re going to reverse technology. Why are we innovating in ways that create more unemployment, rather than innovating to save the planet?”

To his point, nearly half (47 percent) of American jobs are at risk due to the threat of “computerization,” according to Oxford University researchers Carl Benedikt Frey and Michael A. Osborne. Earlier this week, Salesforce CEO Marc Benioff said that he also anticipates technology to create “digital refugees,” further deepening the social divide over time.

Ideas for Reunification

The panelists agreed that to address the divide, it is important for the E.U. and the U.S. to continue working together. It’s also key to encourage Europe to develop new rules to promote “competitiveness, productivity, and innovation,” said the EC’s Moscovisi.

Stiglitz added that, for the E.U. specifically, it ought to get rid of its single currency, or else it risks further eroding ties. He recently authored the book The Euro: How a Common Currency Threatens Europe, which delves into this idea.

“If you have a single currency, you have to have a set of institutions that enables that currency to work,” he explained. “I want to see the European project work, and if you can’t get enough of the institutions to make the single currency, it’s better to leave it behind.”

“A currency is just a piece of paper,” Stiglitz added, “a means to an end, and not an end itself.”






About Uy Do

Banking System Analyst, former NTT data Global Marketing Dept Senior Analyst, Banking System Risk Specialist, HR Specialist
This entry was posted in economists, Uncategorized, Word economy and tagged . Bookmark the permalink.

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