Dhanya Rajendran, Editor-in-Chief, The News Minute.
21st June 2023
13:00 - 14:00
Joseph Stiglitz is a Nobel Prize-winning economist who was Chief Economist at the World Bank and the founder of the Initiative for Policy Dialogue. Professor Stiglitz is a strong advocate for transparency and accountability in the financial sector, and a vocal critic of financial journalism that contributes to the perpetuation of financial bubbles and crises.
1. More attention should be paid to the darker side of capitalism. In the past few years, the global economy has experienced a number of exogenous shocks such as the COVID-19 pandemic and the Russian invasion of Ukraine. Stiglitz pointed out how these two events were experienced differently by developed and developing countries with the latter group suffering more deeply the impacts of inflation, supply chain failures and vaccine inequality. “The ability to produce a vaccine in record time is a scientific achievement. And the fact that we produced it is also a big achievement. The fact that we ended up with vaccine apartheid is a failure of globalisation,” he said.
2. Lack of scrutiny in the financial sector leads to financial crises. The failure of the Silicon Valley Bank serves as an example that economic policy and financial regulation have proven inadequate, said Stiglitz. The news about the bank’s failure came mere days after the US Federal Reserve assured Congress that the financial condition of US banks were stable.
Stiglitz argued that the collapse of SVB represents a failure of regulatory policy. “I think this is an amazing story of regulatory failure,” said Stiglitz. “It also certainly undermined confidence and governance because the head of the Silicon Valley Bank was on the Federal Reserve Board of San Francisco that regulated and supervised that. And that was a question that had also been raised in the 2008 crisis.”
3. Journalists need to be conscious of their sources. Now more than ever there are a variety of sources to listen to when it comes to economics, but Stiglitz warns that journalists must beware of who is giving what information. “The banks are out there feeding you information all the time, the business community is feeding you information all the time,” said Stiglitz. “[They say] how wonderful they are, ‘don’t worry, the risk is low.’” However, as those in financial power will give assurances, it is the job of journalists to look for impartial sources. “You ought to talk to academics more,” he said. “They have a greater impartiality and they play an important role as critic.”
4. When it comes to climate reporting, looking beyond greenwashing is crucial. Journalists have a real challenge when it comes to reporting on climate change, not just in reporting the facts, but also maintaining engagement with audiences. When it comes to the intersection between climate and finance reporting, however, Stiglitz believes examining companies critically is crucial.
“The overall climate reporting is not bad,” he said. “Holding individual companies to account, though, I think they could do a better job and it's not just about greenwashing, but talking about how individual companies are contributing to worsening the claim and getting down into the culpability of particular firms.”
5. The impact of generative AI will be felt more deeply in developing countries. Stiglitz, who explained jokingly that one of his students tried to create an AI version of him and failed, is cautiously concerned about the effects artificial intelligence will have on the global economy and labour markets, since they are unable to replace skilled labour and are mistake-prone. However, he places more focus on the effects these technologies will have for developing countries. “They [artificial intelligence systems] are very effective in replacing routine behaviour and routine analysis, and that's highly correlated with what we call unskilled labour,” Stiglitz said. “That means that these machines are so much faster than routine, unskilled labour, that the developing countries' emerging markets are not moving up.”
Journalists should be critical when covering the financial sector, particularly looking and who is in power and what their interests are. From financial crises to climate change, the role of journalists is to hold companies and individuals to account, and this can turn out to be a real challenge. Moreover, structural inequalities should be taken into account by moving away from solely looking at the impact within developed countries and turning the spotlight towards the developing world.