Donald Trump’s unexpected victory in the US presidential election has prompted much debate on the future path of US economic policy. According to American economist Joseph Stiglitz, the rules of America’s economic system have been rewritten over the past third of a century in ways that serve a few at the top, while harming the economy as a whole, especially the bottom 80%. Stiglitz says that if Trump is serious about tackling inequality, he must rewrite the rules, in a way that serves all of society, not just people like him. Stiglitz makes the following recommendations:
Investment: The item on the agenda should be to bolster investment, thereby restoring robust long-term growth. Trump should emphasise spending on infrastructure and research. Improved infrastructure would enhance the returns from private investment, which has been lagging. Ensuring greater financial access for small and medium-size enterprises would also stimulate private investment. A carbon tax would provide (i) higher growth as firms retrofit to reflect the increased costs of carbon dioxide emissions, (ii) a cleaner environment and (iii) revenue that could be used to finance infrastructure and direct efforts to narrow America’s economic divide. However, given Trump’s stance on climate change, this is unlikely to happen.