FTAs promote inequality: Stiglitz
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Prensa Latina | 22 September 2011
Freely translated by Anoosha Boralessa in April 2015. Not reviewed or revised by bilaterals.org or any other organization or person
FTAs promote inequality: Stiglitz
According to Joseph Stiglitz, the Nobel Prize winner for economics, free trade agreements (FTAs) constitute one of the clearest links between globalization and increasing inequality.
In an IMF seminar, Joseph Stiglitz, who was also a former Vice Chairman of the World Bank (IBRD), said that these agreements prioritized the liberalization of the movement of goods and prevents the free movement of workers.
Such agreements increase capital’s negotiating power on the labor force, reduce salaries and increase inequality, repeated the expert.
Without thinking that asymmetry affects growth, we have to be sure that the policies applied are sensitive to their impact on inequality said Stiglitz, in the context of an annual joint IMF/World Bank meeting.
The Noble Prize Winner for Economics claimed that the FTAs were unfair and were badly drafted. He gave the example of cotton subsidies to US farmers who grab the market from African farmers.
Furthermore the expert considered that the latter cannot compete with subsidized prices.
In his opinion, orientating monetary policy to achieving the goals of inflation is a thing of the past and must be forgotten since this phenomenon must only give rise to concern if it is goes out of control.
The link is clear: when inflation, for example, is related to an increase in energy prices or imported agricultural goods, the only form of buffering is through unemployment he explained.
He noted that workers therefore, in addition to suffering food shortage, have to face up to unemployment.
