It's About Jobs

Monday, December 19, 2011

Joseph Stiglitz, Nobel Prize winner and author of Freefall: America, Free Markets, and the Sinking of the World Economy, says the Depression was caused by the shift from agriculture to manufacturing, and that we face a similar shift today.


Joseph Stiglitz

Comments [36]


I can't disagree David. I wonder how either of them would explain why Beirut-which has been bombed into oblivion before-isn't an economic powerhouse full of prosperity?

I'd suggest if we REALLY want to help the economy while spreading some Christmas cheer people visit the store at the Mises Institute and send one or several of their best sellers on their book list to their congressman, CNBC, Mr. Stiglitz and Krugman, and maestro Bernanke. Maybe a refresher course on economics from people who actually understand economics will do them some good.

Dec. 19 2011 05:51 PM

And, Joe, how many times after a natural disaster such as an earthquake in California or Katrina do you hear the "experts" proclaim: Well, there is a "silver cloud" in this tragedy because now that the damaged areas have to be re-built, this will mean an economic "boost" for the area.

It's difficult to tell if these people really are that economically-ignorant or just seriously screwed up. Here's a great essay on the "blessings" of destruction:

Dec. 19 2011 05:03 PM

Perhaps, as David correctly points out, if stigdaddy and Krugman both believe printing money to fund war and destruction "helps" the economy-as both have said about WWII and Krugman said of sept 11 and alien invasions-we should have the federal reserve print up a few billion to make a few more drones and haw them crash into both of their houses. SURELY that would bring about some economic benefit for the country! Just think of how many jobs could be created just by blowing up those two houses. Surely neither of them could disagree?

Dec. 19 2011 02:42 PM
Offshoring most tradeable-sector work from The Service economy won't save us.

Prof. Stiglitz seems to ignore that much service sector work will also be offshored to where costs are 1/10th of here.
This includes most of the higher skilled service sector work that involves information technology or skilled processing of ideas.

Over time, almost everything that is not nailed down will go.

There are plenty of "tradeable-sector" jobs
or subtasks in the service sector.
Without regulation or barriers, most middle class jobs will be offshored. (Naturally, defense, healthcare and other heavily regulated and locale-based jobs will remain, although moveable part of the work
will be offshored (for example much legal work)).

What will remain here and grow with our
large income inequality is the SERVANT
sector :

Prof. Stiglitz should appreciate the difference between service jobs and SERVANT jobs. It will be a sad day
for America when we are mostly just left
with the latter.

Dec. 19 2011 12:58 PM

wrote "Where are you getting your stats from?" it's a well know fact often reported
for example

to your second point a job is a job right now. we have to take what we can untill the economy works itself out

Dec. 19 2011 12:50 PM
Dallas from Morningside Heights

RE: The Long-term Political Good
Nowhere in this conversation have you discussed the long-term, deeply deleterious effects of service v. manufacturing, farming, etc. Crudely put, servants derive identity from masters & vote for them. People who make/ grow/ create things think independently & vote that way (viz., Jefferson, Franklin, Adams, et al.) To abdicate the role of major mfr., as we have, has harmed more than the US econ.

Dec. 19 2011 12:26 PM
peter schum from Staten Island

I can understand that they have to give the Nobel Prize to a war criminal every now and then, but I thought the one for Economics would be a pretty good indicator that someone had realistic, helpful ideas. Apparently not. That old rotten chestnut, the "service economy?" Really? No room for the manufacturing at sector at all? I didn't hear him say anything to moderate the simplistic duality, e.g,,"a predominantly service-sector economy," and I'm sure he could have managed that if that is what he meant. But apparently he wants the USA to become something like one of those Caribbean vacation islands where the very idea of a factory is anathema. Whoopee. Let's all just give up on manufacturing completely. Stieglitz must be right - he has a Nobel. So if he says we can't compete with Germany, so be it. To put in a more Nobel-worthy way, let's begin the "transition from a competitive to a failure-based economy." Stieglitz must be right. If his Nobel-based crystal ball tells him "it's not going to happen," then all you people working on developing better solar panels, for example - all you inventors, gadge-makers, dreamers with an idea that won't go away - you better move to some other country. From now on, we're all going to work at McDonalds.

Dec. 19 2011 12:17 PM

BTW, here is what caused the Great Depression:

The Great Depression started under Herbert Hoover. It was prolonged, i.e., NOT ended by the New Deal, under Franklin Roosevelt:

Dec. 19 2011 12:17 PM

A. In March 2011, China's domestic consumption was 36% of GDP. The US was 70%. China is aiming for 45% by 2015. In any case, 36% is NOT even close to nil. Secondly, even much of the material for luxury goods from your status symbol European shops are produced in China but I doubt many notice.
B. -
C. You can say that about any other country in the entire world. But neither I nor most people want to pay 10x the price for 0.5% extra in quality; most of us are not involved in highly sensitive activities such as particle accelerators, nuclear reactors, rockets, etc.. that would justify the costs.

Dec. 19 2011 12:00 PM

Amazing! Joe "Stalin" Stiglitz actually supports that monstrous, inhumane notion that war is "good" for an economy. I guess wasting money on manufacturing weapons that not only take away resources and labor from the peaceful, consumer sector, but are used to destroy other countries, is a "good"investment" on the part of government.

So this Pulitzer Prize winner in "economics" believes that any government printing up of more money and spending it on anything is helpful. Than why not just pay people to dig holes and fill them up again? It would certainly create "jobs." In fact, forget the "jobs," why not just print up more money and send it to everybody? Wouldn't that make us all wealthier?

BTW, another issue that Stiglitz and other Keynesians such as "economist" Paul Krugman and Fed Chair Ben Bernanke always try to avoid is: When the housing bubble was going on, not ONE of them predicted what would happen by 2008. They all said that things were fine; there was no bubble. Yet Ron Paul and other followers of that "fringe" Austrian school of economics ( had been warning for YEARS that the United States was heading for a housing bubble and crash.

Ron Paul back in 2001:

Paul Krugman back in 2002:

"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

He finally conceded FOUR YEARS later that there was a bubble:

Dec. 19 2011 11:54 AM

A) The non-Japanese Asian manufacturers do not produce quality products. So few of their products are consumed domestically therefore feedback into their own manufacturing processes is nil.

B) Rapid technological change softens - but does not remove - the need to produce a quality product. 1 in 4 iPhones have a warranteed repair issue within 24 months. Does that matter if I only use a phone for 18 months?

C) IF quality returns as a buying consideration, American manufacturing can recover IF we have workers that are prepared to deliver quality.

The tax code - not Asian manufacturing ascendence - is the root cause of the poor distribution of income here in the USA -10% earning 50% of national income!

Dec. 19 2011 11:38 AM
jgarbuz from Queens

To Nick

You are fundamentally correct. Wealth is PROFITS. If you make something that others are willing to buy at a price above your cost of production, that is gives you a profit, you have created WEALTH in the exchange. That is how wealth is created. But if you make something that no one is willing to pay you a profit for, such as Soviet automobiles or washing machines, even if it is a perfectly functional product, you have not created wealth, but wasted it. All the labor and money you sunk into it will rust away. So, only capitalism,where you must produce a profit or go broke, is the only long term self-sustaining economic system. All others fail to create new wealth and must die, as communism eventually did.

Dec. 19 2011 11:36 AM
jgarbuz from Queens

To MC and Jack

Yes, abortions, low birth replacement ways, ultimately has to bring down the standard of living as the number of aged overwhelm the few productive young required to support them. Japan embraces robotics to try to keep up, even though they have a worse problem than us, but refuse to use mass immigration. They choose to keep Japan for the Japanese at any cost. China's problem will catch up to her in the next generation which will indeed have a tougher job than ours. It too does not seek much immigration. Eventually mass production jobs will end up in the Muslim countries which have lots of kids, but that will take another generation, as China also is now also sending jobs abroad for even cheaper labor. Eventually, robots will be the final solution in my opinion, where most actual physical work is done by them. That may be two or three generations away.

Dec. 19 2011 11:31 AM
MC from Manhattan

We are trying to force a square peg (our current ways of acting economically) into a round hole .. (the evolution of technology and allocation of shared resources) from each according to his ability to each according to his need. The GNU in the software world proves that value, in fact treasured value will flow when people are liberated from debt and cost and systems are open for all of us to contribute and take when we are educated and motivated properly. The cost of a decent middle class life is not THAT expensive... when we engineer it so

Dec. 19 2011 11:31 AM
Nick from UWS

The navel gazing of economists and theorists, Nobel Prize or not, has never made the slightest difference in world economies.

Money works in one way: I make something, someone wants it, they give me money for it, I charge them a little more than what it cost to make it.

That's it. The rest is b}}}sh*t.

Dec. 19 2011 11:29 AM
Tanya from Manhattan

It seems getting a Nobel price doesn't account for much these days. He certainly did not make a case for what he is trying to sell.

Dec. 19 2011 11:29 AM

How about a tax on entrepreneurs who pollute our commonly held natural resources in the process of creating their product? In other words, a pollution tax?

Dec. 19 2011 11:27 AM
MC from Manhattan

So abortion causes economic decline? This line of reasoning is ridiculous. China has more Abortions than the USA , as a state policy ... yeah it has really destroyed their economy.. any more brilliant insight?

Dec. 19 2011 11:24 AM

What economically viable ways, if any, are there to handle racial inequality in a society? Many Tea Party/Libertarians don't ever seem to recognize inequality. They seem to either claim it is not a real problem, or is only a problem due to civil rights laws, or one gets the sense they have a Darwinistic approach which perhaps they dare not spell out. What would your rebuttal to such an argument be?

Dec. 19 2011 11:24 AM
Jerome E. Harris from Prospect Heights, Brooklyn

Could Prof. Stiglitz address the relative roles of government (federal/state/local) and the private sector in aiding the transformation he has outlined?

Dec. 19 2011 11:23 AM
John from Brooklyn

Graduate high school kids who can do math and who have a skill, like welding or working with machine tools, and there will be plenty of them working in manufacturing.

Dec. 19 2011 11:22 AM
Phil from Park Slope

As someone in a service business--media production--it is my worry that these kind of jobs are the easiest of all to move overseas. We're increasingly competing with places like India, South Africa, Brazil, Australia, New Zealand, and as more an more things go digital, physical location becomes less relevant. Is attempting to transition to a service economy doomed enterprise? We can't all be massage therapists...

Dec. 19 2011 11:21 AM
Inquisigal from Brooklyn

Can you ask Stiglitz what jobs he thinks fall in the category of the "service sector?"

This makes me think of a nation full of retail workers and customer service reps, who these days, provide terrible service.

Dec. 19 2011 11:20 AM
John from NYC

With all due respect, unless you own a midtown hotel to include tourism as an integral part of a local economy and a way to earn a living wage is ridiculous.

Dec. 19 2011 11:20 AM
jgarbuz from Queens

To Matt

Just as mechanization meant that farming in the US went from occupying 60% of the US workforce to only 2% today, so the automation of manufacturing has decreased that area to only 12% of US employment today, and we'll be lucky to keep it at that many in the future. Mass assembly manufacturing has left for good (or for bad). The US and EUrope manufacture hi-tech things like planes and satellites, etc., requiring a very small, hi tech work force.

Dec. 19 2011 11:19 AM

The past 30 years were supposed to have been the "transition to a service economy."

The good Prof has dropped into the DC Bubble "common wisdom."

China just put on an anti-dumping fee for US cards.

Dec. 19 2011 11:18 AM
jgarbuz from Queens

Stieglitz and the other left wing economists continue to believe in their extreme Keynesianisms, that even Keynes himself would not have subscribed to. "Priming the pump" was always meant to be a short term fix for regular recessions, but this is not a regular recession. This is a worldwide tectonic shift in the global economy, and it will take other means, such as returning to frugality and accepting a lower standard of living from now on in. It took 30 years to get into this fix, and it will take at least another generation to stabilize, but a lower standard of living as people forget the post WWII "golden age" of suburbs, cheap oil, and cheap credit.

Dec. 19 2011 11:16 AM

What's the present analogy to the 1930s decline in farm prices due to technological change, which made manufacturing goods less affordable, depressed demand and prices, etc.?

Dec. 19 2011 11:16 AM
Nick from UWS

God help us if we attempt to convert our entire country into a service economy.

We need to MAKE things in this country...physical things that people want to buy the world over. We need to MAKE things goddamn it...stop with all this hocus pocus nonsense.

Dec. 19 2011 11:15 AM


Where are you getting your stats from? There are many teachers and (wanna be) college professors out of work. Also, many people with college degrees may have jobs but they are jobs that probably don't require a college degree - like retail.

Dec. 19 2011 11:14 AM
MC from Manhattan

The truth we are all realizing is that with technology... mankind needs increasingly less to work and work is the cost of everything. So the real cost of things is declining. Resources are virtually unlimited if enough mental and physical work is applied ... so what real really have to face is that distribution and allocation of resources are the most important economic facts that we have to deal with. Forget "debt" and all the other parlor tricks of social manipulation.

Dec. 19 2011 11:12 AM
jgarbuz from Queens

Reagan liberated half the world from the slavery of communism and socialism, and that meant the resurrection of Asia and finally TRUE competition for the US and now European worker. But the breakup of the family in the West and the rise of abortion, and other self-destructive ways, also contributed to western stagnation. The rise of Asia means competition for oil and other natural resources, and this raises prices for everyone, but in the US our suburbanized lifestyle made us particularly vulnerable to gasoline prices. So part of the decline is due to the liberation of Asia, and part due to self-destructive ways inside our western societies.

Dec. 19 2011 11:12 AM

2 points.
Americans demanded cheaper and cheaper goods. Walmat found cheap labor in China and Americans bought it up.
For those with a college degree the unemployment rate is less than 5%. With no degree more that 15%. do the math and get that degree.

Dec. 19 2011 10:46 AM
Gerald Fnord from Palos Verdes

I should like Dr Stiglitz' opinion on the very existence of jobs. Not all necessary work can be automated---yet---but so much is so that it seems weird to require that people get up far too early in the morning and travel somewhere to obey a "boss", in order to live---I strongly suspect that apart from habit, that most persistent of forces, the major reason it is kept around is to satisfy many people's need to give and/or take orders, as opposed to getting work done.

Dec. 19 2011 10:42 AM
Brandon from Putnam County

Joe, to what extent is the following true?

Big finance has seen these shifts coming and acknowledged that once-profitable methods and products are no longer so.

In addition to working within the market for solutions, they also seem to be manipulating their influence over our government to get their own type of depression era handouts and dispensations.

Dec. 19 2011 10:22 AM
Jessie Henshaw from way uptown

The way an economy sheds unsustainable loads is a bit of a mystery, but seems quite similar to how it happens in natural economic systems. Plants wilt, depleted environments are abandoned, etc.

That seems very similar to how it's now happening in business and finance. Things that go "bankrupt" in nature no longer generate net-energy, are no longer sustainable, and are broken apart often unexpectedly.

The question is what is wrong with our brains! Why have we not seen that coming, having based our economy on sustaining ever growing demand as we have. That's certain to lead to a break-up, when excess overhead and shrinking earnings cause the shedding of whole sectors and regions of the civilization we've been building.

Dec. 19 2011 10:15 AM

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