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.
If strong economic conditions can partially reverse supply-side damage after it has occurred, then policymakers may want to aim at being more accommodative during recoveries than would be called for under the traditional view that supply is largely independent of demand.
No complaint... is more common than that of a scarcity of money.
The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence.
I'm of those who believe that excesses in all matters are not a good idea, whether it's formation of bubbles, whether it's excess in the financial market, whether it's excess of inequality, it has to be watched, it has to be measured, and it has to be anticipated in terms of consequences.
I think economics - and this is what I've tried to impart - has a tremendous amount of human interest in it.
There is no easy fix or youth unemployment. Partnership between the public and private sectors can make a big difference.
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