Stiglitz, Soros, Summers aim to remake global economy
Ideas could change the world. At least with billionaire George Soros bringing together economic PHDs and Nobel Prize winners with the backdrop of historic Bretton Woods, it suggests someone is hoping they will.
At the original Bretton Woods Conference, allied nations came together during World War II. Facing economic crisis they came searching for stability. They formed the International Monetary Fund, the World Bank, and established the US dollar as the global reserve currency.
It is in the same place that decades later and in the wake of the financial crisis a group of influential economists and former policy makers got together to rethink that framework in response to a different world.
“Everything that we have taken for granted for almost two centuries, American and European dominance is no longer a fact,” former UK Prime Minister Gordon Brown said of that new world at the conference.
In adjusting to that fact and cleaning up the mess of the 2008 financial crisis in the US, to move the country forward, critics there painted a picture of near continuous failure of US policy makers to do the job. President Barack Obama’s former right hand economic man said the stimulus should have been bigger.
“The decision was political, the judgment was we wanted to get as much fiscal stimulus we could,” said Larry Summers, former White House Director of the Economic Council and now President Emeritus at Harvard when RT asked why he didn’t push for a bigger stimulus as some critics argued he should have.
Meanwhile, the Wall Street bailouts of the time and Federal Reserve reaction favored finance.
“They saved the big banks, but they have not really gotten our economy going again,” Nobel Prize winning economist and Columbia University economics professor Joseph Stiglitz said.
The financial reforms passed by Washington, supposed to end “too big to fail,” haven’t. Banks still are not required to hold enough cash – that is just one reason critics like one former JP Morgan executive cite – that puts the country on course for another crisis.
"Depends on what you'd call a crisis but I’d have to say yes," said John Fullerton, founder and president of the Capital Institute. “The concentration of power in finance is greater today than it was before this crisis."
And that’s courtesy of the cash flow from Wall Street to politicians and lobbying, corrupting real reform and belief in the leaders tapped to make it.
Despite some with noble goals, the Institute for New Economic Thinking’s executive director said, “I think there are others who are taking too much money from Wall Street and doing whatever the thugs want and they are contributing to the deterioration of confidence.”
Deterioration coming amidst an increase in inequality in the US, where the top one percent are getting richer while everyone else is lagging behind. Now frustration is starting to pour over into the streets like we’ve seen recently with public union workers in Wisconsin.
Stiglitz believes it’s all sending the country in the wrong direction.
"That's right, and that was what was brought home with what was happened in Wisconsin."
He had high hopes the mix of thinkers and policymakers at INET’s version of the Bretton Woods Conference will lead to new priorities, while others are experiencing their own crisis of confidence that “new economic thinking” will turn into direct action anytime soon.
The more things change the more things stay the same,” said a skeptical Simon Johnson, professor at MIT Sloan School of Management and senior fellow at the Peterson Institute for International Economics.