Joseph Stiglitz

  • Aired:  07/25/12
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In his book, "The Price of Inequality," Nobel Prize-winning economist Joseph Stiglitz argues that America has become the most unequal of all the advanced industrial countries. (6:32)

>> Jon: WELCOME BACK.

OUR GUEST TONIGHT, NOBEL PRIZE-WINNING ECONOMIST,

BESTSELLING AUTHOR, HIS NEW BOOK "THE PRICE OF INEQUALITY, HOW TODAY'S DIVIDED SOCIETY

ENDANGERS OUR FUTURE," PLEASE WELCOME TO THE PROGRAM, JOSEPH STIGLITZ.

( CHEERS AND APPLAUSE ) THANK YOU FOR BEING HERE.

>> NICE TO BE HERE.

>> Jon: "THE PRICE OF INEQUALITY." IN THIS YOU VERY MUCH ARGUE THAT

THE BASIC LAW OF SUPPLY AND DEMAND, THE SIMPLEST ITERATION OF ECONOMICS IS STILL A DRIVER

OF ECONOMIES, AND YET, IF I MAY,

SIR, YOU HAVE GIVEN ME A 300-PAGE BOOK,.

100 OF THE PAGES -- THIS IS TRUE-- ARE FOOTNOTES.

( LAUGHTER ).

I ASK YOU, SIR, GIVEN THE BASIC LAWS OF SUPPLY AND DEMAND,

THAT'S WHAT ECONOMISTS WOULD CALL A ( BLEEP ) LOAD OF FOOTNOTES WHERE FOR ME THE

DEMAND IS VERY, VERY LITTLE.

( LAUGHTER ).

>> THE SUPPLY WAS VERY GREAT.

>> Jon: WHAT DRIVES YOU TO WRITE THIS BOOK?

>> INEQUALITY HAS REALLY BECOME ONE OF THE MAJOR PROBLEMS FACING OUR COUNTRY.

I DON'T KNOW IF MOST AMERICANS REALIZE THAT WE HAVE BECOME THE

MOST UNEQUAL OF ALL THE ADVANCED INDUSTRIAL COUNTRIES, AND WE'VE

BECOME THE COUNTRY OF AMONG THE ADVANCED INDUSTRIAL COUNTRIES WITH THE LEAST EQUALITY OF

OPPORTUNITY, SO DIFFERENT FROM OUR MYTH OF THE AMERICAN DREAM.

>> Jon: THERE ARE TWO THINGS IN THERE-- EQUALITY OF OPPORTUNITY VERSUS EQUALITY OF WEALTH.

SOME WOULD ARGUE THAT EQUALITY OF OPPORTUNITY MORE IMPORTANT BECAUSE THE ABILITY TO REACH

THAT, WE HAD A GUY ON THE SHOW,

ED CONNARD OF BAIN CAPITAL WHO HAD WRITTEN A BOOK SAYING WE DON'T HAVE ENOUGH INEQUALITY

BECAUSE IT WILL DRIVE THE PEOPLE WITH LESS TO WANT MORE IF THEY KNOW THE CARRIED INTEREST RATE

WOULD BE 15%.

>> AND THEY GOT LOWER TAXES.

>> Jon: EXACTLY.

SO IS THERE NOT-- WHAT DO WE NOT HAVE, EQUALITY OF OPPORTUNITY?

>> WE HAVE NEITHER.

THE POINT IS WE DON'T HAVE EQUALITY OF OPPORTUNITY.

LIFE CHANCES OF SOMEBODY-- A YOUNG PERSON BORN IN THE UNITED STATES IS MORE DEPENDENT ON THE

INCOME AND EDUCATION OF HIS PARENTS THAN IN ANY OF THE ADVANCED COUNTRIES FOR WHICH WE

HAVE DATA, MUCH WORSE THAN EVEN IN OLD EUROPE.

>> Jon: DOES THAT-- IS THAT BECAUSE-- HERE'S-- OKAY.

I AM RICH.

( LAUGHTER ).

I AM CARRIED AROUND THIS BUILDING BY A TEAM, AND MY FEET NEVER TOUCH THE GROUND.

SO PEOPLE HAVE IDEAL AT ME ON THE WEB, "HOW CAN YOU CRITICIZE

MITT ROMNEY FOR HIS WEALTH?" I DON'T CARE ABOUT WEALTH.

WHAT SEEMS TO BE UPSETTING IS INSTITUTIONALIZING THE ADVANTAGES THAT WEALTH GIVES

YOU, CREATING A SYSTEM THAT THEN SHIELDS THAT WEALTH FROM A PROPER TAX RATE, AND FROM ANY

KIND OF REINVESTMENT INTO THAT INFRASTRUCTURE.

CAN THAT BE CHANGED?

IS THERE THE POLITICAL WILL OR ANYTHING THAT CAN DO SOMETHING ABOUT THAT?

>> WELL, I THINK IT CAN BE CHANGED BECAUSE IN OTHER COUNTRIES, THINGS ARE DIFFERENT.

YOU KNOW, THESE ARE NOT THE INEVITABLE LAWS OF ECONOMICS.

OTHER COUNTRIES HAVE DONE SAME MARKET FORCES AT PLAY, AND THEY HAVE LESS INEQUALITY, AND MORE

EQUALITY OF OPPORTUNITY.

YOU KNOW, MARKET FORCES DON'T EXIST IN A VACUUM.

WE SHAPE THOSE MARKET FORCES.

>> Jon: THERE IS NO UNFETTERED FREE MARKET.

>> WHEN WE PASS A BANKRUPTCY LAW THE DEFAULT SWAPS, CREDIT DERIVATIVES THAT BROUGHT

A.I.G. DOWN, THAT SAY THOSE GET PAID OFF BEFORE WORKERS OR ANYBODY ELSE IN THE EVENT OF

BANKRUPTCY BUT STUDENT LOANS CAN NEVER BE FORGIVEN, EVEN IF THE SCHOOL GIVES YOU A LOUSY

EDUCATION, YOU'RE SADDLED WITH THAT FOR THE REST OF YOUR LIFE.

THAT HELPS SHAPE OUR ECONOMY AND HELPS CREATE MORE INEQUALITY.

>> Jon: HAS THAT INSTITUTIONAL ADVANTAGE ALWAYS BEEN IN PLAY OR IS THAT A MORE

RECEIPT THING?

BECAUSE IT SEEMS LIKE WHAT WE'VE DONE TO THE ECONOMY IS INVESTMENT INCOME, THAT'S THE

INCOME, BABY.

THAT'S THE GOOD STUFF.

THAT'S THE RESIN.

WORK INCOME, EARNINGS.

NAH, THAT'S NOT AS IMPORTANT.

>> THE NATURE OF INEQUALITY IN THE UNITED STATES HAS CHANGED DRAMATICALLY IN THE LAST 30

YEARS AND IN WAYS THAT IS BOTH BAD FOR OUR ECONOMY AND,

OBVIOUSLY, INCREASED INEQUALITY.

FOR INSTANCE, IN THE THREE DECADES AFTER WORLD WAR II, THE ECONOMY GREW TOGETHER, AND IT

GREW MUCH MORE RAPIDLY THAN IT DID SINCE 1980, WHERE WE'VE GROWN APART.

SO-- AND WE'VE GROWN MORE SLOWLY.

>> Jon: BUT THE IDEA IS IF YOU PUNISH THOSE AT THE TOP, THE JOB CREATORS, THE WEALTH

CREATORS, THEN THEY'LL STOP DOING IT BECAUSE, YOU KNOW,

SPITE, AND THAT, YOU KNOW, IT IS-- IT IS INEVITABLY NOT AN AMERICAN PRINCIPLE TO ASK THEM

TO PAY 39.6% INSTEAD OF 35%.

THAT'S WHAT STALIN STARTED WITH.

( LAUGHTER ).

>> IF YOU LOOK AT THOSE WHO HAVE MADE THE MOST IMPORTANT CONTRIBUTIONS TO SOCIETY, THE

GUYS WHO DID THE BASIC IDEAS BEHIND THE COMPUTER, THE MOST IMPORTANT ADVANCES IN MEDICINE,

D.N.A., THEY DIDN'T DO IT FOR MONEY.

AND IF YOU TAXED THEM AT 80%,

THEY WOULD HAVE DONE WHAT THEY DID.

SO THIS NOTION THAT THE INNOVATION DEPENDS ON THE TAX RATE I THINK IS ABSURD.

>> Jon: WHEN WE COME BACK,

WE'LL GO TO COMMERCIAL, WE'LL DO A LITTLE BIT ON THE WEB, WE'LL

TALK ABOUT HOW THEY HAVE BEEN SO SUCCESSFUL AT CREATING THIS-- MAN, I LOVE THIS PHRASE-- WEALTH

INCUMBENCIY, BUT THIS IDEA ONCE YOU HAVE WEALTH YOU GET TO NOT JUST PLAY BY A DIFFERENT SET OF

RULES, CREATE A DIFFERENT SET OF RULES.

SO WE'LL TALK ABOUT THAT WHEN WE COME BACK.

"THE PRICE OF INEQUALITY" IS ON THE BOOKSHELVES AT THIS VERY MOMENT.

JOSEPH STIGLITZ.

( APPLAUSE )

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