Joseph Stiglitz on Transparency in Government | Big Think

Joseph Stiglitz on Transparency in Government

New videos DAILY

Join Big Think Edge for exclusive videos

----------------------------------------------------------------------------------

Joseph Stiglitz on Transparency in Government

----------------------------------------------------------------------------------

Joseph E. Stiglitz:

A graduate of Amherst College, Joseph E. Stiglitz received his PHD from MIT in 1967, became a full professor at Yale in 1970, and in 1979 was awarded the John Bates Clark Award, given biennially by the American Economic Association to the economist under 40 who has made the most significant contribution to the field. He has taught at Princeton, Stanford, MIT and was the Drummond Professor and a fellow of All Souls College, Oxford. He is now University Professor at Columbia University in New York and Chair of Columbia University's Committee on Global Thought. He is also the co-founder and Executive Director of the Initiative for Policy Dialogue at Columbia. Stiglitz helped create a new branch of economics, "The Economics of Information," exploring the consequences of information asymmetries and pioneering such pivotal concepts as adverse selection and moral hazard, which have now become standard tools not only of theorists, but of policy analysts. In 2001, he was awarded the Nobel Prize in economics for his analyses of markets with asymmetric information, and he was a lead author of the 1995 Report of the Intergovernmental Panel on Climate Change, which shared the 2007 Nobel Peace Prize. His most recent book, The Three Trillion Dollar War: The True Cost of the Iraq Conflict measures the war's opportunity cost to Americans.

----------------------------------------------------------------------------------

TRANSCRIPT:

Card: Does the government have a transparency problem?

Stiglitz: Well, the first point is a broader point. You know, I begin talking about the problems in our financial system related to lack of transparency. Well, one of the problems in our government is also been a lack of transparency. The way we financed this war, we’ve been using emergency appropriations, 24, 25 of them, you know, it’s understandable at the beginning of the war while we use emergency appropriations but 6 years into the war to say we are surprised? The reason why that’s important is that normal appropriation process entails a lot of scrutiny to make sure there’s not [waste], there’s not fraud. But the Bush administration deliberately wanted to avoid that kind of scrutiny. They wanted to say that victory is around the corner and we keep turning the corner and turning the corner and turning the corner, no victory. And so, we have to have another appropriation, another appropriation, another appropriation until we wrote our book. I don’t think there was any real comprehensive accounting of what this… the war is costing. Well, that was one of the reasons that we wrote the book. I testified before Congress and I said, “We should not to have to write this book.” You know this is your responsibility, to come to the American people and say, “This is what the war is costing. This is a big project.” This is what it’s costing, you have to make the judgment about the benefits versus the cost but we couldn’t tell you what the costs are. You… but this is a vast undermining of democratic processes, the… so the lack of transparency, the lack of good accounting. I talked before about the bad accounting procedure in Wall Street. Well, government’s accounting procedures are similarly very bad and for a similar reason, deception. One of the… one of the problems was they didn’t want us to know what the future cost were going to be. Every firm in the country, every responsible firm, uses what is called a [IB] accounting, that is to say when you’re taking action, you’re taking to account the future cost. We’ve been using cash accounting. So we don’t report the cost of the future disability payments, the future healthcare cost of those who are disabled. Until we talked about it, there was no real accounting of what these future liabilities are going to be, the 600 billion dollars, that’s a lot of money. So… but we’ve seen in Wall Street is that there are consequences of bad accounting and the same thing is true of the government. [IB] bad accounting, bad information, you make bad decisions. So, an example was, the President said he’ll get the military everything that it needs. Well, in writing our book, one of the things we discovered and since been reported in a lot of the press, was the military commanders in 2005 has asked for these special vehicles called MRAPs.

Read the full transcript at