Government Stimulus Measures Insufficient
Oct 28, 2011
Nobel Prize-winning economist Joseph Stiglitz recently commented that an “ardent faith” in austerity measures in the face of an ongoing recession around the globe is “effectively a suicide pact” for the international economy.
Speaking at an event in Toronto this week, the Columbia University economist argued that the economy has yet to recover after three years because politicians have underestimated its severity and have wrongfully concluded that only short-term stimulus measures were needed to address the problems.
As a result, he fears that the economic recovery will be unnecessarily slow and will leave millions of people out of work or working part-time because they can’t find full-time employment.
He told the Toronto Forum For Global Cities that it isn’t necessary to go through such a slow process, and that “Government…has the tools to shorten it, and it’s really a shame we are not likely to do what we could do.”
Stiglitz went on to say that the world’s weakest countries, such as Greece, obviously may not have the financial ability to introduce large spending programs to stimulate their economies, but others like the United States (and Canada, one would assume) still have plenty of room to introduce new stimulus programs to build needed infrastructure like roads and transit systems.
“The austerity that is going on in Europe, America and so forth is effectively a suicide pact for our economies,” he said.
Stiglitz, a former chief economist at the World Bank, also cautioned North Americans who might think that they’re insulated from the debt problems now plaguing several European countries. “If Europe goes into a crisis, then the whole world will be affected.”
He went on to add that there is a good chance that countries like Italy, Portugal and Spain could end up in the same crisis position as Greece, which would further escalate Europe’s problems.
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