The Sunday Magazine

Joseph Stiglitz on global economic instability in the age of Trump

From Brexit, to far-right populism, to talk of trade wars and the dissolution of the EU, the world economy seems ominously precarious in the wake of Donald Trump's victory. Joseph Stiglitz is a Nobel Prize-winning economist and former senior vice-president at the World Bank. His latest book is The Euro: How a Common Currency Threatens the Future of Europe.
Nobel-prize winning economist Joseph Stiglitz speaks on May 12, 2015 in Washington, DC. (Win McNamee/Getty Images)

Uncertainty, tumult, instability…we've heard a lifetime's worth of those words in this past year of Donald Trump, Brexit and far-right European populism. They obviously apply to global politics, but no less so to global economics.

The geopolitical, geoeconomic order that was created in the aftermath of World War II is clearly under threat.- Joseph Stiglitz

The Americans who voted for Trump and the British who opted to leave the European Union were voting to overturn the existing economic order, repudiating liberalized trade and globalization in favour of protectionism. 

Such decisions appear confoundingly self-destructive to conventional economic wisdom, which holds that freer trade and markets are the surest, most sustainable path to economic growth, good jobs and a strong middle class. 

But that conventional economic wisdom has also been largely responsible for the following over the past decade: the biggest financial crisis since the depression, a stubborn debt crisis in Europe, trillions of public dollars to bail out banks, widening wealth inequality, angry right-wing populism, a hollowed-out and anxious middle class, and the potential breakup of the European Union.

After decades of the so-called Washington Consensus on the primacy of free markets setting the tone and the rules for global economics, Joseph Stiglitz must be shaking his head and thinking "I told you so" a lot. Particularly when he looks at the European Union and its beleaguered currency, the Euro.

Stiglitz is a Nobel Prize-winning economist who teaches at Columbia University. He's a former senior vice-president at the World Bank and was chair of the Council of Economic Advisers under Bill Clinton. His latest book is called The Euro: How a Common Currency Threatens the Future of Europe

Click the button above to hear Michael's interview with Joseph Stiglitz.

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