14 April 2020

Nobel prize-winning economist calls for Green Deal after Coronavirus

A Nobel prize-winning economist has called for a Green New Deal to help pull the global economy out of its Coronavirus torpor.

Joseph Stiglitz – a professor at Columbia University, a former chief economist at the World Bank, and a former chairman of the US president's Council of Economic Advisers – told the BBC that the scale of the economic downturn and rise in unemployment are estimated to exceed that of the Great Depression in the 1930s.

When asked if a ‘new deal’ – the term given to the stimulus package rolled out in the US in the wake of the Great Depression – was needed to help revitalise the economy, Stiglitz volunteered the Green New Deal as the appropriate solution.

“The Green New Deal, or the Green Deal as it is called in Europe, is precisely the kind of thing that can grow the economy and transform the economy into the 21st century modern economy that we need,” he said.

The downturn was looking likely to lead to a U shaped recovery with a flat bottom, rather than a V shaped recovery as previously hoped, he added.

Outlining the case for stimulus, he said: “There’s a little bit too much focus on the debt, the cost of it and servicing it. In the current environment of near-zero interest rates, it’s not very significant.

“When you go to war you say ‘I am going to do whatever it takes’, you don’t focus on the debt.

“The lesson we should have learned from World War Two is that after the war in the US we had a debt to GDP ratio of 135%, but we said we are not going to let that stop us, we have massive government investment … and we had the fastest period of growth and the ratio came down.”

Read more about the potential for green stimulus here: https://www.environmental-finance.com/content/analysis/stimulus-packages-could-give-green-lining-to-coronavirus-cloud.html 

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Joseph Stiglitz