I would like you to consider the final chapter of Stiglitz’ Freefall book in the context of happiness, shortsightedness, and trust. Stiglitz asks the question “Are we creating an economy that is helping us achieve [the kind of society we would like to have]”. There is plenty of research and insight on happiness, shortsightedness, and trust with respect to the U.S. economy. I would like you to find some applicable research and use it in your comment.
You should not only think about how happiness might be measured, but what might be the problem with only looking at happiness. Can we attain a happier and healthier society, and how can we be sure we have done so? Or, should we simply focus on GDP and income since that is an easy and somewhat effective way of measuring economic activity? We have talked a lot about inequality this semester, and a recent speech by Richard Wilkinson looks at what happens when we examine inequality instead of just GDP. It appears as though well-being has a lot to do with inequality and social status rather than just average national GDP. Thus, does the “rising tides lift all boats” mantra really hold true?
You might also think about the incentives in our economy which have created a sense of individualism without responsibility. Stiglitz notes that there are many situations where success is attributed to the short-sighted aspirations of an individual, but failure is attributed to luck (think of his CEO examples). However, we might be able to avoid many of these failures if we were to give incentives that promote long-run planning. In order to plan for the long-run, we might have to sacrifice some of the instant gratification that typifies today’s culture, but it might be worth it to regain some sense of stability. I would also like you to think about some of the immediate and long-run consequences of switching to a long-run view on the economy. You might also consider discussing how punishment for irresponsible behavior could help or hurt changing to a long-run view of the world.
Finally, you might also consider discussing how the issue of community and trust can lead to a better (or worse) economy. How might the government provide the proper incentives to encourage a greater sense of community? Or should this be left to the markets? You might think about trust and community with regard to banks, firm behavior, or whatever you choose. Think about any possible negative unintended consequences that might result if the government did promote a more trusting and community based economy.
Please try to think about all of these issues from several alternative perspectives. If you believe these are all great ideas, I want you to really consider how we should go about creating change and the consequences that might result from change. I also really want you to consider if these changes are possible in the United States.