Economist Joseph Stiglitz

The Nobel laureate offers his observations about the effects of inequality on economic growth and development and what can be done.

Winner of the 2001 Nobel Prize in economics, Joseph Stiglitz has held professorships at several prestigious universities, including Columbia, Stanford and Oxford. He previously chaired the Council of Economic Advisors and founded the Initiative for Policy Dialogue think tank. He's also written a number of books, including Making Globalization Work and The Price of Inequality. Stiglitz has pioneered pathbreaking theories in economic information and is known for his critical view of several international institutions, including the IMF and the World Bank, where he was once chief economist. He holds a Ph.D. from MIT and is a senior fellow and chief economist at the Roosevelt Institute.

TRANSCRIPT

Tavis: On President Obama’s Asian agenda is the Trans-Pacific Partnership, a 12-country trade agreement spearheaded by the U.S., in fact. But economist, Nobel laureate, and Columbia University Professor Joseph Stiglitz is warning that these kind of trade agreements are actually exacerbating global inequality.

In his most recent article for “The New York Times,” “On the Wrong Side of Globalization,” he talks about this very issue, and joins us tonight from New York City. Professor Stiglitz, good to have you back on this program, as always, sir.

Professor Joseph Stiglitz: Nice to be here.

Tavis: Let me jump right in. So this, as I mentioned a moment ago, is on the president’s agenda, this Trans-Pacific Partnership, better known as TPP. Let me just jump right in: What’s your take on it?

Stiglitz: Well I think as it’s formulated now, I’m skeptical. One of the problems is that the administration has not been very transparent. From what I gather, it shared the contents, the language of the TPP with some business executives, with some foreign governments, but it won’t even let the U.S. Congress see what they’re asking for.

So they’re asking Congress to give them a blank check to pass what they call fast-track, so that whatever they agree to will be put to a vote, up or down. Congress is saying we want to see what you’re asking for before we give you that blank check. I don’t understand the secrecy, unless they’re up to no good.

Tavis: I was about to ask, what do you make of the clandestine approach to this?

Stiglitz: Well, I think that what is being done is going to be compromising, or risk compromising, American interests in general for the interests of some corporations.

Used to be that trade agreements would have, one country would give up its tariffs, the other one would, each country would; therefore, the consumers in each country would benefit from the lower prices.

But tariffs are down now to a very low level, and the areas where they are not at that low level, there’s some very strong special interest groups that are not going to give in.

So the current trade negotiations are, to a large extent, about regulations – regulations that protect workers, that protect consumers, that protect our environment.

What I worry about is that the producers on both sides of the Pacific can get together, special interests, and get the regulations down at the expense of our environment, of our workers, and of our consumers.

We know that that’s partly true, because there are similar provisions in other agreements. For instance, these agreements are called free trade agreements, but they’re not free trade, they’re managed trade.

They’re not just trade, they’re investment. So there’s a provision in these agreements which are called investment agreements. Now they sound like they’re protecting investors.

But we’re insisting on these agreements with Europe, where there’s just as good property rights as there is here in America. So for instance, down in Uruguay they passed some regulations to try to protect their citizens against the dangers of smoking.

They were lauded by the World Health Organization, but they are being sued under this provision by Phillip Morris, by the cigarette companies, who want to strip away these regulations.

This is just one example of many of how these trade agreements can really undermine the interests of the rest of our society.

Tavis: That seems pretty – trying to find the right word here – pretty bold, and I want to be charitable and generous, at least to the extent that I can be. Pretty bold for an American corporation to sue a country, as if the country of Uruguay doesn’t have the right to self-determination, to set its own rules and laws.

What is that about? How does a U.S. corporation sue a country under this provision?

Stiglitz: Well there’s a special thing called investor-state dispute resolution. It sounds all very fancy, but it says than an American corporation can sue a foreign government.

But it’s even worse than that, because an American corporation can go down to one of these other countries, set up a subsidiary claiming to be a foreign company, and then sue the American government.

So we are indirectly giving the right of American corporations to sue our government if they don’t like the regulations, if they think that those regulations are taking away some of their profits, even if they are protecting our citizens.

Tavis: How deep into the pockets of corporate America is the Obama administration to be advancing something like this and hiding the details from Congress?

Stiglitz: Well let’s be clear: This is bipartisan, that you look at the last election. It cost a billion dollars on both parties. So when you have an electoral system that is so dependent on money, it’s not a surprise that both parties go out and I don’t want to say sell their soul, but certainly advocate agreements that may not be in the interests of American citizens.

Tavis: As much as my heart goes out and your heart goes out, given the work that you’ve done for years now, on global poverty, as much as our hearts bleed for poor people in other nations, let’s face it – we do want to know what the impact is going to be on our own people. So what impact does this ultimately have on the American citizenry?

Stiglitz: Well besides the lack of protection for our regulations, there’s a lot of uncertainty. Again, we don’t really know, because they aren’t being honest about what’s going on in these agreements.

They’re not being transparent about what’s going on in these agreements. But what we do know is that the old theories don’t work. The old theories were very simple.

They said don’t worry about the loss of jobs, we’ll create new jobs. New sectors will grow as old sectors die out, and we will change our economy to reflect what we call our “comparative advantage,” our “relative strength,” and incomes will rise.

Well that theory’s been pretty well discredited. What we found is that yes, people do lose their jobs, but new jobs are not being created. When they are created, they tend to be lower-paid jobs.

So the fact of the matter is that median income in the United States, the income right in the middle, half above, half below, is lower today than it was 25 years ago. Trade has played a role in that.

American citizens have not been benefitting from the growth that we’ve had over a quarter-century. If you look at men, the median income of a full-time male worker is lower than it was 40 years ago.

This says something about the way our economy has been working, and again, trade has played a role.

Tavis: The talk of academia and I suspect the entire Eastern seaboard of late has been this book, of course, that suggests that income inequality around the world is going to get worse, not better.

Stiglitz: That’s right, and what he shows, which is really very striking, doesn’t have to be this way. We had a period from the end of World War II until around 1980 where the economy grew faster than it did after 1980, and the economy grew together.

Every group in our society grew, but the bottom grew faster than the top, so we were coming together. Since 1980, we’ve been growing apart and we’ve been growing more slowly.

One of the reasons, as I say, for this growing inequality, most economists are beginning to agree, has to do with trade. Now it doesn’t have to be this way. We could, obviously, open ourselves up, have more progressive taxation, provide better education.

There are other things that we could do, but that’s not what we’re doing. So in the absence of these other things, there’s a real problem.

Tavis: I’ve got to move on to another conversation. Before I do that, and the conversation I’m moving to is a conversation about Earth Day. Today, as you know, is Earth Day, and I want to move to a conversation specifically about climate change.

I know that you have done some significant work governmentally over the years on trying to deal with the issue of climate change. Don’t want to color the question too much, but before I jump to this next guest, your thoughts on Earth Day 2014 and what we are doing or not doing to take these issues seriously.

Stiglitz: I think this is really, really important. Climate change is a reality. I was on the intergovernmental panel on climate change that looked at the evidence way back in 1995, can’t believe it’s almost 20 years.

We saw the dangers then. We made one mistake. We didn’t anticipate how fast things were going to change. But now we know that we are being afflicted just like every other country.

We are one of the largest contributors to global warming. We are the largest per-capital contributor to global warming. So it really behooves us to really do something about it. We can’t escape our responsibility.

Tavis: The latest text from Joseph Stiglitz, now out in paperback, is called “The Price of Inequality: How Today’s Divided Society Endangers Our Future.” Professor Stiglitz, always an honor to have you on. Thanks for your time, sir.

Stiglitz: Nice to be here.

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Last modified: April 23, 2014 at 12:50 pm