The Finance Foundation
Reinventing capitalism for all
President of the Finance Foundation

Debt is good for you says Professor Stiglitz. He is totally right
September 03, 2015 , Michel Gabrysiak - Financial Markets
Professor Joseph Stiglitz, who got a Nobel Prize in economy, is on a path of war again. He is totally against the austerity imposed on European countries in general, on Greece in particular. He considers that austerity is the main cause of the bad performances of European economies.
For him, debt is good. Good, if and when money is used to invest in companies creating jobs, or in infrastructures which in turn force everyone to work and produce. To take new debt in order to build the future is not a mistake. On the contrary, it is good.
Because of the very low interest rates, he says, everybody should be investing with debt.
By the same token, he does not propose a high level of growth. He thinks that, on the long term, a medium growth level would be perfectly acceptable. This growth has to be divided between salaries and profits. Profits are not bad, but when they are too big, when a few people make too much money while the vast majority does not make enough, it is not a situation for the future. Our main problem is investment in real economy. Stiglitz considers that the European conservative bodies are attacking debt only to stop, or diminish, the social role of the state. He is definitely against that.
The question that arises: Is it possible to invest in production and jobs and in huge social endowments? He does not answer that question; nobody does.
But a debate on the positive aspects of debt would be very important and welcome.
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