Stiglitz began his remarks by introducing a theme he would stress throughout the lecture: the importance of asking questions. "At Amherst, the answer is not so important as asking questions. And that's different from other institutions, where professors spew out knowledge and students write it down," said Stiglitz. "There are many times where people believed they knew what the world was. And you asked them, how do you know that? And people get angry. It reminds me of the Emperor who has no clothes. It is very troubling for the people with no clothes to be told they have no clothes."
A former senior vice president and chief economist at the World Bank, Stiglitz focused the lecture on his specialty, global economic development, and particularly the development of Russia. "When Russia began a move from communism to market economy, there were those who believed the transition to market economy would result in a strong burst of economic growth," said Stiglitz. "Well, what happened is that [their] economy started to decline year after year. Rather than growth, they have had real declines in GDP."
Calling the transition to capitalism for communist nations the greatest economics experiment of the 20th century, Stiglitz spoke about one country he views as a success story: China. "Some people say it was easy for China. China was a poor country, and it was easy to grow. Well, China faced the challenge of being poor and experiencing a transition and was more successful [than Russia]," said Stiglitz.
He then explained why China succeeded economically and Russia did not. "Beginning in 1989, China's GDP was below Russia's and at the end of the decade Russia's GDP is more than 40 percent lower than China's," said Stiglitz.
"In a decade Russia had achieved a degree of inequality it took other countries a century to build up," said Stiglitz. "China, on the other hand, took its growth and shared it reasonably equally and has made an effort to reduce poverty and still does today. The standard theory is that Russia's economy should've improved enormously and that China should've failed."
Stiglitz believed another reason for Russia's failed transition was related to corporate governance. "This issue of corporate governance is considered the key component in why these countries were unsuccessful," he said.
"Russia had these enormous natural resources. And this group of oligarchs decided to take charge of Yeltsin's re-election campaign," Stiglitz added. "They said, 'We'll get you reelected if you give us half the country's resources.' They tried to have a semblance of a rule of law. And they owned half of Russia's natural resources overnight. That system of privatization was not only corrupt; it contributed to the downturn of the economies of these countries."
"I thought it was a great lecture," said Mike Stevens '03. "I think he has such great first-hand experience and everything he says, he knows."
Professor of Economics Beth Yarbrough echoed those sentiments. "[Stiglitz's] lectures are treasures for students. First of all, they're always lively, outspoken and thought provoking; and it's always obvious how much he enjoys interacting with students and how much he cares about Amherst," she said.