Ireland could take more than a decade to recover if the Irish government continues imposing austerity policies, the Nobel Prize-winning economist Joseph Stiglitz warned today.
Speaking to students as a guest of the University Philosophical Society, he said that “austerity has never worked” and that government policies need to be geared towards investment in both the public and private sector. “It is remarkable that European nations are trying the same policies over and over again when all they lead to is significant contractions,” he said.
Mr Stiglitz condemned the ECB for supporting the “unconscionable” socialisation of banks and said that it should be blamed for failing to restructure bank debt.
One of the “fundamental flaws” of the eurozone, he said, is that it “has made it very easy for firms to move around the EU and escape taxation.” He said that, “Apple and Google use loopholes in the Irish system to avoid taxation while they live off research funded by American taxpayers.” The issue is that political leaders “created a single market without the institutions that would make a single market work.” He compared the system to American federalism with its single banking system. “We don’t ask California to pay for its own unemployment problems,” he added.
Mr Stiglitz also expressed concern about the youth unemployment crisis and “destruction of human capital” throughout Europe. In an answer to a question from Trinity News about his view of the Jobbridge programme, he said that “any job programme is not going to work if there is no demand.” The first order is to “create aggregate demand” in the Irish economy. “It’s not going to work if you train people for jobs that don’t exist,” he said
Mr Stiglitz then went on to discuss the “crisis of inequality” in the United States. He said that the life prospects of young American people are now “more dependent” on the income of their parents than in “virtually any of the other advanced countries” in the world. Economic policies in the aftermath of the banking crisis have instead benefited “people like Bill Gates and the upper 1%.” “The American economic model has not been delivering for most American citizens,” he said.
It is for this reason, he noted, that there is now so much “riding on the success of the European system.”