Not such a low and dishonest decade

If it is to be interesting, contemporary history has to be a battle between good guys and bad guys. In his The Roaring Nineties Professor Joseph Stiglitz lets the reader know at an early stage in the proceedings that he is a good guy. As he says in the preface, when he first fell in love with economics,

I wanted to understand what caused the poverty, unemployment and discrimination that I had seen all around me growing up, and I wanted to do something about these problems.

Stiglitz spent much of his early career in universities and made important advances in such highly theoretical areas of economics as the understanding of ‘information asymmetries’, which led to his being awarded the Nobel prize for economics. But in 1993 he became Chairman of the Council of Economic Advisers to President Clinton. An active and controversial decade close to real-world policy-making followed, with a stint as Chief Economist at the World Bank between 1997 and 1999, culminating in sharp polemics with the International Monetary Fund. The IMF was savaged in his last book, Globalization and its Discontents, for propounding the ‘Washington consensus’ that free trade, privatisation and independent central banks are the best economic prescription for developing countries.

The Washington consensus also receives a few brickbats in The Roaring Nineties, but the main themes in this new book are American rather than international. The 1990s were certainly an exciting decade for the American economy, with hopes of a New Paradigm of never-ending prosperity accompanied by both a remarkable rise in share prices and an extension of share ownership to about half the population. In retrospect it is clear that much of the excitement was unjustified. Share prices fell for three years from early 2000 and remain about 30 per cent below their peaks.