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.
The societies which have achieved the most spectacular broad-based economic progress in the shortest period of time are not the most tightly controlled, not necessarily the biggest in size, or the wealthiest in natural resources. No, what unites them all is their willingness to believe in the magic of the marketplace.
Reforms aimed at increasing an economy's flexibility are always hard - and even more so at a time of weak growth - because they require eliminating protections for vested interests in the short term for the sake of greater long-term prosperity.
It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.
Constructive trade, the two-way exchange of goods and services, is the most efficient and logical way for each nation . . . to build a stable prosperity, a prosperity based not on aid, but on mutually beneficial economic contacts.
Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget.
No complaint... is more common than that of a scarcity of money.
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