Transcription
Good morning, everybody. Thank you so much for filling our main dining room this morning for what I'm sure is going to be a really interesting and enlightening talk. Uh, my name is Karen Co. I'm the first vice president here at the FCC. So, it's great to see everyone showing up on a Monday morning. And I know there are people downstairs in the main lounge. So, hello to all of you. Thank you for for filling us up as well. And I'm delighted to welcome one of the most influential economists of our time, Professor Joseph Stiglets.
>> Nice to be here.
>> Applause for him. [applause]
>> [applause]
>> So, as most of you probably all of you know, uh, Professor Stiglets is a Nobel laureate, um, in economics and is renowned for pioneering the economics of information. And he, through his work, has really redefined how and reshaped how we think about markets. So, showing how things break down when government, when information is spread unevenly, and why government intervention often matters. Um, it, it, it helps. So, he's done everything from chair the US Council of Economic Advisers and serve as chief economist at the World Bank to advise global leaders and challenging the status quo. And I think that's a little bit of what we want to talk about here. His recent book is called *The Road to Freedom: Economics and the Good Society*. Unfortunately, we're not selling it here, but you [laughter] can buy it on your own. So, the book, which we'll talk about later, really asks us to rethink how economic policies can serve not just markets, but also the people behind them. So, we can, we have a chance to go deeper into some of those ideas and much more, uh, with him today.
So, Professor Stiglets, I'd like to start out by asking you, here we are in November 2025. Um, you've just come from the US. What do you think of the way the US economy is going right now and the policies that have been put in place in this current administration?
>> Uh, well, it's terrible and, I don't know where to begin, uh, in, in saying where, uh, it's gone wrong. Uh, the, I don't think the full consequences, uh, have been felt. Um, I, and it's not clear the full consequences will be felt by November of 2026. So, if we have a free election, it's not clear they will fully register. Uh, but let me just talk about a couple of the things that, that, uh, uh, I think, uh, have been, uh, uh, I, I've been very critical of. Um, you know, let me begin by the, the long run, uh, and because I think that often gets neglected. You know, uh, economists spend a lot of time talking about why, uh, what is the source of the wealth of nations. You know, Adam Smith wrote a book about the topic, why some countries do better than other countries over the long run. And, uh, there's a broad consensus among economists that, uh, the defining moment, the world's GDP had been stagnant per capita for thousands of years, and then came the Enlightenment. The Enlightenment was the idea that you could learn about nature, uh, by rational, you know, by science, and that you can, uh, organize people together rationally. If you start thinking about how you cooperate together, and large-scale cooperation requires governments, and it requires institutions, and how do you design that complicated issue, but we could try to reason about that. And at the fundamental level, uh, I think this current administration is an abandonment of 250 years of what in the West we would call the Enlightenment. It's an attack on the Enlightenment. Uh, you see it as the attack on science. Uh, you know, attack on our universities, attack on the rule of law. Um, you just, uh, trampling on, uh, the legal framework, coming, uh, all the way from a lawyer who defends, uh, Hillary Clinton is not allowed to go into government property as a way of squeezing them, uh, extraction of, of payments from them, and then a majority of the big law firms caved in. So, it's, it's fascism in a way. So, it's on the one hand an abandonment of th- those principles that led to successful growth, and on the other hand, it's an adoption of, in an encroachment way, step by step, of really many of the, of, of the techniques of fascism. And, you know, that's what the, the dinnertime conversations all over America is about. Uh, you know, whenever we meet with somebody from Brazil or somebody from Germany, we ask, you know, how long did it take for you to go slip from democratic government to a, to a fascist country? So, it's, it's that, and that doesn't create a good mood for the economy. So, you go back to the narrow question of the economy. So, that's over the long run. I, I, the US cannot function well as a, a, a society without the rule of law, with a society that's so divided, uh, um, and, uh, without science, >> without technology, which is our comparative advantage. So, that's the long run. When this will show up, and, and, you know, you see, uh, large numbers of people thinking about moving to Europe. Europe is being successful in recruiting numbers of people coming to China, uh, and to Hong Kong, and efforts being made to recruit people there. Um, so, uh, as I say, inevitably over the long run, uh, that has to be bad for, uh, the United States economy.
In the short run, uh, there's been this enormous uncertainty of on-again, off-again, uh, tariffs. Uh, just ruthless firings, uh, letting people go in the government without any thought. Sometimes they hire them back. Uh, but by meanwhile, you can imagine what it does to morale when you fire somebody and then you say, "Oh, by the way, I now, I figured out I need you." [laughter] And so, this chaos is, uh, uh, means that there's just a lot of uncertainty. Consumer confidence is very low. Uh, investors don't know what to invest in. So, the puzzle then is, why are certain aspects of the US economy looking good?
>> So good. Yeah.
>> And one is the stock market. And if you look at the stock market, it's all an, I think, an AI bubble. Uh, and that's also true of investment. If there weren't that AI bubble, and the AI bubble is supporting data centers and investments, and, you know, in real terms, uh, if you look at the rest of the economy, investment is very weak. And if you look at the rest of the stock market, it's not very strong. So, it's an index, and it's an index that's weighted now by, you know, 10 companies, and they are doing very well. But when you say they're doing very well, it's not based on profits that they're making. It's based on the expectations of profits. And when economists look at that, uh, one, you know, there are two, there, there are, we might say, two or three big questions. The first is, will AI have the transformative effect that it says it will in a relevant time frame? You know, eventually it may be real, but, but there are so many sectors of our economy where its impact will be very limited. You know, it will take, eventually maybe, but construction, uh, healthcare sector, 20%. You know, we aren't likely to see enormous effects on, in education. So, there may be an exaggeration of the effect. The second thing is, if they're going to generate profits, there can't be much competition. So, even successful products, if you have two or three firms competing fiercely against each other, the profits will be driven down. And right now, there are many companies competing, and not only in the United States, but there are, you know, DeepSee in China, uh, and Europe is developing one. So, the, the point is, it appears as if that there will be competition, and there may be a shakeout. But the, the real question is, will the profits be anywhere near what the market expects, given that competition would drive profits, uh, uh, down as much as, uh, uh. And the third thing is, if it turned out that AI was as transformative as the advocates claim, they haven't answered the question, with everybody unemployed, where would the demand for the goods come from? You know, that, that the great idea is that AI, you have this machine replace all workers, but what does that mean? You know, it's going to, that would be traumatic for our society. So, when they succeed, we have a real, real problem for our society. And when they haven't figured out the, >> what's going to look like? >> what's going to look like? Who's going to be buying the spending the money that will, uh, give the money to the AI to make the profits if everybody's unemployed? So, you cannot have a robust economy where you've replaced all the workers with the machines who are talking to each other. So, in a, in a way, they don't have a, a coherent story of their success.
>> Okay. I want to go more into AI a little bit later. But just going back to to the beginning, if you look at President Trump's stated aims, for example, for tariffs, they were to bring more jobs back to America, to restore the balance of trade with many countries, to stop the flow of fentanyl, specifically from China. Um, and definitely there was a move to try and stop illegal immigration. Now, those aims of themselves are not negative aims. Would you agree? Or would you think that, you know, if it were not President Trump, if it was some other president, would these aims not still be something the US should, should be reaching for?
>> So, uh, obviously, uh, uh, it's not a good thing to have all this fentanyl coming into the United States. So, I think everybody agrees, uh, and, and China fought a war over something similar in the 19th century. So, so, uh, the, the having drugs come in is, is not a good thing. Um, whether, you know, and it's very clear that, uh, the American economy needs a kind of restructuring. Uh, that we de-industrialized too fast, too much. But the future of the economy is not going to be an industrial, a manufacturing economy. And that, you know, Trump is living in the 1950s. And, uh, even if he were successful in bringing manufacturing back, it wouldn't be bringing manufacturing jobs back, and it wouldn't be the kinds of jobs that were lost. So, manufacturing is under 98% of GDP. It's not important. I mean, I don't want to say, you know, if you're manufacturing, it's, it's important for you. And if you're going to go and manufact, you, if you're going to fight wars, you need guns and you need to manufacture the guns. You need airplanes. So, you'd have to have an important manufacturing sector. But as a source of GDP, source of jobs, it's not that central. And so, what you need to do is identify the parts of the economy that are, uh, have not, uh, been advancing as fast as they should have been. So, the construction industry has not been innovating, and that has to do with the nature of the unions in the construction industry. So, there are many parts of our economy that have not been as innovative. Uh, and that shows up, you know, we talk about the US economy being an innovative economy, the increase in output per unit input, total factor productivity, as we call it, is actually very low. And that reflects the fact that most of the economy is not very innovative. And you can have a very innovative tech sector, but in the aggregate, it just doesn't show up as, uh, an increasing standard of living for most, most people, other than you can use your cell phone.
>> Right?
>> Uh, uh, so, I think he's totally misguided in his view. He's right that we need to think about restructuring. He's wrong about his view of restructuring. He wants to go back to the 1950s. He's opposed the most important aspect of a restructuring, which is moving the green transition. And, you know, that's the, the most important transition that we have to make as a society. And he's trying to dismantle that. And that was what Biden was trying to do with the IRA. Um, so, uh, and, uh, he's not been really. The other important thing that Biden did was, uh, recognized that we were, uh, too dependent on Taiwan for chips. And he passed the Chips and Science Act. And, um, you know, just because Biden supported it, he tends to be against it. So, those were important areas of industrial policy, as we, and, and tariffs don't address those big issues. And, and you ask the question, how can a tariff on coffee make America a coffee producer when our weather isn't right for making coffee? And we have a tariff on Chilean copper. Now, the copper mines in Chile are not marching north to the United States, and so we can have more, more mining of ch- of copper in the United States. These are really, really stupid tariffs, and they make us less competitive because products made using these inputs, like using copper, are now uncompetitive. We can't, manufacturing, uh, we ex- So, if you think about restructuring to make us a manufacturing in those ways, he's actually destroying our competitiveness. Plus, uh, um, uh, uh, I mean, and then the final thing along those lines, you know, when I talk to people who, you say, you know, are you relocating from China to the United States? And they say, look, the US doesn't have the engineers. A car company, I visit a car company in Beijing, half the employees were engineers. We've been producing MBAs, but we haven't been producing engineers. And MBAs may be very good for some purposes, but they don't know how to make cars. Uh, and, you know, we specialize in MBAs. Uh, so, we, we just don't have the labor force.
>> Yeah.
>> That, that would be needed.
>> Yet, there are, there are so many reports that there are so many jobs in the US that are going unfilled. How, how do you address those gaps? I mean, if there were an ideal restructuring, what would it look like to you?
>> Well, I, you know, um, one of the points, uh, you know, that, as I said, the restructuring of the new jobs being created are not the jobs that our labor force is trained to do. The other problem is there are a lot of shortages, uh, of labor in areas where, uh, Americans don't want to work, just because the work is too hard. And we've been very reliant on immigrants, uh, both at the top, the engineering, and at the bottom, uh, uh, uh, construction workers, hospitality workers, care workers, uh, you know, just wide swaths, uh, of, of our economy. And some of them are, uh, undocumented immigrants, and some of them are, uh, legal immigrants. But the sense of fear in the United States right now is that, in, uh, parts of New York, people don't go out of their apartments because ICE is arresting people who are US citizens. ICE comes with masks, seizes these guys, no due process, and even American citizens have been deported, uh, outside the United States. So, you know, and there's just no due process. Uh, so, you know, if you have dark skin, you are at risk. And so, that means people don't go in the grocery stores, don't want to go to work, and that undermines both demand and supply. So, you ask where the economy is. Uh, the, uh, there have been almost no new jobs created since, uh, Trump got elected, and, uh, the number of jobs in manufacturing, I think, is actually down.
>> So, he's not succeeding in, uh, what he says he, he wants to do with the tariffs. Uh, what he has succeeded is just created an enormous amount of chaos. There was one more point of your earlier question I want to come back to, which was the deficit, and are deficits, trade deficits good or bad, and will his policies, uh, uh, correct them?
>> Well, in a way, at a philosophical level, um, many economists would say if you could have trade deficits forever, that would be a good thing. Because what does that mean? Countries are sending you more goods than you're sending them. If they want to keep giving you things to consume, what's your problem? You know, what? They're giving you a gift. If you want, and, and you're getting more things than you're giving them. What's the complaint? Well, the complaint really is that, uh, that may represent difficulties for the economy maintaining itself at full employment. But that's not the problem right now in the United States, uh, or hasn't been. We've been able to maintain full employment. Um, the final point I'd make is, will his policies improve the trade deficit? Actually, there's a broad consensus among economists that his policies overall are going to ex- uh, make the multilateral trade deficit larger. And the reason is that the multilateral trade deficit is the result of macroeconomics. And it's the disparity between the domestic aggregate savings and domestic aggregate investment. And that disparity leads to the capital inflow, and the, and the flip side of a capital inflow is the trade deficit. And his policies, which have been for these very large tax cuts for billionaires and for corporations, paid for a little bit by cutting back on healthcare for the very poor, have actually projected to increase the fiscal deficit of the government by trillions of dollars. What that means is a fiscal deficit is the government having negative savings.
>> So, aggregate savings is actually down, and that means the trade deficit is likely to go up.
>> Okay.
>> He's going to fail, and, and, uh, and he failed last time in lowering the trade deficit, in spite of all the, the rhetoric.
>> Uh, and that's on the macro level. At the micro level, this goes back to to his living in the 1950s, when everybody liked cars, and, you know, that was the thing we all, you know, and, and he really wants America to become a big car producer. He doesn't, >> just not going to happen. >> and it's not going to happen. And the new cars are EV cars, and he's, he's taking away the subsidies for the EV cars. And competition with China. I mean, that's just say it's not, it's not going to happen. Uh, the, um, uh, as I said before, the US economy and the global economy is a service sector economy. And what are service sectors? Tourism, education, health, you know, these are big export sectors of the United States. Tourism, education is bigger than agriculture, you know, corn and, and, and, uh, tourism is a big sector. Um, and he's tried to destroy all those sectors.
>> So, at the microeconomic level and at the macroeconomic level, uh, he's really, uh, been shooting America in the foot.
>> You can tell I'm not pro-Trump. [laughter] I don't, I don't want to sound partisan here, but,
>> No, we appreciate your point of view. Um, [clears throat] I want to, since we're talking about trade tensions, and a lot of the rhetoric is aimed at China, how, how would you characterize the current state of US-China relations beyond the trade tensions? I mean, are there areas of opportunity to cooperate? Uh, I mean, I, there's obviously going to be areas of conflict, but what's your view?
>> Well, I, you know, under Biden, there were lots of areas of cooperation. Uh, we wanted, we, the most important issue is, uh, climate change, uh, and, uh, you know, you live on one planet, you have to have a global climate policy, and we were working really hard to, to get that climate, uh, policy. Um, my criticism of Biden was that he was, uh, he had the view that he could be very hostile in some areas and very cooperative in others, and I thought he ought to tone down the hostility to get more cooperation. That, that, that fury that he had, I wasn't, I buy it, uh, fully. But he did want to really cooperate on climate. Uh, we all know that there's going to be another pandemic, and, uh, it's important that we cooperate. You know, the viruses, uh, don't know, carry passports. They don't know, uh, about visas. They go across borders, and there needs to be a global pandemic policy. Uh, so, we need to cooperate in there. Uh, there are some other, I think, global emergencies. There's a, debt crisis in the world, uh, inequality crisis, and, uh, getting China and the US to cooperate and some global rules that might mitigate those would be very important. So, uh, I think there really are some very important areas of cooperation. Uh, in most, many of those areas, uh, you know, basically, I think the word cooperation is not in Trump's vocabulary. So, um, uh, that's going to be hard, and particularly because he doesn't believe in climate change. So, of the most, all these areas, the one that's most important, most obvious, is the one that he is, uh, distinctly disinterested in. He called it a con, a hoax. So, uh, that makes it obviously not, you know, that, that's not only a source of lack of cooperation, it's a source of hostility. The rest of the world is trying to, uh, uh, stop pollution. And he says, "Drill, baby, drill." And that's a real, real problem for the, uh, international community. Will they let him get away with polluting and destroying the rest of the world? And I, I, I think you, the rest of the world has to put pressure for the US not to do that.
>> M-hm. I know you're an economist, but can we talk about security for a bit because of course there are very complex, um, geopolitical security issues, US concerns about North Korea and China's influence there, and China's relationship with Russia as well. We saw both Kim Jong-un and Putin at the September, um, military gala held in Beijing, and the US would like China to exert some influence. So, China seems to be reluctant to do that. Do, do you see any ways, and at the same time, the US pets is firing generals left, right, and center, and really demoralizing a lot of, a lot of the military. Do you see any, uh, hope on the horizon for the, for the military and, uh, that level of cooperation between the US and China?
>> Uh, no, not really. I mean, it, the, uh, I, I think, you know, overall, going back on your broader question of US-China conflict, the only thing that two parties in the United States agree on is, uh, China's a problem. And, uh, the one area they compete to be, uh, is, uh, who could be tougher on China. And I can't quite explain. I, I mean, the, the, there are some obvious, uh, explanations. You know, when things are going well, you, you always don't want, you want, don't want to think about what you didn't do right, how could you let so many people feel so unhappy in the country, how could you, uh, leave, let so much inequality grow in the United States? That's an American problem, but it's so easy to say, "Oh, ex- oh, oh, China's problem." So, I think, or immigrant problem, you know. So, I think a lot of what you see in the United States in both parties is a blame game, and bl- where it should be policies that we got wrong. And, uh, the Democrats focusing on China, the Republicans, China, and immigrants, or China and other unfair trade agreements, and immigrants. Um, so, in that context, it's, uh, hard to think of, uh, uh, strong cooperation. But, uh, that's where I think the positive thing in the Democrats is they're concerned about climate change, means they know they have to cooperate, >> and they're concerned about pandemics, again, they have to cooperate. Uh, but, uh, uh, whether they could, uh, you, um, you know, their, their approach to China not supporting, say, Russia in the Ukraine war is very much not persuasion, but threat of sanctions of one kind or another. And that's, you know, sort of part of, of this kind of trade, economic conflict, where, I think, at this juncture, most people look, you know, looking at, uh, uh, that relationship would say the cards are mostly in China's hands, not in the US hands. And therefore, uh, the power of the US to do what it wants is very limited.
>> If we look at, uh, how globalization, or the concept and the idea and acceptance of globalization has changed, especially after the pandemic, when we saw a retreat to nationalism, meaning, if you don't have a passport to that country, you're not welcome to come to that country. Um, and countries needing to realize they needed to be more self-reliant in everything from making masks to toilet paper, as we all saw the great toilet paper runs all over the world. Um, do you think that, and we've seen since then a shift to the right in many countries, in Japan, in many European countries, is there a new model of globalization that's emerging where countries say, "I, I want to be part of the global economy, but I want to protect, uh, my national interests in a much more, um, in a, in a more stern way, in a, in a?"
>> Yeah, I think there is. One way of thinking about this is 2008 was a big event. Uh, you know, the global financial crisis, and, uh, we learned that not only good things could go across borders, but also bad things. If one country, if you have a globally integrated economy, you have one country that doesn't regulate its financial market well, it could blow up the whole thing. So, after 2008, you saw actually a marked decline from what, uh, sometimes we call an era of hyper-globalization. You see the data, uh, very much shows that, you know, flows of capital, uh, uh, foreign direct investment went down, you know, lots of things. But then the pandemic really changed things, as you say, in a fundamental way that, uh, uh, we suddenly, uh, it wasn't only that you couldn't move across borders, but each country hoarded whatever pandemic-related products, uh, that we had, in violation of all the WTO rules. And, uh, then we had what I think is one of the most, uh, worst aspects of it. The only WTO rules that were enforced were those that deprived developing countries and emerging markets of vaccines. So, the US government and the German government, uh, had largely financed the development of the mRNA vaccines. So, they were really should have been part of the, owned by the people. Uh, they were financed more than 90% by people, by, by the governments, and yet the governments gave them to Pfizer and Moderna, and Pfizer and Moderna said, "Our profits are more important than the lives of anybody in emerging markets." And that, and so, you had vaccine apartheid. And so, the only time you enforced global rules was against poor people. And then you have Trump come along and say, "The rich countries, the big countries, we're not going to obey any of these international rules. You know, uh, do something to us."
>> And of course, nothing has happened. Nobody has gone to the WTO. And in fact, the United States, uh, effectively defenestrated the, uh, uh, uh, appellate body at the WTO by refusing to appoint anybody. So, there, there's not even a court that's functioning. So, uh, uh, we've gone into a world where we recognize we don't have a rules-based system, and that we need to be more resilient. And so, we, we, we need, you know, US needed to feel like it had the chips. And so, it, we felt we needed to become, go further in the green transition and be competitive. And so, we provided these subsidies that clearly violated international rules. We said, "We don't care." So, that's the end of the rule of law internationally.
>> And of course, you know, as I say, with Trumping, it's been, uh, so much worse. So, the question is, where do we go from here? Um,
>> Do you have an answer? [laughter]
>> Well, yes, I do. I, I think the law of the jungle is, I, I think we've, I think we've learned from Trump that it's important to have a rule of law, that, you know, all those ideas that I talked about in the very beginning were important ideas, and that, uh, there are benefits of international cooperation. We have to have that. And so, uh, I've been arguing that we need a what you might call a G minus one. Um, uh,
>> And minus one being?
>> US.
>> Minus US. Okay.
>> Um, the rest of the world get together and and make rules. You know, if the US doesn't want to play, you know, you, in every school, you'll have a bully. And what do you do with them? Do you let him run the whole schoolyard, or do you put him in a corner and you say, "The rest of us are going to play, and he stays in the corner?" And I think the US is not that important. Um,
>> Tell us more about that. Why do you think the US is not that important? Because everyone in the world seems to think the US is the most important.
>> Oh, it's the single, well, except, except for China, it's the single largest economy. Uh, but it's not the largest in trade. It's not the largest in manufacturing. It's not the, you know, you go down all these things. It's, it's, uh, it dominates a couple of very important industries, you know, the tech sector. Uh, it used to dominate in what I think is the most important industry in the world, which is the university sector. [laughter] It's my sector. So, uh, so self-serving, but I think it was a very important sector that we had a dominant role in, in, in the world. And that's what, that had gave us an enormous amount of of influence. It was really where our soft power came from. And militarily, we spend, I think, as much as the rest of the world combined. So, we are big. I wouldn't want to get in, in a war with the United States. Uh, uh, so, there, you know, it is important in, in, in many, uh, ways, but when it comes to international trade, uh, um, you know, the numbers, it's not clear, you know, is it 13% or 9% of shipping or whatever, you know, it's, it's, it's a significant number, but the rest of the world can adapt, uh, to that. And I think, Uh, the question is, uh, if it's on-again, off-again tariffs, or whether you would rather have a reliable supply chain and a reliable, uh, source of demand, or something that's going chaotically. It seems to me that most people say, you know, "I can't live with this kind of chaos. I need to know what I, you know, the inefficiency of of adapting constantly is just too great." Um, there are some philosophical issues, um, uh, that, uh, uh, if you think about, uh, ecosystems, there are, uh, mathematical models say if you have two integrated, uh, ecosystems, they become, uh, are, are more fragile to various, you want to say, adverse events, pathogens. I'm thinking about more from biology. So, so here, the notion is, is one of the problems of the 2008 financial crisis was the global economy was too interdependent. And if you had a little bit less interdependence, one part of the financial system, US, could go pound, but the rest of the could be strong. So, you know, we, we sometimes talk, we, we don't, uh, value as much as we should some of these, uh, properties of, we call resilient systems. And, uh, there might be some advantages of of creating a world where there are two differing systems.
>> M-hm. Well, we, we are already seeing a lot of countries in Asia reorient towards China and to Europe, simply because they don't see the US as a reliable partner. And what do you think the consequences for the US would be if this trend continues?
>> Well, uh, obviously, lower standards of living in the United States, is going to be lower growth in the United States. Uh, it could change. My, my hope is that it would eventually change American politics. You know, America would say, you know, I, I would strongly support, uh, a version of what Europe has called CBAM, I've been advocating it for a long, you know, the cross-border adjustment for carbon. So, if every other, you know, if we would not buy, no country should buy American, say, steel, if it's made in a way that destroys the environment, that emits carbon, and so there's a carbon tax. So, that provides an incentive for American firms to adopt, adopt the global standards on, on green, uh, production. So, I think it, it may eventually change what's happening in America. I, I, it's going to be hard because, um, America for a very long time has viewed itself as the strongest country in the world, the highest standards of living, you know, all these things, even when data, uh, are not necessarily consistent. So, for instance, America has the lowest life expectancy of any of the major countries of the world, of countries of the world. Um, our life expectancy of Native Americans is lower than in any country in the Western Hemisphere except Haiti. I mean, there, there are just some statistics that that say in some ways we have not been doing very well. Um, and, you know, at the bottom, just to give you another statistic, uh, the minimum wages in the United States, adjusted for inflation, are, uh, roughly the same level that they were 60, 65 years ago. So, there's no growth in 60, 65, if you're at the bottom. So, there are lots of, uh, reasons why US should be worried about itself. But so far, it's been hard to penetrate, uh, this into the national dialogue. The progressive movement, a lot of the younger people are beginning to talk about it in terms of language like affordability, and, you know, the young people can't buy a house, can't, you know, so, there, there are growing movements on this, a recognition of it, with a different vocabulary, of a voc- of affordability, and that played a big role in, in the, the election of our, our mayor in New York, a source of hope.
>> Professor Stiglets, this is a good time to bring in your book because *The Road to Freedom* does kind of, one of your theses is that this whole experiment, if you like, of neoliberalism, of accumulating wealth, of hands-off regulation, is not really working. It's really contributed to a lot of inequality and a lot of other problems in society. Can you tell us why you wrote this book?
>> Um, well, there, there are several, uh, motivations. Um, it might seem for, you know, uh, strange for, uh, an economist to write, uh, a book with the title *Freedom*. You know, that seems more like philosophy. But actually, economists have, often written about that. Uh, a famous book in the middle of the 19th century, early, uh, was John Stuart Mill's book called *On Liberty*, and then in the middle of the 20th century, uh, there are two famous books. One, one Milton Friedman wrote a book, uh, called *Capitalism and Freedom*, and, uh, the title of my book is a riff off of, uh, Friedrich Hayek's book, which was called, uh, *The Road to Serfdom*. And, his idea was, he wrote it in 1944, and, uh, his idea was that, uh, it was a period where, came right after the Great Depression. Keynes had argued that you didn't need to be, uh, in a depression where one out of four, one out of five people were unemployed. Government intervention through macroeconomic policy could stimulate the economy and get you out of depression. And then the welfare state was just beginning. They were talking about, not yet, but it was about to happen, the NHS, uh, in the UK, and, uh, healthcare systems in the rest of Europe. And he, and Hayek was very afraid that, uh, that would lead, that that excessive role of government would lead these countries on the road to authoritarianism. He called it the road to serfdom.
>> And, you know, looking back on it, he was 180 degrees wrong, because you see authoritarian populism not in countries where governments have done too much, but in countries where the governments have done too little. So, part of the motivation of writing this book is that in the United States, uh, uh, the notion of freedom had been adopted as a, uh, uh, code word, in a way, by the right. The Freedom Caucus was the right-wing caucus in Congress of the Republican party. And my view is they didn't understand what they were talking about. And actually, even the discussions of the revolutionary war and freedom were a little bit confused, because they really hadn't talked about freedom. Who's freedom? You know, we became free from the UK, >> right? But our constitution did not do anything about the enslaved people in the South, which were a majority of the population. So, who left a majority of the population in the South enslaved? How can that be a, a fight for freedom? So, you know, but that kind of cognitive dissonance, you could understand it 250 years ago, but we still live in that world, and I wanted to help us move out of, out of that world and have a discussion of what freedom meant, you know. And this notion of freedom is so deep. The word neoliberalism, you know, was new. Liberalism is about freedom. And it was about this idea that you said, if we could free the market, this free market would deliver more growth, >> right? Everyone would be raised up. >> And then there, the other part of it was, was trickle-down economics. Everybody would be lifted up. And then 45 years of this experiment, and what do we see? Lower growth, and trickle-down, and no trickle-up, uh, um, trickle-down economics. So, so the people at the bottom didn't get any, uh, of the benefits. So, I wanted to counter that. And then what really motivated me at that moment was we had a lot of, um, discussion, quote, of freedom during the pandemic. This is dramatic.
>> Yes.
>> And the question was, uh, many on the right said requirements to wear, wear masks, to get vaccines, uh, social distancing, even, were an infringement on freedom. And I thought it ought to be clear that that was an instinct where your freedom not to wear a mask, not to get vaccinated, social distance, meant that somebody else was going to get COVID-19. That meant they lost their freedom. Freedom from illness, freedom from being hospitalized, or even freedom to live. And so, one person's freedom in the right was viewed independent of what anybody else. But in a society, you can't do that. And so, many of the other issues, uh, that have become the contentious issues in the United States could be looked through that lens. So, for instance, we have a big, uh, uh, fight over, uh, the right to carry AK-47s. And
>> Which are absolutely necessary for everyday life.
>> The right-wing says that's a basic human right. You know, the right to carry an AK-47. And, you know, uh, you know, you're infringing my right. And you say, "Yeah, that's one right, but on the other hand, every day in the United States is a mass murder, and you know, you're taking away the right of other people to live. Which is more important? The basic right to carry an AK-47, or the right to live?" And I say, any reasonable society balancing the two would say the right to live is more important than the right to carry an AK-47. And then, in addition to that, you know, uh, when I was a kid, we, we had drills about, uh, air raid drills of, uh, nuclear attacks, right? Um, now, in American schools, kindergarten, you know, little kids have to prepare what, what to do when a gunman, >> active shooter drills.
>> Yeah.
>> Yeah.
>> And so, you, you lose the freedom of fear. Everybody, every parent worries, will their kid come home at the end of the day, because maybe a mad gunman is going to come into their school.
>> Yeah. You, the subtitle of your book here is *Economics and the Good Society*. H- how optimistic are you that a good society is achievable? I mean, when you look, when you talk to children these days, you say, "What do you want to be when you grow up?" "I want to be a YouTuber or a TikToker." That's their ambition, and they're living in an economy that will facilitate that, that actually, you know, you can make a good living as a YouTuber or a TikToker, or, you know, an OnlyFans star. [laughter] Um, so, what does good society mean these days?
>> Well, um, yeah, so, first, you know, uh, I don't ever really precisely define what a good society is, and I, I, I, the democratic tradition to say, you know, society has to decide that for itself. And, uh, much of what I argue is about a better society, that there are some things that are, we can all agree are wrong with our current society, and we can do something that's a little bit better than we are. Um, one of the things that, uh, uh, your examples, uh, illustrate, uh, is an aspect of, of, uh, a critique, uh, that I have of innovation in, in, uh, the modern American economy. So, you, you're, you gave sort of, uh, the example that makes, I think, absurd, clear how absurd our situation is. But, um, if you ask, you know, what has motivated innovation in the United States, the most successful innovation we got, tech innovation, building a better advertising engine, you know, that's really what's driven Google and Facebook, right?
>> Yeah.
>> It's all about, is that the most important societal need, uh, that, uh, that we need to have better advertising, as opposed to the green transition, or, uh,
>> More nurses.
>> More, I mean, just if you thought of all the things that were really, really important, building a better advertising engine would not come towards the top of your list. And yet, that's how we organized our society. And so, that's an illustration that I say, say that something's fundamentally wrong. And another way of seeing it is, your, your examples illustrate, an influencer gets money is advertising. But advertising is selling something, but somebody has to be producing it, and somebody has to be buying it. And so, if you think about the whole system, you have to ask, don't we need to become more efficient in whatever it is that we produce? And don't we have to have income to people to be able to buy it? And isn't, aren't those parts of the system, parts of the system that we ought to be focusing more on, not on this advertising?
>> Yes.
>> Part of it. And so, something has fundamentally gone wrong, I think, uh, with our, uh, society, and I, I do put a lot of the blame in the neoliberal framework.
>> We are running short of time, and I do want to open the floor for questions, but I just want to ask one more question, um, of you, which is about your, um, talk. You're going to be speaking tomorrow at the Chief Executives, uh, Forum Policy Unit Forum. The forum is called "Economic Transformations in a Multipolar World: International Forum on China's Economy and Policy." What, what message or priorities are you going to emphasize in, in that talk tomorrow?
>> Well, I, I, I think I'm going, the message that I, I, uh, already mentioned, that, uh, global cooperation is really necessary, that, um, for the moment, uh, the US, uh, is a, uh, chaotic element in the world, is to put it mildly, and that the rest of the world can't allow one country to [clears throat] stop it from cooperating to deal with climate change, to have a rule of law and trade. So, that G minus one, >> world, uh, that needs to be constructed. You know, that, I hope it will be constructed on, you know, reason principles, uh, of, of fairness, particularly to, uh, poorer countries, you know, rules that are not just a reflection of power dynamics. Um, you're not going to be able to, you know, the, here, uh, you're probably enough in the English tradition, and you probably know the nursery rhyme, Humpty Dumpty sat on the wall, Humpty Dumpty had a great fall, all the king's horses and all the king's men couldn't put Humpty Dumpty together again. You're not going to put multilateralism, >> together again in the way it was, uh, we now know that the powerful can and will break the law when it's convenient, and we don't have a super government to enforce. So, we have to rethink ways of cooperation where we recognize those asymmetries of power. And, uh, but I think we can do that. And so, that's really, those are the main messages.
>> Okay. Thank you, Professor Stiglitz. Now, I'd like to open the floor. I know there's going to be lots of questions. Uh, one, two, three in that corner.
>> Yes. Hi. Um,
>> Yeah, it's working.
>> Yeah. Um, sorry, Simon Clark here. I, um, as a young man yourself, what, what impact has longevity had on society? I mean, you know, people are growing older and older. We can expect to live to 90 or 100. You know, people expected to retire at 55 or 65 or whatever. What impact do you think longevity has had?
>> Well, um, especially for somebody who's getting old, longevity is a great thing. [laughter] Uh, I think over, I, I think for our society as a whole, uh, part of longevity is that people
are [clears throat] able to work longer. So our norms of when retirement need to adjust. Uh and I I think it's actually healthy. There's some evidence it's healthy for people to be engaged in the labor force.
So the second thing is that I think uh different people uh age differently and we need to have uh design in our labor market uh more flexible or uh frameworks. So and we're moving co the pandemic made a big people should be able to work part-time more easily. uh work from home more easily. Uh so I think some of those adaptations of of the labor for you know labor market uh need to be are are important.
And the third thing is um we also have to recognize that there are really big differences uh in health and in the nature of the work. though that um I don't don't know precisely how to design it but blueco collar people who really have a physical uh hard physical life should be able to retire at a good salary when they're 65 and in some sense you could say even actuarily it's fair because they're life expectancy is going to be lower that's the consequence of hard Yeah, >> those of us who've never worked hard uh uh >> sat in an office, [laughter] >> sat in an office, didn't do anything, you know, our life expectancy is longer and and our retirement systems need to recognize those very fundamental differences.
>> Uh the lady at this table, >> Gigi go, thank you so much for for the inspiring talk. So, two short questions. Firstly, I think um it seems um that most of even your neoliberal opponents uh have awoken to the realization that the industrial policy is necessary and is good um to the United States thanks to the China success and do you think the turn um towards the industrial policy in the US is uh would be as successful as in China and this is the first question um I only get one because we're kind of tied on top.
>> Yeah, that's a really good question. We've had a lot of discussions on industrial policy in the United States. Um, first point is industrial policy uh has been part of the United States for a very long time. We just didn't call it that. So in 1863 the United States passed the morale act which was uh an industrial policy act. What was it? What was it? It was what was the major industry in the United States at the time? Agriculture. And it established the agricultural universities and the agricultural extension service to increase productivity, do research and provide that results of the research to farmers in every county, every place in the United States. So it was really a successful model of industrial policy. We industry is not the right word there but of of interference of government in the in the workings of the of the market. Um I uh we always had industrial policy as part of our defense department and you know the first internet the first browser those were all government activities. So those were all again successful industrial policy. If you look at NIH, our drug industry, it's based [clears throat] on government industrial policy. So I would say we've had a very good record of industrial policy. the newer industrial policies uh green transition and uh the chips uh are having a big impact or were having a big impact before Trump started but they were not well designed but they made up for the poorness in design by the magnitude of the spending so it's estimated that the IRA for instance would going to cost between$1 and $1.5 trillion. That's a lot of money. So even if you're not efficient, it has some impact. So I I think uh we've been working hard part of our research agenda has been trying to get a better industrial policy for the US.
>> Okay, next question.
>> Uh hi Evan Miracle with the Lion Rock Institute. Uh just firstly I want to say thank you very much for visiting us in Hong Kong. I hope that you do it many more times and also you mentioned you were in Beijing. Thank you for visiting mainland China. A lot of uh um economists don't actually go to China and see what things are like there. So really appreciate that as well. My question has to do with the way you opened your talk. You said you look around the world. You can see which countries are doing well and which countries are not doing as well. And then later on in your talk, you mentioned Hayek. You said that Hayek I just wondering if you can explain a little more what you meant. You said he is 180 degrees wrong because the countries that are uh more authoritarian in the world are those where the government has done too little rather than too much. And I look at South America and I see that you know Chile is doing much better than Venezuela. Is that really because of more you know two doing too Venezuela didn't do enough in in in terms of intervening in the economy or in Europe you have um the former um Soviet satellite states some of those are doing quite well and you compare that to Russia whose economy has been devastated by this war and really is you know a case of feudalism uh is that because Russia has not intervened enough. I I don't really understand what you mean.
>> Also in Asia, you look at uh North Korea and so forth. Are they not intervening enough in the economy? I I don't I wonder if you can explain. I I was focusing more on democratic governments and I was focusing more on when I say doing too much uh I or too little it's about maintaining full employment and uh having policies that provide a basic safety net social protection for the societies. So I was comparing Scandinavia with the US not now if you look at even Venezuela why did Chevvis come to power and Chavis was followed by Madura what was the reason for that here you had the richest country in Latin America Venezuela in terms of resources and twothirds of the population were in poverty and that provided the ground swell of you know so you had all this wealth going to a few people at the top and the government not doing anything to move people out of poverty for decades that's why you had the re Chavez revolution uh and uh uh I think if you if you look uh you know uh what I said is uh the the authority authoritarian populist movements in democracies are related to the feeling in those democracies that the democracies are not delivering for those people. That was the point I was trying to make.
>> Okay, we have a lady with a question over here.
>> It's probably the last question because we're running a little bit over time.
>> Hi, I'm Edith Terry. Um, thank you so much for your talk. uh uh I wanted to ask you about China. So in Chinese manufacturing u to be specific so China is the flip side of the US and the global economy. You could say that it overmanufactures. There's uh the neo athoritarian government in China has had many successes including uh uh becoming the world's premier manufacturing economy. Yet uh through exports it undermines um particularly uh at the moment EVs and solar u it undermines the capacity of other countries to uh develop in those sectors. So how do you how do you look at Chinese industrial policy uh which has been on steroids now for decades? Uh is it a net positive for the global economy or how do you look at it?
Well, in that particular area in solar and EV, I think China's been a very important positive uh because the world has to make this green transition. It's very clear I mean I think that the pace at which it would have been done in the west was just too slow and uh the cost of being too slow is you know we are on a race to a question of how much carbon will we put in the atmosphere and we know fairly strongly the links between how much carbon is in the atmosphere and climate change. So you know we don't have a lot of time and China accelerating that pace significantly was a major global contribution. Now the question is there's a big debate about why was China so successful and uh it's very hard to parse out the relative importance uh and there's very big interpretation differences. I think uh the most important uh reasons for those successes are first uh the government gave a very clear signal that it was going that that China had to move uh away from uh fossil fuels, you know, and I was at a meeting with, you know, with the premier when he told uh uh car companies, you know, if a foreign car company uh if you're not uh electric within 5 years, you're out of here. You know, it was unambiguous that they were going to go towards electric cars. That clear signal meant there was going to be a huge market in China. And that huge market then provides incentives. So it was a clear regulatory decision, you know, in a sense a threat of a regulatory decision. We are going to be great. We're going to be electric and that creates the market. So, a large market uh through government foresight and then over a 40-year period creating an engineering culture. And that's what I mentioned before. Uh the the car company I I visited more than 50% of their workers were engineers. They they fe the problem is to design the car, not to produce it. and the design robots that will produce it. So it wasn't people. So that was all those were key parts of the success. Now the other thing that was um came up very early in discussions I have back actually back in ' 81 with the government was uh there were discussion about what aspects of a market economy were most important to try try to adopt and I was at the school that emphasized the importance of competition and they had a lot of competition across communities um that was the tbee era but but they a lot of this kind of competition and one side of competition is if you don't have government uh running everything central government which they don't was that you get over supply sometimes we have over supply in the United States you have too many pizza parlors in some communities and then some of them go bankrupt and that will happen to some of the EVs and that's part of you know part of an of a free market economy existing of a market economy is that it it tends to have over supply and then eventually a correction. So it's I it's an irony we had over you know we have many many producers of cars of the old kind in the early part of the 20th century that most of them went bankrupt. So in a way uh and right I think probably several of the AI companies are going to go bankrupt. So the the criticism is of over supply is really a criticism of the market not of excess subsidies because right now they're not getting marginal subsidies at least that's my understanding. They the government provided an impetus to start them but it's not subsidizing them and most of the people ex each each village each city wants to have their own car company they think that's the future so they that's over supply and it it is part of how the market economy uh often overreacts.
>> Okay, on that note we do have to wrap up. Uh thank you. I'm sorry we ran a bit over, but thank you everybody for coming here today and thank you for uh staying and a big big thank you to Professor Stiglets for sharing your thoughts and insights. [applause] And we have a little FCC souvenir for you. [laughter]
>> Can we take a picture, Sydney? Okay, our photographer is down there. Thank you.
>> Okay. Thank you very much, Gar. [applause] Thank you.