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One On 1: Joseph Stiglitz Stocks Up On Economic Insight

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As one of the nation's leading economists, Joseph Stiglitz has been in demand all over the world as a result of the financial crisis. NY1's Budd Mishkin filed the following "One On 1" report.

It's not unusual for one of the nation's top economists to get calls from the White House and leaders around the world. But if you really want to get in touch with him, Stiglitz recommends calling his wife.

"Call my wife, who tends to be much more responsive in answering cell phones or text messaging," says Stiglitz.

That's because Joseph Stiglitz, a man who tries to assess the world's financial future, says he's a little behind the times -- for good reason.

"One of the problems if you're trying to do writing, research, thinking...much of the way modern civilization is organized, makes it very difficult. Because you get constantly bombarded," says Stiglitz.

The 67-year-old Stiglitz has been on the faculty at Columbia since 2001. He served in the Clinton White House's Council of Economic Advisors, then as chief economist for the World Bank and in 2001 won the Nobel Prize for Economics.

With so much attention on the financial crisis, Stiglitz, along with economists like Paul Krugman and Jeffrey Sachs, has become part of a group of so called "rock star" economists, traveling the world, offering advice. Needless to say, his passport gets quite a workout.

His latest book is "Freefall," in which he accuses our government's economic leaders of failing to foresee the crisis.

"There was a bubble. That the bubble would eventually break, that when it broke there would be chaos in its wake," says Stiglitz. "To me it was hard to understand how they could not see the problems that were coming."

He also lambastes Wall Street.

"I could understand a little bit better their mindset. They weren't looking systemically, they were looking at, 'How do I make a dollar?'" says Stiglitz.


Over the last two years, many of the potential dangers that Stiglitz wrote about have come to fruition.

"It's never good to say 'I told you so.' But I probably have not been embarrassed when other people have said, 'He told you so,'" says Stiglitz.

Stiglitz has written a number of best selling books, often criticizing globalization and what he calls "free market fundamentalism."

"You're getting big bonuses for record losses? It just seems too strange for words," says Stiglitz.

Ironically, the book echoes some of the feelings espoused by a group that might be seen as his political opposite, the tea party.

"I think the tea party movement is exactly the kind of thing I feared would happen if we didn't address the problem of the crisis the right way," says Stiglitz. "The problem is we didn't regulate the banks. So what is their reaction? Let's get government totally out of the way so that they give the banks more scope for doing the kind of things that they've just done."

When Stiglitz isn't advising leaders around the world, he's quietly researching and writing in his home near Columbia. But translating his economic world to those who don't speak the language -- namely, most of us -- is not so easy.

"To most non-economists, the fact that there is discrimination, the fact that there's unemployment seems obvious. And to say that I have to explain why markets don't work in a way that leads to unemployment makes people scratch their heads -- 'Obviously, there's unemployment!' says Stiglitz.

The quiet of this environment can't mask the fact that the global economy has become a full contact sport, with Stiglitz giving and getting his share of criticism. He says it's not surprises, because the stakes are so high.

"It makes a difference whether you have a stimulus package or you don't. It makes a difference if you do something about the mortgages that are going into foreclosures or you don't," says Stiglitz.

Years ago, when Yale University was considering Joseph Stiglitz for tenure, they got in touch with the world famous, Nobel Prize winning economist Paul Samuelson, who's from Stiglitz's hometown.

"They wrote to him and said, 'What is your view of Joe Stiglitz?' And he replied, 'He is the best economist from Gary, Indiana.' And of course, since most of them did not know he was from Gary, Indiana, they thought this was a rather left-handed compliment," recalls Stiglitz.

Gary, Indiana was a steel town that became a symbol for the decline of the rust belt. Interestingly, it was home to several of the country's leading economists.

"Something in the context of growing up in Gary and in this industrial city inevitably made a lot of people think about economic issues," says Stiglitz.

His father was a small businessman who imbued in his son a skepticism of anticompetitive practices in big business. Stiglitz later drew on these lessons while working at the White House and the World Bank.

"I would reflect occasionally on wondering what, seeing things through the eyes that he must have seen things as he was trying to struggle," recalls Stiglitz.


As student council president at Amherst College, Stiglitz led a group to Georgia and invited students from Morehouse College, the historically black institution in Atlanta, to visit Amherst. He also attended the March on Washington in 1963, deepening his belief that the so-called "invisible hand" of the market clearly didn't solve all of America's inequities.

Stiglitz impressed his economics professors so much that they suggested a transfer to MIT, where Stiglitz thrived.

"We would spend a great deal of time talking about the problems of development, the problems of poverty and inequality," says Stiglitz.

Stiglitz climbed the academic ladder, teaching at Yale, Stanford, Oxford and Princeton. And there were battles, like arguing against deregulation during the Reagan administration.

"To try to stop that was like, you're on the other side of history. And yet to me it seemed pretty obvious both on the basic of my economic theory and historical experience that there would be a moment of correction," says Stiglitz.

In 1995, Stiglitz got the call to chair President Bill Clinton's council of economic advisors. Suddenly, any mistake wasn't his own embarrassment, but the administration's.

"Inevitably you feel much more pressure about how you put things. And inevitably the result of all that is, one's blander, one's less forceful, and one has to really circumscribe what one says," says Stiglitz.

In 2001, he got another call. From the Nobel Prize committee, citing his work that aimed to debunk the notion of efficient markets. The call came from a friend of his, so Stiglitz knew it was legit.

"There are probably people playing games on other people, knowing that they're waiting to get this call, that somebody could call up to me -- it had not even occurred," recalls Stiglitz. "But obviously, the fact was that he wanted to make sure that I knew that this was not a hoax."

Since 2004, Stiglitz has been married to another Columbia faculty member, former journalist Anya Schiffrin. He has four children from two previous marriages.

He is one of a small number of economists frequently called on to share his views on the financial crisis, the bailout bills and how the administration should proceed. A colleague once referred to those views as "quixotic."

"Many of the important changes take time. And so what looks quixotic at one moment, 10 years later, 20 years later, or even two years later may seem, 'boy was that on target!'" says Stiglitz.

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