Joseph Stiglitz ’64: “Globalism and Its Discontents: Point/Counterpoint with Ilan Stavans”

October 25, 2018

Joseph E. Stiglitz, an American economist and a professor at Columbia University, joined Amherst College professor, and host of NEPR's In Contrast, Ilan Stavans for a Point/Counterpoint discussion.

Transcipt

- 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 500 Internal Server Error

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- Not from me

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- 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

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- 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.

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- 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.

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- 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.

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- 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?

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- 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?

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- 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.

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- 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.

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- 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

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- 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.

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- 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

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- 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.