Joseph Stiglitz: Income Inequality and American Democracy

I always enjoy talking here in Seattle because it's a receptive audience it's just much more fun to talk with people who agree with you than those who disagree but I should point out that not everybody is as like-minded and I sometimes even enjoy some people disagreeing with me and I middle of last week I knew I had gotten under the skin of some people when The Wall Street Journal's complained about my complaining about inequality they thought there was too little inequality and I thought there was too much the the what I want to talk about today is is my my book but it's really the book is about what I've been really passionate about for for a long time about the problem facing the United States the great divide that has opened up now explained some of the dimensions of it here in in in King County but you should understand that you're better than most other parts of the country the divide in most other parts of the country has gotten much more severe as he mentioned my interest was awakened when I was growing up in Gary Indiana and I don't know if you know but Gary Indiana X the industrial town in the southern shore of Lake Michigan that really echoes traces out the history of industrialization and then deindustrialization in America was founded in 1906 it was a real company town in fact probably the most company town in the in the country the name Gary Indiana is named after the chairman of the board of US Steel and it was the largest integrated steel mill at the time and and it's since gone into decline but when I was there what I saw was enormous amounts of inequality extensive racial discrimination and episodic unemployment you know my classmates parents were out of jobs every three or four years as the economy went into a downturn what I didn't realize was this was the Golden Age of capitalism this was the best that a got that that's one of the themes I'm going to come back to that one of the ideas that that our understandings of economics that's changed a great deal was that back then Simon Kuznets who was received a Nobel Prize is the father of our national income account system the way we measure GDP that measures everything at Robert Kennedy said except that support what's important but it was important for tracing out what was happening to the economy and he he enunciated what was called acoustics law he didn't call it Kuznetsov but other people call it acoustics law and the idea was that in the early stages the development inequality will grow as some parts of the economy took advantage of new technology new opportunities and we see that pattern we saw that pattern in United States and we're seeing that pattern today in China but then as the parts that were lagging behind caught up in equality would decline the United States went through exactly that kind of pattern and inequality had started to decline beginning in 1929 and and and it continued to decline actually the continued to decline until about 1980 and said he was writing in the middle of the 50s and he thought of this as a basic law of economics today we know that's not true Quebec we know that beginning around 1980 inequality in the United States and in many other countries has increased and I'll come to in a moment to explain the alternative interpretation of what has gone on but I wanted to tell a little bit about my own story having grown up in Gary Indiana I I was motivated to try to understand what gave rise to this how what I thought was then high level of inequality I didn't understand how bad it could get and so when I went to so I went to Amherst College I thought it was going to major in physics maybe something could have I could have amounted something but my my passion my concerns about trying to understand what was going on and inequality led me to MIT to study economics and to write my thesis under a great economist Bob Solow who himself had had they had written his thesis on the distribution of income and inequality I mentioned this because this was very counter to the main trend in economics as you know economists have had a lot of influence in our society but most the the mainstream of economics has taken the view that even talking about inequalities a bad thing Bob Lucas who teaches at University of Chicago got a Nobel Prize said just a few years ago that the most vicious the the worst thing that any economist could do would be to talk about inequality sort of echoing the view that MIT Romney did when he said once you'd only talk about inequality in closed rooms in quiet voices you could understand why he might have said that well out of my thesis there was a paper published in econometrics I don't know how many of you read econometrics irregularly and I still modestly think it's an important paper it's almost 50 years later and it is still the basic paper laying out the foundations of the determinants of the distribution of income and wealth but a few years ago Vanity Fair asked me to write about the subject and I wrote an article called that really summarizes a lot of what is in this book the title of the article was other 1% for the 1% and by the 1% you sort of get the gist of what I was saying well the good news was that that article got a lot more readership than my kind of metric article did in fact it went viral and that the New York Times to ask me to to curate a series in The New York Times on the we called the Great Divide and some of those articles that I wrote are included in in here as essays updated and and put in context of what has happened in the ensuing time so what I want to want to to do this evening very briefly is a talk a little bit about some of the new insights that we have into inequality into the dimensions that causes the consequences what we can do about it and say unfortunately I only have a few minutes and if you want to find out more about it you'll have to buy the book or or borrow it from somebody because I don't want this to be a private property issue so let me discuss a few ways in which our understanding of inequality has changed very dramatically first I mentioned before the the dramatic change that happened around 1980 and the repeal of kuzmic slaw and there been two interpretations of this one is that world war two was brought the country together we had fought the war together that resulted in a kind of national cohesion that that you know it was a period where we of our fastest economic growth but it was a period of shared prosperity every group in the country grew but those in the bottom grew faster than those at the top so we converged now just as a statistics many of you may not know this but the top tax rate the top marginal tax rate at the time was 91% now if you listen to some people today you would say at 91% the economy must have been falling apart no one was working it just wasn't true it was as I say the period of our greatest fastest economic growth well came the 70s we went through a very difficult period in our country but ever there's the oil price shocks Vietnam war and it seemed for a while that our economic model wasn't working and some people advocated trying another approach and that was called supply-side economics those of us who studied economics thought this is a bonkers idea but you could understand this sort of the logic the logic was you lower tax rates that would provide more incentives they lowered it down to 35% lot lower than the action below 35 and almost down to 30% a lot lower than the 91% and you combine that with deregulation taking away the constraints and the two together Wood was supposed to to lead to a burst of economic growth and yes they realized that there would be more inequality that doing this would would read the papal in the middle in the bottom to get a smaller share of the economic pie but the argument was the pie would get so much bigger that everybody would benefit even those in the middle in the bottom well we've not only had a third of a century of this experiment and we should be able to judge and when we look at what's happened part of the forecast was right we did get more inequality but that was the only part of the forecast that turned out correct we grew more slowly so much more slowly that in fact in the middle there has been essentially stagnation today incomes are lower adjusted for inflation than they were 25 years ago a quarter century ago but this is an average of across different demographic groups one demographic group that I have some empathy with is males and the median income of a full-time male worker is lower than it was 40 years ago so there's four four decades of stagnation but at the bottom things are even worse as most of you know in the country as a whole the minimum wage is lower adjusted for inflation than it was 45 years ago and I can't imagine a half-century in which those at the bottom have seen no increase in their standard of living a half-century during which you know actually in over just the last 35 years China has moved 500 million people out of poverty the biggest change in innocence in a global era and in the middle incomes have increased Eightfold and in that era that same period we increased not only the numbers of people in poverty the percentage of people in poverty so if an economic system doesn't deliver for most of the citizens something is wrong with economic system if we have an experiment that has failed that badly we ought to think about maybe trying something else so that was one of the apophysis of of so one of the policies of what happened beginning in 1980 was that social cohesion after World War two began to erode after several decades the other one is we tried a flawed experiment I'll come back to these themes a little bit later the second big idea that new understandings of inequality it was the and out expressed this quite forcefully it used to be thought that yes inequality might be a bad thing but if we were to do anything about it we'd have to pay a high price we'd have to give up on economic growth economic performance in some important dimension we now understand that the two are complements not substitutes that we can have more economic growth and less inequality this used to be a you know people like me argue this have argued this for a long time but now this has actually become a mainstream view the International Monetary Fund IMF not known as at exactly a liberal organization in fact as many even know it represents the views of the large extent of financial markets they have pointed out and that argued all over the world that inequality especially wouldn't achieves the level that in the form that it does in the United States is actually bad for economic growth I wish you know more of government people our political leaders would would listen to the IMF on this score so this is such a different view than our Oken who was chairman of the Council of Economic Advisers under President Johnson wrote a very famous book called the big trade off where he talked about this trade off and today we realized that's no longer true a third big idea relates two concepts one of equality of income outcomes on the one hand and the other one of equality of opportunity when the debate about inequality first began to heat up in the United States there were some people like Ryan representative Ryan who said we don't care about inequality of outcomes the American way American Americans care about equality of opportunity that's what's really important well the fact is that not only does the United States have the highest level of inequality of income of any of the advanced countries but it has among the lowest level of equality of opportunity and that's so different from the way we see ourselves and the way others see us what that means is that the life chances of a young American are more dependent on the income and education of his parents than in other advanced countries so I tell my student the most important decision that you have in your life is to choose the right parent and if you make that decision wrong the game is all over and you see this in so many different ways for instance if you look at a child born in the top half who does poorly in school he'll wind up with a higher income than somebody from the bottom half of our population who just well in school you know it used to be said that if you work hard and plays by the rules you do it go ahead you'll get ahead not true in America and what's so striking is it's much better in the other advanced countries including the old Europe that we used to think of as being so class written and so rigid they've actually recognized that problems and they've tried to change the way the way they've organized their society and they've succeeded to a large extent not perfectly but they've succeeded to a large extent the fourth idea want to emphasize and that turns out to be really important is that there is a huge variation in the levels of inequality across different countries in the world and even in the direction of change in some countries inequality is actually been coming down now why is that important that's important because the economic forces at play are the same all over the world they're global technology globalization effect essentially all countries around the world particularly all advanced countries around the world but the way these forces play out seem to be very different and what that means it's about our policies about how we've shaped our economy in our society and that in turn means it's about politics and I'll come to that in in in a second but let me try to illustrate some ways in which we reshape our economy we shape our society if you have more monopoly power then the monopolist can raise their prices and if you have weaker protection of workers weaker unions then that bargaining power can drive down wages people here in Seattle recognize that back in nineteen ninety nine ninety eight when you have what is sometimes called the Seattle riots the protests about WTO and why would they protest there were the many issues there was environment there were concerns about developing countries they're concerned about workers but all of this was about how do we set the rules and regulations of legal frameworks which govern ours our economy and that if you if the globalization is an abstract force but the way you shape globalization can lead to more inequality right now the country is involved in a very big debate or ought to be involved in a debate the president tried to slide it through with nobody noticing and that's about the trade promotion Authority and TPP the trans-pacific partnership partnership is a euphemism there's one partner that's bigger than the others and a transatlantic agreement you know those of us who believe in democracy think you ought to have an open debate about the issues some reason the administration in particularly the USD Ark doesn't believe that so the negotiating positions of the US are not only kept secret they're stamped secret they've been made a national security secret now it's not about national security it's about bargaining positions it's about the fact that corporate interests have a seat at the table they get to see the u.s. parking position because they want to make sure that it's consistent with ways that will increase their profits but NGO civil society even congressmen have been having trouble getting a hold of it now how do you how can I be so adamant about that it's a bad agreement with the great news about America is that everything leaks the corset backs out the other side of this is that NSA is listening to everything including what I'm talking about now so the the we know for the obliques and and the the u.s. USTR and the president haven't denied anything about those leaks that that this trade agreement would for instance increase the power of Big Pharma the drug companies over generics and the real irony of that is that Obama has made healthcare Obama care the signature achievement of his administration but these provisions in the trade agreement will drive drug prices up because it will weaken competition from generics and Americans and people all over the rest of the world are going to the Pacific are going to have to pay higher drug prices if this agreement goes through in the way that the the US government is negotiating the way our economy functions has a lot to do as I said with the rules and regulations here in the in the northwest people value the environment and the agreement has provisions that would make it very difficult to regulate to protect the environment there's a particular provision that called the investment agreement which is particularly pernicious because what it says is that if any country including the United States changes of law in ways that reduce the profits that a firm would have expected to have the government has to compensate and the trial doesn't occur in a public court one of the basic aspects of our society is that judicial process is a basic part of government but they privatize it it goes to a it's expensive group of private lawyers who act as arbitrators my concerns about this are not just hypothetical we've seen these suits and let me just share with you one example of something it's important but it affects one aspect of inequality health inequality but there are many many other aspects of inequality including regulations about about our financial system that we found out weren't so good and you change those regulation the gangue you were invite a suit and let me tell you countries are really those who have already signed these kind of agreements are now worried about what will happen if they change their financial regulation so this particular provision is to me a very interesting one back in the 19th century there was a big trade imbalance between the West and China China had a lot of goods that the West wanted in particularly they had porcelain china but there are a lot of other things whereas the West did not have very many goods that China wanted and they're developed a big trade imbalance until you're figured out a way of solving the problem and that was a good that had a property that we in the business school at Columbia and all other business go say is a great property repeat purchases and that of course was opium one of the things about opium is once you buy it you come you tend to buy it again and again and again China figured out this wasn't so good and they said no thank you we don't want any more of your opium and the West said you're interfering with a basic right of free trade and not only did they say it they went to war they went to war twice what are called the opium wars and they won they opened up the market the first open market initiative to to opium and they also took away a lot of the concessions on the east coast of China well you may not know this but your government is waging the 21st century opium war it's not opium this time of course it's a product that is addictive made deliberately addictive again good property for those who interest in making money repeat purchases and destroys health and that of course is cigarettes to countries or AG way and Uruguay and and Australia passed a law regulating cigarettes not a very strong law very similar to the United States where you said you had to label cigarettes as being hazardous to your health they went a little one step further they had pictures of lungs that were destroyed destroyed by the cigarettes the problem was that these labels actually worked and many people were discouraged from buying cigarettes Philip Morris was not very happy and they said well you're destroying our profits the profits that we would have expected because we expected more people to buy our cigarettes until they died and under a provision essentially identical to the provision that the president is existing and having the trade agreements Philip Morris is suing or gray and Philip Morris and if they win we're away in Australia we'll have to either stop the labeling or compensate Philip Morris for not for for this regulation and the legal costs are enormous in the case of word way a poor you know South American country it can't afford the legal cost so fortunately some well-off Americans like Bloomberg and gates are paying for the cost of org wait defending itself now keep you imagine can you imagine a situation where Americans have to pay to defend other countries against what our government has framed as as a basic right of comfort of companies to be able to sell poisonous products and this is just one example of many many regulations that will be undermined the trade agreement that the president obama is pushing and trying to get a blank check that can be used not only by the current president but the next president whoever that is in 2016 and we don't know what the Congress is we don't know what the next president is going to be we hope we know with it but but we don't know and he's asking for a blank check that will go on for years and years and years well the point I want to make is laws and regulations shape our economy and in shaping the economy they shaped the degree of inequality and that's why the US has more inequality than other countries now it's not a question about what we can afford some people say you know we can't afford to do to take the actions that would lead us to have more equality I mean that's absolutely wrong just go back to the period that I mentioned before that period right after World War two we were then a much poorer country that was 70 years ago and in 70 years we've grown but at the end of World War two what did we say we said that everybody who had fought in the war which was every able-bodied man and a lot of women had the right to a free four-year college education to the best education that they could get into they got into Harvard they got into a community college whatever they could get into our nation paid for it today when President Obama proposed that we have two-year community colleges for our poorest Americans many conservatives said we can't afford it now is it a question them can't afford it no it's obviously not a question it's a matter of choice and this is one of the real themes that I try to bring out in the book the inequality that we have as a result of the choices that we've made when I say we've made our political system and that brings me to the next point when you have the level of inequality economic inequality that we have it almost inevitably translates into political inequality to the point where we now have a system that is better described as one dollar one vote than one person would vote to we have a kind of and it gets even worse because as they get as a as the money influences our political system the info just as it influences the rules of the economic game it influences the rules of the political game so what we are the country where money talks about us in the political sphere we are a country where corporate citizens united corporations can give unlimited amounts of money for campaign contributions where the last election each candidate spent over a billion dollars and this election is expected to cost a lot more and when people when when corporations would I call campaign contributions these are not charity they view these as investments and when our banks made this investments these investments were better than any of their financial investments those were disaster but their political investments really paid off both in deregulation in the bailouts and then more recently in preventing the reregulate that our country needed well I've talked a lot about inequality at the top talked a little bit about the growth of inequality at the bottom the increase in poverty but as introduction to my talk pointed out the real problem a real problem United States is the evisceration of the middle and he described how a here in Seattle which is one of the better performing places all of the growth has been at the top and the bottom but the middle class is shrinking you know that's reflected both in the fact that incomes in the middle adjusted for the inflation are stagnant for a quarter century but it's also in that a smaller and smaller fraction of the population is plus or minus 50 percent of that middle income and more more people are moving into the bottom and the top tales after World War two the United States was successful in creating the first middle class Society and the country was being brought increasingly together but again since 1980 and especially since the year 2000 the basic attributes what defines a middle class lifestyle are increasingly moved being moved out of reach for a larger and larger number of Americans kind of retirement security home ownership of the of home that they would like to have sending their kids to college all of these you might say almost basic necessities are becoming increasingly difficult take the issue of education which is so important for getting ahead what's happened here and and in Washington reflects what's happening so many other places around the country cutbacks of support for universities and colleges have led to tuition soaring the combination of soaring tuition and declining or stagnant incomes in the middle has meant the only way that you can get ahead is by borrowing student debt is now over a trillion dollars larger than credit card debt it's affecting the way our economy functions in fundamental ways other countries have solved the problem in other ways Australia has an income contingent loan program available for all the students so they can borrow but what they paid depends on their income so if they decide to go into teaching teaching high school then they know their income is going to be low but the amount that they pay back is just commensurately whereas in for so many young Americans they feel their choices are constrained they have to accept a job as a bank or a corporate lawyer when that's not really their passion for good reason and because it's the only way that they'll be able to pay back the crushing loans average student graduating from college now has $25,000 debt but if you go onto graduate school the numbers are more like a hundred thousand in some cases two hundred thousand dollars well the final point I want to raise before I open it to question is these problems that I've described won't be solved there's no magic bullet there's no the problems have been been growing for a quarter for for a third of a century and so there's nothing that we can there's no magic both nothing we can do that will correct it right away but if we don't begin things will get worse and worse we've seen the trajectory that our economy is on an economy where we have growing and increasing inequality where for instance eight people who inherited their wealth have more wealth than the bottom forty four percent of the country and exercise that wealth in a political sphere to try to make sure that they can and that others can't climb up so it's really important for us now to recognize that minor tweaks in the system won't solve the problem it is really important to increase the minimum wage it is really important to increase the educational opportunities but unless we address some of the more fundamental structural problems that have led us to be the most the the economy with the most inequality we're just addressing the symptomatic problems we aren't getting at the root causes so that's why I think it's just at parroted that we begin to discuss what are the root causes and figure out what to do about it but I also think that we can't wait to solve the problem that is to say it's going to take literally to correct the mistake of that's been accumulating for a third of a century it will take another 20-30 years and the meanwhile I think we have to take actions to make sure that a middle class lifestyle is accessible to the majority of our of our citizens so I just wanted to end on this note of urgency 35 years ago we began this grand experiment which anybody with an inkling of a scientific background would say has been a dismal failure Reata we have to change and we can't go on as business as usual I hope discussions like this town hold meetings all over the country will we'll be part of a process of bringing about that kind of change that we will take this course not of accepting business as usual continuing the course we've been on for a third of a century but really going into the different course that will enable us to restore the kind of society that we had a kind of social cohesion that we had in the decades after World War two thank you how important do you believe that unions are and continue to be towards maintaining the middle class in this state we have a very worrisome problem there is a big movement to turn the state into a right-to-work state what suggestions what help do you think I think that would be a big mistake and unions played an important role in as part of you might say our systems of checks and balances one of the things I didn't have time to talk about was the issues of corporate governance and the power of executives one of the really truly outstanding facts of inequality in the United States is the growth of CEO pay relatives of those of average citizens used to be 20 to 1 now he's closer to 301 and that increase is not because they suddenly got more productive this the bank CEOs got huge bonuses not because and even after 2008 when they brought the banks and our country the brink of room they walked off with huge bonuses so what we have come to understand is that it's not just competitive forces in the way that you learned about that in your elementary textbooks that are driving the inequality in the United States but it's you might say a balance of power and right now we have an imbalance and really the voice of workers is not being adequately heard and it's not heard in in lots of different form I mean for instincts one of the issues I is the Federal Reserve monetary policy affects supposed to affect output inflation unemployment that's supposed to be the mandate to look after all three of those but there's nobody representing workers a lot of people representing the banks in the financial sector and so you get an imbalance between a concern about inflation and a concern about unemployment some other countries that are much better performing have always have represented from workers on this Federal Reserve on their equivalent of the central bank the Federal Reserve Board so unions are the way that workers get together in some sense and tried to reflect the interest and concerns of workers you know there are imperfections in unions just like their imperfections in corporations I mean no no humanist institution is perfect so you know we know that there were lots of problems in the past unfortunately the unions for strength has been diminished to the point where some about 10% of the labor force again some people said that this is a the natural evolution it's not true other countries that have experienced just as much globalization just as much nology have a much greater voice of workers and one of the reasons why they have more equality so it's again it's the way we've shaped our economy in our society there was a book that came out over a year ago by thomas piketty's one of the one of the things he brought up was one of the things he brought up was that from the progressive area and era until about yes about 1980 that it was our economic results were mostly an anomaly and that what we're doing is returning to what we were maybe we naturally are we were in the 17th and 18th centuries yeah so I actually did talk about that in my book very explicitly a couple of the essays were in some sense written in response to typically the title of his book is capital in the 21st century and the main thesis is precisely what you said that inequality is three is the basically the natural workings of the capitalist system and it's the accumulation of capital decks driving this inequality and the real anomaly was what I call the Golden Age of capitalism of the 50 60s and 70s I argue that he's wrong that it's not about capital in the 21st century it's about democracy in the 21st century and that it's the way we shape the economic system and that we can have a market economy let me say a market economy where where markets actually look like markets are supposed to where you have less market power on the part of monopolies where you don't have the CEOs having a kind of say over the division of the of the corporate pie that they have a whole set of deviations from textbook economics that have driven inequality to the extent that it is so so my view is he's right in documenting documenting the magnitude of inequality but the interpretation of what what of that I think he's wrong that I'm much more hopeful that we can do something about it if we can get our politics right a shift of power the capital took place and that power was able to implement the policies that have produced the inequality and we didn't have successful Soviet Union to scare the capitalist as FDR did in the 30s so isn't it really a lack of viable socialist alternative that is the problem here well I I think I I think it is the framework that has been failed to be able to check the development of the of the power you might say of the one percent and I use that as a metaphor because a lot of people than 1 percent are are actually worried about what has been happening to our society the and what I've been trying to describe is how changes in the rules and regulations have have have affected this change in the market power of monopolies the weakening of the of unions I tell in the beginning of my book an interesting story that reflects what happens when you don't have the the check of real competition across economic systems and I think that point that you make there is is relevant I I was at a dinner party of somebody you know in New York we divided between the East Side West Side between East of Central Park and Western Central Park and and it's a little bit of a caricature but it's still true that their different cultures and the east side for those who don't know is is where the bankers live and the west side is where the publishers the musicians and Columbia University yes so but I do get him vitae though across the park occasionally and I got invited across the park by a somebody very well with a who who was very concerned about the growth of inequality and she decided to have a dinner party and decided to invite a few academics and a number of billionaires multi-billionaires that was an interesting it was an interesting evening marked by you know kinds of conversation that were really memorable as as one of the people who had inherited a few billion dollars was saying you know how about lazy people and then and then he went on you know the people who shirked and and and then he went on and talked about with the guy sitting next to him about where is the best place to hide your money was the cayman islands better than some other offshore center but then the conversation went on to a refrain that got her several time in the evening which was remember the guillotine which was a refrain back of course of those who know it's back to to the French Revolution and what was so interesting it wasn't a sense of compassion that was motivating the discussion except for themselves I think it wasn't a sense of what is a just society it was we have to remember not to be too greedy because we aren't very many and and and and there are limits of how much of the pie that we can take for ourselves and so in a sense that is part of one of the things and I saw that in in the context of development of the way we treated countries in Africa and elsewhere when there was competition we treated them a lot better than when the era of competition ended and I think there's an important lesson from that we have time for one or two more questions well thanks does the term fascism defined by Mussolini is the marriage of corporation and state resonate with you you know especially regarding policies and Supreme Court decisions and data-driven police states well fortunately were not down that far are you sure I better take last question hi I'm Blythe we are so grateful that you've come here and I represent a group of PhD students from the University of Washington studying pharmaco economics and together we have a question for you so we absolutely love your 1973 paper with Rothschild establishing the pooled and separated equilibrium for health insurance and so what we wanted to know is how do you just wait you guys it's important how do you predict what do you predict is going to be the effect of the Affordable Care Act of Obamacare in changing inequality based off of this equilibrium okay well I think the Affordable you know the the distinguishing aspect of America is that it has been the only advanced country that has not recognized the right to access to health care as a basic human right and it shows up the fact that we we we don't recognize it shows up in the statistics that in terms of average life expectancy we do much more poorly but then countries that spend a lot less money that we spend about 70% of GDP there are countries like Australia they spend 8% of GDP but their life expectancy is 3 years longer than the United States but you look within the United States at the life expectancy of people who are at the bottom even in something broad like those women who have not graduated from high school and it's 10 years shorter than those who managed to graduate from college or from the rest of the average Americans I was tell a little story I was Sarkozy president Sarkozy of France visited Columbia in the midst of the air mayor Affordable Care Act debate long voluntary debate and a student asked him what do you think of Obamacare you know of the bill and he first hesitated and he says you know I I don't want to comment on your domestic disputes remember of her Sarkozy is on the right in France just went silent and then he couldn't help himself but he said he went on to say I just don't understand you Americans we view we on the right in France view access to health care as a basic right we can't imagine the way that you've approached health care now I think there are two aspects of Obamacare one of them was that it would extend access it's been undermined by the that a large number of steaks including the steaks that have been where the the need is greatest have turned down Medicaid expansion and so they've totally undermined and the Supreme Court said that undermined the the the the mechanism that was put into the law to try to cajole mistakes to providing health care for their poor citizens so that part you know just was undermined by the Supreme Court and so there won't be equal access in the southern steaks in the United States the second thing was that it was intended to bring down cost I think it will do that to some extent but in getting that agreement Obama makes some compromises that allowed monopoly power to continue in the health insurance industry it allowed monopoly power to continue in the pharmaceutical industry and one of the reasons why Americans pay much higher drug prices than others anywhere else in the world and as I said earlier I am very worried and am befuddled why Obama is trying to push a trade agreement which will lead to higher drug prices for Americans and for countries all over the other members of the trade trade agreement now over the long run what what she was asking about is my earlier work raised some real problems of what are called adverse selection of problems that that when you're an insurance company the best way of increasing your profits is to make sure that you don't insure people who are going to need the insurance and they spent a lot of money to figure out how to do and they're very clever and so so you know the the the the the implication of that is I am not over the long-run optimistic that this kind of patchwork that we did to try to keep an old system going rather than reforming it to a single-payer system recognizing you know recognizing that that system is broken and I mentioned before that you know how much evidence do you need the experiment and supply-side economics thirty-five years old has been a failure our system of private health insurance has been going on longer and it's a more dismal failure so I think eventually we will have to force to think about alternatives and and there are alternatives that are working so much better than ours thank you so much

9 thoughts on “Joseph Stiglitz: Income Inequality and American Democracy

  • In the 1950s, a typical CEO in America made 20 times the salary of his or her average worker. in 2018 the CEO pay at an S&P 500 Index firm was about 361 times more than the average worker. Is this really the sign of a fair society?! Seems feudalism is making a comeback pretty soon if the same trend continues.

  • How did this guy ever win a Nobel prize? Oh, yeah, Nobel prizes were also given to Al Gore and Barack Obama. Politics.

  • Inclusive economic growth is a forlorn hope because spreading plutocratic pseudo-markets are increasingly dominating and degenerating economies- see

  • We can help Bernie by sharing this video. Listen to the experts. Interview with Nobel Prize winner in economics.. Share this video to help Bernie get people to understand that he can do what he is saying in his campaign.

  • I found a solution to the problem: "Commonwealth!" Here's an example of how: a talented entrepreneurs enjoys the challenge to create a successful business. He then sells it to his employees, who then become owners; i.e. don't depend anymore on unions and  low wages.  
    The entrepreneur gets his money back with some extra and starts a new venture… and again selling it to his employees etc. and every time the entrepreneur gets his money back with some extra and starts an even bigger venture… Gradually, we all become self-employed business owners! If then the more greedy ones own more, the less greedy ones won't envy them. Imagine how proud an entrepreneur then could be after having turned 2000 low wage earners into well to do business owners!
    So, why it is not happening?  Because most (if not all) talented entrepreneurs suffer from sordid greed! They believe only their talents deserve all the materialistic riches in our world.  🙁  Reason: They failed to dismantle their inherited/ or environmentally acquired negative traits and thus are unable to develop their full human potential!
    Are they not worried that their grossly selfish behavior in the long run might ignite yet another massive "Kristallnacht" type revolt?

  • One hour of deep economics by a nobel prize winner….and we have 861 views and a strange comment thread. Take two kids hitting each other with sticks and you will get ten thousand views. Sorry Joseph….you can be sure this country will pay in spades for its ignorance, bigotry, and hate.

  • 📰 Great talk by Stiglitz… It's a shame these words aren't being shouted frm the rooftops all across America.💲💵💱💸

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