Joseph Stiglitz's memoirs of his years in Washington, D.C. -- first as chair of President Bill Clinton's Council of Economic Advisers and then as chief economist at the World Bank -- have the flavor of a morality play. Our goodhearted but slightly naive hero, on leave from Stanford University, sets out for the nation's capital to serve his country and improve the lot of the developing world. Once there he finds a morass of political opportunism, ideologically motivated decision-making, and bureaucratic inertia. Undeterred, he battles valiantly on behalf of impoverished nations against the unrelenting globalizers of the International Monetary Fund (IMF). As the tale unfolds, the reader waits with bated breath to learn whether the hero can save the world's poor from the consequences of bad economic advice.
Its melodramatic aspect notwithstanding, this book has a serious point. At its core is a withering critique of globalization, and of the role played by multilateral institutions and their principal shareholders in pressing developing countries to liberalize their economies. Too often, Stiglitz contends, those concerned with economic development have seen economic openness and liberalization as panaceas. He criticizes the Clinton Treasury Department for embracing this approach less because of its analytical merits than because it allowed the department to promote policies helpful to U.S. commercial and financial interests. Instead of progress, he argues, the result has all too often been devastation. Developing countries that have opened themselves to trade, deregulated their financial markets, and abruptly privatized national enterprise have experienced more economic and social disruption than growth. Foreign direct investment has destroyed potentially viable domestic companies. And liberalized international finance has made emerging-market economies more vulnerable to erratic shifts in investor sentiment without conferring any visible benefits.
Stiglitz's account also raises questions about the moral and professional obligations of economists in government and international organizations. Academics on leave, he argues, seduced by plush offices and first-class travel, may lose sight of their original motivation for public service -- namely, to enlist
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