Published on CommonDreams (first on The Guardian/UK), by Joseph Stiglitz, June 16, 2008.
As food and fuel prices continue to increase the world must look to new patterns of consumption and production:
Around the world, protests against soaring food and fuel prices are mounting. The poor — and even the middle classes — are seeing their incomes squeezed as the global economy enters a slowdown. Politicians want to respond to their constituents’ legitimate concerns, but do not know what to do.
In the United States, both Hillary Clinton and John McCain took the easy way out, and supported a suspension of the gasoline tax, at least for the summer. Only Barack Obama stood his ground and rejected the proposal, which would have merely increased demand for gasoline — and thereby offset the effect of the tax cut.
But if Clinton and McCain were wrong, what should be done? One cannot simply ignore the pleas of those who are suffering. In the US, real middle-class incomes have not yet recovered to the levels attained before the last recession in 1991 …
… Rich countries must reduce, if not eliminate, distortional agriculture and energy policies, and help those in the poorest countries improve their capacity to produce food. But this is just a start: we have treated our most precious resources — clean water and air — as if they were free. Only new patterns of consumption and production — a new economic model — can address that most fundamental resource problem. (full text).
(Joseph Stiglitz is university professor at Columbia University. In 2001, he was awarded the Nobel Prize in economics. His latest book is Making Globalization Work).