Stiglitz for the Public; Stiglitz for the Undergrads

Uli Volz has a great piece in The Mint about Joseph Stiglitz’s contribution to economic thought, particularly regarding his critiques of the Washington Consensus as Chief Economist of the World Bank from 1997 until 1999, and in his capacity as founder of Columbia University’s Initiative for Public Dialogue (IPD), which aspires to “broaden dialogue and explore trade-offs in development policy by bringing the best ideas in development to policymakers facing globalisation’s complex challenges and opportunities [while] striving to contribute to a more equitably governed world by democratising the production and use of knowledge.” (IPD, 2019) He is prolific: in addition to his work with great economists like Stephany Griffith-Jones and Jose Antonio Ocampo, a selection of his books for popular audiences in the past three decades includes Globalization and Its Discontents (2002); Fair Trade for All (2005); Making Globalization Work (2006); Freefall (2010); The Price of Inequality (2012); The Great Divide: Unequal Societies and What We Can Do About Them (2015); The Euro: How a Common Currency Threatens the Future of Europe (2016); and, most recently, People, Power and Profits: Progressive Capitalism for an Age of Discontent (2018). I’ve given copies of these books as gifts; my mother-in-law (not an economist) purchased People, Power, and Profits of her own volition; and some guy I went to college with posted a photo of himself reading aloud from Globalization and its Discontents at a party as his first Facebook profile picture.

Stiglitz’s body of academic work is likewise awe-inspiring. He won his Nobel Prize for his work on asymmetric information and market failure, and its relevance to labor markets, financial markets, and competition writ large, and has written quite a lot about development, the failures of globalization, the role for regulation, and crisis. In addition to his work with the IPD at Columbia, he is prominent within the Institute for New Economic Thinking (INET) both for his many different research projects as well as his mentorship in INET’s Young Scholars Initiative. And, as Volz mentions, in his time at the World Bank (which fueled his motivation to write Globalization and Its Discontents), he came under fire for the admirable reason of criticizing the IMF for requiring countries to impose austerity and high interest rate policies if they wanted aid to respond to major financial crises in the 1990s.

I greatly admire Stiglitz’s work. But my first introduction to him was way back in college, as a freshman taking Principles of Economics. My professor used Stiglitz’s then current textbook (probably the third edition from 2002, though I guess that hints at my age), and, tantalizingly for a globally conscious undergrad who was deciding between sociology, government, and economics as a major, that globalization book. To my dismay as a good if under-examined US-style liberal, most of that semester seemed to revolve around showing why minimum wages and rent controls were bad ideas if you cared about unemployment and access to housing, taxes were bad for consumers and the economy at large thanks to dead-weight loss, and regulation created so many perverse incentives that, like, why bother. It was a one-semester principles class, so my professor, a micro guy who was also my advisor, picked and chose the sorts of things he liked to teach, and all macro was reserved for the frenzied last month of the spring semester.

That’s when my professor deployed Globalization and Its Discontents — our one paper assignment of the semester asked us whether Stiglitz had contradicted his textbook. In hindsight, it was a brilliant troll: any left-leaning students taking an economics class because they wanted to learn about the monetary forces behind inequality and oppression (there were at least a few of us) had to confront the disconnect between the technical story Stiglitz’s textbook presented and the polemic he’d written in anger about what he’d observed on the ground at the World Bank, or at least as close to the ground as its chief economist ever gets. Wesleyan’s Principles of Economics classes had a way of filtering out most students critical of market dogma — students who thought econ was BS because it didn’t acknowledge real-world problems left for other social science majors, while students who remained mostly accepted the unfortunate “fact” that raising the minimum wage would hurt the precariate, or else they didn’t care much. I clung on — again, thanks to my advisor — and remember on occasion meeting fellow critics in the major by my senior year. We were a small group.

Why not refame that assignment? Why not ask what was wrong with the textbook we read in the first place? While it’s true that the most interesting work by most textbook authors is their articles, how many undergrads actually hang on to be assigned those papers, let alone seek them out on their own? How many technocrats keep up with the literature, let alone incorporate newer findings into their reports?

Alternately, why couldn’t Stiglitz have rebuilt his textbook from the ground up, knowing how tempting textbooks that package everything just so, with practice questions and test banks and everything, are for overtaxed faculty? And set the academics lucky enough to get tenure (or tenure-track or full time jobs) aside: how are adjunct faculty supposed to have the time to craft a nuanced treatment of economics in a semester that upholds diverse university and college standards of rigor and assessment, especially if they’re rushing from campus to campus to make ends meet?

I suspect that many of us who use textbooks do so with at least a modicum of guilt; we should, anyway. They’re expensive for students, and the supplemental sections with real-world examples that students don’t read anyway drive up the prices. But time is important, and the cheap or free textbook alternatives (I’ve been using CORE for a year and a half now — it’s fine but at least it’s free) often lack those amenities that facilitate evaluation. I also suspect that we choose our textbooks to signal our values — there’s no way I’ll assign a textbook by Glen Hubbard, and I resented how one university required me to teach with Mishkin’s Money and Banking textbook. But is Cecchetti and Schoenholtz’s book really better, even if I like their papers more, and they weren’t featured in Inside Job as captured by industry? I appreciate Paul Krugman and Daron Acemoglu’s work too, but the contrast between their textbooks and the books that they’ve written for undergrads’ parents (I have to assume) is great.

It’s worth noting that textbooks — successful ones with multiple editions, and international versions, too — are good business, if you can find it. Henry Farrell wrote as much in this Monkey Cage post with the apt title, “College Textbooks Are a Racket.” It’s easier to find reports on what Greg Mankiw has earned in royalties — in 2013, his publisher’s bankruptcy could have interrupted his receiving $1.6 million — than what Krugman earns, and it’s also worth noting that Paul Krugman refused to comment in his own blog post revealing that data.

The most recent US edition of Stiglitz’s textbook came out in 2006, but international editions have been published in 2011 and 2015. Economics students that plan to go into business, policy, or academia and whose professors don’t want to assign Mankiw or Krugman will read these books. Who are Stiglitz, Krugman, and Acemoglu writing their popular books for? If the answer is policy-makers, they should think about the content of their textbooks. If the answer is voters, we are going to see a continued disconnect between the politicians we vote for, and the feasibility of their passing what they promise, if their staff have bought in to the ideas they learned about early on.

Volz’s piece ends with two discomfiting anecdotes. In 2008, Stiglitz chaired a UN Commission of Experts on Reforms of the International Monetary and Financial System to evaluate how the IMF should proceed in responding to the Global Financial Crisis; he also chaired a Commission on the Measurement of Economic Performance and Social Progress, convened by then French president Nicolas Sarkozy. In these capacities, Stiglitz (and the Commissions) argued that the World Bank and IMF should prioritize financial stability through the creation of various macroprudential institutions, and that GDP was a flawed indicator of economic performance and social progress. (Stiglitz, Sen, Fitoussi, 2019) In 2013, the one division of the IMF released an Ombudsman report about how it had failed in its responses to the Eurozone crisis; its research staff continue to make pro-austerity proposals. And with some understatement, Volz notes that the second report “did not lead to any meaningful policy uptake.” (Volz, 2019)

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