Economics: You may have seen television pictures of Michael Jackson's Gulfstream Jet landing at Santa Barbara airport in California, bringing the entertainer back home from Las Vegas to face child molestation charges.Here is a small but significant detail of interest to economists and taxpayers about that event: the megastar's arrival was subsidised by the American taxpayer, writes Conor O'Clery.
Corporate jets, which whisk celebrities and overpaid CEOs around the country, from offices to ski resorts and political fundraisers, are exempt from paying their share of the US's publicly funded and hugely expensive air traffic control system.
One would think that with privatisation and the emphasis on the bottom line, corporate jets would be made to pay their way, just like the airlines which pass the charges on to you and me in economy class.
Not so, according to Joseph Stiglitz, who reveals this "particularly obnoxious example" of corporate welfare in this book. And moreover, he says, it exists because it was protected by corporate lobbyists who otherwise make a career out of attacking government spending on services for the public.
Skewed deregulation and misregulation of this kind are among the flaws that Stiglitz identifies as responsible for bringing about the bust after the boom of the 1990s. Other seeds of destruction included fundamental mistakes by the Federal Reserve, creative (i.e. dishonest) accounting, corporate looting, over-zealous deficit reduction, and globalisation policies that imposed impossibly harsh prescriptions on developing countries.
None of this will come as a surprise to those who have been following Stiglitz's evolution from insider at the heart of global decision-making - he was chairman of President Clinton's Council of Economic Advisers and,for three years, chief economist at the World Bank - to scourge of market fundamentalists and globalisers.
Last year the author caused some shock and horror in the corridors of the International Monetary Fund (IMF) headquarters in Washington, when he charged in his bestseller, Globalisation and its Discontents, that IMF policies had been hijacked by deregulators and ideologues and were responsible for exacerbating the suffering of countries in trouble. He provoked Kenneth Rogoff, then chief economist of the IMF, into accusing Stiglitz of slandering IMF officials, of advocating inflationary policies that would have devastated the poor, and (here he put the boot in) of never admitting he was wrong.
This book is Stiglitz's counter-attack. The author, who won the Nobel Prize for economics in 2001, argues that the US is still failing to learn lessons from what went wrong after a decade of unprecedented growth and the triumph of capitalism over communism.
In the 1990s, like the golfer who has just played a good shot and lectures his fellow players on how to swing the club, the US took to telling the world how to conduct its business. Its politicians lectured less fortunate countries; its CEOs became gurus in world capitals; the US went through a period of preening self-confidence as the global economic leader.
As the "new economy" revolutionised the way the US did business, the rich reaped the largest share and everybody seemed to be gaining. Financial killings were made on Wall Street and the Nasdaq. Money flowed into the US. The deficit was eliminated, poverty was reduced and the growth in inequality halted. Eight million jobs were created between 1997 and 2000. Welfare rolls fell by more than a half over six years.
The first glimmerings that something was wrong came in 1997 in Asia with the crises in Thailand, Korea and Indonesia. Two years later, the anti-globalisation riots in Seattle were a harbinger of growing world protest. Then, four months into the new millennium, technology stocks crashed.
Within two years $8.5 trillion was wiped off the value of American companies. First Enron, then WorldCom went bankrupt. Industrial production went into decline. Two million jobs were lost in 12 months.
Should the Feds not have seen the signs of the bursting bubble? Federal Reserve chairman Alan Greenspan warned in 1996 against "irrational exuberance" but didn't act on his own advice, assuming that words of warning alone would do the trick. When they didn't, there was no next step.
Next, the deregulation of the telecommunications industry paved the way for the over- investment bubble. The craze for compensation in the form of stock options led to all sorts of financial chicanery. As the financial community was lecturing the government on fiscal rectitude, it was working to help the Enrons avoid taxes they should have been paying. Washington aggravated the long-term fiscal position by cutting capital gains tax.
Stiglitz is a sharp critic of what George Bush senior once called "voodoo economics", cutting taxes to increase tax revenue through higher production, as Ronald Reagan did and as George Bush junior is now doing. The secondary agenda, of course, was to create deficits that would force expenditure cuts and fulfil the Republican ideal of downsizing government.
At the same time as the US condemned subsidies for failing industries abroad, American farmers were being heavily subsidised to produce more, forcing down global prices for crops that poor, underdeveloped countries depended upon. Mali received $37 million in aid from the US, the author points out, but lost $43 million from depressed cotton prices.
Stiglitz maintains that the present Bush administration's tax cuts are a return to voodoo economics, its subsidies are hypocritical, and its abandonment of treaty after treaty, from global warming to the international criminal court, has made the world less enthusiastic about helping the Americans when needed.
This book, with its central message that there is no single ideal or right form of market economy, is a useful primer for Democrat candidates in the presidential election, though they should be careful about embracing too closely its pervasive cynicism (The productivity boom, for example, was not a bust.)
For someone who was on the inside during the last decade there are disappointingly few insights into the personalities that drove "the roaring nineties" and the often chaotic process of decision-making. The closest we get to personal flavour is the fact that when Greenspan warned of irrational exuberance, he was wearing evening dress.
Bush's approach is a "thousand times worse" than Clinton's on issues such as globalisation, says Stiglitz, but it would have been illuminating to know more about Clinton's personal role in the last decade and how he came to let himself be rolled over by Wall Street.
Conor O'Clery is North America Editor of The Irish Times
The Roaring Nineties. By Joseph Stiglitz, Allen Lane, 389pp. £ 18.99