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Free Minds & Free Markets

Can the Free Market End Global Poverty? Nobel Laureate Joseph Stiglitz vs. NYU's William Easterly

Watch two leading development economists debate at the Soho Forum.

There has been a staggering reduction in global poverty over the last four decades. In China, sustained rates of economic growth have lifted 800 million people out of extreme poverty. Ethiopia, a country once synonymous with famine, has grown faster than China while nearly halving its poverty rate over the last 15 years. Across the planet, developing countries large and small, from India to Ghana, have seen astonishing successes in alleviating poverty, exceeding even the most optimistic economic forecasts.

How did this extraordinary shift happen? Do poor countries need more markets, or more government?

Two of the world's best-known development economists, Joseph Stiglitz and William Easterly, met on August 27, 2018, at the SubCulture Theater in Manhattan's East Village to debate these questions. The event was sponsored by the Soho Forum, a monthly debate series partnered with Reason. Soho Forum Director Gene Epstein moderated.

Stiglitz, a Nobel laureate and former chief economist of the World Bank, is a professor at Columbia University. He credits thoughtful and aggressive government intervention for the rising fortunes of China and Ethiopia. In his view, markets are a tool to stimulate economic growth—but not always the most effetive one. "You always are going to have a mixture of governments and markets," he says. "And the only success is going to be where you get the right mixture."

Easterly is a professor of economics at New York University and a senior fellow at the Brookings Institution. He argues that China only achieved stellar growth rates after the Communist Party started to recede from economic life and created a space for markets to thrive. Likewise, Ethiopia prospered only after the disintegration of a repressive Communist regime, known as the Derg, paved the way for widespread privatization of industry and commerce.

Produced by Todd Krainin.

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  • BestUsedCarSales||

    It has been doing so for 100+ years now. This is such a weird question.

  • Shirley Knott||

    200+
    And yes, weird, if not uncommon, question.

  • Diane Reynolds (Paul.)||

    If we could socialism right, it would end faster.

  • MatthewSlyfield||

    It depends on how you define poverty. If you define poverty in relative terms as progressives like to do, nothing can end poverty, it will always be with us.

  • Doug Heffernan||

    What's the way to define poverty where it can be ended? How much of a reduction constitutes an end?

    As long as new biological human beings are being born, the best we can hope for is a reduction in poverty, or that "ending" is a continual process, as opposed to it being "ended" (past tense).

    Although some sustained period of global poverty being at a trivial level might be enough to call it ended, at least for a while.

  • Zeb||

    Yes, under a literal reading of the question, the answer has to be "no". But I don't think that's what the discussion was really about.

  • Diane Reynolds (Paul.)||

    What's this I'm hearing about the EU passing an "anti-meme" law?

    Article 11
    Dubbed the 'link tax', this snippet would force news aggregators like Google and Facebook to buy a licence to publish links to news organisations and extracts from their stories.

    Article 13
    Under this section, online platforms would be liable if its users upload or publish unlicensed content, such as photos, videos, source code or music, on their website. Such actions would require a licence fee to be paid, or for the content to be pre-filtered or automatically censored.

    Major publishers and lawmakers say these reforms are necessary to ensure the survival of traditional news media which have seen their advertising revenue slump as consumers digest news on aggregators and seek free alternatives.

    Is it just me or is the idea of freedom going down in flames here in the west?

  • Mickey Rat||

    And who is behind this?

    Well, Paul McCartney for one, as he does not like musical artists not getting royalties for usage on content edited by your small time youtuber.

  • Mickey Rat||

    And who is behind this?

    Well, Paul McCartney for one, as he does not like musical artists not getting royalties for usage on content edited by your small time youtuber.

  • perlchpr||

    So, Google will just stop indexing Europe. Done.

  • Mark22||

    "Every continent has a purpose, even if it's to serve as a bad example"

    I'm all for Europe going down this road because we need another large failed society to put the fear of God into Americans, since the Soviet Union obviously isn't doing the job anymore.

  • MoreFreedom||

    The Constitution does say "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries" which seems to me to apply and is a reasonable restriction here.

    What you're suggesting is about the equivalent of abolishing the idea of patents, licenses and copyrights. Shouldn't there be some incentive to promote the "progress of science and useful arts" and the resulting increase in prosperity by allowing those who come up with better ideas (inventions, stories, music, etc.) some limited time whereby they are the ones who reap the benefits of their efforts, rather than just allowing anyone to copy them? Certainly there's room for argument as to what a reasonable time is. Many inventions require huge investments in R&D. And often a lot of R&D spending results in nothing useful. There should be some reward for those risking their capital/time to advance our prosperity.

  • Fist of Etiquette||

    You always are going to have a mixture of governments and markets...

    As long as top men exist, it will never be just markets.

  • Doug Heffernan||

    Easterly begins his opening statement with:
    "But first let's avoid the straw man, that anyone who advocates free markets believes in some kind of zero role for government. Of course I recognize that there's a role for government such as providing public services like police and courts."

    Implicit in that statement is a role for some kind of legislative body (the rule of law), which is a pre-condition in order for police and courts to function.

    That is a mixture. Easterly and Stiglitz agree on this much. They both agree that "just markets" won't work, because it can't.

    Market enterprises, especially multi-national corporations, flock to the strongest rule of law governments with their money, while flocking to governments (where rule of law is weaker) for production and labor, because it tends to be cheaper there.

  • Fist of Etiquette||

    Not with that attitude anyway.

  • Agammamon||

    Can the Free Market End Global Poverty?

    What is there to debate? Its already done so.

  • Zeb||

    And it has done so even faster than even the most optimistic predictions of 20 years ago projected. It is utterly baffling that the trend of being anti-capitalist only seems to be increasing. How can people look at the world we live in and say that capitalism is the problem and government action is the solution? It's just totally backwards.

    Of course there will always be poor people and some absolute poverty still exists in the world. But the gains and momentum are all in the right direction if people can manage not to fuck it up.

  • Doug Heffernan||

    Really, poverty is over, globally?

    That's awesome!

  • perlchpr||

    It really is!

    In the 1200s, 90+% of the planet was living in poverty. Now the numbers have flipped and 90+% aren't living in poverty.

  • Darth Soros||

    If the answer to the question were "Yes," do you think a State fellator like Stiglitz would support it?

  • Hank Phillips||

    Can coerced markets end global poverty? Can they end global freedom?

  • Uncle Jay||

    Joseph Stiglitz?
    Where's Hugo Stiglitz when you need him?

  • Jerry B.||

    It might if we could get rid of the kleptocracies that run most of the poorest countries.

  • Gracchus||

    If by "free markets" you mean capitalism, then yeah. State capitalism, to be more technical, but capitalism nonetheless.

  • Mark22||

    Stiglitz, a Nobel laureate and former chief economist of the World Bank, is a professor at Columbia University. He credits thoughtful and aggressive government intervention for the rising fortunes of China and Ethiopia. In his view, markets are a tool to stimulate economic growth—but not always the most effetive one. "You always are going to have a mixture of governments and markets," he says. "And the only success is going to be where you get the right mixture."

    When stripped of all the verbiage of "right mixtures" what it comes down to is that Stiglitz is basically a fascist.

  • texexpatriate||

    Economists have their value but one area in which they seem poorly educated is human history and poverty. Poor people will be found in all societies, and poverty will never be eradicated. Also, poverty is a construct that is relative to the living conditions and wealth of the people in any given society.

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