Foreign Policy Digital

An Icon of the Left Tells Democrats: Don’t Go Socialist

The economist Joseph Stiglitz still mistrusts markets. But he’s worried "democratic socialism" will cost the Dems the 2020 election.

Over the past quarter century, no economist has worked harder than Joseph Stiglitz to keep the Democratic Party from moving to the center—to prevent Democrats from going gaga over free markets and the supposed glories of globalization. Along with a handful of other slighted seers of the left, such as former Labor Secretary Robert Reich, Stiglitz was concerned early on about the eroding safety net for the middle class, income inequality, and the “financialization” of the economy. As chairman of Bill Clinton’s Council of Economic Advisors and later the chief economist at the World Bank in the 1990s, Stiglitz argued passionately (and unsuccessfully) against opening up global capital flows too rapidly; he also spoke out against (again without results) repealing the Glass-Steagall Act, which regulated financial institutions and separated commercial from investment banking.

The subprime mortgage disaster of the late 2000s was almost tailor-made proof of some of Stiglitz’s theories about the imperfections of markets; he had shared the Nobel Prize in 2001 for showing how “asymmetric” information—in which one party to a transaction knows more than the other—can distort and rig markets (which helps explain how Wall Street sold all those junky mortgage-backed securities to credulous investors). Like Clinton, Barack Obama had little use for Stiglitz either (though some of Stiglitz’s seminal thinking about the failures of the insurance industry to supply equitable health care made its way into Obamacare). And of course Hillary Clinton all but ignored Stiglitz’s progressive ideas in

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