ECONOMIC POLICY : STIGLITZ PROPOSES "MORE EUROPE" TO TACKLE INEQUALITY.
Nobel Prize-winning economist Joseph Stiglitz sees the need for stronger political action to tackle inequality in the EU. "The problem is in politics," he stated at the Annual Progressive Economy Forum, held at the European Parliament in Brussels on 5-6 March. The challenge of correcting its political course would be tough for Europe, he warned, because "there is a race to the bottom" in the continent. The solution, he said, should come from more action at European level - "more Europe".
Stiglitz, author of 'The price of inequality', stressed that the inequality challenge goes beyond income inequality. Thus, those at the bottom have worse life expectations, they are more exposed to environmental hazards, with consequences transmitted over generations, and suffer inequalities in access to justice. Furthermore, inequality affects political participation. "Now we have a government of the 1%, by the 1% for the 1%."
To start changing the course, the 2001 Nobel laureate advocated a new approach to measuring economic performance. "We shouldn't focus on GDP, but instead on medium income and other factors of sustainability." Stiglitz proposed to include in the to-do list changing the European Central Bank's (ECB) mandate, drafting a full employment agenda, introducing a financial transaction tax and redirecting innovation to create more jobs.
Stiglitz challenged the political right's argument that prioritises equal opportunities and expects the upper classes to create wealth. The economist explained that inequality results from the absence of equal opportunities, since there is a "high correlation" between the two. He also differentiated between wealth creation and wealth appropriation to explain how those at the top take a bigger slice of the pie without contributing to social performance. To illustrate his point, Stiglitz recalled the large bonuses paid to Wall Street managers, or the tendency by those at the top to benefit from monopolistic practices. Furthermore, he denied that a trade-off existed between growth and inequality, as is often argued.
Addressing the same event, European Parliament President Martin Schulz identified similar priorities for his campaign to become president of the European Commission. Schulz highlighted the need to fight against tax avoidance and to establish an EU-wide minimum wage.
Schulz also called for stronger political action to address some of these challenges. "If you have the political will, you can go fast," he commented, recalling the swift agreement reached between the EU, the US and Switzerland to end the latter country's bank secrecy.
Schulz warned that the "gap has widened in Europe, especially in the crisis years," and stressed that "progressive economies must close this gap".
"We are a heavyweight so we can use that power to protect our citizens" and to stop the race to the bottom, he stated.
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|Date:||Mar 7, 2014|
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