Joseph Stiglitz says it’s time to rewire the U.S. financial system: ‘We shouldn’t let a very good disaster go to waste’

U.S. economist Joseph Stiglitz believes now is an effective time to rewire the U.S. financial system, arguing that “we should not let a disaster go to waste.”

The previous senior vice chairman and chief economist of the World Financial institution mentioned on Thursday that the coronavirus pandemic has highlighted how the financial system is not working, referencing inequality, the local weather disaster and the dearth of resilience of the market financial system.

Stiglitz mentioned he is optimistic that many current issues may be tackled concurrently, since they’re associated.

“You may get a two-for-one,” he advised CNBC’s Steve Sedgwick on the annual Ambrosetti Discussion board on the shores of Lake Como in Italy.

The U.S. ought to, for instance, put money into constructing “inexperienced” infrastructure that creates jobs and helps carry down inequality, Stiglitz mentioned. “As soon as you place your thoughts to it, you understand that we will assault two or three of those issues concurrently,” the 78-year-old mentioned, including that the U.S. has the labor and the capital.

Stiglitz mentioned it could be “wholesome” for the U.S. financial system to boost taxes “a little bit bit” to finance “a few of the issues we’d like for the widespread good.”

In July, 130 nations backed a world minimal company tax price of 15%, and Stiglitz mentioned that transfer has ended the race to the underside on taxes, highlighting how the U.S. is contemplating a 25% price.   

A profitable financial system just isn’t outlined simply by tax charges but in addition by different elements equivalent to infrastructure and analysis and improvement efforts, Stiglitz mentioned.

He mentioned there is a rising consensus that the U.S. wants to alter outdated legal guidelines which were in place for 125 years and handle extreme market energy throughout the entire of America. “The focus of market energy has elevated enormously within the final 35 years” he mentioned.

Overregulation and overtaxing will not see the West lose its aggressive edge to rising powers and China, in response to Stiglitz. “I am truly fairly assured that this new agenda will truly strengthen us,” he mentioned.

Competitors makes market economies extra progressive, whereas monopolies scale back innovation, Stiglitz mentioned. “We have seen how the large giants truly squash innovation,” he mentioned.