L.I.S.A.: In spite of the criticism of the crisis-hit prevailing economical system, advocates of this system argue that from a global point of view, humankind has become wealthier and the life expectancy has constantly increased. Is it working better than perhaps one thinks?
Prof. Galbraith: No. There is nothing to be said for the waves of financial fraud that swept over the developed world in the run-up to the crisis, and whose aftermath has unnecessarily impoverished millions, especially among low-income communities in the United States and on the periphery of Europe. A visit to Cleveland, or to Athens, will persuade any sensible person of this.
L.I.S.A.: How do the people of the United States judge the European policy to deal with the financial and debt crises? The U.S. government has reacted in the Keynesian way with massive deficit spending measures, while European governments have chosen austerity ones. How can the shift in the economic policies on both sides of the Atlantic be explained?
Prof. Galbraith: The main difference lies in the fact that the dominant US social institutions remain those created during the New Deal and the Great Society -- Social Security, Unemployment Insurance, Medicare, Medicaid, Food Stamps -- which have a powerful stabilizing effect. In Europe the continental-level institutions were created in the age of neoliberal economics, they lack continental-level stabilizers, and so they are destabilizing in the face of crisis. Differences of current policy ideas are also present but they are less important than this fundamental difference in institutions.