U.S. economist Joseph Stiglitz believes now is a good time to rewire the U.S. economy, arguing that “we shouldn’t let a crisis go to waste.”
The former senior vice president and chief economist of the World Bank said on Thursday that the coronavirus pandemic has highlighted how the economic system isn’t working, referencing inequality, the climate crisis and the lack of resilience of the market economy.
Stiglitz said he’s optimistic that many existing problems can be tackled simultaneously, since they’re related.
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“You can get a two-for-one,” he told CNBC’s Steve Sedgwick at the annual Ambrosetti Forum on the shores of Lake Como in Italy.
The U.S. should, for example, invest in building “green” infrastructure that creates jobs and helps bring down inequality, Stiglitz said. “Once you put your mind to it, you realize that we can attack two or three of these problems simultaneously,” the 78-year-old said, adding that the U.S. has the labor and the capital.
Stiglitz said it would be “healthy” for the U.S. economy to raise taxes “a little bit” to finance “some of the things we need for the common good.”
In July, 130 countries backed a global minimum corporate tax rate of 15%, and Stiglitz said that move has ended the race to the bottom on taxes, highlighting how the U.S. is considering a 25% rate.
A successful economy is not defined just by tax rates but also by other factors such as infrastructure and research and development efforts, Stiglitz said.
He said there’s a growing consensus that the U.S. needs to change outdated laws that have been in place for 125 years and address excessive market power across the whole of America. “The concentration of market power has increased enormously in the last 35 years” he said.
Overregulation and overtaxing won’t see the West lose its competitive edge to emerging powers and China, according to Stiglitz. “I’m actually quite confident that this new agenda will actually strengthen us,” he said.
Competition makes market economies more innovative, while monopolies reduce innovation, Stiglitz said. “We’ve seen how the big giants actually squash innovation,” he said.