When Russia attacked Ukraine, European decision-makers made at least one big mistake, says economic Nobel laureate Joseph Stiglitz to EPN

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When Russia attacked Ukraine at the end of February, the European decision-makers did by Joseph Stiglitz in my opinion, at least one big mistake.

Then it should have been immediately understood how much disruption the attack will cause to the energy sector, Stiglitz, Nobel laureate in economics, tells .

Now, the disruption caused by the war is felt in the lives of almost all Europeans, as electricity and heating bills are rising at a furious pace. The concern is the increase in poverty and political unrest.

In Stiglitz’s opinion, these consequences are largely unnecessary. This shouldn’t have happened.

– European leaders did not want to think that this is actually an economic war with huge consequences for the energy market. The leaders did not act quickly enough.

Share your profits, the Nobel laureate says to large companies

Joseph Stiglitz is used to examining countries’ reactions to economic crises and drawing a picture of the direction the world economy is going.

Stiglitz is one of the world’s most influential economists. He received the Nobel Prize in Economics in 2001.

Joseph Stiglitz

  • American Joseph Stiglitz, born in 1943, is a professor at the famous Columbia University.
  • He received the so-called Nobel Prize in economics in 2001 after studying the effects of imperfect information on the functioning of markets.
  • He has worked, among other things, as chief economist at the World Bank.
  • He has advised both US President Bill Clinton and French President Emmanuel Macron.
  • Since then, Stiglitz has become known as a vocal critic of globalization and neoliberal ideology, which wants to equalize the power relations between rich and poor countries and tax large multinational corporations heavily.

    In taxation, Stiglitz also finds one solution to Europe’s energy crisis.

    – At the same time that families and small businesses are suffering enormously, there are companies that are making huge profits. They haven’t done anything special to create these profits, they’ve just profited [sodan takia] from expensive gas, oil, electricity and so on.

    This is unfair to Stiglitz. On Tuesday, he published together with his famous colleagues report regarding the taxation of multinational companies (you will switch to another service). The conclusion of the report is that states must impose some kind of emergency or exceptional tax on companies profiting from the war situation.

    – We tell them to share your winnings.

    The finger of blame is aimed especially at oil companies

    A so-called windfall tax introduced in a few European countries, such as Belgium.

    In practice, it is an additional tax for those companies in the energy sector whose profits have increased during the crisis, but whose production costs have remained the same. The idea is that these tax revenues can be directed to support, for example, the households most affected by the increase in energy prices.

    A windfall tax may also be introduced at the level of the European Union. EU energy ministers will probably discuss the proposal again next week.

    It is a step in the right direction, but it comes too late and could be much wider, says Stiglitz.

    Stiglitz points his finger especially in the direction of the energy sector and especially oil companies.

    The price of oil – as well as natural gas – has risen sharply as a result of the war. For example, the oil giants Exxon, Shell and Total have reported their top profits.

    But the problem is not only in the operations of oil companies, but according to Stiglitz, companies in the food industry could also benefit from martial law.

    In general, multinational companies have been taxed too lightly, says Stiglitz.

    – They have taken advantage of globalization so that they have been able to avoid paying taxes, says Stiglitz.

    He is not the only one who thinks so. More than 130 countries have committed to setting a global minimum tax. An agreement was reached on the project last December, but its implementation is still in progress.

    The pandemic showed the good and bad sides of globalization

    Globalization is one of Stiglitz’s most central research subjects.

    First the pandemic, then the war of aggression by Russia and the extensive sanctions related to it, as well as talks about reassessing the risks related to China as well. Where is globalization now?

    Stiglitz first makes two observations about the pandemic. According to him, it showed the fruits of globalization and its downside.

    The development of the coronavirus vaccine was a victory for science and globalization. A Hungarian researcher worked on the MRNA project in the United States and a Turkish researcher in Germany, Stiglitz lists.

    But the end is failure.

    – The global distribution of vaccines failed miserably. They were hoarded.

    Stiglitz sees that the consequences of this failure are also reflected in the reactions to the Russian war of aggression.

    A large number of countries in the world – especially in Africa – have not clearly condemned Russia’s military actions in Ukraine. According to Stiglitz, the reactions of these countries are related to the hoarding of vaccines and the fact that the know-how and intellectual property rights needed to manufacture vaccines have not been shared with poorer countries.

    – Why would we support your sanctions when you were selfish when we needed help?

    – We are now paying for our selfishness.

    “We are in a new cold war”

    Globalization can still produce benefits.

    Stiglitz has not lost his faith that international trade can create good for a wide range of people.

    – We have to be more realistic. We have now realized that the borders of countries matter and there are parties that do not share our values, says Stiglitz.

    – I hope that we can convince people in different parts of the world that there is a connection between democracy and human rights and economic development.

    On the day of the interview, the President of Russia Vladimir Putin has told about a partial implementation of the movement. Economics professor Stiglitz has a rather gloomy view of the current world order.

    – We are in a new cold war. Like it or not, it’s true.

    But there are also things where Stiglitz is hopeful.

    He said at the Nordic Business Forum event that the availability of renewable energy and its current low price have positively surprised him.

    Young people also give hope to the soon-to-be 80-year-old Stiglitz. Young people understand the importance of slowing down climate change and also the dangers associated with inequality, he says.

    What thoughts did the story evoke? You can discuss the topic until Saturday, September 24 at 11 p.m.

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