‘Tackling inequality is key for India in age of change’: Economist Joseph E Stiglitz at HT Leadership Summit

Joseph Stiglitz, the US economist and Nobel laureate, spoke at the 24th Hindustan Times Leadership Summit about the challenges facing today's global economy. He noted that the US is in the twilight of its power, and China is transitioning from being an export superpower to focusing on domestic consumption. Stiglitz emphasized that managing domestic inequality in India is key to sustaining high levels of growth.

He pointed out that the biggest change in the global economic order occurred in the last decade when China's GDP in purchasing power parity (PPP) terms surpassed the US's. However, China still relied on the export route for growth, much like the US did in the past. Stiglitz warned that China's large trade surplus and the need for a better quality of life will require the country to reorient its economy.

He also highlighted that the US economy's increasing monopoly power and the super-rich not paying their fair share of taxes contribute to the fiscal cliff it faces today. Stiglitz argued that growing debt levels in advanced economies, especially the US, must be corrected by taxing the super-rich to avoid raising the cost of capital for all nations, including India.

He explained that inequality is not only a domestic issue but also a global one, leading to migration pressures and growing anxieties. This has produced politicians like Trump, who undo the US's past advantages by attacking universities, research, and science. Stiglitz called for a global understanding of inequality, proposing the creation of a global panel on inequality similar to the one established for climate change.

He emphasized that the world needs to treat inequality as a systemic political economic risk. Stiglitz was a member of the Intergovernmental Panel on Climate Change (IPCC) in the 1990s, and he warned that climate change is happening faster than the IPCC had anticipated. Tropical areas, including India, will be particularly severely affected.

He noted that "groundwater sustainability" is becoming a crisis in India, and if left unchecked, it could lead to serious consequences for agricultural productivity. Stiglitz believed that India's biggest advantage is its large domestic market, provided that income inequality is managed well. He stressed the importance of investing in human capital, especially education, as well as maintaining fiscal discipline for India's continued growth.