By finally daring to tell a new economic story that puts investment first, Labour is showing the UK there is another wayby Joseph E. Stiglitz / October 9, 2017 / Leave a comment
Published in November 2017 issue of Prospect Magazine
As an American looking across the Atlantic at the policy debate heating up in the UK, I feel a certain envy: at least in Britain there is a pretense of belief in rational argumentation. Maybe a few words about what economic theory and evidence have to say might make a difference.
A third of a century ago on both sides of the Atlantic an economic experiment was undertaken. Until then, growth had been amazingly strong in the post-war decades, and there was shared prosperity. In the US, incomes had risen at every part of the distribution, and they rose fastest at the bottom. There was convergence. In the US, especially, there was heavy public investments in infrastructure (the national highway program), education, science and technology—Sputnik gave a particular spur. There was a bipartisan consensus on this, and on the need for regulations, for instance concerning the environment. Air became breathable, and rivers swimmable. Depression-era regulations on banks had resulted in decades of financial stability: again, in the US, an unprecedented half-century without a financial crisis.