Joe Stiglitz adds his name to the list of those who called the recent financial crisis. I guess it's like the Crash of 1987, which immediately afterword, everyone seemed to have called. In his lecture at the Nobel Laureate Meetings in Lindau, he says that he was among several people who told markets the crisis was going to occur.
His critique is like Taleb's (he mentions unappreciated fat tails), but more consistent, because he has written down some models on this for decades. Much of his oeuvre is based on showing how specific information asymmetries lead to deviations from perfect markets assumptions, non-Pareto efficient outcomes (one can make someone better off, without making anyone worse off).
But the fact that the world is filled with imperfections, and is not Pareto efficient, does not imply government regulation is an improvement, especially because government has worse imperfections. Indeed, government was right in there, as the Government controlled Fannie and Freddie were reducing their underwriting criteria to increase home ownership, especially for historically disadvantaged communities. And of course, like so many of these critics, he did not call the crisis, he merely has been carping on market irrationality and inefficiently for decades.
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