July 14, 2012

Why does not Professor Stiglitz get it?

Sir, I refer to Samuel Brittan´s “Unequal measures” and where he reviews Joseph Stiglitz latest book, July 14. As a former Executive Director of the World Bank I have over the years had several opportunities to interact with Professor Stiglitz, although that of course does not mean he should have the faintest idea of who I am.

Nonetheless, in doing so, it has been an immense source of frustration to me not being able to get him to understand that if your bank regulations have, as its principal pillar, that lending to those who are perceived as risky require the banks to hold more capital than when lending to those perceived as not risky, you are effectively, and aggressively, impairing the rights of the "risky" to an equal opportunity to access to bank credit… and that this signifies one of the most important drivers of the increased inequality. 

And Professor Stiglitz, like so many other experts, stubbornly keeps on mentioning excessive financial risk-taking as the cause of this crisis, not wanting to listen to the argument that it was because of excessive trust in things not being risky, cést pas la même chose, only because that does not perhaps fit his agenda. But then perhaps it is also so that when you get a Nobel Prize, it is only human to stop listening to anyone else but yourself. If so let that serve as a consolation, and warning, to all of us non Nobel Prize winners.