European officials thought that austerity was part of what they called their 'convergence policies,' of trying to bring countries together. Instead, it actually made things worse. There's more inequality within countries and more disparity across countries.
Interpretation
Austerity measures intended to unify European countries have instead exacerbated inequality.
Joseph Stiglitz critiques the convergence policies adopted by European officials during periods of austerity, arguing that rather than promoting equality and cohesion among countries, these policies have led to increased inequality both within individual nations and across the continent. The quote suggests that such economic strategies have failed to achieve their intended goals and may have harmful consequences instead.
In practice
During a discussion on economic policies, one might say, 'As Stiglitz notes, austerity often increases inequality,' to emphasize the drawbacks of such measures.
Free migration within Europe means that countries that have done a better job at reducing unemployment will predictably end up with more than their fair share of refugees. Workers in these countries bear the cost in depressed wages and higher unemployment, while employers benefit from cheaper labor.
I don't think we can have democracies that work where most of the people are not benefiting economically, where most of the people are worried about their job security.
Let me put it very forcefully: No large economy has ever recovered from an economic downturn through austerity. It's not going to happen in the United States, and it's not going to happen in Europe.
What separates developing countries from developed countries is as much a gap in knowledge as a gap in resources.
One of the arguments I make for the failure of the euro is that, at the time it was being constructed, there was a 'neo-liberal' ideology which said that all we need to do to make this thing work is to get deficits low, keep inflation low, and take down barriers, and then everything would be fine.
Trump sees the world in terms of a zero-sum game. In reality, globalisation, if well managed, is a positive-sum force: America gains if its friends and allies - whether Australia, the E.U., or Mexico - are stronger. But Trump's approach threatens to turn it into a negative-sum game: America will lose, too.
We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.
The economic position is only flourishing on the surface. Germany is in fact dancing on a volcano. If the short-term credits are called in, a large section of our economy would collapse.
I went to the bank and proposed that they lend money to the poor people. The bankers almost fell over.
All taxes, except a 'lump-sum tax,' introduce distortions in the economy. But no government can impose a lump-sum tax - the same amount for everyone regardless of their income or expenditures - because it would fall heaviest on those with less income, and it would grind the poor, who might be unable to pay it at all.
Economy consists in a due and proper application of the means afforded according to the ability of the employer and the situation chosen; care being taken that the expenditure is prudently conducted.
Can we please agree that in the real world, corporations exist for one purpose and one purpose only - to make as much money as possible, which means cutting costs as much as possible?
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