July 24, 2021

"The data is overwhelming. Raising the minimum wage does not harm employment "| Economy

"The data is overwhelming. Raising the minimum wage does not harm employment "| Economy

Joseph Stiglitz he seems to enjoy dismantling truths that other colleagues consider indisputable. Born 75 years ago, this economics Nobel laureate, ex-adviser to presidents Bill Clinton and José Luis Rodríguez Zapatero and former chief economist of the World Bank, is now a professor at Columbia and a regular debater. Form, together Paul Krugman, the dream team of the progressive American economists. With a perennial smile and always looking into the eyes of his interlocutor, he attacks with equal ferocity the rise of populist leaders, the increase in inequality or the European management of the crisis. But above all, he has found his archenemy in Donald Trump, a president whom he accuses not only of a disastrous fiscal policy and of promoting a commercial war with unpredictable consequences, but of attacking "the American ideals of freedom, democracy and justice for all. "

The victory of the Democratic Party in the House of Representatives -And his failure in the Senate- took Stiglitz in Madrid, where on Wednesday he participated in an innovation forum invited by Mastercard. A few hours after knowing the results of the legislative, the author of The discomfort in globalization It swung between the hope for the democratic conquest of one of the two Chambers – "The Republicans will not be able to pass any law in Congress. There will be no funds for the wall, which is finished, "he says, and frustration over the fact that the increase in Democratic votes will not translate into a radical change in US policy.

"After the elections, Trump will not have the yes of the Congress to obtain funds for plans like the wall"

Stiglitz does not elude any puddle. Prototype of what the US calls "liberal", applauds without hesitation the decision of the Spanish Government of increase the minimum wage by 22%, up to 900 euros per month, one step, he says, "long awaited". In front of the catastrophic auguries of the Bank of Spain -Which puts the cost of raising the wage floor at 150,000 jobs- or the more moderate European Commission -which this week reduced the impact on 70,000 jobs-, Stiglitz denies the major.

Raising the minimum wage has an "insignificant or even positive" impact on employment, he says. To justify this opinion, he cites a hundred studies made in the USA. "There, the data is overwhelming. And they do not refer to increases of 22% as in Spain, but even 100%, as in Seattle, "he says. Stiglitz attributes the criticism of Pedro Sánchez's decision to an old vision based on the presumption that the labor market works like any other market defined by supply and demand, an idea that Stiglitz considers "a kind of religious belief". "Studies show that this is not the case," he concludes.

Another controversy in which he splashes with pleasure is the clash with Brussels of the new Italian Government at the expense of your budget. He considers the third economy of the euro "a real danger for the eurozone, both in the short and medium term". From here, Stiglitz has criticism for all. The populist Executive of Di Maio and Salvini reproaches some unrealistic accounts, based on the misconception that reducing taxes will increase the collection. "It's an idea that Reagan already used. It did not happen then and probably will not do it now, "he says. But the American – whose last book, The euro: how the common currency threatens the future of Europe, describes the euro as an error fruit of "politicians not versed in economics who wanted to create their own reality" – also has ammunition against the European Commission. "Your spending rules are wrong. There must be reforms. Italy is right about that, "he says.

The economist does not believe that the Italian Government is going to back down, as the Greek did. And as the most likely outcome of this crisis, it envisions a scenario in which Rome launches a bid to the European Commission, forcing it to choose between expelling Italy from the euro or accepting European rules to be flouted. "Salvini and his people bet that it will be Brussels that will back down. And I think it's a good bet, "he anticipates.

"Merkel pays penance for her sins in the euro crisis"

In the management of the euro crisis, Stiglitz points to a major culprit: the German Chancellor Angela Merkel. "It was inconceivable how I was willing to sacrifice Greece to save the German banks. In addition, she created an internal problem herself. His rhetoric of placing Greece as responsible for the crisis by its waste – when countries like Spain, with public surplus, also fell into crisis – made it very difficult for German politicians who wanted to offer a more balanced view, "he says. Just when the most important European leader of the last 15 years starts to say goodbyeStiglitz only recognizes the courage with which he faced the migratory crisis. "But then he did not achieve his goals either. It has been his penance for his sins in the crisis of the euro, "he adds with an evil smile.

When asked about the great dangers of the world economy, Stiglitz does not hesitate for a moment: the trade war – he says, a great critic of the mega-deals that the US negotiated with the EU and the Pacific countries, agreements to which Washington has said do not- and the slow farewell to ultra-cheap money due to the progressive rise in interest rates.

On the first threat, points to a clear responsible: Trump. "A commercial war between the two great world powers would be very damaging. Right now it is very possible that conflict erupts. Although I only put one but: Trump is not rational. And at any time you can change your mind without any rational justification, as you did with North Korea, "he concludes.

"The trend of greater inequality gives ground"

Looking back on the United States, Stiglitz questions the avalanche of good macroeconomic data. When you mention the unusually long period of growth in your country, it qualifies that this refers only to GDP, not to other indicators. "The current growth is a sugar high that will end. The trade deficit will increase. Despite the fall in unemployment, employment is still not at its 2007 level. Wages do not grow as fast as the economy. And the inequality worsens despite the growth, "he adds.

In this scenario, the revolutionary fiscal plan promoted by President Trump is one of the great black beasts of Stiglitz, which, according to forecasts, will contribute to increase its great concern: the growing social inequality. "The tax reduction is a gift for large companies and billionaires in the country with more inequality among the developed. And it increases taxes to the middle classes in a country where life expectancy falls as a result of the millions of people who are running out of health insurance. It goes exactly in the opposite direction than it should. And it aggravates the problems ", shoots. It defines the economic policy of the Trump Administration as "a strange mixture of populism and corporatism."

Despite the black diagnosis on the Government of his country, Stiglitz is moderately optimistic about the immediate future of the world. This economist, well versed in Spain, where he spends one or two months a year in his house in Cadaqués, believes that the trend of growing inequality that began with the conservative revolution of the eighties of the last century begins to subside. "People have seen that they have gone too far," he explains. And it points out some symptoms of the renewed strength of redistributive policies, such as the extension of free infant education in New York or the rise of the minimum wage in Spain.


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