Nobel laureate says economists are apologists for inequality

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Professor Joseph Stiglitz

The recent global economic and financial crisis has showed that a conventionnal economic theory promoted by economists is false, according to Joseph Stiglitz, who won the Noble Prize for Economics in 2001.

Mr. Stiglitz, a professor at Colombia University in New York spoke at an event at UN headquarters on Monday on  "The Threat of Growing Inequalities: Building More Just and Equitable Societies to Support Growth and Sustainable Development".

In his keynote address, Professor Stiglitz said that economists have long been apologists for inequality.

He said they developed what is called "the theory of marginal productivity" which says that what individuals receive corresponds to their contributions to society.

"This is a view that was never true, never established but the crisis has made it evident how false that view is. In the midst of the crisis, the bankers who had brought the world to the brink of ruin, whose contribution to society was unambiguously negative, were walked off with mega bonuses. Their compensation had no relationship to their contribution. Their contribution was negative, and yet they walked off with millions of dollars in pay." (29")

Professor Stiglitz said  there are two ways to get rich.

One way, he pointed out, is to increase the size of the national pie, to do something that adds to the well being of society.

He said the other way, in which a large part of the incomes at the top have originated, is to try to seize a large fraction of the given economic pie by even destroying some of the pie.

Derrick Mbatha, United Nations.

Duration:1’48″

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