Joseph Stiglitz says it’s time to rewire the U.S. economic 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. economic system, arguing that “we should not let a disaster go to waste.”

The previous senior vp 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 economic system.

Stiglitz mentioned he is optimistic that many present 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 deliver down inequality, Stiglitz mentioned. “As soon as you set your thoughts to it, you notice 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. economic system to boost taxes “a little bit bit” to finance “a few of the issues we want for the frequent good.”

In July, 130 nations backed a worldwide minimal company tax charge 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% charge.   

A profitable economic system isn’t outlined simply by tax charges but in addition by different components reminiscent of infrastructure and analysis and growth efforts, Stiglitz mentioned.

He mentioned there is a rising consensus that the U.S. wants to vary outdated legal guidelines which have been in place for 125 years and handle extreme market energy throughout the entire of America.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, based on Stiglitz. “I am really fairly assured that this new agenda will really strengthen us,” he mentioned.

Competitors makes market economies extra revolutionary, whereas monopolies cut back innovation, Stiglitz mentioned. “We have seen how the massive giants really squash innovation,” he mentioned.