Nobel Prize winner Stiglitz addresses Commonwealth youth

Joseph Stiglitz, the 2001 Nobel Prize winner for economics, yesterday (24 November 2009) urged delegates at the 7th Commonwealth Youth Forum to continue to put pressure on their governments on climate change.

“I am concerned that while attention is focused on the economic crisis, we have taken our eye off other crises. We will get over the economic crisis, but not so easily, the climate change crisis,” Dr Stiglitz said.

Addressing some 600 young people in Port of Spain, Trinidad and Tobago, he conceded that the upcoming United Nations climate change conference which takes place in Copenhagen, Denmark, next month was likely to be a disappointment. “You need to keep up the pressure on governments to do what has to be done to address the problems of climate change,” he told them.

“We’ve been treating the atmosphere as if it was a free good, but there is a cost,” he warned. “These are big issues. You have to charge for it, make people pay the cost. There aren’t any other planets for us to live on. We have to be risk averse.” He added that unless the strategy for dealing with climate change was treated as a risk and action was not taken early, it would prove very costly.

On the global financial crisis, Dr Stiglitz said it had seemed as if the world was doing well. But if you looked underneath the numbers, you would have realised how poorly it was doing. The numbers were based on property prices, with 40 per cent of all corporate profits in the financial sector. “A means to an end is not an end in itself,” he said. “This is where values come in.”

The numbers were all fictional, he continued. The 2008/09 losses wiped out the profits made from 2003 to 2007. “It was called creative accounting, but it was actually deceptive accounting,” he said. US growth was based on debt and the country was living beyond its means. The richest country in the world had to borrow from poorer countries. “That which is not sustainable cannot be sustained,” he told delegates.

The USA had a crisis and it exported its problems all over the world. The financial sector forgot what it was supposed to do and banks engaged in predatory lending. They created a system that was so non-transparent, so exploitative that it blew up, he said.

“They should have been lending money to create new businesses, including for youth. They didn’t ask that fundamental question: ‘What are the needs that society has and how can I help meet those needs?’ They forgot the social function of markets and got caught up in greed.”

Comparing failed governments to failed markets, Dr Stiglitz stressed that the answer to failed governments was not to get rid of government, but to improve it. Likewise, the answer to failed markets is not to abolish markets, but to improve them.

He said he recognised how young people focus on the needs of society and there were a number of examples of doing well by doing good.

“With the kinds of commitment I have heard here, we will have the energy to address problems in the short run, but also the long run – those that won’t go away so easily, like climate change.”

Secretariat Links:

• Youth
• Country Profile: Trinidad and Tobago