Thursday, July 02, 2015

Joseph Stiglitz 1: "Creating a Learning Society" even in New Albany?

The economist and educator Joseph Stiglitz is a Hoosier, born in Gary in 1943. Not unexpectedly, he's lived elsewhere ever since.

Economics can be an impenetrable morass, and there is no way of briefly surveying the career of someone as ubiquitous as Stiglitz, but here's a brieg biographical teaser.

Stiglitz helped create a new branch of economics, "The Economics of Information," exploring the consequences of information asymmetries and pioneering such pivotal concepts as adverse selection and moral hazard, which have now become standard tools not only of theorists, but of policy analysts. He has made major contributions to macro-economics and monetary theory, to development economics and trade theory, to public and corporate finance, to the theories of industrial organization and rural organization, and to the theories of welfare economics and of income and wealth distribution. In the 1980s, he helped revive interest in the economics of R&D.

His work has helped explain the circumstances in which markets do not work well, and how selective government intervention can improve their performance.

In New Albany, the Oscar Meyer Prize-winning fraudomist Dan Coffey also has done pioneering work in the economics of information, proving that when the the mayor is hostile, there's never enough information, but when he isn't, any available information must be carefully guarded by storage in grandma's cookie jar.

If the title of Stiglitz's forthcoming book is any indication, it is doubtful that he and Coffey will be breaking bread for the ritual sopping of barbecued bologna, washed down by copious quantities of sun tea, any time soon.

(No, Dan. "Leaning" means something else entirely)

But doesn't the phrase "Creating a Learning Society" perfectly capture New Albany's challenges as we move forward? The political culture of non-learning isn't keeping pace, and it may be time to try something different, for a change.

Creating a Learning Society: A New Approach to Growth, Development, and Social Progress, by Joseph E. Stiglitz and Bruce C. Greenwald. With Philippe Aghion, Kenneth J. Arrow, Robert M. Solow, and Michael Woodford

It has long been recognized that an improved standard of living results from advances in technology, not from the accumulation of capital. It has also become clear that what truly separates developed from less-developed countries is not just a gap in resources or output but a gap in knowledge. In fact, the pace at which developing countries grow is largely a function of the pace at which they close that gap.

Thus, to understand how countries grow and develop, it is essential to know how they learn and become more productive and what government can do to promote learning. In Creating a Learning Society, Joseph E. Stiglitz and Bruce C. Greenwald cast light on the significance of this insight for economic theory and policy. Taking as a starting point Kenneth J. Arrow's 1962 paper "Learning by Doing," they explain why the production of knowledge differs from that of other goods and why market economies alone typically do not produce and transmit knowledge efficiently. Closing knowledge gaps and helping laggards learn are central to growth and development. But creating a learning society is equally crucial if we are to sustain improved living standards in advanced countries.

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