Economist returns to Chile with Green Keynesianism project

Great-niece of Kafka, removed from Chile by Pinochet, author of works with Nobel laureate Joseph Stiglitz — the biography of economist Stephany Griffith-Jones is impressive.

But at age 74, instead of looking to the past, she invests her efforts in the future: a green Keynesian transition.

Next month, Stephany returns to Chile to take up again a post at the Chilean Central Bank, which he left in the 1970s, after the fall of Salvador Allende.

The military coup imposed a kind of self-exile on the economist. In 1973, she spent a period of studies in England, the country that would give her her second nationality, permanent residence, academic training and family.

“I stayed for a doctorate Pinochet, a doctorate by force”, he tells Sheet, in a videoconference interview from his home in Brighton, on the south coast of England. The tone has a certain irony, inherited perhaps from the Kafkas.

Now, she will be an advisor to the institution, appointed by President Gabriel Boric and former President Piñera.

“The Boric government will give high priority to green investments. And one of the mechanisms will be to expand the existing public bank, Corfo, which was great in the past in financing Chile’s industrialization. Today it works well, but it is small. create another development bank with a broader scope”, he says.

For the economist, Chile’s strategy aims to take advantage of the country’s existing natural resources. She cites the case of lithium and the possibility of producing hydrogen from solar or wind energy, the so-called green hydrogen, in addition to traditional copper, also with methods that are less harmful to the environment.

As advisor to the Chilean Central Bank, she will have to deal with the general rise in prices, which she largely attributes to national strategies for injecting a lot of financial resources, with emphasis on the action she considered excessive by the previous Chilean government to counteract the slowdown. economic. Situation accentuated by the impact of the Russia-Ukraine war on the price of oil and grain.

“It is a very complicated cocktail, and there is a little risk there. In 2022 we will have more inflation and less growth in the world than before. The dilemmas for those who conduct economic policies are very difficult. , at least in the short term, on growth, even if it is beneficial for growth in the medium term. And policies in favor of growth can stimulate inflation. The situation is indeed very complex”, he assesses.

“The most important thing now is to focus our attention on the green transition, a great challenge for humanity. It is important to save the planet, but also to generate new job opportunities and increase productivity. With the transition, it will be possible to generate many innovations, many investments and lots of jobs,” says Stephany.

The economist’s return to Chile takes place after her name was unanimously approved by the Chilean Senate, last March.

With this, she will seal the political relationship with Boric, built amid numerous online meetings, which put her on an equal footing with the others, as everyone spoke from their respective homes because of Covid.

“Now I will live in Santiago because the meetings of the Central Bank need to be in person, including for security reasons. Besides, it will be very good to live in Chile”, she says, looking a little insecure with the institutional rules imposed by the new role.

During the campaign, Stephany had at times the role of presenting Boric’s ideas to dialogue with national and international media.

A letter written by the economist and published in the Financial Times, in November 2021, had repercussions when criticizing a report in the English newspaper from days before.

She considered it a mistake to contrast the candidate of the Chilean left and that of the extreme right, José Antonio Kast, 55, as if both occupied the same degree of “extremism”, one on the left and the other on the right.

“The Financial Times had written that the alternatives in Chile were two extremes. [na carta] no, that’s not true, that’s half the truth, because Kast is indeed very extreme, but not Boric, who is on the European-style social democratic left or, if you prefer, the American democratic left. And the letter had a lot of impact in Chile,” he says.

She believes that the growth of the extreme right is partly related to the “bubble effect” potentiated by social media, but considers that the left also has a share of responsibility.

“As a colleague at Columbia University says, it’s also a bit of a failure of the center-left, that we should have been more assertive in creating a more progressive, more egalitarian, more inspiring platform,” says Stephany.

“To a certain extent, this is what has now happened in Boric’s campaign, which has enchanted everyone, especially young people. It is about offering a more renewed, greener and certainly more feminist left-wing alternative, trying to be closer to the people”, evaluates the economist.

Co-author with Stiglitz and José Antonio Ocampo of the book “Time for a Visible Hand”, she has already been advocating for the creation of international financial instruments with a Keynesian bias, with the improvement of regulation, since the 2008 subprime financial crisis.

The strategy of creating institutions that act in a countercyclical way, as envisaged by the English economist John Maynard Keynes, will occupy a key position in the Boric government, says Stephany.

Thus, it takes to Chile a project that it has been building internationally. Last year, Stephany participated in the US discussion around the package proposed by US President Joe Biden, which included the creation of a green development bank.

“We organized a high-level panel to discuss the issue with US senators and people linked to European development banks, but unfortunately the project has not been approved by the US Congress so far”, he says.

His relationship with Stiglitz dates back to the period when he was dedicated to the think tank Initiative for Police Dialogue, at Columbia University, in New York, where he worked with the Nobel laureate in economics and Ocampo.

Stiglitz was also head of Bill Clinton’s Economic Council and chief economist at the World Bank. Ocampo was Minister of Finance and Agriculture of Colombia, having held several prominent positions at the UN (United Nations).