Why the market fails in a crisis (with Joseph Stiglitz)

Pitchfork Economics with Nick Hanauer

Civic Ventures

Business, Government, News, Politics

4.8 • 1.5K Ratings

🗓️ 19 May 2020

⏱️ 41 minutes

🔗️ Recording | iTunes | RSS

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Summary

One of the central theories of classical economics is that markets respond quickly and efficiently to changes in demand. But the pandemic clearly demonstrates that the markets aren’t the efficient adapters that classic economists believe them to be. Nobel laureate economist Joseph Stiglitz explains why the tendency to believe in the market is one of the most deeply rooted trickle-down myths, and why government intervention is the best way forward through this economic downturn. Joseph Stiglitz is a Nobel laureate economist and a professor at Columbia University. He is also the co-chair of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD, and the Chief Economist of the Roosevelt Institute. In 2011, Stiglitz was named by Time magazine as one of the 100 most influential people in the world. Known for his pioneering work on asymmetric information, Stiglitz focuses on income distribution, risk, corporate governance, public policy, macroeconomics, and globalization. His most recent book, People, Power, and Profits, was just released in paperback. Twitter: @JosephEStiglitz Further reading: People, Power, and Profits: Progressive Capitalism for an Age of Discontent: https://www.indiebound.org/book/9781324004219 Four Priorities for Pandemic Relief Efforts: https://rooseveltinstitute.org/four-priorities-for-covid19-pandemic-relief-efforts/ Why Our Affluent Society Is Facing Shortages in the Face of the Coronavirus Pandemic: https://time.com/5811505/affluent-society-shortages-coronavirus-pandemic/ Deficit Lessons for the Pandemic From the 2008 Crisis: https://prospect.org/economy/deficit-lessons-pandemic-2008-crisis/ How the Economy Will Look After the Coronavirus Pandemic: https://foreignpolicy.com/2020/04/15/how-the-economy-will-look-after-the-coronavirus-pandemic/ Top economist: US coronavirus response is like ‘third world’ country: https://www.theguardian.com/business/2020/apr/22/top-economist-us-coronavirus-response-like-third-world-country-joseph-stiglitz-donald-trump Website: http://pitchforkeconomics.com/ Twitter: @PitchforkEcon Instagram: @pitchforkeconomics Nick’s twitter: @NickHanauer

Transcript

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0:00.0	When we talk about markets we're not talking about the convenience store down the street or the local Safeway
0:05.6	There are stories of farmers destroying food, destroying milk because the restaurants no longer are buying them.
0:12.5	And yet we have in our society people who are going hungry every night.
0:16.2	The market clearly is failing.
0:17.6	Joe also is a big believer in markets, but shares our view that they have limits
0:22.3	and that there has to be a big role for government
0:25.0	in harnessing the power of markets for public good.
0:30.0	From the offices of Civic Ventures in downtown Seattle, this is Pitch Fork Economics with
0:38.3	Nick Hanauer, where we explore everything they forgot to teach you in Econ 101.
0:45.0	I'm Nick Hanauer, founder of Civic Ventures.
0:51.0	I'm David Goldstein, Senior Fellow at Civic Ventures.
0:58.4	So Nick, sometimes our critics accuse us of being socialists because you know we're often dissing the market
1:07.2	but we're pro market right we are deeply pro market because we know that markets are the best social technology ever created for evolving
1:19.6	new solutions to human problems.
1:22.0	But you know markets are super good at certain kinds of things
1:26.1	but collapse in the face of other challenges and and the pandemic is a great example of how the market has to fail in the face of this.
1:38.4	And you know, no individual company could put aside enough inventory or whatever it is if you're a face mask
1:48.5	manufacturer to anticipate a pandemic.
1:51.9	You'd go bankrupt if you tried to do it. And the only solution to that is for
1:58.4	government to solve that collective action problem by either requiring every company to put a little aside or collectively
2:07.1	buying enough face masks from every company and putting them aside on behalf of the rest of us as an insurance policy.
2:14.4	Yeah, because the, you know, the market actually tells the individual companies not to produce excess supply.
	...

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