“We shouldn’t let a good crisis go to waste”

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US economist Joseph Stiglitz believes now is a good time to rewire the US economy. “We shouldn’t let a crisis go to waste”.

The former senior vice president and chief economist of the World Bank said Thursday the coronavirus pandemic had shown the economic system not working, highlighting inequality, the climate crisis and the lack of resilience of the market economy.

Stiglitz is optimistic that many existing problems can be addressed at the same time because they are interrelated.

“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.

For example, the US should invest in building a “green” infrastructure that creates jobs and helps reduce inequality, said Stiglitz. “Once you think about it, you will find that we can address two or three of these issues at once,” said the 78-year-old, adding that the US has the manpower and the capital.

Stiglitz said it would be “healthy” for the US economy to raise taxes “a little” to “fund some of the things we need for the common good”.

In July, 130 countries supported a 15% minimum global tax rate, and Stiglitz said the move ended the tax race, underscoring how the US is considering a 25% rate.

A successful economy is not only defined by tax rates, but also by other factors such as infrastructure and research and development efforts, said Stiglitz.

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He said there is a growing consensus that the US needs to change outdated laws that have been in place for 125 years and address excessive market power across America. “The concentration of market power has increased enormously over the past 35 years,” he said.

According to Stiglitz, overregulation and excessive demands will not result in the West losing its competitive advantage over the emerging countries and China. “I’m actually pretty confident that this new agenda will actually strengthen us,” he said.

Competition makes market economies more innovative, while monopolies reduce innovation, said Stiglitz. “We have seen how the big giants actually displace innovations,” he said.