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Economic Power


 

What is the role of the U.S. in the disposition of the world's economic and environmental resources? How are financial markets best defended from economic shock? Does liberalization ensure prosperity? Journalist Naomi Klein speaks with economists Joseph Stiglitz and Hernando de Soto in a conversation moderated by David Harvey, Distinguished Professor of Anthropology at the Graduate Center, CUNY.

 

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Comments (6)add comment

ALVARO MOSCOSO said:

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Hernando de Soto es un excelente economista y es muy conveniente escuchar sus puntos de vistas mas aun en estos momentos de declive de las finanzas mundial quisera que halla mas personas como el en ayudar no solo a un sola bandera sino al mundo saludos desde Huacho Perú
June 18, 2009

anthony said:

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At the time of financial crises we need to come together united and try to solve the problems which are responsible for such a hazard. We need to overcome it. It is meant to bring calm to the population and markets and display government strength and stability. As a large number of people spend their money in movies, making films, sports, nowadays even on internet many casinos offer to
March 18, 2009

Shaterian said:

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I was shocked that Hernando de Soto was even on this panel! He did not engage the issues at hand except to re-state his pet thesis of property rights, which Stigliz raised questions about and Klein coyly critiqued with evidence from her research. I was also shocked that New York audiences seemed to be eating up his fury and finger-wagging. I expected an audience at the Graduate Center to resemble readers of the New York Post less.
March 11, 2009

kirs said:

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excellent forum!
hernando de soto comes across clear and sensibly and is SPOT ON!

securitization markets are a clear sign of fraud. IT is a current legal strategy for the foreclosed to challenge the banks ownership of the note and it is successful!

Banks have SO much OFF BALANCE SHEET...all the garbage. we are told that the economy really tanked in Nov 2007 but the "fraud" that is the information system of our capital markets kept the music running for a year more! This is evidenced in overnight OIS--Libor spread charts. Crystal Clear. What kind of "property" system is this?

Further, the "math" behind CDS is FLAWED FLAWED. CDS assumes to price:
(the probability of default) X (the depth of default).
However, the mere existence of CDS alters the likelihood of default itself! How can you price something circular like this! And yet the PhD investment banks pulled the wool over everyone's eyes. Teh ceo's of the same banks don't care..they made out good. How can we trust "investment banks" to come up with a pricing model when it is never properly discussed/peer reviewed. It is all proprietary for profit motives. FRAUD
March 11, 2009

Ignacio Gutiérrez said:

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Having just heard the talk with Steiglitz, Klein and De Soto, I’d like to take a stab at discussing capitalism, what it means as a system, and its future in simple laymen’s terms.

While I have no problems being described as a “free market ideologue” and listening to Naomi Klein refer to such thinking as silly as she did in the conference, I wish I would have heard De Soto talk just a bit more about why property rights are so important beyond their record keeping, which I found to be an enlightening point of view nonetheless.

To begin with, the fundamental meaning of capitalism by most dictionaries is “an economic system where individuals have the right to own property as well as have the right to create goods and services from that property which they can sell for a profit in an open and free market to willing buyers”. And it’s precisely that right which has helped solve innumerable societal problems through innovation much more effectively and efficiently than the relatively few other options in terms of economic systems such as communism, socialism or any other collectivist system where all goods, services and means of production are purportedly owned by the people or the state, which in turn is almost always a military dictatorship.

Without property rights, most people could kiss their individualism, and most importantly their creativity, goodbye. And to dismiss this whole financial crisis as the fault of capitalism, and to blame it squarely on Alan Greenspan, is grossly misinforming.

I was surprised De Soto didn’t describe the real cause of the current financial crisis which has been credit run amuck through dangerously low interest rates (where Al Greenspan can definitely be blamed) as well as creative financing on the part of many banking and financial institutions which sought to make a profit from mortgages they must’ve known would default. At least De Soto and Steiglitz saw eye to eye on much needed regulation, and perhaps even banning altogether derivatives and mortgage bundled securitization. Which is why merely blaming this all on free markets and “American capitalism” is too simple a generalization and one which leads people to believe, and continue to experiment with socialism and communism despite their failing time immemorial.

Hopefully if more people begin to understand the undeniable merits of a free market economic system where people are allowed to own property, and will have that right respected and protected on a more definitive and equitable basis, then maybe capitalism, with all it’s negative connotations and misunderstandings, will have a future. After all, there aren’t many other options economically speaking. Either governments grant people the right to own property and sell goods or services for a profit, or they don’t. The only “in betweens” or “third ways” are putting caps on how much people can earn, what they can and cannot own, and these usually lead to extremely unproductive societies where rationing becomes the norm and corruption is much more prevalent than in any capitalist society. Their only equality achieved is everyone being poor by essentially setting their productivity at the pace of the weakest links.

Both De Soto and Steiglitz are correct in their views. If property rights are better and fully protected from theft, extortion, arbitration, fraud, speculation, etc through proper regulation that is based on the rule of law rather than moral outrage, then economic prosperity for all will have a better chance at becoming an actual reality as opposed to right or left wing rhetoric.
December 03, 2008

Nandini Shroff said:

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When I read about the economic power forum at the Graduate Center in my Macaulay Honors College Thesis Colloquium, I knew I had to attend this prestigious gathering of economic scholars. In a refreshing and passionate manner, Naomi Klein, Hernando de Soto and Joseph Stiglitz engaged in an enthusiastic conversation regarding the current global economic crisis. The event was focused on capitalism, the market system and mostly on the recent bail out of the banks by the government.

Both Klein and Stiglitz criticized the American bail out. While Stiglitz praised the British handling of the bail out because of their stipulations and clear guidelines on where the money will be allocated, he condemned the United States government for the failure to do so. Where or who exactly is the bail out money going to? This is an important flaw in our bail out, especially in the light of recent AIG spending on exotic hunting trips for their executives. Klein also raised an interesting point regarding the issue. The government is not establishing the rules for Wall Street and the financial sector in the crisis. Rather, it is Wall Street that is directing the actions of our government. It really demonstrates that the government does not act in the interest of all; instead it is controlled by the elites for the elites.

Klein and Stiglitz primarily discussed the crisis in terms of the American government, Wall Street, the upcoming elections and what it means for the next president in office and the actions they will have to take. Hernando De Soto, on the other hand, brought the perspective of the developing nations, the so-called “banana republics” to the conversation. He emphasized that the cause of the financial collapse in northern countries is due to the failure of reconciling the reality and records. He insisted that the foundation of our economic system was our legal system, in the form of property rights. The collapse of the system of property rights has subsequently led to the downfall of the financial sectors.

Although the event was enlightening, it was disappointing in one aspect. I was expecting a more wholesome discussion on capitalism as an economic system and how it changed due to the bail out. I was hoping they would address the future of capitalism. Was it a failure as a system or just needed additional tweaking? But overall, it was a very lively evening where the audience got to hear some of the most prominent people discuss the current economic conditions.
November 18, 2008

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Naomi Klein

NAOMI KLEIN

Naomi Klein is an award-winning journalist, columnist for The Nation and The Guardian and the author of The Shock Doctrine: The Rise of Disaster Capitalism. full bio >>

 

 

 

desoto.jpg

HERNANDO DE SOTO

Hernando de Soto is the President of the Institute for Liberty and Democracy and the author of The Other Path and The Mystery of Capital. full bio >>

 

 

 

Joseph Stiglitz

JOSEPH STIGLITZ

Joseph Stiglitz is a Nobel Prize-winning economist and University Professor at Columbia University. A graduate of Amherst College and MIT, Stiglitz has taught at Oxford, Yale, Princeton, Stanford, MIT, and Columbia. full bio >>