Among all the books I've read describing the mistakes, misdeeds and malarkey that got us into the current Great Recession, Stiglitz' Freefall: America, Free Markets, and the Sinking of the World Economy is the most ambitious and comprehensive. The 2001 Nobel economics prize recipient, former World Bank economist and professor at Columbia takes an very expansive look at what's wrong and what might be done about it. This book is too big for a quick summary (and I'm underqualified to write such a thing) but I can share what I found so appealing about it, in addition to the fact that it is written to be read by general readers.
- Stiglitz starts with a thorough description of the subprime mortgage bubble, highlighting fraud and predation on poor people by bankers and financial whiz kids. He writes as if it matters that ordinary people ended up fleeced of their savings and without a home so Wall Street could inflate profits. He wonders repeatedly why the U.S. government didn't act more creatively to keep people in their homes after the bubble burst.
- He writes descriptively about what it means that we've had nearly 10 percent official unemployment for well over one year. In particular, he digs into one of the long lasting consequences of the lack of jobs that I had not seen explained elsewhere: unemployed people who might have held on in the working economy despite major disabilities have been forced to struggle their way into the permanent disability category of Social Security. Officials estimate that by the end of 2011, one million will have applied for disability and 500000 will get it, for the rest of their lives.
- Stiglitz asks questions that are so obvious to "little people" tossed around in these hard times, but are largely invisible to folks who are still prospering. Questions like: what's an economy for? -- he think it might include stability and leisure as well as vast wealth for a few. Or why do we need a financial sector? He suggests finance's reason for being is to move capital around to where it will serve the larger economy, not to act as a handy casino for the filthy rich.
- He is caustic on the limits of unregulated and under-regulated markets.
- He is critical not only of the Bush administration, but also of Obama's response to the crisis, despite having been an Obama booster in 2008. He uses the language "muddled through" and "moving the deck chairs on the Titanic" of the current adminstration.
- We might expect from a former World Bank economist, he puts his entire discussion in the context of the world economy at large. The Great Recession proceeds in the context of technological shifts, climate change, and emerging new economies; the U.S.A. is not the unchallenged top gun anymore. We cannot restore the illusory economic and political bubble that existed in 2000. We have to accomodate to a new reality.