Nobel Prize-winning economist Joseph Stiglitz on Friday called for greater international cooperation to address the “seismic” changes brought on by COVID-19 and the Russian invasion of Ukraine.
In a speech given virtually to the Taipei School of Economics and Political Science Foundation, the former World Bank chief economist said that the pandemic and Russia’s Feb. 24 invasion of Ukraine would be marked by historians as “cataclysmic” turning points of the 21st century.
Such challenges underscore the need for collective action and international cooperation, he said.
“None of us individually would have been able to combat the disease [COVID-19] or combat the economic effects of the disease,” Stiglitz said.
The economic toll of COVID-19 would have been considerably higher had it not been for the collective action of governments around the world, he said.
The Columbia University professor said that the ratification of a 750 billion euro (US$790.5 billion at the current exchange rate) stimulus fund by all 27 EU member states in May last year was an example of successful collective intervention.
However, the world is more divided and moving toward a “new cold war” that could jeopardize the coordination of international collaboration, he said.
A world of liberal democracies and free-market economies envisioned by some economists has not played out, and instead, the world is overshadowed by the rise of authoritarianism in China and Russia, Stiglitz said.
“So the challenge that we are going to be facing is how do we wage this new cold war and at the same time cooperate in solving common global problems,” he said, adding that global problems such as climate change and pandemics could only be addressed by cooperative action by all the countries of the world.
He also highlighted the importance of social cohesion and trust to tackle global challenges.
“Those societies that responded [to COVID-19] best, like New Zealand, were those where they trusted the government, they trusted science... There was a high level of social cohesion,” he said.
Stiglitz said he did not agree with the argument made by some US politicians that inflation had been caused by COVID-19 stimulus spending.
“The underlying problem is the supply chain,” he said adding that interest rate hikes could make inflationary pressures worse.
“In fact, an increase in interest rates may have adverse effects, because what we need to respond to a supply-side problem is investment,” he said, adding that raising interest rates would make investment more difficult.
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