I don't always agree with Professor Stiglitz but I have always found his point of view interesting to hear and contemplate. I have met him and heard him in person on several occasions over the last 20 years. In this case, I do agree with him on why the tax cuts contained in the 2009 economic stimulus were wasted and should have been spent on infrastructure spending. We should still do that with savings from reduced defense spending while we balance the budget with revenue increases to pay for the Borrowed War on Terror and reform entitlements in a responsible manner.
The one thing Prof. Stiglitz forgets is by forcing down US wage rates to levels that can compete with China, we will eventually bring jobs back to the U.S. starting in 5 to 10 years where previously I had thought that would take 20 to 30 years. Unfortunately, wage rates that are comparable to China afford a living wage only in the rural parts of the country where you can buy a house for $20,000 and the whole economy will have to adjust to that which is extremely deflationary and will wreck economic havoc on anyone with outstanding debt. It is all very complicated.
Prof. Stiglitz on income inequality and economic growth
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