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Published on November 11, 2007

Joseph Stiglitz, the Columbia University professor who won the 2001 Nobel Prize for economics, was in Bangkok late last month to promote his third title "Making Globalisation Work", which came out a year ago.

Stiglitz, 64, argued that China and India could be said to be among globalisation's success stories, however the forces of globalisation have also widened the divide between the rich and poor around the world.

Inequality or asymmetry is also evident in the United States, where the standard of living has not risen in step with continual expansion of gross domestic product over the past six years.

For Stiglitz, who won the Nobel Prize with two other academics for their analyses of markets with asymmetric information, it seems globalisation has mainly benefited only those at the top echelons while the rest do not get a fair share - or are even adversely affected.

Stiglitz said the world was not flat as suggested by Thomas L Friedman in his book "The World Is Flat: A Brief History of the Twenty-First Century", adding that a large gap remains between Africa and the rest of the world in terms, for instance, of human capital and technological development.

On international trade, the economist said it was obvious that developing countries are now worse off as a result of the signing of the multilateral trade agreement under the auspices

of the Uruguay Round in the 1990s.

According to Stiglitz, who was also a former chief economist and senior vice president at the World Bank, the West asked other nations to remove farm subsidies as a means to liberalise global trade, but the US itself, for example, did not do so.

US farm subsidies on the other hand have been effectively doubled.

He suggested that the world should now head towards a new round of multilateral trade negotiations that are pro-development so as to minimise discrimination against developing nations, many of which have found it hard to move into the next stage of development due to existing discriminatory measures.

He sees global financial instability as another major issue, as evidenced by the US sub-prime mortgage woes, which have seriously affected the world's financial system.

In his opinion, easy credit in the US is one of the root causes for the sub-prime woes, worsened by the notion that asset prices always go up.

However, the US median income has been falling for years, so low-income home-owners could not pay back their mortgages.

In the next few years, more than 1.7 million US home-owners may lose their properties and related equity, he predicted, adding that the current number of defaults is just the beginning.

He pointed at asset securitisation, which has been popular around the world in the past several years, as a means of creating more asymmetric information in the global financial system.

As a Columbia University professor who lectures on

globalisation, macroeconomics and related topics, Stiglitz

feels he has more freedom

to speak out now than when he was still working for the World Bank.

During the first four-year term of Bill Clinton's presidency, Stiglitz also worked as an economic adviser to the US president.

As for George W Bush, he views the current president as a "hypocrite" who dislikes multilateralism.

Despite his critical view of the US economy or certain administrations, he added: "I'm very pro-American as my values are fairness, non-discrimination and openness."

Last but not least, Stiglitz said he had been working on his fourth book, in which he plans to tackle the economic and social consequences of the Iraq War, which he believes are worse than earlier believed.

The economic cost alone is as high as US$1 trillion-$2 trillion (Bt33.9 trillion-Bt67.8 trillion), which will have to be paid over the next several years, while the social costs include an unprecedented number of disabled soldiers.

On skyrocketing oil prices, he said the war had added $5-$10 per barrel to the market price.

Nophakhun Limsamarnphun

nop1122@yahoo.com