This book review, by Nobel Prize winning economist, Joe Stiglitz, is a MUST READ, if you are interested in understanding the financial crash of 2008 and the aftermath. In the article published by the London Review of Books, Joe Stiglitz reviews Robert Skidelsky‘s book entitled “Keynes: The Return of the Master“.
Let introduce Joe Stiglitz a little by quoting from his Wikopedia profile:
Stiglitz is the 3rd most influential economist in the world today based on academic citations, and in 2011 he was named by Time magazine as one of the 100 most influential people in the world. Stiglitz’s work focuses on income distribution, asset risk management, corporate governance, and international trade, and is the author of ten books, with his latest, The Price of Inequality(2012), hitting The New York Times best seller list.
Reflecting on the lengthy article, the thing that impressed me most was the importance of effective regulation of financial markets and banks. Based upon my own political beliefs, I am fundamentally a neoliberal, but believe, like Stiglitz, that their must be effective checks and balances. I am also a Keynesian in that I passionately believe that the Governments in the US and Europe should be using aggressive fiscal policy to restore growth and jobs. For me, the Financial Services sector has become far too powerful and ineffective in the last twenty years; this has contributed to a divided society based on wealth and privilege, rather than meritocracy.
Let me conclude by re-stating with an open question:
Has the Financial Services sector has become too powerful and ineffective in the last twenty years, contributing to a divided society based on wealth and privilege, rather than meritocracy?