In the Sept 2014 Harper's there is "reading" titled "Phony Capitalism" by
Stiglitz. Stiglitz seems to be an admirable person, revealing the monstrous
cost of the Iraq invasion and speaking at Occupy Wall Street at Zucotti park.
The piece in Harper's is adapted from another, which I haven't seen.
The Harper's version reveals a Stiglitz totally imprisoned mentally by learning
"elementary economics." He can't rid himself of it.
Some sentences plucked from the Harper's piece:
1. "But what is practiced in the United States today is perhaps best described
as an ersatz capitalism designed to create inequalities."
I.e. not as designed by economists in the textbooks, but by some other
unnamed designer. Actually existing capitalism isn't real capitalism?
2. "The most innovative and successful industries in the U.S. economy (tech
and biotech) rest on foundations provided by government research."
How is he measuring "successful" in that sentence? Profits? If so,
those profits rest on patents and copyright, i.e. control over supply, leading
to monopoly profits, which he later defines as "rents" and decries.
3. "While Piketty tells us that market capitalism naturally creates obscene
levels of inequality, I believe we have a different problem: our markets don't
act as competitive markets. [Well, yes, there's that.] We learn in the most
elementary economics courses that competitive markets, which promote efficiency
and innovation drive profits down."
So capitalism isn't like our most elementary economics courses. WE
COULD FIX THE ELEMENTARY ECONOMICS COURSES or we could eliminate "rents."
Stiglitz seems to divide capitalists into the good kind, selling at marginal
cost, and the bad kind, seeking rents. (He names Bill Gates and Carlos Slim)
And he'd try some taxes to get rid of the bad kind of capitalists.
This is really a sad Stiglitz confession -- unintended confession -- that
"elementary economics" is a crime.
This effort by Stiglitz seems like a wonderful opportunity for a progressive
econ teacher to show how bad "elementary economics" is.
Gene
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