Sometimes I wonder if Joseph Stigltz has ever read a five year plan that he did not agree with ex ante. Not surprisingly, he agrees with China’s continued attempt at managed economic development through its five year plans. The last paragraph of his recent op-ed summarizes his position.
Market economies are not self-regulating. They cannot simply be left on autopilot, especially if one wants to ensure that their benefits are shared widely. But managing a market economy is no easy task. It is a balancing act that must constantly respond to economic changes. China’s 11th five-year plan provides a roadmap for that response. The world watches in awe, and hope, as the lives of 1.3 billion people continue to be transformed.
Even though most economic theory and evidence contradicts what he claims, Stiglitz remains steadfast in his conviction that his research (i.e. information asymmetries in markets lead to suboptimal outcomes) undermined all propositions about the self-regulating aspects of market economies.
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