Economist Joseph Stiglitz on income inequality in the U.S.
U.S. Nobel Prize for Economics winner Joseph Stiglitz speaks during a meeting at Tempio di Adriano in downtown Rome, on May 2, 2012.
For some, the big problem isn't the economy -- but what it's done. Rising inequality, and how fast the gap is growing. Not just the gap between the rich and the poor, but between the super-rich and everyone else.
Today, another Nobel Prize-winning economist: Joseph Stiglitz. His new book is called, "The Price of Inequality." Good to have you with us.
Joseph Stiglitz: Nice to be here.
Ryssdal: So I hate to be the one to break this to you, but it's not like this is new news, right?
Stiglitz: Well, it is new news in the following sense: Of course we've always had inequality, but the magnitude of our inequality has actually increased dramatically. The fraction of the income that goes to the upper 1 percent has doubled since 1980. The fraction that goes to the upper .1 percent has almost tripled since 1980. So yes, we've always had inequality, but not of this magnitude.
Ryssdal: I'm going to quote yourself back to you here, as a way to sort of crystallize your thoughts on this: 'Growing inequality,' you say, 'is the flipside of something else -- shrinking opportunity.' Play that out a little bit, would you?
Stiglitz: That's right. The United States has become the most unequal country among the advanced industrial countries. Some people have said, 'we don't care of equality of outcome, what we really care about is equality of opportunity.' America's the land of opportunity. We have less opportunity than not only the countries of all of Europe, but any of the advanced industrial countries for which there's data. And what that means is very simple: The life chances of an individual are more dependent on the income and education of his parent than in other countries. And an implication of that is people born in the bottom, who unfortunately chose the parents who were poor or not well-educated, will be more likely not to be able to live up to his potential.
Ryssdal: You make no secret of how you feel about the 1 percent and their pursuit of remaining in the 1 percent. But doesn't it kind of imply actual malice on their part that they just want to stay rich while everybody else doesn't get rich?
Stiglitz: I don't think anybody begrudges somebody who has made a real contribution to our society -- somebody, you know, that invented the transistor, or the laser, the computer -- from receiving a high income. The real concern is a sense of unfairness, that it's not the case that the people with the highest income have made the largest contribution to our society. Look at what happened in the Great Recession. I think most Americans understand that there's something fundamentally unfair about that. Not only unfair -- my concern is that it actually undermines the efficiency of our economy. They have incentives to behave in ways that impose costs on the rest of our society.
Ryssdal: This is essentially a political position, you're advancing here. You want to see certain things happen to change the rising inequality in this country.
Stiglitz: Yes, and for a very special particular reason: Our political system has shaped our economy in ways that have led to this high level of inequality.
Ryssdal: Right, and that gets to me to my question, which is: You know politics in this country, and you know how intractable managing the American economy is -- how and why do you believe that the congress and political Washington are going to be able to do anything about this?
Stiglitz: We're going to need political reform. I raise a question: Is there hope? And I think the answer is, if you look historically, America's made some very dramatic changes. And so, I'm hopeful that Americans will see what is going on, realize that the direction we've been going is not a good direction, and change. But I'm not confident.
Ryssdal: Joe Stiglitz, he teaches at Columbia University. His most recent book is called "The Price of Inequality." Thanks very much for your time.
Stiglitz: Thank you Kai.