News & Events Globalism and Its Discontents: Point/Counterpoint with Joseph Stiglitz ’64

- Hello everybody, it's a pleasure to see this big crowd. My name is Ilan Stavans, I am professor here of the humanities, Latin American and Latino culture, the Lewis-Sebring Professor. It is an enormous pressure for me to see you all here. This is the 3rd of five events this year of our second series called Point/Counterpoint. The gestation of the series started just about when the presidential election was taking place in 2016, and many of us on campuses all across the country certainly on this campus, felt that we were living in a bubble, that we were listening to the same types of rhetorical thinking and that we had lost touch with the rest of the country or maybe the rest of the country also had lost touch with us. There was a motion that came from the class of 1970, to create a series of lectures connected with a course that would bring opposite sides of the ideological divide together, in order to engage with one another to listen to each other, to humanize each other, to be able to understand what is happening nationally and internationally. Last year we had a wonderful group of guests that included the Bret Stevens and Bill Kristol; people on the left, people on the right. And this year we are just in the middle of another what at least in my mind is extraordinary group of individuals. We started with a George Will, the political commentator who writes for The Washington Post and his columns are syndicated in 400 newspapers nationwide. Saskia Sassen who teaches at Columbia and specializes on the global city, our distinguished guest today, I'm gonna introduce him in a second, Joseph Stiglitz. We have coming up in November, and I invite you all to come as well, Amartya Sen, also a novel Prize winner who teaches at Harvard, who connects freedom with development. We will be discussing this with him, and then the last one, after Thanksgiving, Martha Nussbaum who has done extraordinary explorations as a philosopher in connection with the emotions. I want to thank the class of 1970, in particular, 36 members of the 50th reunion of the class of 1970, I think I got it right, who have sponsored the course and have sponsored also this lectures. I, as a faculty member, thank them dearly and I feel that this is also an opportunity for us to have a connection in the campus community, with the campus beyond the larger community. And I want to stress one more thing before I go to the conversation and it's not about me clearly but the reason why I like this so much is because it is an opportunity for individuals from different disciplines to talk to each other and to talk to us in a language that can be understood. We all know that in campuses like this we can be trapped in our own a vocabulary, in our own lexicon, and the idea of having economists and political scientists and philosophers and sociologists being able to speak to the audience at large, and in this room we have students, we have faculty, we have administrators and we have the public at large is is really extraordinary. I want to state that what you're gonna hear is likely to be provocative and that there might be things... 

- Not from me

- Not from him. And that there might, I'm gonna try to do that part, Joe, and that there might be parts that you disagree with but that is the point. The point is to be able to listen to the other part. I want to say very quickly that I got a phone call from the security, one of the security administrators at the consortium in the West Coast Pomona and Scripps and others asking how we managed to have George Will here without having a commotion. They had it disinvited him and now they were thinking of inviting him again, and I was very proud to say that we listened to him not always agreeing but we listened to him. So a professor Joseph Stiglitz is one of our most distinguished alums, he is a novel Prize winner, he is the voice of reason in economics, at times when reason has all but disappeared, the author of many books who are able to communicate across audiences sophisticated terms and concepts in ways that we are able to understand. He has written very eloquently about inequality and the topic of today, he has written about globalism and it is about globalism show that I want this conversation to be about. There's a moment in Hamlet when it is said by the Prince that things are neither good nor bad but thinking makes them so. You say somewhere in the book that globalism is neither good nor bad and it depends on what we make of it. Where are we right now with globalism?

- We're not managing it very well and unfortunately it hasn't managed very well actually for a very long time and therefore there was a need for changing the way we construct globalization but unfortunately we're moving in the wrong direction and... we're moving towards a more you know like isolationism, nativism, which will undermine.... the advantages that we want gone without solving the problems that it had brought.

- And the reason has one word connected to it, and it's Trump. 

- Yeah

- Trump is emerging as the face of protectionism of tariffs. He is one the most prominent one, among many populist leaders nationwide who are a questioning severely what globalism is about. You totally disagree with Trump's policies, why?

- Well so let me begin with.... with where there is a problem and then as you know the countries faced deindustrialization it's a problem in Europe and there are a number of reasons for it. Technological change has meant that the growth in productivity has exceeded the growth in demand and that means employment in manufacturing has gone down and that itself would have been a problem without globalization, so there would have been a problem of unemployment but globalization is meant that we will be getting a smaller share of a declining global employment in manufacturing. And that's true not only United States, but the other advanced industrial countries but some countries have responded intelligently to the problem, and have said how do we create new industries how do we move people from the jobs of the past to the jobs of the future? And instead, we have a president who talks about trying to save coal mining. You know industries that are killing us and he wants to save them and imposing impediments on importation of cheap solar panels that you have on the top of this roof that allow you to have renewable energy without all the negative effects of coal mining. So that's just one example but so he's looking back to the past that we will never be able to recreate, even if we got the production of manufacturing back to the United States it would be done with robots and 3d printing and things like that, that would not create any jobs. So the idea that you would solve the problem of the workers who've lost their jobs in Ohio or Indiana deindustrialized through his policy is a is absurd. In fact, I think that... what he is doing is going to have permanent damage you know for 70 years we tried to create a world where borders matter less. I mean we are still at the case that the nation-state is the basic unit of our politics but the borders were mattering less, and now he's reminded everybody that borders matter a great deal, and that will mean people will rely less on global supply chains and that will increase cost of production and that will disadvantage particularly American firms and make us less competitive and will actually hurt employment in the United States.

- But Joe, Trump is the figurehead, the one who's driving this entire rethinking of globalization but Trump is also a symptom.

- No, you've done you know rethinking is a word that's sort of an oxymoron when we're talking about him. so but I understand what you mean.

- So there is a constituency within the country that has felt that it has been left behind by the globalist expansion of the last day 20 30 years and is the very side in the rural landscapes, the white male blue-collar population that is very supportive of Trump, that is a segment that was not driving along with all that progress that the globalization had promised. The fact that there are people who are just contented he has picked up on and he's exploiting it and you know and the numbers are just very striking in just a couple numbers that the income of a full-time male worker and the full-time guys are the lucky ones, today is about the same as it was 42 years ago. And at the bottom, the real wages adjusted for inflation are the same as they were 60 years ago. So you know in in an era where those at the top 1% who we hope all our students will be, has gone up and really soared the average income of the bottom 90%. We are not just talking about the bottom it's really almost stagnated. So there are grounds for any happiness and I think both parties failed to recognize the very large changes that were going on in the economy and as I say technological change as well as globalization, and they didn't do what they should have done to try to respond in a more creative way to these real forces that are leaving a lot of people behind

- That has been your main argument and the argument that you make in globalism and its discontents in the revised or the one that is called revisited, the argument is that there were a certain number of the promises and premises that globalism would have been able to do in order to succeed and lift an entire a broad segment of the population but that it failed to do so, it failed to do so, I would say miserably because of the nearsightedness both of politicians and of corporations.

- So maybe, let me step back actually economists had predicted that globalization on its own without other policies to contravene it would lead to lowering of wages of unskilled workers. So for a fundamental theorem that hopefully student still study called the Samuel Johnson theorem the factor price equalisation theorem so you know in the argument when we engage in trade with say an emerging market they produce unskilled labor-intensive goods and we import those goods and that reduces demand in the United States for unskilled labor and if you just believe in the law of supply and demand that will lower the demand for unskilled labor and that will be to lower wages of unskilled labor. So it was just very predictable that this was going to happen. Now, unfortunately, a lot of politicians didn't want to hear that, and there were a lot of special interests who found this argument inconvenient. So they ignored it and they said somehow they believed in trickle-down economics increased the pie and everybody's going to be better off. And what I and a lot of other people said no, the pie may get bigger but more than a 100% of the game will go to the people at the top and the people at the bottom will actually wind up with a smaller slice. So this was predicted and it was really, I think, it was partly a political agenda, some of us said, you need to have retraining programs, you need to help people move out of the old jobs into the new jobs, increase their skills and remarkably there was opposition to helping those who are losing their jobs. Other countries did something about it in the United States there was opposition and you know the training programs were never perfect and you could... But as I thought about it and I talked about this in the book, I think one of the reasons that there was this opposition is there were large groups who actually wanted people to be worse off. And that may sound, you know, were they crew? Were they masochist? Well, I think it was, they just realized that if there was a larger number of people without jobs who were struggling, that would put downward pressure on wages. They like the idea that real wages were going to go down because as real wages went down profits went up. And so they were able to get cheaper labor abroad through globalization, but they were also able to get cheaper labor at home than they otherwise would have gotten.

- I wanna, maybe, invite to come out of the economics into psychology or the larger scheme of human nature. If this was done by this special interest by and by these groups because of self-interest, because of a desire to accumulate more wealth. That is the law of the jungle that is the way things work. Is it too utopian to expect that those at the top will restrain, will sacrifice, in order to be able for others to be lifted? I mean, I love the idea I couldn't support it more but there is something almost too romantic about it.

- Well actually, that was a question I talked about in an article I wrote a few years ago about inequality. I had written my thesis on inequality and I published it in econometrics and it didn't get a lot of readership even though it was really a good article. But a few years ago I wrote an article called Other 1%, For the 1%, By the 1%. And I published it in Vanity Fair, and it got a lot more readers. But one of the themes in that article was that the view that there was such a thing called the enlightened self-interest. And that's what a lot of people think that Annasmith really meant when he talked about the pursuit of self-interest, it was a lightened self-interest and that it isn't enlightened self-interest other people at the top to create a society where there is shared prosperity. Partly because if you don't have shared prosperity it's very hard to have sustainable prosperity. And you know, any of you who go into some of the Latin American countries where you have huge device, you know how unpleasant life is, you have armed guards, you have gated communities it's not very pleasant even for the 1%.

- So that means Joe, that we are going through a crisis of some of the values of the Enlightenment that they are being put in question to the degree that a portion of society that is at the top no longer cares for the well-being of the rest. Do you, you mentioned in a previous conversation that you and I had in contrast day the NPR show that seiwe did this afternoon that some of the values of the Enlightenment might be going through, maybe a seismic change.

- Yeah so, you know one of the books that will be coming out probably in the spring, one of the questions I begin with is asking, why is it that our standard of living is so much higher than 250 years ago? For hundreds of years, before that actually, you know from the time we have recorded data incomes hardly changed at all, you know, they go up a little bit and then down a little bit the plague, a great plague in the Middle Ages actually led incomes, with a hundred year leg to go up because the supply of labor went down, and you kill off enough people and wages do go up. But it, you know, it verified economics a little bit but... you know beginning around 1750 1800 you have this change from flat wages to incomes, to really going up. And the question is, what happened? And what I argued the basic thing is the Enlightenment. And there were two characteristics the Enlightenment, one science, its appropriate talking about this in this place, that we discovered how to discover about the universe in which we live. And the second thing is, we also discovered about how to organize our social and economic relations with each other. You can't find that out in the same way you do in the hard sciences, but a method of discourse where we, you know, discovered ideas like Adam Smith, the role of market, checks-and-balances, democracy. A whole set of, you know what we call the rule of law and a whole set of institutions about the verification of truth, assessing truth. What we call epistemology, and these two institutions Science, Universities, truth-telling institutions the way we discover, are what Trump has been attacking. And that attack is far more profound, far more dangerous than any of the particular policies that all of us may object to, you know there are many particular things, but one has to understand the depth of the attack on our social fabric, of our social institutions, our value of what is going on. And the consequence that that would have is the consequences you hear we talk about foreign democracies but it's also consequences for our standards of living. So in a way globalization, to bring this back to globalization, he wants to return to in a global context, to the rule of the jungle rather than the rule of law. So whoever is the biggest guy gets to beat up on the guy who is smaller, rather than, we all know that what makes our society function and what makes our economy prosper is basic rules of law. And internationally, as we become more integrated we don't have the same kind of rule of law that we have domestically, it's understandably you might call sparser, but we still need to have some basic foundations of a rule of law and that's what he's attacking. In fact, his representative at the meeting of the WTO and Buenos Aires in December said, "You know there's too much law here "we ought to go back to negotiation." What he meant was we're stronger than other countries and we'll beat them up until they give in and that I think he's wrong about whether that's even going to be successful for the Unites because other countries won't want to deal with a country that doesn't believe in the rule of law. You don't want to engage with a bully, there are enough other countries around that you don't need to, other than the minimal amount that you have to.

- And in this polarization that you're describing between those that are endorsing and supportive of the rule of law and those that are moving in the direction of the jungle. We still are in the United States, in the context of we will wait for them to vote, we will try to vote him out, we will resist. Is there, what is your recommendation for young people, for thinking people, for people that are connected with the rule of law of how to handle impatience.

- Well I don't know how to answer that question I guess you know fundamentally for young people, it's their future, you know I don't have that many years left but they have their whole life ahead. So, any rational theory says that the young people should really be investing more in making sure that we get this right. And I think you know damage has already been done in the way that I described because we now, people know that borders matter and that won't be reversed very quickly. But each of the other institutions that I talked about that have been attacked the press, the universities are important institutions. And he's attacked the civil service and says the government should, he should have the right to fire civil servants that disagree with him. And the reason we have these civil service protections is we've learned what happens in other countries where you don't have civil service protections. So we have these systems of checks and balances because people thought about this I mean reason discord over several hundred years have evolved to these understandings of what makes our society function. They're inconvenient and obviously, every president complains but every president till this one, in the end, says the press is really important. I don't like them criticizing me, who like criticism? But they will say, I want us to have a free press because it is one of the checks in our democracy.

- Now you, yourself Joe, have been... One of the topics of your book Globalism and its discontents especially in the revised edition is the criticism that you have made of the governance of institutions that are connected with how globalism was spelled out in the last 30-40 years. The International Monetary Fund, The World Bank, and here I bring another type of inequality or another type of discrepancy. One of the developed countries and one of the developing countries who claim that whoever is in command of this organizations is always being represented by a Europe or the United States and the voice of a Latin America or India, or other parts of the world always comes as an afterthought. So those that are making the laws are those that want to perpetuate themselves in those very economic systems. You have been critical of this having also participated in some of those governance institutions. How come those institutions make a case that they are going to be more pluralistic, more open, where the laws that we want to sustain and endorse are all going to be for everybody and not only for those that are the very top.

- Yeah, before answering that I want to make one other comment about Trump and my perspective and globalization. I've been as you said a strong critic to globalization as it's been managed. And Trump has been criticizing globalization and so I'm in the uncomfortable position on this particular issue of seeming to be on the same side and it reminded me after I wrote my book Globalization and its Discontents, I criticized NAFTA and I criticized NAFTA because I thought it was unfair to Mexico. And some of you may remember not the young people you're a Lou Dobbs he's still on Fox News but Lou Dobbs. And Lou Dobbs was one of the early protectionist of the early guy a pre-Trump protectionist.

- In anti-Mexican.

- When?

- Anti-Mexican.

- A very anti-Mexican, very anti-Mexican. So he used to invite me on his TV show because he understood that I was critical of NAFTA, he was critical of NAFTA. And his attention span was so short he couldn't figure out that he and I were on the opposite side of the view of what was wrong. And so he would invite me, I went on his show because it gave me a platform to criticize NAFTA explaining of why it was unfair to Mexico and he never listened to what I said because he always would say, you were great Joe, and we had to have you back here again. And then he would invite me again, back there again. Well you know... Trump in this book first version of Globalization's Discontents, I talked about globalization as being unfair to the developing countries more generally. And Trump has said that globalization is unfair to the United States. So I asked my students who was correct, me or Trump? And that was a rhetorical question, but...

- You're asking the wrong audience, right?

- My students gave the right answer, that I'm correct. So, but the idea that... the global agreements would be like NAFTA, would be unfair to the United States is really absurd because we wrote those agreements, you know I've watched the negotiations for years and the United States got 99.9% of what it wanted. So the agreements are American made agreements. Now, what is true is they were not fair to American workers and that's because, and this goes back to how these agreements are made, they're done in secret with who is at the table, the corporations are at the table. And even in the Obama administration, they would not let the senators, including the chair of the committee that oversees trade see what the US bargaining position was. So it was you know a real, but the corporations got to see, they were writing the U.S. position. So not a surprise that the agreements wound up to reflect our corporate interest. And the new trade agreement is no different, in that, in fact, the provisions in terms of access to health care are worse than TPP, which I thought was terrible. So they actually made it more difficult to get access to generic medicines, for instance. The point of what I said is, who's at the table matters and governance matters, the next, relates then to your question, one of the complaints about the World Bank and the IMF is that they are basically run by Europe and America, the advanced countries and don't reflect the interest of the other five billion people in the world. And there has been a change since 1944 these institutions began in 1944 at Bretton Woods and there has been an evolution they are more representative but they are still not very representative. So an example of their attempt to change was the G20, which is the gathering of all the countries, decided in the aftermath of the global financial crisis, that it should not be the case that way. What they decided was the IMF, the World Bank leaders, should be chosen on the basis of merit. Now in the 21st century that might sound a little bit of a radical idea that you choose people on the basis of merit, but it took them, it was really hard fought, this idea, and by merit the World Bank had always been American and the IMF had always been headed by European. And they said, look up especially the World Bank it deals with the development, maybe somebody from the developing world might know something more about development than somebody who grew up in an American suburb. So everybody agreed on this until, everybody was really excited, and then a bankruptcy occurred in the presidency of the World Bank and two very distinguished people from the emerging markets, one from Colombia, Jose Antonio Compo and one from Nigeria, who had been the foreign minister of Nigeria a really talented woman, were nominated. But Obama said at that point, Oh, I don't like the idea of the World Bank be headed by somebody who's not an American. I understand this principle of merit, but not yet, not under my watch. So ...

- So the yet is the key word here it will open up you think, eventually?

- It will open up, eventually, we will enter the 21st century but, it's not quite yet.

- Yeah, now I wonder if we can, if I can ask you to go beyond it, to define the corporations all as a single group is, seems to me in the 21st century also a bit a stereotypical. There have been, because I the corollary of what you're saying is that if we educate the corporation's to be more open, then there's going to be some change that will broaden the possibility of lifting people from the inequality that we, that the world is experimenting. But the corporation, some corporations have already been going in that direction. Do you believe that it is time to start thinking about the corporate approach, that component in your chess board as having the good guys and the bad guys.

- Yeah, and you're right to criticize me for probe lumping it all together, I mean there is a lot of heterogeneity. And where you see that most dramatically, is another area not this but in climate change. There are especially, a large number of European companies that are really pushing for doing something with climate change that are really being very innovative and pushing the agenda. And there's something called, a whole coalition of companies, that have gotten together. Disproportionately, few American companies are engaged in that, but there are some, there are a number.

- Joe, I want to switch to an aspect of your work that I, as a person who devotes himself to literature, appreciate very much and that is its legibility, its accessibility, the capacity as I was mentioning at the beginning of making difficult complex ideas available to a broad audience. And the very anecdote that you mentioned that you published a significant piece, or at least a significant piece when it comes to Leadership In Vanity Fair, this economist from Columbia, a Nobel Prize winner, publishing in Vanity Fair. And making a statement, it seems to me that goes with your very mission of speaking to a broad audience that can understand where we're going and educating the young in how, I'd love for you to tell particularly the young people, about your passion for writing and about what the forums are to communicate your ideas in 2018.

- So, as part of the reason I do it, I enjoy writing I mean, it's not easy and it's the... You never really understand your ideas until you write them down and shape them. But on the other hand, takes a lot of work but there's a lot of pleasure at the end, if you get to where you want although you know you have to say, you're never satisfied, every time... I don't like to read my stuff after I finish it because I realize I want to change it again and my publisher doesn't like me to do it over and over and over again. But what one of the things that's motivated me besides the fact that I enjoy doing it is, I realized that when I was chairman of the Council of Economic Advisers, when you're inside government, there are only a limited amount of things that you can do. You think you have leverage but you're so constrained about everything you want to do and what... you realize that one of the reasons you're constrained is you have to persuade other people to agree with you. And you have to get people in Congress to support you and to do that, you have to have lots of other people in the electorate, to support you. So a lot of this has really been, you might say political in the sense that I've wanted to persuade other people to think like I do, because I think I'm right. And to get more support.. For... these ideas. And by the way maybe I should say when I was at Amherst, I was through the spring of my junior year a physics major I wanted to be a theoretical physicist I didn't like all the apply stuff, but I enjoyed mathematics and of joint theoretical physics and it was really in the spring of my junior year that I have grown up in Gary Indiana. Which was a city just life with inequality, racial discrimination, labor strife inequality. And would I exceed growing up kept gnawing at me and I decided at that point that what I wanted to do was really think about the problems of inequality, the problems of why our economy, this rich country wasn't able to have this kind of shared prosperity. And so I began studying issues of inequality and after that inequality got worse and worse.

- Were there elements also in the agenda.

- But I wasn't the causal factor.

- Were there elements Joe where, you and I were talking a little bit about this, were there elements in the family environment that we're also pointing you at the ideological approach that you ended up taking if I have it right, a grandchild of immigrants at least on one side a coming from different parts of Europe that he were... Your parents and an uncle were very Pro Union.

- Yeah, I mean I we were very, we were not very well-off but parts of our family we're well-off. But even the parts of the family that we're well-off we're very Pro Union because they felt very strongly that you needed, somebody needed to have a voice for those who were working. And without that voice, our politics don't reflect the interest of a large number of people and the absence of that voice has contributed to the growth of inequality it's no doubt about that, an empirical work shows that. There's one aspect about this, got reflected as I was growing up, which was, we had help. One a day week my mother worked and we had somebody to do you know, but my father was very strong about talking to me about this, that paying Social Security for our help. And he said you know, these are the people who need it the most, and even if they say, we don't want you to pay Social Security, we'd rather take the money now, he said, no, we have a public social security system to protect people when they're old. And he insisted that we contribute, that he contributed to their Social Security. It turned out that that was really important because when I had help when we had young children we always pay Social Security. And during the Clinton administration and remember in the beginning of the Clinton administration a number of people ran afoul of not paying Social Security and they didn't get confirmed. Now today, in the era of Trump that seems such a minor picadillo that you would not even I mean, just that, if that was the only sin we'd say you're a god. But at that time, that would rule you out. And so it turned out really good that my father had given me that lesson as a little kid.

- And I have a couple of more questions Joe, but let me just say something in about how we're going to proceed from here. There is a microphone here to my right and we invite the audience to post questions in the interest of rhythm and in the interest of giving a people an opportunity. I asked for brevity and clarity and so that you, others can have that opportunity as well. I also want to thank the folks of communications for recording this, this is going to be online for people who couldn't be here and to the folks of Amherst books for having books, Joe is going to sign books immediately after. So I have a couple of questions here, one question Joe is that, I would love for you to reflect on how your political and economic thinking has evolved over your career. You talked right now about that family, that coming to terms with the not going to physics, but going into economics what would the younger immersed Joe Stiglitz say to the man that is sitting here. Would they understand each other?

- Yeah, I think they would understand each other, but in a way for... many, well... I forget what you call it, president the student council, when I was at Amherst. And I was somewhat pretty politically engaged even then, one of the things that... I waged a campaign against fraternities because I thought that they were somewhat divisive of the community. At the time 90 something percent of the college was in fraternities. So it was a politically not, it wasn't launching my national presidential campaign, but eventually and maybe this is, I think, my saying this and a number of other people over a number of years, eventually led to a change and a recognition that fraternities were divisive of the Amherst community. There were other issues, it was 1962-3 that period, was a period where the civil rights movement was very strong and I organized a group of students to go from Amherst down to Georgia, to visit more, we organized an exchange program with Morehouse College and it was part of sort of our exploration and our, you might say activism, in trying. At the time I didn't realize that it was at all dangerous I thought it was the right thing to do. But people did get killed, doing things like that. So there were, I guess I was involved in a little activism when I was at Amherst. But, I suppose interestingly, while I always kept this activism I went to, not long after I got my PhD I went to Africa and spent some time working in Africa. At the same time I had this other much more theoretical and those of you know about my theoretical work, it is very abstract mathematical economics and so ideas are really important, I think and rigor, mathematical rigor is really important and science, I need to say so. Economics is a science I always feel embarrassed among real scientists saying that, and especially some of the Nobel Prize winners in economics, aren't real scientists but, and I won't tell you which ones. You know, so I spent a awful lot of my time doing that rigorous kind of thinking which i think is really important. And informing your yourself about these complex issues, I mean they are complex understanding why, when markets work and when that when they don't.

- Last question before we go and I invite people to stand on line if you have a question. Joe, also in the spirit of the Point/Counterpoint that we are part of in this conversation trying to see oneself from the other side, I just asked you how would the young Joe Stiglitz see the old one and vice versa, What do the critics get right about Joe Stiglitz how would you criticize yourself if you had an opportunity to be your own critic.

- That's a hard question. I guess you know, I do... Sometimes... get carried away with the argument, the world is very complex and there are many... aspects of footnotes and footnotes to footnotes which in a book like this you can't really do. And I always feel bad about that, wherein the first draft of most of the book like this there's footnotes that are actually longer than the book itself because I'm trying to qualify everything I say. The problem with that, of course, is A, the book is unreadable and most of the qualifications nobody understands why I'm saying that. In other words, I'm much more aware of the weaknesses in the arguments than anybody else and you don't want to be caught short but in the end I accept the censorship of my publisher and I allow him to can out those footnotes and you know, I'm not sure that was the right thing.

- Okay, first question.

- Thank you Dr. Stavens. My question regards the rise of the corporate state as you mentioned the corporations are mainly writing our laws at this point, corporations and corporate lobbyists and along with the historical decline in the power of unions and the rise in inequality seeming to correlate with the rise in corporate power versus and the power balance with unions what would you propose as a structural adjustment in our society, government and socially to address this and try to make some fundamental change in this rising inequality.

- Yeah, I think the most fundamental change is in our politics and the changes the role of money in our politics you know campaign contributions, Citizens United but there's more, there's many other laws that have contributed to citizens united that allow... these unbridled campaigns campaign contributions you know, there are many very strong democracies all over the world of Scandinavia, Europe you know that don't make a fetish of First Amendment. By that I mean, our Supreme Court has said any restrictions campaign contributions is a restriction on the First Amendment. They even recognized that the amount of money that we have in our politics might seem corrupt. It is corrupt. But they never went the final step and say you know there are balancing issues and we haven't gotten that balance right. You know, our Supreme Court even went so far one of the states passed a law that said, if somebody spends a lot of money gets campaign contribution with his own money, the state will match that or try to level it up. And they said, the Supreme Court said the right inequality in spending was a basic First Amendment right and that it was wrong to try to have a level playing field. Now I mean that is really going crazy. First Amendment rights, you have free speech but you also are denying other people their rights when you don't have the level playing field. So I think that's very important. There are some other aspects like the revolving door which is another way that we influence corporate influence gets exerted constantly. So I think the most important thing is getting the money out of politics and it's very and the reason why that's so important is because it's the political system that writes the rules of the market economy. If you don't have the right rules the market economy you wind up with monopoly power, you wind up with exploitation, you wind up with eviscerating unions and the existence of checks and balances and so you get this what I view is this vicious circle with economic inequality greeting the political inequality leading back to more economic inequality.

- Next question

- Professor

- Yeah

- You deserve great credit for lifting 25 million people out of poverty when you were a chairman of Clinton's economic adviser's council. Are you frustrated though for not doing more to make NAFTA fairer to Mexico

- Yes and no. Let me say... the... Clinton administration inherited the bill, the bill was all finished and signed from the Bush administration. And when you go through a negotiation like that, nobody wants to reopen the negotiation. And so Clinton added a couple of sidebars one on the environment, one on the labor, they were not very effective but the attempt was without opening them up could they rebound a couple of the deficiencies. One area where... I've been very actively involved in criticizing the recent trade agreements are the investment provisions of those that was chapter 11 of NAFTA and these are the provisions that say... for instance,there hasn't been a case like that but there are, I'll mention this case because it's easy to understand and there was a case like this with Agway if you passed a regulation, the effect of which lowers profits, the company whose profits are lowered, can sue the government no matter how justified the regulation is. So in the case of Agway, Agway passed a regulation saying that you have to disclose that cigarettes are bad for your health. And... that disclosure had the effect that was hoped for. People stopped reduced their smoking and sued because it meant their profits were lower, they claim that the right to kill was a basic human right. They didn't put it that way. So there was a provision like that chapter 11 of NAFTA and during the Clinton administratio,n we had not had a single conversation about it. So I had, after... the Clinton administration was over I had a chance to ask the US Trade Representative who's the guy responsible for it. I said "did you know what was in Chapter 11?" and he said, "I never bothered, "that my job was to get it passed, we inherited the bill "and I did what I was told." What I said to the you know civil society groups I said," your job is to tell us what's wrong." You know, we can't look at every bill that comes before us these are thousands of pages. Your job is to to tell us what are the really important things that we ought to be looking at and that's why we have civil society, why we have NGOs, why we have big things and I you know I don't want to say I'm shifting the blame but I said they didn't do their job and if they had said they came back and said "we didn't at that time understand "how bad this provision was." The lawyer who put this provision in said and he understood and he almost boasted he said we wrote this bill, this provision so that if you put plutonium in baby cereal and you pass the ball that you couldn't do that we would be able to sue. And that gives you the nature of the trade agreements and how the written and the lack of transparency with what is going on.

- We have the next one. We're gonna have four more and then we'll conclude with Yanni's being the last one.

- So on a bit more of a softer note. I was personally a very enthusiastic when you mentioned rule of law and discuss that because I'm taking a class on the rule of law. So on that note, would you remember some of your most influential classes here at Amherst or some of the classes which you found most useful.

- Well, actually there are a lot of classes and what is so I think so amazing in many ways is it's 50 some years since I was we were to Amherst and I can still remember so many of my classes so vividly. So on the issue of globalization in my... second year in world history, in our history class, we had a big section on . It was we didn't call globalization but we had a discussion of I remembered the discussion of the U.S. encounter with Japan and the effect it had in Japan and those discussions. So that that was one class I had from Professor Halstead a course on intellectual history of the 19th century that really did help shape my thinking. I have to say my economics teachers were fantastic. Jim Nelson... I had... three different teachers with three very different personalities that reflected in a way the different aspects of economics there was a Jim Nelson had been engaged in policy he did work in economics and transportation. He was extraordinary bubbly you know full of ideas and really very policy relevant. And then I had Arnold Carly who became, was the Dean here and eventually went to Columbia became the Dean of Columbia. The room where I give my lecture classes at Columbia is called Arnold Carly room in his memory. And he was you might say very dry humored, very analytic and it was really from him that I got really appreciation you might say theoretical economics and then there was Ralph bales who was a young guy who came from MIT and was very more quantitative econometrics kind of... working and in economics. Well anyway I could go through all the classes I think I can remember almost everyone very vividly and the all of us in our generation I think one of the classes that we remember most vividly was our freshman English class which was a very special but I can't describe it. You should talk to anybody of our generation and they'll tell you the ways in which it was very special. We wrote three essays a week and... the one essay that I remember most vividly was one we had to write about the meaning of the Jabberwocky poem in Alice in Wonderland.

- Excellent, yes next question.

- Professor Stiglitz do you still adhere to a Henry George theory of public finance and if so like why do you think there's been no major move towards land taxation like anywhere.

- So Henry George for those who don't know and probably none of you do except for you was a great 19th century progressive economist who wrote I think a book called Progress In Poverty or progress in

- Progress in Poverty

- Yeah, Progress In Poverty. And he advocated the... use of the land tax, land taxes have a very big advantage in that if you tax labor people might not work as much, if you tax capital or savings people might not save as much but if you tax land the land is not going away and in an open economy talk about globalization you tax the land in UK and it's not going to move to France So even with or without Brexit it's there. So it is non distortionary as we would say. It has a lot of advantages and I've written, I wrote a paper showing that it actually was an efficient tax for funding particularly local public goods, for local communities. The value of land, a lot of the value land is associated with urban agglomeration. You know, the land in New York isn't wasn't very valuable when the Indians were there, but is now very very valuable and it's partly because New York City is there as an urban agglomeration. It also when I advocate land tax I also argue natural resource taxes for the exactly the same reason that and I argue you should have a carbon tax, because carbon is one of our most important our atmosphere, clean atmosphere is one of our most important aspects of the environment and a carbon tax is a tax that induces people to blute less And so yeah I've been arguing that. Now, why don't more people agree with me that's a mystery but it gives me such hope that at least somebody is reading some of my papers and we'll carry on the torch to the next generation.

- Excellent one more.

- What is your take on China's reach a recent approach to globalization and their foreign policy specifically of the Belton Road initiative and how do you think that the U.S. would ideally respond to that.

- So those who don't know the the Belton Road initiative is China's... attempt in a way to change the economic geography of Asia by putting Beijing or China in the center of all of Asia by massive infrastructure construction that will enable them everything to be connected. It has some other advantages for China. They had excess supply of steel, and a lot of Steel can be used when you build infrastructure. So it solved another one of of their problems. Until recently China was not as engaged it was really focused on increasing standards of living of its people. And its totally understandable. You know 40 years ago per-capita income was $150 $200 and it's... increased 30 40 in the in the last 35 40 years, 740 million people have moved out of poverty. And as they've gotten better off, they've begun to project their influence beyond their borders. So to the extent that it is helping the other countries in the region, it is obviously very very helpful. And for China's perspective changing the economic geography is very important. They have not been managing it very well and... I'm been actually a little surprised that they have not, how poorly they've been doing and by that I mean, when you engage in the magnitude of what they're doing and its really huge, 60 billion dollars to Pakistan for instance, there are lots of political problems that you wind up getting into. They use a lot of Chinese labor for the construction. And that means a lot of Chinese labour are located in all these countries and making sure that they all behave well is not so easy. And it changes, it leads to migrate, problems analogous to migration. But also they've been typically not just giving the projects but lending money for it. And without really thinking about whether the country is going to be able to repay the money, whether the projects are we call self liquidating, did they generate the revenues to pay. so the result is that in Sri Lanka, Sri Lanka couldn't pay and they took over in the case of Sri Lanka a major major port. And only for in the next 100 years but 99 years but it has echoes of neocolonialism. If you remember china seed a number of places like Hong Kong there it was that was but it still has the same overtone. It also leads to problems of corruption. So I was just in Malaysia a week ago and there were a number of projects there where 80% of the money has been dispersed and 20% of the work has been done. And the question is where did the rest of the money go? Now for those who've been following Malaysia know they had a extraordinarily corrupt government and Mahathir just got elected prime minister again. He gives us all hope. He was 93 years old when he got elected again. I knew him as a young man of 75, when he was the prime minister in the late in the late 90s and early years of this century but he went to China and said you know you got to renegotiate look you know this was a corrupt contract. And China said no now they may eventually come around but the result of this is a lot of political... backlash in Asia today. But the United States is finally beginning to say we are to become more engaged with foreign aid. You know when Trump got elected he said, came out basically against foreign aid and just in the last week he has said we we need to engage in foreign aid and partly to respond to the Belton Road initiative.

- Hi, professor, thank you for coming. I'm from Greece and China is also buying ports in Greece.

- Yeah I know

- My question is about inequality. So is your argument against global is your opposition to global inequality fundamentally about poverty or is it about the inequality itself? Like if as some people have argued globalization has lifted people out of poverty why increasing inequality is it a negative

- Yeah exactly actually both that... in some countries globalization has led to more poverty If you look at one of the concerns say in, Mexico we talked about NAFTA one of the concerns was that NAFTA allowed U.S subsidized corn to compete with Mexican farmers growing corn. And Mexican farmers you know they might be able to compete with American farmers but not with Washington. And about 50% of the value of American of the price is a subsidy. So... it hurt Mexican farmers and you can see in the data what happened. Acreage in Mexico which is where the poor people a lot of the poor people are, acreage in corn farming went down in Mexico and it went up and rich corn farmers in the United States. So that was an example where globalization actually increased poverty but inequality itself is a concern because when you increase the divide in a society it tears that the fabric of society. When you have... particularly where you have persistent, a kind of persistent inequality, inequality of opportunity and United States has the highest level of inequality among advanced countries but also has one of the lowest levels of equality of opportunity. You know that we like to think of us the United States as a land of opportunity the American dream but the statistics show otherwise that the life chances of young American are more dependent on the income and education of his parents than in almost any other advanced country. Well, when you have that kind of inequality, it inevitably translates into inequality of opportunity and that really translates into has impact on the very nature of the fabric of a society.

- So and thank you to all the students. We have come to the end and I have one more question for you and it kind of circles back to the beginning into the conversations that we've been having throughout the day Do you think that Trump, sorry to bring the word back, represents a threat to the Democratic fiber of the United States or do you think that it is actually going to fortify it by the reaction that young and not so young people are having to his a approach to a foreign policy and domestic policy?

- So I think he represents a real threat. I mean I think there's absolutely that he I don't I don't think we should just personalize it because I think there the fact that he has as much support says that there are other people who are sharing that view. So but I think that view does represent a real threat to our democracy, to our society, to our civilization but as you're saying one of the most encouraging... one of the positive aspects of it if you can say a silver client lining is that it is leading to an enhanced engagement by a lot of young people. You know certainly I see it at Columbia You know we've had events recently where 2,000 people have shown up for a political speaker never happened before We had the young Alexandra show up we invited her and 600 people you know and a short notice showed up and they were you know really it's not only showed up enormously, enthusiastic and engaged at a level that I had never seen in in my academic career. So the fact that so many are realizing that so much is at stake and our out there willing to fight for it is heartening.

- It has been an honor and a humbling experience to be with you thank you and thank you all.