The Grey Chronicles


Learning from Stiglitz

Ever since I fared miserably in Economics during my first try of Master in Business Management [MBM] back in the middle of the 90’s, I vowed to read everything about the subject, at least those I could get hold of. This vow continued even to this day, even though I was graduated from the programme last year.

I was reading Steven Pressman’s second edition of his book entitled Fifty Major Economists (2006) the other night and was not surprised that he added Joseph Stiglitz in lieu of Robert Owen. The book contains brief biographical information of 50 economists and an explanation of their major contributions to economics, along with simple illustrations of their ideas, references to their major works, guides to further reading. In the Preface, Pressman justifies:

“But to add new chapters, and to keep to the constraints of having only fifty economists in the volume, someone had to go. … I had originally included Owen, despite many objections from my colleagues, because of his concern with labor issues, something I felt was important and underrepresented even with the Owen chapter. Since labor and unemployment is also a key concern of Stiglitz, I look at this as a somewhat sensible trade-off.”

According to Pressman’s book, Joseph Stiglitz, a Nobel Laureate in Economics in 2001, has been “a pioneer in studying the economics of information, which examines individual decisions to obtain information and how the economy is affected when people have insufficient information.” The most popular feature of Stiglitz’s work is “the lack of information generates economic problems,” which made him a leader of the new Keynesian school of economics, which seeks to explain why unemployment can exist in a world of rational individuals (Pressman, 2006: 307—308).

In my thesis proposal, one of the backdrop used for the evaluation/analysis of why National Steel Corporation [NSC] closed was the Asian Financial Crises of 1997-1998. Some related literature cited was excised from the final copy because the paper was deemed too lengthy. Thus, all the references to the financial capability of NSC between 1995 and 2000 were deleted and a limitation was put in place, such as: No financial analyses were made of the periods between 1995 and 2000. One of these excised related literature in my thesis was that of Stiglitz.

Stiglitz (2002) argues that in dealing with the Asian currency crises, the International Monetary Fund [IMF] pushed for higher interest rates which in effect increased loan defaults and corporate bankruptcies, and reduced confidence in these troubled countries [which included the Philippines]. Similarly, by pushing for free markets, the World Bank and IMF made problems worse in some of the poorest areas of the world.

The justification given by the thesis reviewers was that the paper should primarily focus on the production side of NSC. Although, I explained that production or manufacturing management involves finances, among other things, some of the thesis reviewers find it odd that why should I discuss it, even in passing, when I was majoring in production management and neither on finance nor economics. Probably the economics-slant of the thesis was highlighted because two of the reviewers majored in economics in their baccalaureate as well as doctorate degrees. One even criticized my paper circumstantially mentioning of Gross Domestic Product [GDP] in relation to a discussion of the steel intensity declaring it as more on economics than steel manufacturing.

I also suggested that maybe I could also major in finance management, in addition to my elected major: production management, and thus could use the thesis to complete the two majors in one. There was not appropriate rule in the student handbook that one thesis could partially complete both the thesis requirements for two majors, production and finance. I also declared that I have secured the financial statements of NSC for the same period primarily through a contact at SEC as each company was required to provide the commission of its financial statements each year. The idea was that I could incorporate the financial analysis of that period and relate the same with NSC’s closure applying primarily the predictive tests using either a modified Z-Score model, the use of financial ratios or through other statistical methods of corporate failure detection.

The MBM coordinator asked clarification from the Academic Council whether my suggestion of completing two majors in MBM was feasible. Apparently, this was never done before in the history of the university, or it would require me to enroll for additional elective courses to complete my second major. I could then opt to make a case study of the financial capability of NSC between 1995 to 2000 instead of doing another thesis about it.

Pressed for time, I successfully defended the thesis for my MBM major in production management last 26 September 2008. It only focused on the production, and some fleeting references to the effects of the Asian Financial Crises to NSC. With my employment on-call basis starting last year, I decided to hold my MBM major in finance for some other time.

Had it not for the strict academic style on thesis writing as well as the undue criticism of citing economics or finance ideas in a production management thesis, I could have presented all the known sides—financial, economical and production— faced by NSC during the particular period of the study. In retrospect, the thesis would have become much longer than the 278 pages of approved final copy. Yet, it would probably be much more compelling than what I had submitted.


Stiglitz, Joseph (2002). Globalization and Its Discontents. New York: W.W. Norton, June 2002. p. 54. back to text.

Pressman, Steven (2006). Fifty Major Economists. 2nd ed. London and New York: Routledge (Taylor & Francis Group), 2006. p. 292, 306—313. back to text.

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