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good evening good evening and welcome my
name is Joyce brown in

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I am the president of the Fashion
Institute of Technology

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and it is my great pleasure to welcome
you here this evening I want to welcome

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you on behalf of fitn our partners the
Institute for new economic thinking

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and Shakespeare and Company booksellers
there are delighted that we could bring

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together to such eminent economist says

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Joseph Stiglitz and Paul Krugman as part
of our fashion finance forum

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to help us think through some of the
economic challenges the country is

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facing today

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especially with the presidential
election that is just two weeks away

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we all have a stake you know in the
outcome

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up the election and in the policies that
affect

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our economy and I want to say just a few
words about why

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a is president ever FITA worry every day

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about where our economy is going you see
people forget or perhaps they

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do not know that FITA is a public
institution

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it's a college at the State University
of New York

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and so it is heavily dependent upon
public funds primarily from the state

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in the city in addition we are a
community college

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one that grants bachelor's and master's
degree

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so I let you think about that for a
while as a career based college where

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exactly the kind of institution the
country and our policy makers look to

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today

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to prepare our 21st century workforce

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so FITC singular combination

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business design and liberal arts
education

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attract 10,000 talented

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deeply motivated full and part-time
students every year

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each one of whom passionately wants to
enter that work force

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in the design or the fashion industry's
or the businesses that support them

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we offer as many as 46 degree programs
to help them do so

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but like every educational institution
and perhaps especially

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every public educational institution
we're challenged almost every time

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there's a glitch in the economy

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no matter how pruden our budget or how
aggressive are fundraising

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we're always battling cuts in our
budgets despite the emphasis that

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policymakers and politicians put

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on education it's no secret that state
has dropped dramatically over the last

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decade throughout the nation

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and hear it if I T we receive less in
state aid today than we did 10 years ago

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in fact we've lost about 20 percent of
our state funding

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just in the last three years alone so a
discussion at the kind we are about to

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hear will be very illuminating for all
of us

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and will be especially important for our
students some a former here

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and will be voting in a presidential
election for the very first time in

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their lives

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for them the opportunity to hear from
these two distinguished an influential

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thinkers

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just before they go into that voting
booth is a real privilege

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just as it is for us as well so now

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I am pleased to relinquish this podium
to introduce doctor Nancy zimpher

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who is the Chancellor at the State
University of New York

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thank you and good evening

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I too am thrilled to be here you have to
know what

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a a privilege it is to work with
President Joyce brown

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and to support the fashion Institute of
Technology

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so we've both welcome you we are
certainly privileged to be working with

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the Institute

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up for new economic thinking and the
Shakespeare Company booksellers

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I think we all feel that fitt the
Fashion Institute of Technology

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is just a premier institution it
represents the State University of New

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York

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and such a fabulous way right here in
the city

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this great city on the planet and so we

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appreciate the collaboration that that
that went into

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the fashion finance forum sponsoring
this evening

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am I can imagine that there might be
someone in the audience that does not

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know the scope

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and scale at the State University of New
York so I will say to you that

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we are the largest public higher
education system

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in america out one of our distinctions
is the sheer number of students we

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educate

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about 465 thousand students

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every year about 89,000 degrees

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that's so much why we cherish the work
at FITA here in New York

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at something else that's very distinct
about us

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is that under one umbrella we have

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30 community colleges we have

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liberal baccalaureate four-year
institution's medical schools

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research institutions we r

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the only system in the country that has
the opportunity

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to integrate the sector's in such a way

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and to provide such as sterling group
that citizens and

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employer's perspective employees each
year

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so when I first came to suny wanted the
charges was to develop a

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strategic plan a big fan have Jim
Collins and you know him from his

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authorship

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good to great we came upon a a big

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carry audacious goal that the State
University of New York could be the

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economic engine for new york's economic
revitalization so the topics

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address this evening are near and dear
to

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our central mission is at to use our
mission up

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teaching and research in service in
service to

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not only new york's economic
revitalization

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but the quality of life our citizenry
that is such an audacious goal that we

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have broken it down into six

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big ideas you would expect us to be
innovators you would expect us to care

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about health care since we prepare so
many

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healthcare professionals about energy
about the vibrancy of our communities

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about our role

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in in the global economy and

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the international relationships we have
but one particular big idea

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so connects with the theme this evening
and that is our commitment

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to work with elementary and secondary
education

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and early childhood education and that
the other in the continuum

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with workforce development to seal the
leaks

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in the education pipeline to close the
achievement gap

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in america once and for all again very
fitting

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to the themes tonight and then a thirdly

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to be able to introduce to the larger
education

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community a concept that we now have on
Wikipedia

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yes we have and then to deter it's
called

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system yes and we given Wikipedia

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a very sophisticated definition but you
know what it really boils down to this:

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that the whole is greater than the sum

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at the parts and back friends is the
State University

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New York and that is why tonight we have
many

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alumni not only from fitt

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but from across are 64 campuses

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celebrating their relationship to the
State University of New York this is

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kinda

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new are drive to find all three million

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a our alumni so you have to know how
privileged and thrilled we are to have

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to

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Nobel Prize winners in Jessup stiglitz
and Paul Krugman

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forecasting the relationship quite
frankly

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between ek education and economics

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and our future as a country one of my
favorite

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New York Times columnist david Leonhardt
said this

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a few months ago education

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educating more people and educating the
better

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simply the best bet any society

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can make so without further adieu

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I want to turn the program over to
robert johnson he is the executive

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director for the Institute for new

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economic thinking iiNet and a senior
fellow at the Franklin

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and eleanor roosevelt Institute in New
York

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doctor johnson is an impressive
moderator a former senior economist with

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the US Senate

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with degrees from Princeton at MIT

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we welcome doctor johnson thank you

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enjoyed this evening thank you

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thank you very much

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thanks to the Fashion Institute of
Technology

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shakespeare books for hosting that this
evening

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and also very side

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I think we're all very excited to see

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probably too people who are

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I would say unquestionably the most
cited

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a columnist in the world today and

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the in addition to being most cited

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and as you all know both nobel laureates

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I would have to say from the vantage
point

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Institute for new economic thinking the

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if I were to nominate to people

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as being the most courageous columnists
in the world

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the most impactful these would be my two
finalists

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so very excited artist

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as you know

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each of them so written and

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book that pertains to our current
challenges and circumstance

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Joe Stiglitz book the prices in a
quality and

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Paul Krugman's book in this depression
now or part of your goodybag tonight

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they'll we therefore

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on behalf of them all thank you for your
patronage but

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I think we should move right to the
discussion let's start with Paul

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call you you talked about title your
book

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in this depression now there a lot of
people don't believe

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we could racial what what agency the
human beings have to take on mister

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here up so I spend the

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fair bit I'm looking back at at the
Great Depression sigh I think what we're

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seeing is a

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something that is recognizably the same
time animals the Great Depression

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obviously not as bad as the Great
Depression thats

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that's a are optimistic slogan not as
bad as the Great Depression up but

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but print really pretty bad and and
recognize the same kind of thing any

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technology is still there the human
skills are still there the resources are

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there but we're not actually

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making use them and and so we're in that
same kind of stuff if you go back

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to the nineteen thirties find a lot of
people

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making the argument that there were no
easy answers

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no quick fix that and that it was absurd

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to think that that you could quickly get
out of this thing absurd to think that

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particular that these keynesian types
said all we need is an increase in

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government spending

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who dis out crazy and there there are
wonderful our articles in 1939

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published the American ex-army
explaining that's

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really either its its is a fundamental
problems and and what we really need to

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do to

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to one make progress in structural
reform in

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cut unemployment benefits and things
like that and then along came

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not after the war but just the just the

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the war came in Europe United States
began preparing we begin our military

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buildup really in 1939

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and within two years up

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unemployment that's our total employment
has increased by 20 percent

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equivalent to batting $27 million jobs
right now

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just like that it turned out that
doorstep 'til

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I was there was not enough spending in
the economy and there was 0

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one player and the economy could and
should have been spending more on was

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the government

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and thanks to thanks to adolf hitler I
all the sudden

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fact that they're finally did what
should have been doing all along and

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began increasing spending

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same thing right now with there's every

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this overwhelming confirmation that that
this is a time when

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having the government spend more would
be very free would be put into

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you're putting people to work with
otherwise be unemployed putting capital

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to work

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that would be basically doing nothing
and it's actually very easy

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at it's very hard politically up because
it's very hard to persuade people

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need to do that which is why that's
right folks now

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some those who would argue with you
would say

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you do the spending it's like a sugar
pill

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gives you a boost for transient period
time in the fall back

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but we didn't fall back in depression
after world war two

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weapons i think is very interesting
story right if if you wanna ask question

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why

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white did World War two why wasn't a
temporary why didn't we slide back

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the press which lots of people for what
in fact they were

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same-store Montgomery Ward was a major
store chain

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and but the the president Montgomery
Ward believe that the Great Depression

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was gonna come back and so he courted
cash instead

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a building stores and kept on waiting
for the depression come back in

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and by the time it became clear it
wasn't going to they have basically lost

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their position in the marketplace so it
was

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I'll not just a question that's been
studied as much as it should have been

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but the best going story right now about
what is really going on

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which was also is also the best thing
sorry but what's really going on the

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nineteen thirties

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was it was but excessive private-sector
debt she had a debt bubble

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that when it burst left people stranded
with too much debt

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and what happened during world war 2

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was that we had first of all period

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very full employment which made it easy
for people to pay down debt

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just couldn't borrow say more was forced
to pay down debt

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plus significant about inflation
affliation so the real value of the debt

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felon so you came into there were two
with

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with quite high levels of private debt

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household debt relative to income and by
the time the weather half witted

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up before the warrant so you don't solve
the problem

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and so the best thing you can do if your
problem is excessive

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indebtedness what you want is a a strong
economy

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and maybe a little bit if inflation but
certainly a strong economy so that

245
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people have a chance to pay that debt
down and then it it does not come back

246
00:15:05,720 --> 00:15:06,600
that there is

247
00:15:06,600 --> 00:15:10,630
it's not just it's not a sugar high it
actually is it's more like that

248
00:15:10,630 --> 00:15:13,720
a diet that the session essential
nutrients that enables you to actually

249
00:15:13,720 --> 00:15:14,550
recover

250
00:15:14,550 --> 00:15:17,900
helmet their their couple other factors

251
00:15:17,900 --> 00:15:21,640
that I dad there was some 64 savings

252
00:15:21,640 --> 00:15:25,150
during the war and that meant when we
got

253
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I'll after the war people yes had very
strong balance sheets

254
00:15:29,319 --> 00:15:33,000
which they can expand at the same time

255
00:15:33,000 --> 00:15:36,230
part of the problem a before

256
00:15:36,230 --> 00:15:40,50
at the time the Great Depression was
that we had to move people

257
00:15:40,50 --> 00:15:43,660
from agriculture Int

258
00:15:43,660 --> 00:15:47,900
the problem is your were we had been a
success because we had increase

259
00:15:47,900 --> 00:15:49,220
agricultural productivity

260
00:15:49,220 --> 00:15:53,829
enormously in the nineteenth century in
the nineteenth century we still had

261
00:15:53,829 --> 00:15:56,59
sixty seventy percent people

262
00:15:56,59 --> 00:16:01,709
a working and farming by 1930 was down
to about 25-30 percent

263
00:16:01,709 --> 00:16:05,439
today we have two percent we have to
move them into

264
00:16:05,439 --> 00:16:09,469
manufacturing from rural to urban

265
00:16:09,470 --> 00:16:13,360
didn't have the resources to do it but
in the war with they had to move because

266
00:16:13,360 --> 00:16:15,130
that's where the plants were

267
00:16:15,130 --> 00:16:19,390
a so we we began to work with people

268
00:16:19,390 --> 00:16:23,880
I'll for this new middle of the century
Industrial Co

269
00:16:23,880 --> 00:16:26,990
and then we did something important up
we have the

270
00:16:26,990 --> 00:16:30,490
GI Bill so we gave them the education

271
00:16:30,490 --> 00:16:34,579
that made them suited for a this new
economy

272
00:16:34,579 --> 00:16:37,770
so we were actually was not just the
government spending

273
00:16:37,770 --> 00:16:40,980
government unintentionally in a sax

274
00:16:40,980 --> 00:16:44,750
was restructuring economy making it
prepared

275
00:16:44,750 --> 00:16:49,20
for the post-war period outfield also

276
00:16:49,20 --> 00:16:53,279
as a really interesting book in the
history this period

277
00:16:53,279 --> 00:16:57,800
and he also point out that in the period
the thirties

278
00:16:57,800 --> 00:17:01,260
the government was actually doing a lot
of investment and

279
00:17:01,260 --> 00:17:04,270
rose and that

280
00:17:04,270 --> 00:17:08,59
that increase productivity and that
after the war

281
00:17:08,59 --> 00:17:11,319
that productivity actually increased
returns

282
00:17:11,319 --> 00:17:15,178
to investment in the private sector and
so

283
00:17:15,179 --> 00:17:19,339
it it created a the context you know it

284
00:17:19,339 --> 00:17:23,490
plus a lot of R&D that was done during
the war so we had a a

285
00:17:23,490 --> 00:17:28,30
a backlog yeah public spending have
provided the context in which private

286
00:17:28,30 --> 00:17:29,90
investment

287
00:17:29,90 --> 00:17:33,168
had a higher returns in the section
important point its

288
00:17:33,169 --> 00:17:37,190
in general we've got this notion that
the public sector the private sector

289
00:17:37,190 --> 00:17:37,669
always

290
00:17:37,669 --> 00:17:41,850
competition but quite a lot special
public investment is complementary to

291
00:17:41,850 --> 00:17:42,840
private investment

292
00:17:42,840 --> 00:17:46,309
mean a there's a lot of things that

293
00:17:46,309 --> 00:17:49,270
that people will do if the if they
believe that there's adequate

294
00:17:49,270 --> 00:17:50,340
transportation network

295
00:17:50,340 --> 00:17:53,459
believe that the that the power network
is adequate they believe that they're

296
00:17:53,460 --> 00:17:55,70
gonna have skilled workers

297
00:17:55,70 --> 00:17:58,168
available because they've had good
education ensure

298
00:17:58,169 --> 00:18:02,130
so sure I think I i I i tend to be

299
00:18:02,130 --> 00:18:05,500
stripped out the minimal story in my
minimal storm just about the debt but

300
00:18:05,500 --> 00:18:07,340
you the other stuff is there as well

301
00:18:07,340 --> 00:18:11,370
and at chrysalis reinforced a crazy what
we're doing right now

302
00:18:11,370 --> 00:18:14,560
in the we have states and

303
00:18:14,560 --> 00:18:17,899
most state governments canceling
infrastructure projects because

304
00:18:17,899 --> 00:18:21,530
revenues depressed because the time is
depressed which is exactly the opposite

305
00:18:21,530 --> 00:18:23,350
how we got the Great Depression

306
00:18:23,350 --> 00:18:27,439
and and in fact I mean when we were we
haven't focused on your part about

307
00:18:27,440 --> 00:18:30,610
austerity we don't talk about it but
we're practice at you if you actually

308
00:18:30,610 --> 00:18:33,709
look at the measures what's new about
that hundred thousand seven thousand

309
00:18:33,710 --> 00:18:37,230
fewer public employees than we did
before the crisis

310
00:18:37,230 --> 00:18:41,830
when if we had normal expansion
corresponded increase the labor force

311
00:18:41,830 --> 00:18:46,80
we would have gained about 1.2 million
employees so there's a big gap there

312
00:18:46,80 --> 00:18:49,449
caused by this kind of austerity that we
already have

313
00:18:49,450 --> 00:18:53,470
to meet the real danger is a

314
00:18:53,470 --> 00:18:57,399
if if the Romney a get selected

315
00:18:57,399 --> 00:19:00,729
I the a

316
00:19:00,730 --> 00:19:04,179
I they might actually do what they say
they might do right now and

317
00:19:04,179 --> 00:19:09,330
I as remarkable feature of the current
political environment that your best 0

318
00:19:09,330 --> 00:19:12,939
is that one of the candidates is in fact
lying through his teeth about his

319
00:19:12,940 --> 00:19:16,550
plants the hope

320
00:19:16,550 --> 00:19:19,780
we we've set now in

321
00:19:19,780 --> 00:19:23,70
what feels like long stagnation

322
00:19:23,70 --> 00:19:27,80
Jordan written a book on inequality

323
00:19:27,80 --> 00:19:32,178
thus cannot be a positive development
for the distribution proceeds to help

324
00:19:32,179 --> 00:19:35,730
idly put what they called reserve army
of the unemployed

325
00:19:35,730 --> 00:19:39,810
driving wages down weakening the parking
or

326
00:19:39,810 --> 00:19:43,20
yep yet up your inequality a

327
00:19:43,20 --> 00:19:46,860
has become serious problem I think
United States I mean it's interesting

328
00:19:46,860 --> 00:19:50,620
while polls been arguing about this and
I'd argue

329
00:19:50,620 --> 00:19:54,600
for a long time he's gotten so serious
that even economist

330
00:19:54,600 --> 00:19:58,580
realizes yet it's a serious problem when
they say it's a serious problem

331
00:19:58,580 --> 00:20:02,780
you gotta believe that Rd the bags you
to make this thing that nothing not our

332
00:20:02,780 --> 00:20:04,770
colleagues up

333
00:20:04,770 --> 00:20:07,850
up but the magazine the compass a

334
00:20:07,850 --> 00:20:10,980
I colleagues will never with no outs II
it's my job

335
00:20:10,980 --> 00:20:14,000
take them on got a stick on a magazine
so

336
00:20:14,000 --> 00:20:19,750
a and and want the reasons that it
weakens the economy

337
00:20:19,750 --> 00:20:24,330
you know a Paul is emphasized the
problem right now is laptop demand

338
00:20:24,330 --> 00:20:28,30
I backup total demand and that means

339
00:20:28,30 --> 00:20:31,440
people are not buying a as many goods as
the economy is

340
00:20:31,440 --> 00:20:34,870
capacity to produce and that leads to
unemployment

341
00:20:34,870 --> 00:20:39,719
10 the promises if you transfer money
from the bottom up the economic pyramid

342
00:20:39,720 --> 00:20:41,40
to the top

343
00:20:41,40 --> 00:20:45,320
the people at the top save about 15
percent but their income

344
00:20:45,320 --> 00:20:48,770
the people the bottom spend everything

345
00:20:48,770 --> 00:20:53,379
they need to spend everything to get by
so you gauge in that kinda transfer it

346
00:20:53,380 --> 00:20:56,389
lowers total aggregate demand

347
00:20:56,389 --> 00:21:00,149
I'll and a

348
00:21:00,149 --> 00:21:03,610
there is now a vicious cycle going on

349
00:21:03,610 --> 00:21:06,850
that because the high unemployment a

350
00:21:06,850 --> 00:21:10,689
wages are being brought down the share
wages is

351
00:21:10,690 --> 00:21:14,480
weaker otherwise would be and

352
00:21:14,480 --> 00:21:18,169
I'll so that intern

353
00:21:18,169 --> 00:21:21,700
weakens the man and even before the

354
00:21:21,700 --> 00:21:25,250
even before the crisis a

355
00:21:25,250 --> 00:21:29,290
incomes in the middle we're not doing
very well median income today is lower

356
00:21:29,290 --> 00:21:32,260
than it was a decade and a half ago

357
00:21:32,260 --> 00:21:35,990
so there there is a vicious cycle

358
00:21:35,990 --> 00:21:40,429
circle in place where where a

359
00:21:40,429 --> 00:21:44,929
a weak economy leaks to more inequality
leaves to

360
00:21:44,929 --> 00:21:48,510
weaker economy I'll well we got there

361
00:21:48,510 --> 00:21:51,860
there there's some technical I I don't
go too deep we turn

362
00:21:51,860 --> 00:21:55,350
I'm not totally persuaded that channel
is it turns out because

363
00:21:55,350 --> 00:21:59,678
in fact the overall savings rate even
now even

364
00:21:59,679 --> 00:22:03,260
is still well below what it was in
thirty years

365
00:22:03,260 --> 00:22:07,360
use deadly 8 percent private savings and
now it's even now it's it was 0 for a

366
00:22:07,360 --> 00:22:08,870
while as well for now

367
00:22:08,870 --> 00:22:11,899
that's so something

368
00:22:11,899 --> 00:22:15,399
that their that the debt issues I think
are very real inequality

369
00:22:15,399 --> 00:22:19,449
leads many people to go into debt to to

370
00:22:19,450 --> 00:22:22,540
attempt to to maintain a middle-class
their living at sea

371
00:22:22,540 --> 00:22:25,720
above all attempt to have a house in a
middle-class neighborhood their kids

372
00:22:25,720 --> 00:22:27,10
cavities in school

373
00:22:27,10 --> 00:22:30,80
but I'm not sure that it that he is a
story that run through Dec rather than

374
00:22:30,80 --> 00:22:31,590
just a simple mechanical

375
00:22:31,590 --> 00:22:34,870
but now let's buy me know that the point
I guess who

376
00:22:34,870 --> 00:22:38,70
which by the way or a lot of discussion
talked about

377
00:22:38,70 --> 00:22:41,220
a the american consumers coming back

378
00:22:41,220 --> 00:22:44,570
I and before the crisis the

379
00:22:44,570 --> 00:22:47,790
savings rate in the United States 10

380
00:22:47,790 --> 00:22:51,668
and we hope to welcome back that's right
well I was not

381
00:22:51,669 --> 00:22:56,300
that was obviously not sustainable and
as one of my predecessors as chairman

382
00:22:56,300 --> 00:22:58,730
the councilman said that which is not
sustainable

383
00:22:58,730 --> 00:23:01,860
is da can be sustained I that that that
that the

384
00:23:01,860 --> 00:23:05,50
that's what the canonical version this
time slot was it something cannot go on

385
00:23:05,50 --> 00:23:05,700
forever

386
00:23:05,700 --> 00:23:09,280
it will stop so

387
00:23:09,280 --> 00:23:13,550
so the the the a but the point is that

388
00:23:13,550 --> 00:23:16,918
that if you you know roughly a

389
00:23:16,919 --> 00:23:21,169
divide the population the upper 20
percent

390
00:23:21,169 --> 00:23:25,230
historically save about fifty percent
during L

391
00:23:25,230 --> 00:23:28,929
but they have now about forty percent of
all the income and you just do that

392
00:23:28,929 --> 00:23:30,129
arithmetic

393
00:23:30,129 --> 00:23:33,320
that means that we should be expecting a
6-percent

394
00:23:33,320 --> 00:23:37,399
right savings rate rather than the four
and a half percent that we have now

395
00:23:37,399 --> 00:23:42,80
so in some sense savings are depressed
relative to what we might have expected

396
00:23:42,80 --> 00:23:46,20
so it is even conceivable as people get
adjusted

397
00:23:46,20 --> 00:23:49,950
a to new standards a living

398
00:23:49,950 --> 00:23:53,800
that we will see savings rates increase
from the best friend porn have percent

399
00:23:53,800 --> 00:23:54,879
level and that

400
00:23:54,879 --> 00:23:58,600
is another reason why we should be
worried over this

401
00:23:58,600 --> 00:24:04,678
long a recession that that the
restorative forces in place on the role

402
00:24:04,679 --> 00:24:09,460
are very weak with regard to

403
00:24:09,460 --> 00:24:12,700
inequality study

404
00:24:12,700 --> 00:24:16,389
talk a little bit about along slope as a
contributing

405
00:24:16,389 --> 00:24:20,639
what other dimensions sees causes

406
00:24:20,639 --> 00:24:25,270
wanted the there are there a lot to
causes when equality in a box dimensions

407
00:24:25,270 --> 00:24:26,600
to inequalities

408
00:24:26,600 --> 00:24:30,449
you know the the the fractured income
that's going to the top

409
00:24:30,450 --> 00:24:35,10
the hollowing out the middle and the
increase in the number people

410
00:24:35,10 --> 00:24:38,470
in poverty at the bottom and each of
them has their

411
00:24:38,470 --> 00:24:42,940
their own causes a a multiple causes

412
00:24:42,940 --> 00:24:46,580
up at the top which is got a lot of
attention

413
00:24:46,580 --> 00:24:50,270
the ninety-nine percent 1 percent I'll

414
00:24:50,270 --> 00:24:53,418
wanted the factors that is to say even
the

415
00:24:53,419 --> 00:24:56,429
even economist as long recognized

416
00:24:56,429 --> 00:25:00,10
and that I talk about in book is the

417
00:25:00,10 --> 00:25:03,250
a lot I'll the in command

418
00:25:03,250 --> 00:25:07,200
at the top comes from what economists
call rent-seeking

419
00:25:07,200 --> 00:25:10,639
that is a a things like

420
00:25:10,639 --> 00:25:14,668
monopoly power activities where people
are trying to grab a larger share the

421
00:25:14,669 --> 00:25:15,690
pie

422
00:25:15,690 --> 00:25:19,250
rather than trying to make the economic
pie bigger

423
00:25:19,250 --> 00:25:23,210
I other examples b-sides you know
monopolist

424
00:25:23,210 --> 00:25:27,330
gets his profits by Sh by reducing
production rather than

425
00:25:27,330 --> 00:25:31,199
you know restricting production other
examples were

426
00:25:31,200 --> 00:25:34,460
a a exploited activities love

427
00:25:34,460 --> 00:25:38,000
the financial sector where they were
moving money from the bottom

428
00:25:38,000 --> 00:25:43,290
near mint top abusive credit card
practices predatory lending a whole set

429
00:25:43,290 --> 00:25:45,889
of things that have now been exposed

430
00:25:45,889 --> 00:25:49,439
that wasn't making the economy more
efficient I

431
00:25:49,440 --> 00:25:54,750
argue it was actually making even more
unstable and

432
00:25:54,750 --> 00:25:58,159
a you know poker a

433
00:25:58,159 --> 00:26:01,560
said that wasn't single financial
innovation

434
00:26:01,560 --> 00:26:05,980
that have that too the increase in
productivity American economy

435
00:26:05,980 --> 00:26:10,800
except the ATM machine and what was
wrong with the ATM machine is a British

436
00:26:10,800 --> 00:26:12,740
innovation that an american

437
00:26:12,740 --> 00:26:16,649
hi innovation since they said that they
raise my fees from a dollar

438
00:26:16,649 --> 00:26:20,30
3.0 shop so a

439
00:26:20,30 --> 00:26:23,940
that's another example a the CEOs have
taken a bandage

440
00:26:23,940 --> 00:26:27,690
or deficiencies in corporate governance
to increase the

441
00:26:27,690 --> 00:26:30,899
share a the corporate income

442
00:26:30,899 --> 00:26:35,158
they get no evidence that they become
that much more productive or that

443
00:26:35,159 --> 00:26:36,940
they're that much more productive than

444
00:26:36,940 --> 00:26:40,870
CEOs and other parts of the world a but
what they have become

445
00:26:40,870 --> 00:26:44,719
is better at getting a larger share the
pie you have to meet

446
00:26:44,720 --> 00:26:48,520
there's a certain amount of cleverness
and that but it hasn't let our economy

447
00:26:48,520 --> 00:26:52,289
to be more efficient back money that
could have gone into investment or

448
00:26:52,289 --> 00:26:55,799
or the are R&D I'll is spent on

449
00:26:55,799 --> 00:27:00,379
on on their salary yeah I like to do a
division take the

450
00:27:00,380 --> 00:27:03,960
taking US economy since the early
post-war years and

451
00:27:03,960 --> 00:27:08,620
it roughly divides about have at this
point to two years first euro was

452
00:27:08,620 --> 00:27:12,49
serve legacy the New Deal which was a

453
00:27:12,49 --> 00:27:16,379
I'll Iran love where corporations

454
00:27:16,380 --> 00:27:20,409
view themselves as being more about have
coalition of stakeholders rather than

455
00:27:20,409 --> 00:27:20,710
just

456
00:27:20,710 --> 00:27:25,380
ruthless capitalism I'll stay with
strong labor unions

457
00:27:25,380 --> 00:27:29,29
course quite high tax rates the top and
then a second

458
00:27:29,29 --> 00:27:33,250
Europe watches this era of financial
capitalism

459
00:27:33,250 --> 00:27:36,809
deregulation

460
00:27:36,809 --> 00:27:40,658
capitalism red in tooth and claw a and

461
00:27:40,659 --> 00:27:44,669
and and there's a widespread belief talk
to people

462
00:27:44,669 --> 00:27:47,970
part of bankruptcy in DC they just know

463
00:27:47,970 --> 00:27:51,29
that that transition from the old stodgy
thing

464
00:27:51,29 --> 00:27:54,500
to the new that led to a explosion
economic growth and and higher

465
00:27:54,500 --> 00:27:55,590
efficiency and

466
00:27:55,590 --> 00:27:58,600
must've made everybody better off and
it's actually not true

467
00:27:58,600 --> 00:28:01,820
growth was slower in the second half and
of course

468
00:28:01,820 --> 00:28:04,850
the that the big difference is that the
benefits of growth stopped

469
00:28:04,850 --> 00:28:07,850
being spread to the general population
all into a

470
00:28:07,850 --> 00:28:12,559
a relative handful of people at the top
Michael my complete occupy

471
00:28:12,559 --> 00:28:15,700
was that they're they're actually
setting that the cup too low

472
00:28:15,700 --> 00:28:18,870
it's not even really the 1 percent is
the point one percent better

473
00:28:18,870 --> 00:28:23,350
the people who made it it being and in
the earlier period II

474
00:28:23,350 --> 00:28:27,199
pose after the right about your your
period every quintile every bit the part

475
00:28:27,200 --> 00:28:28,789
every group the population

476
00:28:28,789 --> 00:28:33,460
was growing but the bottom part was
growing faster in the top

477
00:28:33,460 --> 00:28:38,80
today it's not that way and you know GDP

478
00:28:38,80 --> 00:28:41,100
doesn't really give you a good measure
what's happening to our

479
00:28:41,100 --> 00:28:46,649
economy to our society so well that one
tenth of one percent or

480
00:28:46,650 --> 00:28:50,630
has been doing very well 1 percent doing
very well median income

481
00:28:50,630 --> 00:28:54,70
is lower than it was a decade and a half
ago

482
00:28:54,70 --> 00:28:59,10
median well is lower is as low as it was
two decades ago

483
00:28:59,10 --> 00:29:02,600
so all the increase in well is gone

484
00:29:02,600 --> 00:29:06,840
to the top I'll so is clear that

485
00:29:06,840 --> 00:29:10,428
in these ways are you know our economy
hasn't been functioning

486
00:29:10,429 --> 00:29:15,390
as well as it did in that period in
which we were growing together

487
00:29:15,390 --> 00:29:20,260
all your one of the leading thinkers

488
00:29:20,260 --> 00:29:23,480
called new trade international issues

489
00:29:23,480 --> 00:29:27,600
relate quality we've seen a tremendous
amount of fights in Ohio

490
00:29:27,600 --> 00:29:31,39
just in the last month or so between
Romney Obama

491
00:29:31,39 --> 00:29:34,629
Wall of China this are you see

492
00:29:34,630 --> 00:29:38,169
international yell so I'll

493
00:29:38,169 --> 00:29:41,220
several different pieces there up

494
00:29:41,220 --> 00:29:44,320
one other just coming back to why is our
economy depressed

495
00:29:44,320 --> 00:29:48,730
a week least have much higher part
savings rates

496
00:29:48,730 --> 00:29:53,20
we do now how were we able to have full
employment

497
00:29:53,20 --> 00:29:56,250
given that we did not have assist

498
00:29:56,250 --> 00:29:59,260
large budget deficits what was telling
the whole or what

499
00:29:59,260 --> 00:30:04,289
what what what makes it so much harder
at just sort of do the adding up

500
00:30:04,289 --> 00:30:09,158
is the the persistent trade deficit used
to not have one now we do and that's

501
00:30:09,159 --> 00:30:11,490
that's a big drag on the economy

502
00:30:11,490 --> 00:30:16,870
up which has gotten better actually we
trade-offs is actually significantly del

503
00:30:16,870 --> 00:30:19,899
and some others just because our economy
is depressed but not all we've actually

504
00:30:19,899 --> 00:30:21,620
had some

505
00:30:21,620 --> 00:30:24,889
USX become more competitive but thats
that's up front

506
00:30:24,890 --> 00:30:28,679
on which we need to work and and there
is a that the trouble is

507
00:30:28,679 --> 00:30:32,899
we the political debate has not kept up
with the reality here

508
00:30:32,899 --> 00:30:36,629
a we it's all about china actually
Chinese the longer the core

509
00:30:36,630 --> 00:30:39,720
that anymore it's a much broader set of
countries

510
00:30:39,720 --> 00:30:43,679
%uh something to be worked out the I
hope that the next president instead

511
00:30:43,679 --> 00:30:48,510
not not just crew China bashing but will
try did say what what we need to do them

512
00:30:48,510 --> 00:30:52,350
world that there is no longer this the
world in which we don't have everybody

513
00:30:52,350 --> 00:30:53,980
trying to run a trade surplus

514
00:30:53,980 --> 00:30:57,960
which the Germans believe as possible
the rest at this moment

515
00:30:57,960 --> 00:31:01,120
up then this dish issue of trade

516
00:31:01,120 --> 00:31:04,350
and income inequality and

517
00:31:04,350 --> 00:31:09,559
a a lot of a much used to be that we
traded mostly the country's

518
00:31:09,559 --> 00:31:13,870
this men fashion betrayal countries the
word similar leveling out well

519
00:31:13,870 --> 00:31:17,260
a and that presumably had relatively
little effect on

520
00:31:17,260 --> 00:31:21,49
just you if you make the

521
00:31:21,49 --> 00:31:24,658
its US Sens auto parts to Canada Inc
sends

522
00:31:24,659 --> 00:31:28,590
assemble cars back United States that's
not be making a big difference

523
00:31:28,590 --> 00:31:32,90
that's just increased efficiency up now

524
00:31:32,90 --> 00:31:36,850
but now we do a lot of arching countries
that are substantially lower income

525
00:31:36,850 --> 00:31:42,240
a and our are selling us labor-intensive
products that problem increasing

526
00:31:42,240 --> 00:31:45,649
inequality up through the income

527
00:31:45,649 --> 00:31:49,229
through skill differentials the highly
educated tend to do better although

528
00:31:49,230 --> 00:31:52,610
mostar increase the quality is not
something highly educated wristlet

529
00:31:52,610 --> 00:31:56,418
part of it yes and that's and increasing
factor I had an interesting evolution

530
00:31:56,419 --> 00:31:59,630
myself I was writing papers

531
00:31:59,630 --> 00:32:04,39
a eighteen years ago seventeen years ago

532
00:32:04,39 --> 00:32:07,419
saying that trade isn't that big a
factor in any call

533
00:32:07,419 --> 00:32:10,559
because the numbers are just not big
enough which was true

534
00:32:10,559 --> 00:32:14,809
seventeen years ago but the but Canada

535
00:32:14,809 --> 00:32:19,490
where China next door a much bigger
factor trade now than they were then and

536
00:32:19,490 --> 00:32:21,460
so that that that is some

537
00:32:21,460 --> 00:32:25,289
that the question what do you do about
and

538
00:32:25,289 --> 00:32:28,720
there a lottery it's not what a
protectionist

539
00:32:28,720 --> 00:32:32,59
not not something not to have a a
general return to protection as well

540
00:32:32,59 --> 00:32:33,700
that nothing else because

541
00:32:33,700 --> 00:32:37,840
response to global citizens this little
bit and for the very poorest countries

542
00:32:37,840 --> 00:32:38,820
having access to

543
00:32:38,820 --> 00:32:41,860
world markets is critical Bangladesh

544
00:32:41,860 --> 00:32:45,100
almost literally keeps its head above
water just expertly

545
00:32:45,100 --> 00:32:48,408
as a product's the right way to deal
with it is to have

546
00:32:48,409 --> 00:32:51,929
the decent society with a strong social
safety net

547
00:32:51,929 --> 00:32:54,929
so important safety net II X X

548
00:32:54,929 --> 00:32:58,330
training programs like everything and
and and a good people skills I

549
00:32:58,330 --> 00:33:01,480
basic the the standard theory is

550
00:33:01,480 --> 00:33:05,899
the with open markets the winners

551
00:33:05,899 --> 00:33:09,689
the country as a whole be better off the
winners could problems 8

552
00:33:09,690 --> 00:33:12,770
losers but they never do

553
00:33:12,770 --> 00:33:16,610
and a that's really the problem that

554
00:33:16,610 --> 00:33:21,379
impact some some the advocate's devil
was Asian

555
00:33:21,380 --> 00:33:25,750
at the same time that they're talking
about the wonders of globalization

556
00:33:25,750 --> 00:33:30,450
have been saying to compete you have to
strip away the social safety net

557
00:33:30,450 --> 00:33:34,49
I and and in that sense there EE hurting

558
00:33:34,49 --> 00:33:37,320
the people in the middle in the bottom
yes with actually at Germany is

559
00:33:37,320 --> 00:33:41,658
just in case the Germany's is doing
relatively well in this crisis

560
00:33:41,659 --> 00:33:45,880
I think well as the think they are but
they're doing relatively well I'll

561
00:33:45,880 --> 00:33:49,110
ads with the European sup

562
00:33:49,110 --> 00:33:52,418
then they'll discover that they have
some problems but the but

563
00:33:52,419 --> 00:33:57,10
I'll and but still you the amazing is to
watch

564
00:33:57,10 --> 00:34:00,370
conservatives in this country adopter
many as a

565
00:34:00,370 --> 00:34:04,178
as an icon to submit got austerity same
really don't but they would but they

566
00:34:04,179 --> 00:34:08,230
but he actually wide wise wise Germany
able to export so well

567
00:34:08,230 --> 00:34:11,649
they pay very high wages by our
standards

568
00:34:11,649 --> 00:34:15,449
they have a very extensive welfare state
to a level that that's beyond the

569
00:34:15,449 --> 00:34:16,350
wildest dreams

570
00:34:16,350 --> 00:34:20,418
American progresses but what they have
is among other things

571
00:34:20,418 --> 00:34:24,129
very good technical education very close
collaboration

572
00:34:24,129 --> 00:34:27,270
between the educational system and
industry

573
00:34:27,270 --> 00:34:30,850
strong role the government assist
corporate governance that is

574
00:34:30,850 --> 00:34:34,710
much more like what we used to have in
this country actually purrs represent on

575
00:34:34,710 --> 00:34:36,29
the boards of companies

576
00:34:36,29 --> 00:34:39,510
all of which suggest that if you really
want to be able to the high-wage country

577
00:34:39,510 --> 00:34:41,520
competing in the global economy

578
00:34:41,520 --> 00:34:44,279
you actually want to move in the
opposite direction from all what people

579
00:34:44,279 --> 00:34:46,569
say that we must slash social programs

580
00:34:46,569 --> 00:34:50,549
a you actually want to a more integrated
more cohesive society

581
00:34:50,549 --> 00:34:53,889
yeah i i and actually the Scandinavian
evidence

582
00:34:53,889 --> 00:34:57,520
have done much better in this crisis
have grown faster

583
00:34:57,520 --> 00:35:00,589
and have been more stable if you if you
took

584
00:35:00,589 --> 00:35:04,290
if you look at Sweet look at what they
do and

585
00:35:04,290 --> 00:35:08,69
and you just described the abstract
without well

586
00:35:08,69 --> 00:35:11,960
Saint having to do with particular
country and put that frontal

587
00:35:11,960 --> 00:35:15,319
that what is that conventional wisdom
about how economic works

588
00:35:15,319 --> 00:35:18,890
here we would say they must be grass
growing in the streets

589
00:35:18,890 --> 00:35:22,89
must be it must at the Cape possibly
survive as the economy and

590
00:35:22,89 --> 00:35:25,580
share some personal run across people
less on last couple years but

591
00:35:25,580 --> 00:35:29,509
who are just sure that it must be there
must be terrible terribly now situation

592
00:35:29,510 --> 00:35:30,000
say

593
00:35:30,000 --> 00:35:33,670
if like is that Stockham your walked
around the a

594
00:35:33,670 --> 00:35:36,460
this is the thought this does not look
like a desperate place this look it

595
00:35:36,460 --> 00:35:37,60
looks like they're

596
00:35:37,60 --> 00:35:40,730
they're doing pretty well okay come back
to the issue but equality and

597
00:35:40,730 --> 00:35:42,000
globalization

598
00:35:42,000 --> 00:35:45,970
I talk about germany things I think that
they've done a lot of other things

599
00:35:45,970 --> 00:35:49,480
in the right direction but they haven't
really kept up

600
00:35:49,480 --> 00:35:53,549
with the Scandinavian countries and the
result of that is that

601
00:35:53,549 --> 00:35:56,779
while up a

602
00:35:56,779 --> 00:36:00,680
you know thirty years ago they were in
the middle the event industrial

603
00:36:00,680 --> 00:36:03,190
countries in terms of quality

604
00:36:03,190 --> 00:36:06,660
there with her manager me as a check
today they were they were not

605
00:36:06,660 --> 00:36:10,799
they were when the better country they
were not as good as Scandinavia but they

606
00:36:10,799 --> 00:36:11,870
were

607
00:36:11,870 --> 00:36:15,759
a they've now moved into the middle and
the point of this

608
00:36:15,760 --> 00:36:19,410
is a that to a large extent

609
00:36:19,410 --> 00:36:22,500
inequality is result of what we do

610
00:36:22,500 --> 00:36:25,859
not just market forces you to market
forces overplay

611
00:36:25,859 --> 00:36:29,9
scandinavia yen in Germany

612
00:36:29,10 --> 00:36:33,230
UK we shape those market forces

613
00:36:33,230 --> 00:36:36,790
and the way we shake those market forces
has resulted

614
00:36:36,790 --> 00:36:41,200
in the most inequality any the that
countries in the least equality of

615
00:36:41,200 --> 00:36:43,210
opportunity

616
00:36:43,210 --> 00:36:47,720
very contrary to our image Marcel Nadia
country American

617
00:36:47,720 --> 00:36:51,100
I it's really a male a

618
00:36:51,100 --> 00:36:54,680
and what you also seen over time is

619
00:36:54,680 --> 00:36:58,980
how countries that interesting and
imitated United States

620
00:36:58,980 --> 00:37:02,240
have done like the United States

621
00:37:02,240 --> 00:37:06,89
UK used to be the middle of the week
table and now which second

622
00:37:06,89 --> 00:37:09,120
to the United States in terms of quality

623
00:37:09,120 --> 00:37:12,359
where Scandinavia's kept up you know X X
X

624
00:37:12,359 --> 00:37:16,100
struggle did inequality has increased a
little bit

625
00:37:16,100 --> 00:37:20,589
by it is still the least that most
equality of opportunity

626
00:37:20,589 --> 00:37:24,529
and we stick low I think this comes that
it the this this fatalism

627
00:37:24,529 --> 00:37:27,750
ol its global economy there's nothing
you can do and

628
00:37:27,750 --> 00:37:31,450
streams you just cannot happen kinda a

629
00:37:31,450 --> 00:37:35,839
relative the equal society and social
justice that maybe was possible

630
00:37:35,839 --> 00:37:39,240
back when rest the world was in ruins I
get that all the time

631
00:37:39,240 --> 00:37:42,709
but just looking to say whether our
country's

632
00:37:42,710 --> 00:37:46,819
scandinavians best to maintain the high
level of I'll

633
00:37:46,819 --> 00:37:50,89
widespread distribution the benefits of
economic growth

634
00:37:50,89 --> 00:37:53,509
hyperactivity up you do not have to be

635
00:37:53,510 --> 00:37:57,560
we r me he said I

636
00:37:57,560 --> 00:38:00,740
even Canada is surprise

637
00:38:00,740 --> 00:38:04,569
is a much less harsh unequal society
that hours

638
00:38:04,569 --> 00:38:08,910
and that their pre obviously operating
pretty much the same environment we are

639
00:38:08,910 --> 00:38:12,100
for the most part even speak the same
language and its the

640
00:38:12,100 --> 00:38:15,430
so it's it showing that these are
choices say

641
00:38:15,430 --> 00:38:18,680
its choices both about how we run
markets

642
00:38:18,680 --> 00:38:23,29
market the distribution marketing is not
something that's god-given there's a lot

643
00:38:23,29 --> 00:38:23,319
you

644
00:38:23,319 --> 00:38:27,80
dude as a choice about what you do
afterwards as well

645
00:38:27,80 --> 00:38:30,470
and whether you provide universal health
coverage when you provide

646
00:38:30,470 --> 00:38:33,810
a decent support where the provide
educational system

647
00:38:33,810 --> 00:38:37,390
that is well-funded were for everybody
not just for people

648
00:38:37,390 --> 00:38:41,200
up eleven the right deferments and and
also the tax system

649
00:38:41,200 --> 00:38:45,29
is obviously important and all these are
important

650
00:38:45,29 --> 00:38:49,20
not only for this UV quality inequality

651
00:38:49,20 --> 00:38:52,880
an opportunity but also for efficiency
and grow

652
00:38:52,880 --> 00:38:56,930
so for instance if you have a tax system
like ours

653
00:38:56,930 --> 00:39:00,310
where speculators are taxed at a
fraction rate

654
00:39:00,310 --> 00:39:03,370
up people who work for a living or

655
00:39:03,370 --> 00:39:06,410
a with if you can keep your money in

656
00:39:06,410 --> 00:39:09,870
bank account the Cayman Islands a rather
than

657
00:39:09,870 --> 00:39:13,170
in the United States I you having
centers

658
00:39:13,170 --> 00:39:17,760
you know those rules not only give lower
taxes

659
00:39:17,760 --> 00:39:21,319
tax rate to those who can take a pale
built themselves

660
00:39:21,319 --> 00:39:25,529
these but it distorts the economy you
wind up with more speculation

661
00:39:25,529 --> 00:39:29,150
morning stability I and a

662
00:39:29,150 --> 00:39:32,850
you know the money is in in the Cayman
Islands because it grows better in the

663
00:39:32,850 --> 00:39:33,970
sunshine their

664
00:39:33,970 --> 00:39:37,270
I back to the lack of sunshine that

665
00:39:37,270 --> 00:39:41,69
a is the reason that people keep their
money there

666
00:39:41,69 --> 00:39:44,580
resist has just had a conversation with

667
00:39:44,580 --> 00:39:48,880
a someone from that the financial
industry

668
00:39:48,880 --> 00:39:52,20
was trying to make the defense about
things like carried interest

669
00:39:52,20 --> 00:39:56,400
special with which is even investing
company gets taxed Elizabeth was

670
00:39:56,400 --> 00:39:59,700
15 percent well you know but there's a
lot effort put in

671
00:39:59,700 --> 00:40:02,720
with uncertain return and so you need to
and my

672
00:40:02,720 --> 00:40:06,299
by I couldn't help by know what else is
also a lot of effort with on certain

673
00:40:06,299 --> 00:40:07,240
return

674
00:40:07,240 --> 00:40:10,740
reading books I as somehow I don't get
that

675
00:40:10,740 --> 00:40:14,740
expect you don't get the tax break but
there we are

676
00:40:14,740 --> 00:40:19,470
just a to clarify this question carried
interest

677
00:40:19,470 --> 00:40:22,939
win fund private equity or hedge fund

678
00:40:22,940 --> 00:40:26,880
earns money from their customers

679
00:40:26,880 --> 00:40:30,120
they are the three that is there in Co

680
00:40:30,120 --> 00:40:33,690
they're allowed to do for their I used
to work management is you could do for

681
00:40:33,690 --> 00:40:35,390
that

682
00:40:35,390 --> 00:40:38,390
keep it invested in your business at the
and

683
00:40:38,390 --> 00:40:42,299
on any gain you pay capital gains from
the original fee income

684
00:40:42,299 --> 00:40:45,630
paid income tax now

685
00:40:45,630 --> 00:40:48,810
they've transformed that incall into

686
00:40:48,810 --> 00:40:52,580
a capital gain which it is not it hasn't
called this is legalized

687
00:40:52,580 --> 00:40:56,500
brought yeah

688
00:40:56,500 --> 00:41:00,180
other confessions of a former hedge fund

689
00:41:00,180 --> 00:41:05,600
a the they were up

690
00:41:05,600 --> 00:41:09,310
healthcare you talked the phrase you
used was

691
00:41:09,310 --> 00:41:12,900
how we manage our markets well I
remember

692
00:41:12,900 --> 00:41:16,250
thinking one of the most profound papers
I read soledad

693
00:41:16,250 --> 00:41:19,819
was Canada rose paper in the early
nineteen sixties why

694
00:41:19,819 --> 00:41:24,830
healthcare is different why does
free-market

695
00:41:24,830 --> 00:41:28,60
rest here work for health care system in
what

696
00:41:28,60 --> 00:41:32,210
and what other designs with the ticker

697
00:41:32,210 --> 00:41:37,779
so what a road did said we have a
picture we haven't this wonderful

698
00:41:37,779 --> 00:41:41,69
idealized version of the market that we
all

699
00:41:41,69 --> 00:41:44,900
that's in all of our textbooks and

700
00:41:44,900 --> 00:41:47,940
which is which in which a market is a is
up

701
00:41:47,940 --> 00:41:51,120
perfectly efficient way to organize
activities

702
00:41:51,120 --> 00:41:54,890
and not this early fear which is a
different question but at least it's

703
00:41:54,890 --> 00:41:55,569
insufficient

704
00:41:55,569 --> 00:41:58,759
and and your budget things that you need

705
00:41:58,759 --> 00:42:02,830
that that their budget assumptions that
are involved their assumptions that

706
00:42:02,830 --> 00:42:06,130
that everybody has the same information
there's something there but knows what

707
00:42:06,130 --> 00:42:07,310
they're doing

708
00:42:07,310 --> 00:42:10,700
that they that the buyers understand
what what the sellers are providing that

709
00:42:10,700 --> 00:42:11,520
you are

710
00:42:11,520 --> 00:42:15,980
are able to make informed decisions and
what can a rigid

711
00:42:15,980 --> 00:42:19,299
great economist their in more than

712
00:42:19,299 --> 00:42:23,460
I guess almost 60 years ago up he said
look if you

713
00:42:23,460 --> 00:42:26,680
if you made a list that these things and
thought but the various ways in which

714
00:42:26,680 --> 00:42:28,140
markets can sail

715
00:42:28,140 --> 00:42:31,250
which this this doesn't doesn't

716
00:42:31,250 --> 00:42:34,759
paradigm doesn't apply every one of
those things applause healthcare

717
00:42:34,759 --> 00:42:38,299
healthcare is the absolute nightmare for
for the proposition that markets are

718
00:42:38,299 --> 00:42:42,750
are good we organize things up that you
have asymmetric information out there

719
00:42:42,750 --> 00:42:43,20
it's

720
00:42:43,20 --> 00:42:46,620
sites people people may have a better
notion that there

721
00:42:46,620 --> 00:42:50,69
well first you have to rely on insurance
you cannot have a as

722
00:42:50,69 --> 00:42:53,589
health care because the big costs are
unpredictable and huge

723
00:42:53,589 --> 00:42:57,589
if they occur up very few people can
afford to pay for it out of pocket so

724
00:42:57,589 --> 00:42:59,509
already you're having to

725
00:42:59,509 --> 00:43:03,310
rely on third-party payers which is
going to be a big problem for any kind

726
00:43:03,310 --> 00:43:04,609
of decision see

727
00:43:04,609 --> 00:43:08,850
you have a situation where when applying
for insurance people may know more about

728
00:43:08,850 --> 00:43:09,900
their health condition

729
00:43:09,900 --> 00:43:13,220
insurers do on the other hand in dealing
with health care

730
00:43:13,220 --> 00:43:17,560
issues itself those are highly technical
you not going to be able

731
00:43:17,560 --> 00:43:21,220
to to know whether your doctor is
recommending the right thing

732
00:43:21,220 --> 00:43:24,980
so there's a whole setup I'll in your
patience there are certain patient Press

733
00:43:24,980 --> 00:43:25,520
by the

734
00:43:25,520 --> 00:43:28,670
as those that we actually talk about
health care consumers

735
00:43:28,670 --> 00:43:32,100
that has become standard language it's
deeply disturbing

736
00:43:32,100 --> 00:43:37,470
I i'm not consuming healthcare why I'm
receiving a patient and

737
00:43:37,470 --> 00:43:40,669
at of course that the notion that we're
your view see people talk about what

738
00:43:40,670 --> 00:43:41,410
people need

739
00:43:41,410 --> 00:43:45,640
to comparative shopping right if you've
just been rushed to the emergency room

740
00:43:45,640 --> 00:43:47,200
with a heart attack because I

741
00:43:47,200 --> 00:43:50,319
no I think that the better deal at the
hospital dal

742
00:43:50,319 --> 00:43:53,319
up and up and

743
00:43:53,319 --> 00:43:57,69
at the bundy an arrow actually said that
while he points out that a lot of the

744
00:43:57,69 --> 00:43:59,670
things we do in health care we didn't
healthcare

745
00:43:59,670 --> 00:44:03,230
sixty years ago were obviously responses
to this the whole

746
00:44:03,230 --> 00:44:06,690
we expect that ethical standards from
doctors

747
00:44:06,690 --> 00:44:10,680
that you don't expect from used car
salesman up because

748
00:44:10,680 --> 00:44:15,69
the cuss a used car salesman who missed
the issue was not going to kill you

749
00:44:15,69 --> 00:44:19,50
and so you have a a lot and what's
happened is

750
00:44:19,50 --> 00:44:22,640
okay so so healthcare happens to be a
all

751
00:44:22,640 --> 00:44:27,29
just on general principles in the area
where free market principles do not

752
00:44:27,30 --> 00:44:27,760
apply

753
00:44:27,760 --> 00:44:31,589
it tanks there one in which is a
remarkable book in a row

754
00:44:31,589 --> 00:44:35,109
was a that for

755
00:44:35,109 --> 00:44:38,509
to a New Year's 175 years before he

756
00:44:38,510 --> 00:44:43,359
written I there was this very
influential idea by Adam Smith that

757
00:44:43,359 --> 00:44:46,810
market the market we

758
00:44:46,810 --> 00:44:50,29
pursuit of self-interest we as it by
Invisible Man

759
00:44:50,30 --> 00:44:53,560
to the deficiency the economy and can
narrow

760
00:44:53,560 --> 00:44:57,290
with the person who actually proved the

761
00:44:57,290 --> 00:45:00,290
right circumstances under which it was
correct so

762
00:45:00,290 --> 00:45:04,20
anybody who talked about the wonders the
free market

763
00:45:04,20 --> 00:45:07,970
he was the one who actually show data
Smith was right

764
00:45:07,970 --> 00:45:11,410
but we're showing was right also
understood

765
00:45:11,410 --> 00:45:15,379
that it was only right under a very
restrictive conditions

766
00:45:15,380 --> 00:45:19,940
and the healthcare sector was one
condition in which was never right

767
00:45:19,940 --> 00:45:21,849
and you know someone

768
00:45:21,849 --> 00:45:24,960
my own work on economics I'll

769
00:45:24,960 --> 00:45:28,319
asymmetry and information mention that
that's

770
00:45:28,319 --> 00:45:32,960
court understanding this is just working
a wouldn't showed is the reason the

771
00:45:32,960 --> 00:45:35,40
invisible hand seems invisible

772
00:45:35,40 --> 00:45:40,380
is that it's not there and at

773
00:45:40,380 --> 00:45:43,500
in this sector is is is a a real case

774
00:45:43,500 --> 00:45:48,160
a point and just to add that is all
abstract reasoning or

775
00:45:48,160 --> 00:45:52,299
but then you look at reality and it's
overwhelming

776
00:45:52,300 --> 00:45:57,300
the up the looking across countries

777
00:45:57,300 --> 00:46:01,79
nice it has the most market-oriented
health care system and also by far the

778
00:46:01,79 --> 00:46:01,960
most expensive

779
00:46:01,960 --> 00:46:05,59
without getting better results we were
results or results

780
00:46:05,59 --> 00:46:09,460
upper yes ranked 37th world by the World
Health Organization's

781
00:46:09,460 --> 00:46:13,960
while right and within the United States
although medicare is very expensive

782
00:46:13,960 --> 00:46:15,700
attacks been much more successful

783
00:46:15,700 --> 00:46:20,140
a cost-control the private insurers have
been medicaid even more successful

784
00:46:20,140 --> 00:46:24,200
and the great thing about america we're
so big and the first we actually have

785
00:46:24,200 --> 00:46:25,000
everything

786
00:46:25,000 --> 00:46:28,750
all all possible systems exist and some
burst here the Veterans Health

787
00:46:28,750 --> 00:46:32,520
Administration which is true socialized
medicine actually the government

788
00:46:32,520 --> 00:46:35,770
you think that the doctors are
government employees is incredibly

789
00:46:35,770 --> 00:46:36,319
efficient

790
00:46:36,319 --> 00:46:39,329
relative to the rest for health care
system in Rob

791
00:46:39,329 --> 00:46:43,920
you did a calculation show that if we
had a health care system that was a

792
00:46:43,920 --> 00:46:44,770
sufficient

793
00:46:44,770 --> 00:46:48,430
as the best in Europe or France Canada

794
00:46:48,430 --> 00:46:52,299
Germany or the UK take your pick we
would have

795
00:46:52,299 --> 00:46:55,770
no no no deficit give her the baby ball

796
00:46:55,770 --> 00:46:58,839
demographics that's right we we are
that's where we

797
00:46:58,839 --> 00:47:01,880
the everyone else other one but the but

798
00:47:01,880 --> 00:47:07,270
the system which very right canada is is
just a single-payer system but not a

799
00:47:07,270 --> 00:47:11,79
not socialized medicine up its actually
called medicare

800
00:47:11,79 --> 00:47:14,400
but it's better care for everybody a
France

801
00:47:14,400 --> 00:47:17,829
is complicated its a

802
00:47:17,829 --> 00:47:21,589
very gallic up but it's but it's a
mixture of public provision

803
00:47:21,589 --> 00:47:24,599
public health insurance but it its but

804
00:47:24,599 --> 00:47:27,660
a much heavier hand government the
canadian system

805
00:47:27,660 --> 00:47:31,180
it's about the same cost the Canadian
system but spectacularly good

806
00:47:31,180 --> 00:47:35,480
outcomes relative anybody's are and
Britain has a system which is pure

807
00:47:35,480 --> 00:47:36,569
socialized medicine

808
00:47:36,569 --> 00:47:40,390
and up the outcomes are a little better
than ours

809
00:47:40,390 --> 00:47:43,770
at the cost is forty percent about us so

810
00:47:43,770 --> 00:47:47,569
sure all of these things as we were able
to emulate these things we would be able

811
00:47:47,569 --> 00:47:48,270
to

812
00:47:48,270 --> 00:47:51,530
a our budget problems with God

813
00:47:51,530 --> 00:47:55,30
and also our competitiveness forms based
and its

814
00:47:55,30 --> 00:47:58,520
est and at its just Chris defies

815
00:47:58,520 --> 00:48:02,119
so so what is the yeah whatever to

816
00:48:02,119 --> 00:48:05,569
presidential tickets that signature
proposal is to take

817
00:48:05,569 --> 00:48:09,9
one other parts versus that works pretty
well and privatize

818
00:48:09,10 --> 00:48:13,670
repeal would as a governor well that's
what I saw your Romney

819
00:48:13,670 --> 00:48:17,880
by but let's let's make sure that nobody
else it gets to do what I

820
00:48:17,880 --> 00:48:21,140
as governor Massachusetts but then
alright want to assess the privatize

821
00:48:21,140 --> 00:48:24,700
Medicare privatize and underfunded so
dismantle Medicare

822
00:48:24,700 --> 00:48:27,730
which is a credible its its its

823
00:48:27,730 --> 00:48:31,470
its rejection up both theory and
evidence

824
00:48:31,470 --> 00:48:38,470
a FF I pretty impressive with when you
look at this

825
00:48:38,740 --> 00:48:43,689
interface between medical costs in the
budget this

826
00:48:43,690 --> 00:48:47,99
this ideal that we have to have all
these commissions

827
00:48:47,99 --> 00:48:51,99
like Paul Simpson all these rituals
about shares between spending and

828
00:48:51,99 --> 00:48:51,579
support

829
00:48:51,579 --> 00:48:56,270
why don't we just have health care cost
Commission white when we look that in

830
00:48:56,270 --> 00:48:56,559
the

831
00:48:56,559 --> 00:49:00,380
because that would be death panels no I
mean that

832
00:49:00,380 --> 00:49:03,380
I'll I but I I'll I also think

833
00:49:03,380 --> 00:49:06,780
we have to the reality of american
politics is

834
00:49:06,780 --> 00:49:10,680
a the drug industry's are very
influential the insurance industry is

835
00:49:10,680 --> 00:49:11,759
very influential

836
00:49:11,760 --> 00:49:14,900
and it has beaten back reforms

837
00:49:14,900 --> 00:49:19,849
over and over again you take one
provision in the

838
00:49:19,849 --> 00:49:23,980
one-line almost in the in the Medicare
drug bill

839
00:49:23,980 --> 00:49:27,869
the bill that provided prescription
drugs for

840
00:49:27,869 --> 00:49:31,440
medicare and it says that we the
government

841
00:49:31,440 --> 00:49:34,440
the largest purchaser drugs in the world
couldn't bargain

842
00:49:34,440 --> 00:49:38,560
with drug companies that estimated to be
a gift to the drug companies over 10

843
00:49:38,560 --> 00:49:38,930
years

844
00:49:38,930 --> 00:49:42,9
a half trillion dollars now you know

845
00:49:42,10 --> 00:49:45,579
anybody serious about doing with our
deficit

846
00:49:45,579 --> 00:49:48,940
that's a good place to begin but I'll

847
00:49:48,940 --> 00:49:52,680
hardly talked about and by the wall

848
00:49:52,680 --> 00:49:56,230
is it creates an interesting problem for

849
00:49:56,230 --> 00:49:59,980
if you're an economist advocate up how
much

850
00:49:59,980 --> 00:50:03,940
how much imperfection are you willing to
accept how much

851
00:50:03,940 --> 00:50:07,510
fall short at there was little bit less
I a lot of us

852
00:50:07,510 --> 00:50:10,890
me the really thought that that a lot

853
00:50:10,890 --> 00:50:15,379
I really think that health care reform
should take the form a single

854
00:50:15,380 --> 00:50:19,30
if we Medicare for All is where we
should go

855
00:50:19,30 --> 00:50:22,369
but that was on the table the question
is

856
00:50:22,369 --> 00:50:25,480
so we we have had this planned for

857
00:50:25,480 --> 00:50:29,329
really Jake Packers plan which became a

858
00:50:29,329 --> 00:50:33,220
the part the that the genesis of
Obamacare eventually which was

859
00:50:33,220 --> 00:50:35,990
to passing which was actually run
through the markets it's a Rube Goldberg

860
00:50:35,990 --> 00:50:37,250
device

861
00:50:37,250 --> 00:50:40,420
that badges to try and get at the
effects up

862
00:50:40,420 --> 00:50:43,560
up up a single pair system without the
actual single pair but

863
00:50:43,560 --> 00:50:47,279
should have a public option in there so
it's not entirely Plainfield insurance

864
00:50:47,280 --> 00:50:48,829
companies

865
00:50:48,829 --> 00:50:52,160
the public option gets killed in the
political scram you still

866
00:50:52,160 --> 00:50:56,368
supported and I at in the end might buy
judgment was yes you do because

867
00:50:56,369 --> 00:51:00,130
the important thing right now is for us
is to establish the principle

868
00:51:00,130 --> 00:51:03,369
universal health care and once that's in
place then there'll be a lot of pressure

869
00:51:03,369 --> 00:51:05,500
to make it more efficient to make it

870
00:51:05,500 --> 00:51:09,260
work better eventual managed to squeeze
the insurance companies out there

871
00:51:09,260 --> 00:51:10,470
controlling role but

872
00:51:10,470 --> 00:51:13,980
but first get it in place and that's
course that more than anything else is

873
00:51:13,980 --> 00:51:15,690
what's at stake in this election

874
00:51:15,690 --> 00:51:19,810
so some people would say we'd was a $47
million people

875
00:51:19,810 --> 00:51:23,680
on uninsured who came onto the school's

876
00:51:23,680 --> 00:51:28,140
the the health care passage that's right
that's transformed into a budget problem

877
00:51:28,140 --> 00:51:31,279
because they're playing Monopoly prices
except its said

878
00:51:31,280 --> 00:51:34,760
turns out not to be a big deal it to the
amazing thing is the uninsured

879
00:51:34,760 --> 00:51:38,290
America are by and large young adults

880
00:51:38,290 --> 00:51:41,540
which were not expensive the the
expensive people in

881
00:51:41,540 --> 00:51:45,29
are are the elderly who are covered
under Medicare and and the other aspect

882
00:51:45,30 --> 00:51:45,520
to that

883
00:51:45,520 --> 00:51:49,579
is that america's not so inhumane

884
00:51:49,579 --> 00:51:52,780
that at the end when they need

885
00:51:52,780 --> 00:51:57,799
you know desperate they do get into a
hospital but because it's been delayed

886
00:51:57,799 --> 00:52:00,970
the cost are larger and then it gets
shifted

887
00:52:00,970 --> 00:52:04,459
in the complicated counting they have to
somebody else

888
00:52:04,460 --> 00:52:08,780
so in fair one of the reasons why we
have such an inefficient health care

889
00:52:08,780 --> 00:52:09,579
system

890
00:52:09,579 --> 00:52:13,440
is that we are don't buy was urged to

891
00:52:13,440 --> 00:52:17,69
large fraction population yet the

892
00:52:17,69 --> 00:52:20,900
the amazing thing when all is said and
done is that getting to a

893
00:52:20,900 --> 00:52:24,950
sort of universal health care system
despite the absolute public option

894
00:52:24,950 --> 00:52:26,140
despite the

895
00:52:26,140 --> 00:52:30,20
the compromises made is it's really not
a big budget

896
00:52:30,20 --> 00:52:34,819
bust the it to a they were able to pay
for it with relatively modest cost

897
00:52:34,819 --> 00:52:36,740
saving measures in medicare

898
00:52:36,740 --> 00:52:40,979
and a a little bit extra taxation and on
balance

899
00:52:40,980 --> 00:52:45,569
see wrestle Budget Office says that the
health reform bill

900
00:52:45,569 --> 00:52:49,220
is actually going to reduce the budget
deficit increases and it's not gonna

901
00:52:49,220 --> 00:52:51,740
lead to huge burton's on the public so

902
00:52:51,740 --> 00:52:56,720
a that made i that's that's said that's
really very much at stake in two weeks

903
00:52:56,720 --> 00:53:01,379
it if about reelected the sting survives
America finally joints the community a

904
00:53:01,380 --> 00:53:02,630
civilized nations

905
00:53:02,630 --> 00:53:06,490
the provider that provide some form of
health insurance to all their citizens

906
00:53:06,490 --> 00:53:10,348
I and if he's if he loses with that it
gets killed

907
00:53:10,349 --> 00:53:13,720
I'm expert comment coming the same sense
in which we r

908
00:53:13,720 --> 00:53:17,790
out of tune with with the rest the

909
00:53:17,790 --> 00:53:21,420
rest the events the industrial countries
a

910
00:53:21,420 --> 00:53:24,599
I'll is our cozy who is it was on

911
00:53:24,599 --> 00:53:28,740
the right in in pracs came to Columbia
gave a talk and

912
00:53:28,740 --> 00:53:32,430
at the time that that about the health
care

913
00:53:32,430 --> 00:53:35,460
bill was under discussion

914
00:53:35,460 --> 00:53:38,520
college students asked him at the
comment

915
00:53:38,520 --> 00:53:42,200
on this debate he said why don't want to
meddle in the affairs

916
00:53:42,200 --> 00:53:45,348
but up and then you said

917
00:53:45,349 --> 00:53:50,690
I don't understand you know I in in
France we take it is a basic

918
00:53:50,690 --> 00:53:54,750
right human right that you should have
access to health care

919
00:53:54,750 --> 00:53:57,970
a matter you know what your income level
is so

920
00:53:57,970 --> 00:54:01,939
for us we we just don't know you know in
this is a question that the right and

921
00:54:01,940 --> 00:54:02,849
the left there's

922
00:54:02,849 --> 00:54:06,410
this is basic a

923
00:54:06,410 --> 00:54:10,368
human rights and at and he just couldn't
understand a bit Olympic ceremonies and

924
00:54:10,369 --> 00:54:11,839
in Britain with the dancing

925
00:54:11,839 --> 00:54:15,99
dancing nurses wear where with people
here

926
00:54:15,99 --> 00:54:18,779
what is that across the British love
their health system we we think that's

927
00:54:18,779 --> 00:54:19,69
its

928
00:54:19,69 --> 00:54:23,60
you know if you list people here it's a
tell-all disaster

929
00:54:23,60 --> 00:54:26,529
she's ever been treated it stopped but
it's a it

930
00:54:26,529 --> 00:54:29,970
yep with with its and by the way 1 I'll
one again the other

931
00:54:29,970 --> 00:54:34,29
the thing about the politics of is if
get

932
00:54:34,29 --> 00:54:37,819
always meet the become irreversible be
people say how

933
00:54:37,819 --> 00:54:41,670
by inconceivable that we would with it's
like me right here

934
00:54:41,670 --> 00:54:44,750
it's like Medicare that most Americans

935
00:54:44,750 --> 00:54:48,410
a really think is a good system

936
00:54:48,410 --> 00:54:52,460
back you know the joke in the in the
debate about the

937
00:54:52,460 --> 00:54:55,310
Obamacare was a person

938
00:54:55,310 --> 00:54:58,450
who said a I what you keep

939
00:54:58,450 --> 00:55:01,839
the government's hands-off out really at
and

940
00:55:01,840 --> 00:55:04,380
and quite a few people are saying don't
let the government gets hands on

941
00:55:04,380 --> 00:55:04,850
medicare

942
00:55:04,850 --> 00:55:09,770
yep and that out to you I think raises a
a fundamental issue that we've been

943
00:55:09,770 --> 00:55:10,820
circling around

944
00:55:10,820 --> 00:55:14,310
which is what is the role government in

945
00:55:14,310 --> 00:55:17,470
in our society in our economy and

946
00:55:17,470 --> 00:55:20,868
the a for thirty years now

947
00:55:20,869 --> 00:55:24,270
americans have been sold a bill of goods
that

948
00:55:24,270 --> 00:55:28,810
government can't do anything well that's
the problem not the solution

949
00:55:28,810 --> 00:55:32,220
and and therefore I'll

950
00:55:32,220 --> 00:55:36,270
you know if medicare is successful can't
be a government program

951
00:55:36,270 --> 00:55:39,320
I and the same thing

952
00:55:39,320 --> 00:55:43,380
in terms of social security they find it
very difficult to believe

953
00:55:43,380 --> 00:55:46,930
that the transaction cost associate with
social security

954
00:55:46,930 --> 00:55:49,950
are fraction up that any private

955
00:55:49,950 --> 00:55:53,680
insurance companies providing annuities
and provide two kinds a

956
00:55:53,680 --> 00:55:58,490
although a a insurance against inflation

957
00:55:58,490 --> 00:56:03,40
against a other things that you can't
get enough private insurance

958
00:56:03,40 --> 00:56:06,600
a private annuity so I'll

959
00:56:06,600 --> 00:56:11,859
you know that that really raises I think
so deeper issues that have been

960
00:56:11,859 --> 00:56:15,940
at the center I'll up this Spain

961
00:56:15,940 --> 00:56:19,220
there was a study done in our school
years ago number

962
00:56:19,220 --> 00:56:22,290
people participate in that study in
Germany

963
00:56:22,290 --> 00:56:25,350
UK United States and Sweden

964
00:56:25,350 --> 00:56:28,589
their last as a battery of questions

965
00:56:28,590 --> 00:56:33,960
not surprising United States response

966
00:56:33,960 --> 00:56:37,380
distrusted government more than you

967
00:56:37,380 --> 00:56:40,680
the other countries and the one question
that stood out is

968
00:56:40,680 --> 00:56:44,299
do I trust our government to protect
powerful

969
00:56:44,300 --> 00:56:47,300
the American answer Knoll

970
00:56:47,300 --> 00:56:51,250
was of the skills to 15 points more

971
00:56:51,250 --> 00:56:54,770
distrust no part of the reason for that
maybe

972
00:56:54,770 --> 00:56:58,280
related to to the subject to inequality
that we've been talking about that

973
00:56:58,280 --> 00:57:02,40
a polled written about this as well that
we have

974
00:57:02,40 --> 00:57:07,279
a high such a high level inequality
economic inequality that

975
00:57:07,280 --> 00:57:10,560
inevitably it gets transferred into
political inequality

976
00:57:10,560 --> 00:57:14,490
and particularly given the rules the
game just like the rules the economic

977
00:57:14,490 --> 00:57:14,939
game

978
00:57:14,940 --> 00:57:18,170
determine how the car aka

979
00:57:18,170 --> 00:57:21,500
economic system place I'll lead to this
high-level

980
00:57:21,500 --> 00:57:25,950
inequality we now have political rules
to the game

981
00:57:25,950 --> 00:57:30,200
a like Citizens United that give scope
for money

982
00:57:30,200 --> 00:57:33,910
we move closer to a system rather than
one person one vote

983
00:57:33,910 --> 00:57:39,670
to one dollar one vote and then that
becomes a self-report reinforcing so you

984
00:57:39,670 --> 00:57:40,170
have

985
00:57:40,170 --> 00:57:45,430
more political inequality that generate
was in regulations

986
00:57:45,430 --> 00:57:48,770
Whittemore economic inequality in that
reprobate

987
00:57:48,770 --> 00:57:52,170
back into more political inequality
example

988
00:57:52,170 --> 00:57:55,880
that I just fine astounding are
something like

989
00:57:55,880 --> 00:57:59,20
our bankruptcy law you know something
very technical nobody

990
00:57:59,20 --> 00:58:04,310
normally get interested in up one
provision the bankruptcy law

991
00:58:04,310 --> 00:58:09,700
is a that when you go bankrupt the
question is who gets

992
00:58:09,700 --> 00:58:13,430
papers big issue and the answer is

993
00:58:13,430 --> 00:58:16,720
the derivatives not a surprise a

994
00:58:16,720 --> 00:58:20,450
because they put it and when everybody
else was not noticing what

995
00:58:20,450 --> 00:58:24,160
you know who pays attention to
bankruptcy laws what do that mean that

996
00:58:24,160 --> 00:58:24,720
means you

997
00:58:24,720 --> 00:58:28,790
courage that kind of economic activity
but

998
00:58:28,790 --> 00:58:34,340
at the other extreme student loans can't
be discharged a

999
00:58:34,340 --> 00:58:38,369
even in bankruptcy so that means that

1000
00:58:38,369 --> 00:58:43,40
the bank's do well body really
discourages people

1001
00:58:43,40 --> 00:58:46,529
borrowing up for student loans and in a

1002
00:58:46,530 --> 00:58:49,859
a country where we have

1003
00:58:49,859 --> 00:58:53,109
tuition going up the last three years I
think

1004
00:58:53,109 --> 00:58:57,160
average State University tuition got up
about 40 percent

1005
00:58:57,160 --> 00:59:00,910
because up the cutbacks and state San

1006
00:59:00,910 --> 00:59:04,190
state budgets incomes are going down

1007
00:59:04,190 --> 00:59:07,600
the only way that people can afford it
is borrowing

1008
00:59:07,600 --> 00:59:11,450
and then they realized that if they get
cheated as

1009
00:59:11,450 --> 00:59:14,680
the lotto Matt been particularly in the

1010
00:59:14,680 --> 00:59:17,859
were profit private schools

1011
00:59:17,859 --> 00:59:21,440
a result that is that

1012
00:59:21,440 --> 00:59:24,710
if you don't get a job given the
recession I'll

1013
00:59:24,710 --> 00:59:28,530
XO it's a noose around your neck your
ball

1014
00:59:28,530 --> 00:59:33,30
teachers what do you tell your people
right now look at those tuition bills

1015
00:59:33,30 --> 00:59:36,930
those low rates I'll and the
unemployment level for you

1016
00:59:36,930 --> 00:59:40,649
you know problem where journalist
something like this problem is the

1017
00:59:40,650 --> 00:59:41,109
prince

1018
00:59:41,109 --> 00:59:44,250
such rarefied a

1019
00:59:44,250 --> 00:59:48,50
right its very its it's not percent

1020
00:59:48,50 --> 00:59:51,450
who it is it is the one percent or less
than 10 21 and

1021
00:59:51,450 --> 00:59:54,919
a and add to the extent that students
are not the one percent they go

1022
00:59:54,920 --> 00:59:58,440
pretty generous scholarships school a
lot of money

1023
00:59:58,440 --> 01:00:02,450
so I don't think it's okay rest up right
but not me at II

1024
01:00:02,450 --> 01:00:05,649
but certainly have

1025
01:00:05,650 --> 01:00:11,520
young people I know relatives and

1026
01:00:11,520 --> 01:00:16,180
really urging them to have find ways to
not be dependent

1027
01:00:16,180 --> 01:00:19,690
nephew thank God teaching English in
Japan

1028
01:00:19,690 --> 01:00:23,390
so he's got a job urging him to stay
there until the job market has been here

1029
01:00:23,390 --> 01:00:24,529
is it not this is

1030
01:00:24,530 --> 01:00:28,400
I'll by the justice or comes back a

1031
01:00:28,400 --> 01:00:31,740
we sorta most of the questions up
current

1032
01:00:31,740 --> 01:00:35,479
depressed economy but among other things
what people say

1033
01:00:35,480 --> 01:00:38,880
or can we really afford spent to

1034
01:00:38,880 --> 01:00:43,260
boost the economy costs are up not doing
that

1035
01:00:43,260 --> 01:00:47,440
are are lost Jenner among other things a
lost generation young people

1036
01:00:47,440 --> 01:00:51,839
it's a terrible job market people are a
know people coming out of school

1037
01:00:51,839 --> 01:00:55,839
Cup our college or even if issues not
for college coming out of high school

1038
01:00:55,839 --> 01:00:59,830
into a market that has no use for them
they never get that first job that

1039
01:00:59,830 --> 01:01:03,569
that makes use of their potential they
never get started on the latter

1040
01:01:03,570 --> 01:01:06,940
and this is going to would be paying a
price

1041
01:01:06,940 --> 01:01:10,869
for our inaction in the face a pass on a
player to be paying that price thirty

1042
01:01:10,869 --> 01:01:11,450
years from now

1043
01:01:11,450 --> 01:01:14,919
still because I've what we're doing
human potential station

1044
01:01:14,920 --> 01:01:19,260
oppose after the right and particularly
pollution right now

1045
01:01:19,260 --> 01:01:23,619
US government can borrow at a negative
real interest rates right

1046
01:01:23,619 --> 01:01:27,990
US government's cells among other things
bother protect against inflation

1047
01:01:27,990 --> 01:01:30,859
so that they will not the valuable
eroded by inflation and the interest

1048
01:01:30,859 --> 01:01:31,410
rate on

1049
01:01:31,410 --> 01:01:36,359
on 10-year inflation-protected bonds is
-0.8 percent

1050
01:01:36,359 --> 01:01:39,580
the people into paid US government to
take them so

1051
01:01:39,580 --> 01:01:43,190
what you recognize that and you you
recognize that we have these

1052
01:01:43,190 --> 01:01:47,690
high return investments and technology
infrastructure anybody look at the

1053
01:01:47,690 --> 01:01:49,850
infrastructure in New York

1054
01:01:49,850 --> 01:01:53,480
a you have the feeling that we're a
third-world

1055
01:01:53,480 --> 01:01:56,720
a country except it's an insult to some
third world countries

1056
01:01:56,720 --> 01:02:00,140
up and I you really you know

1057
01:02:00,140 --> 01:02:03,740
investments in technology a a

1058
01:02:03,740 --> 01:02:07,790
that would really provide the basis we
began by talking about why we got out

1059
01:02:07,790 --> 01:02:10,890
are the Great Depression those going to
investments

1060
01:02:10,890 --> 01:02:15,000
would be a compliment to the private
sector and

1061
01:02:15,000 --> 01:02:18,480
create jobs now and promote growth in
the future

1062
01:02:18,480 --> 01:02:21,910
an improved our fiscal position because

1063
01:02:21,910 --> 01:02:25,660
you have these positive real returns and
the negative real cost

1064
01:02:25,660 --> 01:02:30,750
above a fund's it anybody looking to
balance sheets are you crazy not to do

1065
01:02:30,750 --> 01:02:31,270
it

1066
01:02:31,270 --> 01:02:36,170
my pet thing of course is that the
greatest city in the greatest nation on

1067
01:02:36,170 --> 01:02:39,720
in the world is linked to the 20 points
west

1068
01:02:39,720 --> 01:02:43,830
by a single rail tunnel completed in the
year 1910

1069
01:02:43,830 --> 01:02:48,319
a and a and the project the
long-standing project to

1070
01:02:48,320 --> 01:02:52,420
at a sec withdrawal which runs at a
hundred percent past during rush hour

1071
01:02:52,420 --> 01:02:56,680
and the a long-standing project at a
second title has been cancel

1072
01:02:56,680 --> 01:02:59,690
at a time when the US when the federal
government can borrow it negative real

1073
01:02:59,690 --> 01:03:00,800
interest rates

1074
01:03:00,800 --> 01:03:05,109
credible at in all these idle resources

1075
01:03:05,109 --> 01:03:08,380
do not pay taxes but know that people
are worried about that

1076
01:03:08,380 --> 01:03:12,140
it Larry Summers and and break the law a

1077
01:03:12,140 --> 01:03:15,589
now that he's a free man larry is
something a lot more

1078
01:03:15,589 --> 01:03:19,310
like join me actually but a I'll

1079
01:03:19,310 --> 01:03:22,339
they had a paper making a very

1080
01:03:22,339 --> 01:03:27,40
strong purse persuasive case that that
even a purely physical terms

1081
01:03:27,40 --> 01:03:30,520
up spending more money now as a positive
that what it will do

1082
01:03:30,520 --> 01:03:33,800
to the long-term budget long-term US
economic growth

1083
01:03:33,800 --> 01:03:36,950
will more than pay for itself in future
tax rate

1084
01:03:36,950 --> 01:03:41,379
that's because the borrowing costs alone
because the the long-term shadow

1085
01:03:41,380 --> 01:03:44,670
up mass unemployment on the on the
economy is

1086
01:03:44,670 --> 01:03:48,609
is quite large so yep it's a covers the
cutting back

1087
01:03:48,609 --> 01:03:51,950
at times like this is is self-defeating

1088
01:03:51,950 --> 01:03:57,40
it actually worsens the fiscal situation
course then what happens is people sell

1089
01:03:57,40 --> 01:04:00,980
inflict more pain just as the situation
really it really is like medieval

1090
01:04:00,980 --> 01:04:03,250
doctors with all that you treat illness
by pleading

1091
01:04:03,250 --> 01:04:06,240
people and then they got sicker so you
let them some more and that's that's

1092
01:04:06,240 --> 01:04:06,689
right now

1093
01:04:06,690 --> 01:04:10,270
out cities well I'm getting depressed

1094
01:04:10,270 --> 01:04:13,589
you guys still I have to turn to the
audience now

1095
01:04:13,589 --> 01:04:16,710
up the people have questions there ugly

1096
01:04:16,710 --> 01:04:19,730
microphones in a couple places your

1097
01:04:19,730 --> 01:04:24,670
please come up got some time for some
questions

1098
01:04:24,670 --> 01:04:28,770
yessir the

1099
01:04:28,770 --> 01:04:32,200
like make an observation before I put my
question

1100
01:04:32,200 --> 01:04:36,350
appreciate the opportunity here in three
billion people like yourselves

1101
01:04:36,350 --> 01:04:40,259
discuss the issues I suspect that we had

1102
01:04:40,260 --> 01:04:43,330
3 distinguished economist different
political persuasion

1103
01:04:43,330 --> 01:04:46,470
we have different incident different
observations

1104
01:04:46,470 --> 01:04:50,29
so let me get my questions okay number
one

1105
01:04:50,30 --> 01:04:53,170
you think the problems the 99 percent

1106
01:04:53,170 --> 01:04:57,260
a result what one percent is doing to
them the one that was my good wishes

1107
01:04:57,260 --> 01:05:00,680
three questions not disappear so first
question is the problem to ninety-nine

1108
01:05:00,680 --> 01:05:01,680
percent

1109
01:05:01,680 --> 01:05:04,940
result what one percent done to them
secondly

1110
01:05:04,940 --> 01:05:08,500
what do you think the appropriate
maximum tax rate should be

1111
01:05:08,500 --> 01:05:12,500
on the highest incomes site in 3

1112
01:05:12,500 --> 01:05:15,890
how would you narrow the income
differential between the fact the flow

1113
01:05:15,890 --> 01:05:17,549
worker in the CEO

1114
01:05:17,550 --> 01:05:22,660
thirty years ago that different about 30
times the today to 500 times

1115
01:05:22,660 --> 01:05:25,660
okay and I wonder how you go about
narrowing the French Russian the

1116
01:05:25,660 --> 01:05:26,750
differential is

1117
01:05:26,750 --> 01:05:31,339
occurred to some degree because China
has brought down the wages

1118
01:05:31,339 --> 01:05:35,410
American factory workers know why CEOs
make what they make i think is an issue

1119
01:05:35,410 --> 01:05:38,129
governance I totally agree with the
observations you made

1120
01:05:38,130 --> 01:05:43,130
but I those three questions if you could
shed some light on your opinions

1121
01:05:43,130 --> 01:05:46,220
1 percent cause the 99 percent role

1122
01:05:46,220 --> 01:05:49,500
well I you know what I try to explain

1123
01:05:49,500 --> 01:05:54,89
Korea's is that the the difficulties
have the 99 percent

1124
01:05:54,89 --> 01:05:57,730
middle the you know are are

1125
01:05:57,730 --> 01:06:01,520
a result of a whole host the different
things that

1126
01:06:01,520 --> 01:06:05,900
we talked about are you know right now
the major problems

1127
01:06:05,900 --> 01:06:09,230
unemployment but up education

1128
01:06:09,230 --> 01:06:13,10
a a ho-hos to

1129
01:06:13,10 --> 01:06:16,810
you know the knack financial sector
deregulation allowing

1130
01:06:16,810 --> 01:06:20,690
predatory lending and use a credit card
practices and things like that

1131
01:06:20,690 --> 01:06:24,180
now you can say a lot of these are
resolved

1132
01:06:24,180 --> 01:06:27,940
all the way our political process has
passed rules and regulations

1133
01:06:27,940 --> 01:06:31,390
supported education not supported
education I

1134
01:06:31,390 --> 01:06:36,230
and that is affected now we say by the
one percent by

1135
01:06:36,230 --> 01:06:39,740
by the way money the impulse that money
is had

1136
01:06:39,740 --> 01:06:42,979
in our political process so yes a lot of
their plight

1137
01:06:42,980 --> 01:06:46,500
years as result that I don't say all
that is

1138
01:06:46,500 --> 01:06:49,700
on the issue over a issue corporate

1139
01:06:49,700 --> 01:06:52,799
the issuer above the a

1140
01:06:52,800 --> 01:06:55,950
co-pay relative to ordinary shareholders

1141
01:06:55,950 --> 01:06:59,560
ordinary workers a lot of that has to do
with

1142
01:06:59,560 --> 01:07:03,20
corporate governance is a a we had

1143
01:07:03,20 --> 01:07:06,69
stronger laws about saying pay

1144
01:07:06,69 --> 01:07:09,170
I I think that would be curbed me some
that

1145
01:07:09,170 --> 01:07:12,859
to some extent it's a different racial
here than in other countries

1146
01:07:12,859 --> 01:07:16,210
well Australia brings things has a
strong same pay law

1147
01:07:16,210 --> 01:07:20,470
and it very different ratio and and
their companies are pretty you know

1148
01:07:20,470 --> 01:07:25,419
just a sufficient to as our our company
also also stronger labor movement

1149
01:07:25,420 --> 01:07:28,950
we've had a very heavy toll to a policy
against

1150
01:07:28,950 --> 01:07:31,970
labor organizing and that's important
restraining factor II

1151
01:07:31,970 --> 01:07:35,100
oh and about the middle question %uh yes
resistive touch

1152
01:07:35,100 --> 01:07:38,460
73 percent 73 said Peter diamond

1153
01:07:38,460 --> 01:07:41,420
a whose

1154
01:07:41,420 --> 01:07:43,860
former colleague of mine and and Nobel
laureate

1155
01:07:43,860 --> 01:07:47,540
and and deemed unqualified to be on the
federal reserve board

1156
01:07:47,540 --> 01:07:50,670
I republicans in congress up but

1157
01:07:50,670 --> 01:07:55,200
as it's actually the you don't have to
take that exact number but

1158
01:07:55,200 --> 01:07:58,240
although he did actually to put in that
that's not that's not up

1159
01:07:58,240 --> 01:08:01,410
up to have this done with a lot of
careful estimates but there's a very

1160
01:08:01,410 --> 01:08:02,000
strong

1161
01:08:02,000 --> 01:08:05,610
are economic argument that says that
that that

1162
01:08:05,610 --> 01:08:09,180
best we should be taxing very high
incomes at rates that

1163
01:08:09,180 --> 01:08:13,210
that yields revving with yet one more so
it won't work factor

1164
01:08:13,210 --> 01:08:16,430
well it doesn't quite feel that without
knowing it I think

1165
01:08:16,430 --> 01:08:19,850
the it above my pay grade but up but a

1166
01:08:19,850 --> 01:08:23,380
but the in this book sells you might
with right

1167
01:08:23,380 --> 01:08:26,529
the but but there's desert clear

1168
01:08:26,529 --> 01:08:30,750
ClearCase the notion that that you need
to keep tax rates at the top

1169
01:08:30,750 --> 01:08:34,109
low because of these wonderful
spillovers it

1170
01:08:34,109 --> 01:08:37,750
it's just not right yup word up by
theory or evidence and a much higher

1171
01:08:37,750 --> 01:08:40,670
rates than currently have at the very
high and would actually be perfect

1172
01:08:40,670 --> 01:08:44,460
and remember we've talked before about
appeared before 1980 and I

1173
01:08:44,460 --> 01:08:48,270
after nineteen eighty up for nineteen
eighty would appear we will hear a

1174
01:08:48,270 --> 01:08:49,420
growing the fastest

1175
01:08:49,420 --> 01:08:52,730
top tax rates were seventy percent
that's right with 702 one more

1176
01:08:52,729 --> 01:08:56,540
more thing that that I would add which
is I'll

1177
01:08:56,540 --> 01:09:00,319
you want to think a little bit about the
sources of income at the top

1178
01:09:00,319 --> 01:09:04,589
and if the you identify a lotta

1179
01:09:04,589 --> 01:09:08,890
sources become a monopoly power a all
coming to bring seeking

1180
01:09:08,890 --> 01:09:12,520
if you could target taxes on that kinda
bring seeking

1181
01:09:12,520 --> 01:09:17,140
you actually generate income and improve
economic efficiency

1182
01:09:17,140 --> 01:09:21,410
I so you know most economists say to the
extent that you could actually

1183
01:09:21,410 --> 01:09:25,180
target those kinds of Rams got a tax
that is close

1184
01:09:25,180 --> 01:09:29,200
two hundred percent as you can I

1185
01:09:29,200 --> 01:09:33,649
I sense that if you had a higher
marginal tax rate at the top you would

1186
01:09:33,649 --> 01:09:37,870
discourage the pursuit once again there
there's a slow start exactness

1187
01:09:37,870 --> 01:09:42,430
there's a fair bit of evidence as the
can size but they were the

1188
01:09:42,430 --> 01:09:46,420
that the that that one of the reasons
why we've had this explosion

1189
01:09:46,420 --> 01:09:51,770
up corporate pay a executive pay is that
the kind of brutal

1190
01:09:51,770 --> 01:09:56,550
gaining up the system that CEOs now do
in order to get these very high

1191
01:09:56,550 --> 01:09:57,320
paychecks

1192
01:09:57,320 --> 01:10:00,420
wasn't worth doing when the tax rates
were much higher so

1193
01:10:00,420 --> 01:10:04,710
so with the causality goes both way that
that when you have more

1194
01:10:04,710 --> 01:10:07,770
economic inequality the political
process

1195
01:10:07,770 --> 01:10:12,470
weeks to less progressive taxation and
more distorted tax system

1196
01:10:12,470 --> 01:10:16,980
but it's also when you have up less
progressive taxation in this

1197
01:10:16,980 --> 01:10:21,80
kinda distortions you wind up with an
economic system with more inequality

1198
01:10:21,80 --> 01:10:23,390
because people buy them worthwhile

1199
01:10:23,390 --> 01:10:30,390
to try to game the system take or two
left here

1200
01:10:35,470 --> 01:10:38,340
hella yes yes so

1201
01:10:38,340 --> 01:10:41,820
there's there's been some criticism

1202
01:10:41,820 --> 01:10:45,940
the notion that that economists as a
group

1203
01:10:45,940 --> 01:10:50,250
and look at the world is it the only
thing that matters is efficiency

1204
01:10:50,250 --> 01:10:56,290
and see the so-called rational solutions
to you

1205
01:10:56,290 --> 01:10:59,810
to problems inefficiency a.m. and I'm

1206
01:10:59,810 --> 01:11:03,490
getting this strong sense that to view
are not

1207
01:11:03,490 --> 01:11:09,380
exactly camp in that there's some sort
moral code that is at least in part

1208
01:11:09,380 --> 01:11:14,120
underpinning your your work and your
views and I wonder if you could

1209
01:11:14,120 --> 01:11:17,950
articulate what that moral code years

1210
01:11:17,950 --> 01:11:22,250
a code for economists to live by

1211
01:11:22,250 --> 01:11:29,250
while I mean I don't think tomorrow
codes

1212
01:11:29,320 --> 01:11:34,980
to for a person is any different if
you're an economist anything else

1213
01:11:34,980 --> 01:11:38,110
try and but not I think needed

1214
01:11:38,110 --> 01:11:41,150
let me answers a slightly different
question usually which is what it what

1215
01:11:41,150 --> 01:11:41,480
is

1216
01:11:41,480 --> 01:11:46,30
what what it's your social

1217
01:11:46,30 --> 01:11:51,509
vision what is it you want to see it an
old joe with subtract this but I think

1218
01:11:51,510 --> 01:11:52,260
that I am

1219
01:11:52,260 --> 01:11:55,770
more or less roles in without being too

1220
01:11:55,770 --> 01:11:58,800
the roles this notion was that that you
should

1221
01:11:58,800 --> 01:12:01,980
a think about society

1222
01:12:01,980 --> 01:12:07,610
as if you were devised society without
knowing who you're going to be within it

1223
01:12:07,610 --> 01:12:11,89
that you should think about it that the
hypothetical ability

1224
01:12:11,90 --> 01:12:15,440
rights say it if I didn't know whether I
was going to be born the son up

1225
01:12:15,440 --> 01:12:19,980
up a corporate executive or or the sign
up a

1226
01:12:19,980 --> 01:12:24,940
a migrant worker up which what's that
society would i look forward

1227
01:12:24,940 --> 01:12:29,650
given that through the answer so that
the and it's a little bit slow but like

1228
01:12:29,650 --> 01:12:31,379
a a golden rules for nothing

1229
01:12:31,380 --> 01:12:35,390
that just just consider the possibility
of

1230
01:12:35,390 --> 01:12:38,970
what would you want if you were going to
be someone else

1231
01:12:38,970 --> 01:12:42,780
that's a don't have to be super formal
about

1232
01:12:42,780 --> 01:12:46,809
I think that's the way that's actually a
was a great line saying that

1233
01:12:46,810 --> 01:12:50,180
well whatever two presidential
candidates that the building

1234
01:12:50,180 --> 01:12:54,800
it starts social philosophy that starts
bill Americans a

1235
01:12:54,800 --> 01:12:58,890
anyway yeah a let me just at one other
thing

1236
01:12:58,890 --> 01:13:02,610
that so the argument we've been talking
about this evening

1237
01:13:02,610 --> 01:13:06,170
say that no matter what your

1238
01:13:06,170 --> 01:13:09,940
you about a your moral loss P years

1239
01:13:09,940 --> 01:13:13,599
that the level than equality that we've
achieved in United States

1240
01:13:13,600 --> 01:13:16,710
is bad for almost all us yeah

1241
01:13:16,710 --> 01:13:21,780
that that we've actually got to a a push
the boundary beyond the point

1242
01:13:21,780 --> 01:13:26,599
all I'll we where where all this in a
way sup are so are

1243
01:13:26,600 --> 01:13:30,160
will separate so if we thought about
this in terms of our liking

1244
01:13:30,160 --> 01:13:32,190
self-interest the one percent thought
about

1245
01:13:32,190 --> 01:13:35,660
terms are there like self-interest they
would realize that stop probably in

1246
01:13:35,660 --> 01:13:36,000
their

1247
01:13:36,000 --> 01:13:41,140
this want her long-term study education
and socioeconomic status that

1248
01:13:41,140 --> 01:13:45,90
I always think up in this context it
turns out that in America right now

1249
01:13:45,90 --> 01:13:49,880
it looked at at students by test score
by socioeconomic background and tracked

1250
01:13:49,880 --> 01:13:50,170
them

1251
01:13:50,170 --> 01:13:54,30
for a number of years later it turns out
that in America right now

1252
01:13:54,30 --> 01:13:57,630
basically a a don rich kid

1253
01:13:57,630 --> 01:14:01,670
is more likely to graduate college that
any

1254
01:14:01,670 --> 01:14:04,780
the that us course market that

1255
01:14:04,780 --> 01:14:08,389
is telling is just enormous waste of
human potential that there are

1256
01:14:08,390 --> 01:14:11,690
millions probably tens of millions of
young Americans

1257
01:14:11,690 --> 01:14:15,480
who could be doing great things for
themselves and for for the rest of us

1258
01:14:15,480 --> 01:14:19,570
who because we have such unequal society
are being denied that

1259
01:14:19,570 --> 01:14:23,280
so that's that's not only quality
quality opportunity where again we are

1260
01:14:23,280 --> 01:14:23,900
performing

1261
01:14:23,900 --> 01:14:27,19
worst have any the back and at the
notion that

1262
01:14:27,20 --> 01:14:31,10
that you can divorce equality of results
from

1263
01:14:31,10 --> 01:14:34,700
quality opportunities to before 28 when
the results are so unequal

1264
01:14:34,700 --> 01:14:39,179
it turns into an equality opportunity as
well well they glow plug i

1265
01:14:39,180 --> 01:14:43,400
that's doing your joint venture with the
Union Theological Seminary

1266
01:14:43,400 --> 01:14:46,929
Joe Stiglitz kicked off the first
discussed

1267
01:14:46,930 --> 01:14:51,570
his book months ago will be continuing
that in filming

1268
01:14:51,570 --> 01:14:54,610
for our website economics organ

1269
01:14:54,610 --> 01:14:58,849
Joe Midwest question a lot to me you
afterwards and it's an invitation to the

1270
01:14:58,850 --> 01:15:01,160
next session which is George Akerlof
talking

1271
01:15:01,160 --> 01:15:04,250
about formation identity 28

1272
01:15:04,250 --> 01:15:10,780
up see questions I look at the last
decade I see

1273
01:15:10,780 --> 01:15:14,610
I Crean in debt run-up under the Bush
administration

1274
01:15:14,610 --> 01:15:19,480
the comparable amount under Obama
administration this is the stentorian

1275
01:15:19,480 --> 01:15:24,269
seems to me to be a legacy extraordinary
amount pump priming

1276
01:15:24,270 --> 01:15:29,400
fiscal pump-priming and yet we have I
see if economic problems

1277
01:15:29,400 --> 01:15:32,519
now are our sovereign debt is

1278
01:15:32,520 --> 01:15:37,970
roughly around GP and this is the point
at which

1279
01:15:37,970 --> 01:15:41,160
at least in Europe investors have begun
to question

1280
01:15:41,160 --> 01:15:45,19
acid so I'm curious

1281
01:15:45,20 --> 01:15:48,800
in what way future pump priming

1282
01:15:48,800 --> 01:15:52,170
would-be with would be poses

1283
01:15:52,170 --> 01:15:55,570
as a solution to problems that the past
pump priming

1284
01:15:55,570 --> 01:16:00,980
was not how can it be financed

1285
01:16:00,980 --> 01:16:04,70
notes I i don't buy the premise for
school

1286
01:16:04,70 --> 01:16:08,549
a the look we had the

1287
01:16:08,550 --> 01:16:13,250
a stimulus bill which was about a
hundred billion

1288
01:16:13,250 --> 01:16:17,90
up that's a very small part step none of
the rest

1289
01:16:17,90 --> 01:16:20,820
was the result a deliberate efforts at
economic stimulus

1290
01:16:20,820 --> 01:16:24,150
so where is this coming from I mean the
the rest a bit is we

1291
01:16:24,150 --> 01:16:27,889
we have a large amount the up that that
was

1292
01:16:27,890 --> 01:16:31,530
a lot of large about we ran deficits
even during good news

1293
01:16:31,530 --> 01:16:34,990
which witchy for people like myself
don't think it's a good idea I Y

1294
01:16:34,990 --> 01:16:36,240
because

1295
01:16:36,240 --> 01:16:39,790
because george bush wanted to give tax
cuts to high-income individuals and he

1296
01:16:39,790 --> 01:16:40,260
wanted to

1297
01:16:40,260 --> 01:16:44,160
to have a couple upon funded worse that
has nothing to do with pump priming

1298
01:16:44,160 --> 01:16:47,210
up and then we had a collapse of revenue

1299
01:16:47,210 --> 01:16:50,590
a that that took place after

1300
01:16:50,590 --> 01:16:53,770
2007 which is the result of a

1301
01:16:53,770 --> 01:16:58,590
severe downturn in financial crisis
which reflects at least in part

1302
01:16:58,590 --> 01:17:02,790
a at least in part I'll I'll

1303
01:17:02,790 --> 01:17:07,19
financial deregulation sale affiliate
understand that you need to

1304
01:17:07,20 --> 01:17:10,920
to actually have some some some
oversight on the financial system and

1305
01:17:10,920 --> 01:17:14,20
and and all of that so the the notion

1306
01:17:14,20 --> 01:17:17,280
this is that people talk as if we we've
got are

1307
01:17:17,280 --> 01:17:20,889
our current level of depth through
Keynesian policies we get very little to

1308
01:17:20,890 --> 01:17:22,690
do with we got to our current level up
that

1309
01:17:22,690 --> 01:17:25,769
through a combination of adult moralist
lippert

1310
01:17:25,770 --> 01:17:29,710
I'll policy starving the beast

1311
01:17:29,710 --> 01:17:33,460
when the economy was wasn't didn't need
it a budget deficit

1312
01:17:33,460 --> 01:17:37,210
coupled with mishandling up I'll
financial policy that

1313
01:17:37,210 --> 01:17:42,680
that helped create this economic crisis
up all that said

1314
01:17:42,680 --> 01:17:46,770
the notion that there's a that bad
things happen but there's some red line

1315
01:17:46,770 --> 01:17:48,490
on debt that work somewhere close to

1316
01:17:48,490 --> 01:17:52,710
is just not borne out by by yes in the
really poor piece of

1317
01:17:52,710 --> 01:17:57,480
that this this it look at look at who is
in trouble right now in terms of debt

1318
01:17:57,480 --> 01:18:01,400
and it turns out to be only only
countries that

1319
01:18:01,400 --> 01:18:05,780
that are no longer have their own
currencies are a special problem

1320
01:18:05,780 --> 01:18:08,940
mean that the at this countries that
still have their own currencies

1321
01:18:08,940 --> 01:18:12,889
monetary independence have repeatedly
both in current events

1322
01:18:12,890 --> 01:18:16,370
historically been able to handle debt
levels like we have at

1323
01:18:16,370 --> 01:18:20,260
is a fallacy that that partly propagated
by up

1324
01:18:20,260 --> 01:18:24,510
a well-known book world of right spot in
your book that's a very important this

1325
01:18:24,510 --> 01:18:27,900
that writer road outside hammering on
camera

1326
01:18:27,900 --> 01:18:31,309
of have a wonderful book about history
of crises

1327
01:18:31,310 --> 01:18:34,700
although there's some mistakes but then
after the book that throughout this

1328
01:18:34,700 --> 01:18:38,809
very casual paper which was just a which
was just some

1329
01:18:38,810 --> 01:18:42,240
rocker relations saying that its
countries with high debt

1330
01:18:42,240 --> 01:18:45,950
to have high seem to have low growth
with if you start to look at it looks

1331
01:18:45,950 --> 01:18:48,880
like it's actually the other way around
countries that have lot low growth and

1332
01:18:48,880 --> 01:18:49,940
up with high debt

1333
01:18:49,940 --> 01:18:54,160
really is it's really just not up to
standard there other United States that

1334
01:18:54,160 --> 01:18:58,340
debt GDP ratio at the end of world war
two about a hundred and thirty percent

1335
01:18:58,340 --> 01:19:01,840
and it was followed by the high-spirited

1336
01:19:01,840 --> 01:19:05,270
economic growth that we had and we
brought the DEP dau

1337
01:19:05,270 --> 01:19:08,690
a relatively quickly so a

1338
01:19:08,690 --> 01:19:13,450
this notion that that there is a any
magic number which there's a problem

1339
01:19:13,450 --> 01:19:19,500
a is just Paul the counterfactual that
way we you should ask questions could've

1340
01:19:19,500 --> 01:19:21,40
asked questions is

1341
01:19:21,40 --> 01:19:25,519
what would have happened teacher after
he has a %uh that whatever

1342
01:19:25,520 --> 01:19:29,40
goes up for a layup tied what i was
gonna say thats you think the quest

1343
01:19:29,40 --> 01:19:32,370
at what would have happened if

1344
01:19:32,370 --> 01:19:36,180
we hadn't a allow the deficit

1345
01:19:36,180 --> 01:19:40,120
to agrees that we are try to do the
Herbert Hoover

1346
01:19:40,120 --> 01:19:44,570
I kinda policy old slash slash in

1347
01:19:44,570 --> 01:19:49,40
and and kaback expenditures as the tax
revenue went down

1348
01:19:49,40 --> 01:19:54,470
we we did that experiment I and II a map
is force that experiment on a number of

1349
01:19:54,470 --> 01:19:55,380
other countries

1350
01:19:55,380 --> 01:19:59,610
I and the EC be in Europe have been
forcing that on Greece

1351
01:19:59,610 --> 01:20:03,49
and I week found two things about that
one

1352
01:20:03,50 --> 01:20:07,270
I the country's going to depression and
the other one is

1353
01:20:07,270 --> 01:20:10,550
a the deficit and

1354
01:20:10,550 --> 01:20:14,700
doesn't get down as much as anybody
hopes they keep saying over surprised

1355
01:20:14,700 --> 01:20:16,769
I'm surprised that they're surprised

1356
01:20:16,770 --> 01:20:20,580
I because it was perfectly anticipated

1357
01:20:20,580 --> 01:20:27,580
that they would fail thank you for the
opportunity

1358
01:20:32,000 --> 01:20:35,740
asking question answer my question is

1359
01:20:35,740 --> 01:20:40,650
slightly on a different topic but it
relates to the kinds of

1360
01:20:40,650 --> 01:20:43,969
economic ideas that some US groups have
been promoting

1361
01:20:43,970 --> 01:20:47,770
broad I'm international soon from
Georgia and the summer I went back

1362
01:20:47,770 --> 01:20:51,380
and I went to an economics camp which
surprisingly was funded by

1363
01:20:51,380 --> 01:20:54,930
T organization and they were promoting

1364
01:20:54,930 --> 01:20:58,360
libertarianism and written students and
there has been

1365
01:20:58,360 --> 01:21:01,500
an emergency orthodox economists back
home

1366
01:21:01,500 --> 01:21:05,830
which has led to deregulation most taxes
but also increase

1367
01:21:05,830 --> 01:21:09,120
inequality so my question is

1368
01:21:09,120 --> 01:21:12,390
how do you discuss alternatives market
fundamentalism

1369
01:21:12,390 --> 01:21:16,620
in post-soviet countries which are so
sensitive to this to their

1370
01:21:16,620 --> 01:21:20,300
historical says I missed which the
country was

1371
01:21:20,300 --> 01:21:25,910
Georgia well

1372
01:21:25,910 --> 01:21:30,490
I think part of the no it's not a
surprise

1373
01:21:30,490 --> 01:21:34,210
that people in countries where there was

1374
01:21:34,210 --> 01:21:37,410
excessive government intervention like

1375
01:21:37,410 --> 01:21:42,490
comfort some I'll would react by going
to the other extreme

1376
01:21:42,490 --> 01:21:46,120
so in that sense I'm not you know I'm
not surprised but

1377
01:21:46,120 --> 01:21:49,370
I'll hopefully in and particularly

1378
01:21:49,370 --> 01:21:52,750
there's a risk they go from one
orthodoxy

1379
01:21:52,750 --> 01:21:56,130
fundamentalism to another kind orthodox

1380
01:21:56,130 --> 01:21:59,740
fundamentalism and I hope

1381
01:21:59,740 --> 01:22:04,410
a that one of the things that i net is
trying to do is to try to say

1382
01:22:04,410 --> 01:22:09,160
market fundamentalism doesn't work just
like the kind of marxism

1383
01:22:09,160 --> 01:22:12,250
doesn't work you need to have a balanced
role

1384
01:22:12,250 --> 01:22:15,640
couple other things that we've been
talking about or some other rose the

1385
01:22:15,640 --> 01:22:16,670
government

1386
01:22:16,670 --> 01:22:20,750
him way we don't have to pick up

1387
01:22:20,750 --> 01:22:24,640
the move post but we don't have to
accept just a recession

1388
01:22:24,640 --> 01:22:28,620
libertarian would say just let the
market work in and there are people

1389
01:22:28,620 --> 01:22:32,19
who were upset that don't do anything
just let

1390
01:22:32,20 --> 01:22:37,870
a.m. said: in you know just let the the
ashes burning out a %uh

1391
01:22:37,870 --> 01:22:42,460
there was one op-ed in the New York
Times said this from Chicago

1392
01:22:42,460 --> 01:22:47,90
you're just let the markets the have
their way though all collapse in out of

1393
01:22:47,90 --> 01:22:48,130
the ashes

1394
01:22:48,130 --> 01:22:51,480
will come a new economy a I'll

1395
01:22:51,480 --> 01:22:55,769
you know in meanwhile there's been a lot
of suffering and say that's the H rap

1396
01:22:55,770 --> 01:22:56,320
brown

1397
01:22:56,320 --> 01:23:00,910
you like and I'll yep you know you're a
gen-y

1398
01:23:00,910 --> 01:23:04,360
burn baby burn nurses yeah it

1399
01:23:04,360 --> 01:23:07,429
and many the thing to say

1400
01:23:07,430 --> 01:23:12,190
it's a little bit narrower but now been

1401
01:23:12,190 --> 01:23:15,990
for now almost five years into this
crisis and

1402
01:23:15,990 --> 01:23:20,139
up different I economic ideas have

1403
01:23:20,140 --> 01:23:23,600
people have made predictions not us so
much

1404
01:23:23,600 --> 01:23:26,690
what the number for GDP per how things
will work

1405
01:23:26,690 --> 01:23:30,120
there were predictions that was a
widespread belief two-and-a-half years

1406
01:23:30,120 --> 01:23:30,960
ago that

1407
01:23:30,960 --> 01:23:34,150
their austerity programs would actually
expanding top

1408
01:23:34,150 --> 01:23:37,150
became the government other way well we
all have pretty clear evidence that

1409
01:23:37,150 --> 01:23:40,410
thats doesn't work that way up we have

1410
01:23:40,410 --> 01:23:43,790
don't the different different economic
doctrines have

1411
01:23:43,790 --> 01:23:47,310
in a lot of ways been subjected to a
test events and

1412
01:23:47,310 --> 01:23:50,670
what's has survived is a what what

1413
01:23:50,670 --> 01:23:54,940
what has worked as is at economic you a
view of how these things work that

1414
01:23:54,940 --> 01:23:58,599
that does support a case for government
intervention so

1415
01:23:58,600 --> 01:24:02,170
that's that it's not just let's have
sees abstract principles and throw them

1416
01:24:02,170 --> 01:24:02,730
out

1417
01:24:02,730 --> 01:24:05,879
you have to look at what has actually
worked in practice and its it's not the

1418
01:24:05,880 --> 01:24:07,40
libertarian

1419
01:24:07,40 --> 01:24:10,170
market fundamental issue and there's one
aspect that

1420
01:24:10,170 --> 01:24:13,970
picked up appointed mention with a bit
earlier

1421
01:24:13,970 --> 01:24:17,180
I'll want the standard doctrines

1422
01:24:17,180 --> 01:24:20,300
I'll you like that the libertarian is

1423
01:24:20,300 --> 01:24:24,380
a a more flexible wages

1424
01:24:24,380 --> 01:24:27,700
no unions economy is going to perform

1425
01:24:27,700 --> 01:24:32,70
better and the countries in which they
have stronger unions and

1426
01:24:32,70 --> 01:24:36,230
better job protection have done better
and responding

1427
01:24:36,230 --> 01:24:39,280
to the crisis United States which which

1428
01:24:39,280 --> 01:24:43,139
a is quote the best a country drizzle

1429
01:24:43,140 --> 01:24:46,230
labour market flexibility hasn't done

1430
01:24:46,230 --> 01:24:49,540
that well so it's another experiment
what's really interesting

1431
01:24:49,540 --> 01:24:54,150
from the point of view I'll have
economics economic theory a

1432
01:24:54,150 --> 01:24:57,580
is this crisis has been wonderful are

1433
01:24:57,580 --> 01:25:00,690
we've got a lotta a experiments and

1434
01:25:00,690 --> 01:25:04,969
and we will be able to make test a lot
different apostasy

1435
01:25:04,970 --> 01:25:08,170
and a a its X shedding a lot

1436
01:25:08,170 --> 01:25:12,640
a fight at a lot of different issues at
a great cost a lot of people in like

1437
01:25:12,640 --> 01:25:13,490
these countries

1438
01:25:13,490 --> 01:25:19,59
yep

1439
01:25:19,60 --> 01:25:22,130
this is a question restful tubal you

1440
01:25:22,130 --> 01:25:25,820
what is your view on the standard
decision theory

1441
01:25:25,820 --> 01:25:29,99
of subject is expected utility in
academic

1442
01:25:29,100 --> 01:25:32,740
economics is it does it describe reality

1443
01:25:32,740 --> 01:25:35,969
is it given especially considering your
experiences

1444
01:25:35,970 --> 01:25:39,430
in international economics and at

1445
01:25:39,430 --> 01:25:44,200
asymmetric integration and really
operating hours

1446
01:25:44,200 --> 01:25:48,870
while I

1447
01:25:48,870 --> 01:25:50,540
art it the

1448
01:25:50,540 --> 01:25:55,880
why do you cry Paul with what up

1449
01:25:55,880 --> 01:26:01,190
well we head a lot of economics is built
around the notion

1450
01:26:01,190 --> 01:26:07,889
this idealized home looking objects that
rational

1451
01:26:07,890 --> 01:26:10,930
man Scott's utility as a

1452
01:26:10,930 --> 01:26:15,420
really a clear a clear ordering a
preferences

1453
01:26:15,420 --> 01:26:20,880
and which sometimes even expresses a
mathematical function and makes rational

1454
01:26:20,880 --> 01:26:22,180
decisions given all of that

1455
01:26:22,180 --> 01:26:27,360
%uh which obviously is not scription a
literal description if anybody I this

1456
01:26:27,360 --> 01:26:32,80
the question its its it's a metaphor
that's helpful for organizing your thing

1457
01:26:32,80 --> 01:26:35,309
out about how decisions are made and

1458
01:26:35,310 --> 01:26:38,640
a I think the way it to to do it is to
always

1459
01:26:38,640 --> 01:26:42,170
always always think about it the
subjunctive

1460
01:26:42,170 --> 01:26:45,330
if that were the case the people were
like that then they would do this which

1461
01:26:45,330 --> 01:26:49,120
can offer you some guidance about how
they act up anyone

1462
01:26:49,120 --> 01:26:52,590
anyone who an economist who believes
that that the

1463
01:26:52,590 --> 01:26:57,870
the that that the expected utility model
a decision making under uncertainty

1464
01:26:57,870 --> 01:27:01,800
is a literal description %uh how people
make decisions

1465
01:27:01,800 --> 01:27:05,300
up probably should find another
profession but it's a a

1466
01:27:05,300 --> 01:27:08,630
but its but it but it nonetheless is
very useful

1467
01:27:08,630 --> 01:27:13,290
yes I'm let me say their two parts a
question wanna miss

1468
01:27:13,290 --> 01:27:16,730
a there's no

1469
01:27:16,730 --> 01:27:20,589
water research over the last thirty
years

1470
01:27:20,590 --> 01:27:23,790
that show that people's behavior

1471
01:27:23,790 --> 01:27:28,120
making decisions under uncertainty is
not well described

1472
01:27:28,120 --> 01:27:32,540
by model that calling you

1473
01:27:32,540 --> 01:27:36,519
a major that that there are sickening

1474
01:27:36,520 --> 01:27:41,220
significant deviations from the of
behavior from the prediction

1475
01:27:41,220 --> 01:27:45,370
that model on the other hand I'll

1476
01:27:45,370 --> 01:27:49,50
there when we think about

1477
01:27:49,50 --> 01:27:52,730
the I'll a

1478
01:27:52,730 --> 01:27:56,59
those you issue 00

1479
01:27:56,60 --> 01:28:00,80
weird probability distributions come
from

1480
01:28:00,80 --> 01:28:03,290
are the objective or the subjective how
you

1481
01:28:03,290 --> 01:28:06,300
where you where the that the view that

1482
01:28:06,300 --> 01:28:11,380
we ought to think of them as relatively
subjective that they reflect our

1483
01:28:11,380 --> 01:28:13,100
experience that the way we

1484
01:28:13,100 --> 01:28:17,800
see the world base their experience I
think that has a lot of persuasion

1485
01:28:17,800 --> 01:28:21,300
that to the extent that we use those
probabilities

1486
01:28:21,300 --> 01:28:24,470
and would be able according to them then

1487
01:28:24,470 --> 01:28:27,670
the subject to probably approach of that
which does make

1488
01:28:27,670 --> 01:28:31,140
more question over here

1489
01:28:31,140 --> 01:28:34,300
hi

1490
01:28:34,300 --> 01:28:38,170
thanks for coming as the bell discussed
earlier

1491
01:28:38,170 --> 01:28:41,230
the United States was evil you get there

1492
01:28:41,230 --> 01:28:45,240
Great Depression by government spending
were too

1493
01:28:45,240 --> 01:28:48,820
and on manufacturing in a large since by

1494
01:28:48,820 --> 01:28:53,530
currently we are ready at war and the
manufacturing landscape United States is

1495
01:28:53,530 --> 01:28:54,650
drastically different

1496
01:28:54,650 --> 01:28:58,150
was seven years ago and in light of
those

1497
01:28:58,150 --> 01:29:02,420
two points where would you direct this
government spent

1498
01:29:02,420 --> 01:29:05,620
I up

1499
01:29:05,620 --> 01:29:08,750
possession how I concluded

1500
01:29:08,750 --> 01:29:12,10
and this depression Allen book the

1501
01:29:12,10 --> 01:29:16,840
let me start the the good news is that
there are

1502
01:29:16,840 --> 01:29:21,230
some there are some natural recuperative

1503
01:29:21,230 --> 01:29:24,389
forces already at work so if you look a

1504
01:29:24,390 --> 01:29:27,720
with the very few houses in this country
for for

1505
01:29:27,720 --> 01:29:33,360
for for six years so we actually there
is no longer excess housing stock

1506
01:29:33,360 --> 01:29:36,429
probl we were anywhere close employment

1507
01:29:36,430 --> 01:29:39,960
with we would actually however housing
shortage and you can see housing is

1508
01:29:39,960 --> 01:29:41,100
starting to come back

1509
01:29:41,100 --> 01:29:44,130
household debt is down

1510
01:29:44,130 --> 01:29:48,100
but still high by historical lows but
not as much so a lot of reasons to think

1511
01:29:48,100 --> 01:29:49,520
that the economy

1512
01:29:49,520 --> 01:29:54,660
is somewhat on the mend I actually if
you look at the last year

1513
01:29:54,660 --> 01:29:57,910
it's been a significant improvement
labor markets so

1514
01:29:57,910 --> 01:30:01,840
some so that the point is that the hill
that needs to be clyde is not as steep

1515
01:30:01,840 --> 01:30:02,630
as it was

1516
01:30:02,630 --> 01:30:06,440
on you don't have to have a world war
two level stimulus

1517
01:30:06,440 --> 01:30:10,900
to get us back to a much much better
economic situation and this kind of

1518
01:30:10,900 --> 01:30:11,780
stimulus you

1519
01:30:11,780 --> 01:30:16,130
do what a lot that can be achieved just
by reversing this austerity

1520
01:30:16,130 --> 01:30:19,730
that we have in fact carried out so Joe
and I both

1521
01:30:19,730 --> 01:30:23,150
at this time we went down six hundred
thousand government jobs

1522
01:30:23,150 --> 01:30:26,450
as the state and local when we should be
up by normal

1523
01:30:26,450 --> 01:30:30,10
growth we should be up more than a
million sore right there you can

1524
01:30:30,10 --> 01:30:33,170
create a lot of

1525
01:30:33,170 --> 01:30:36,400
a you can create directly

1526
01:30:36,400 --> 01:30:39,650
million half 1.6 million 1.7 million
jobs

1527
01:30:39,650 --> 01:30:44,179
I had that including indirect effects
probably two-and-a-half million or more

1528
01:30:44,180 --> 01:30:48,520
just by basically restoring normal
levels of funding

1529
01:30:48,520 --> 01:30:52,310
for schools for road construction for
road repair

1530
01:30:52,310 --> 01:30:55,470
for for the functions of government that
we already have

1531
01:30:55,470 --> 01:31:00,560
we not we don't need to find exotic
projects we don't need to find a

1532
01:31:00,560 --> 01:31:04,600
something that we unprecedented spend on
just be turning to where we

1533
01:31:04,600 --> 01:31:08,800
the under normal operation gets us
probably with unemployment rate well

1534
01:31:08,800 --> 01:31:10,300
below seven percent

1535
01:31:10,300 --> 01:31:15,130
so it's not hard yet but to give I'm
coming to say I i think to get back to

1536
01:31:15,130 --> 01:31:18,930
relief full employment a we will need to
do

1537
01:31:18,930 --> 01:31:22,40
more than that I mean if you if you look
back

1538
01:31:22,40 --> 01:31:26,300
sick appears in the where we were 2007
where we are

1539
01:31:26,300 --> 01:31:29,810
likely to be up we won't have

1540
01:31:29,810 --> 01:31:33,280
real estate anything like we had before
because we were

1541
01:31:33,280 --> 01:31:36,750
irrationally exuberant we won't have

1542
01:31:36,750 --> 01:31:40,120
consumption I'll like we had

1543
01:31:40,120 --> 01:31:43,940
a 40 savings rate you know whether it's
pouring it

1544
01:31:43,940 --> 01:31:47,750
56 XO going to be well

1545
01:31:47,750 --> 01:31:52,450
where we were I'll and we are going to
continue to have

1546
01:31:52,450 --> 01:31:55,950
the problem with the trade deficit
almost surely a mess

1547
01:31:55,950 --> 01:32:00,120
things change very dramatically so up

1548
01:32:00,120 --> 01:32:04,420
the good news is that we have lots of
things that we need to invest it

1549
01:32:04,420 --> 01:32:08,570
a education infrastructure retrofitting
the economy for global warming

1550
01:32:08,570 --> 01:32:11,910
you know that their locks ok needs that
we have

1551
01:32:11,910 --> 01:32:17,250
so in my mind a particularly since we
can borrow now with negative real

1552
01:32:17,250 --> 01:32:18,610
interest rates

1553
01:32:18,610 --> 01:32:23,339
I there there is a we don't need to do
anything exotic

1554
01:32:23,340 --> 01:32:27,250
and there is really let me make another
important when there's a

1555
01:32:27,250 --> 01:32:30,260
this law a you

1556
01:32:30,260 --> 01:32:33,410
that it was war spending that got us out

1557
01:32:33,410 --> 01:32:36,430
we're spending is that any different
from other kind is going to accept

1558
01:32:36,430 --> 01:32:40,310
in one way you don't have anything left
over wing after you drop those

1559
01:32:40,310 --> 01:32:44,880
bombs I whereas if you actually bill
grow

1560
01:32:44,880 --> 01:32:47,950
you have something leftover so

1561
01:32:47,950 --> 01:32:51,280
I I even if you don't do a perfectly

1562
01:32:51,280 --> 01:32:54,769
X wilford and expected that we're
spending so

1563
01:32:54,770 --> 01:32:58,570
so the fact is that all this cum
spending would actually

1564
01:32:58,570 --> 01:33:02,349
put us in a better state then the kinda
spending that we had to do in world war

1565
01:33:02,350 --> 01:33:04,580
two

1566
01:33:04,580 --> 01:33:07,840
okay I E running short on time here

1567
01:33:07,840 --> 01:33:10,860
my staff today

1568
01:33:10,860 --> 01:33:15,420
back to me said you have to great

1569
01:33:15,420 --> 01:33:19,860
original thinkers and Nobel laureates on
stage with you

1570
01:33:19,860 --> 01:33:23,130
Rob give them the wheel

1571
01:33:23,130 --> 01:33:26,320
the last question for the Institute in
New

1572
01:33:26,320 --> 01:33:29,759
new economic thinking what new economic
thinking

1573
01:33:29,760 --> 01:33:33,140
do you think we should pursue develop
enhance

1574
01:33:33,140 --> 01:33:36,200
questions for each one

1575
01:33:36,200 --> 01:33:39,809
while II

1576
01:33:39,810 --> 01:33:43,770
your part problems i think im you really
want to ask a question

1577
01:33:43,770 --> 01:33:46,800
younger guy but there is this prop up a

1578
01:33:46,800 --> 01:33:50,350
having been in it so long you have your
own set way of thinking

1579
01:33:50,350 --> 01:33:54,770
but look where

1580
01:33:54,770 --> 01:33:58,340
I think we need we need a lot more

1581
01:33:58,340 --> 01:34:01,760
a lot more a lot more evidence-based
this

1582
01:34:01,760 --> 01:34:05,850
their a worse the we're seeing a
renaissance certain areas I'm interested

1583
01:34:05,850 --> 01:34:07,580
Rex seeing a lot of

1584
01:34:07,580 --> 01:34:10,650
really good empirical work on things
like if it's a fiscal policy which was

1585
01:34:10,650 --> 01:34:12,139
much neglected

1586
01:34:12,140 --> 01:34:16,310
a and neglect the party because it
wasn't did seem to be a live issue but

1587
01:34:16,310 --> 01:34:17,290
also because the

1588
01:34:17,290 --> 01:34:20,870
at this sir crippling orthodoxy up

1589
01:34:20,870 --> 01:34:24,450
believing that everything must be
derived from

1590
01:34:24,450 --> 01:34:28,309
rational behavior of individuals and if
you can't you can't drive it that way

1591
01:34:28,310 --> 01:34:29,570
that must not exist

1592
01:34:29,570 --> 01:34:33,380
and if we if we adopt have a looser
jointed

1593
01:34:33,380 --> 01:34:36,480
more open-minded way up up

1594
01:34:36,480 --> 01:34:39,540
approaching how the economy works that I
think we

1595
01:34:39,540 --> 01:34:43,430
we open the door I don't think we're
ready for a lot all

1596
01:34:43,430 --> 01:34:46,510
grand theories at this point I think we
have the opportunity

1597
01:34:46,510 --> 01:34:50,400
have a lot of of people looking at how
things actually work

1598
01:34:50,400 --> 01:34:53,940
what actually happens recess what
actually happened recovery what happens

1599
01:34:53,940 --> 01:34:57,30
when when when spending is is increased
or cut

1600
01:34:57,30 --> 01:35:00,150
I for getting a lot of natural
experiment setup

1601
01:35:00,150 --> 01:35:03,670
that that times are good for generating
interesting data

1602
01:35:03,670 --> 01:35:06,870
and that's that's where I would go I'm
sure there's a lot more stuff economic

1603
01:35:06,870 --> 01:35:07,830
history

1604
01:35:07,830 --> 01:35:11,100
history yes at weather was great like
Ashley

1605
01:35:11,100 --> 01:35:15,90
two things one was with Mark Thomas
because if you block

1606
01:35:15,90 --> 01:35:18,660
said that after attending a conference
he said that new economic thinking

1607
01:35:18,660 --> 01:35:22,170
seems to consist in large part of the
reading old books with the I

1608
01:35:22,170 --> 01:35:25,310
which is true and what does a lot of
there was a lot of forgetting the others

1609
01:35:25,310 --> 01:35:27,350
yet we've learned that history

1610
01:35:27,350 --> 01:35:31,400
history is a really powerful tool that
that in some ways it's

1611
01:35:31,400 --> 01:35:34,969
is we've been

1612
01:35:34,969 --> 01:35:40,520
there was a lot a lot a pic lot of
empirical work in economics was

1613
01:35:40,520 --> 01:35:44,110
a being dictated by where the day they
were easy

1614
01:35:44,110 --> 01:35:47,540
easy to get them cleaned and which means
modern times

1615
01:35:47,540 --> 01:35:50,790
but it turns out that a lotta the
interesting events

1616
01:35:50,790 --> 01:35:55,550
mean going further back at further
afield also battle with special thing

1617
01:35:55,550 --> 01:35:59,170
cry international were better about this
but the

1618
01:35:59,170 --> 01:36:02,180
its uptick in this country there's a
tendency to have

1619
01:36:02,180 --> 01:36:06,330
to to do it now research as if america
is the only country

1620
01:36:06,330 --> 01:36:09,650
at the fact that there's a lot of
experience is out there

1621
01:36:09,650 --> 01:36:13,129
economics principles to tend to stay the
same

1622
01:36:13,130 --> 01:36:17,90
across time across space stuff forever
not everywhere but

1623
01:36:17,90 --> 01:36:21,190
you can learn a lot if we have paid more
attention

1624
01:36:21,190 --> 01:36:24,559
with a be paid more attention to Japan

1625
01:36:24,560 --> 01:36:29,370
its experiences the nineties we wouldn't
be doing such a bad job here right now

1626
01:36:29,370 --> 01:36:32,640
or well I don't know where to begin I
well

1627
01:36:32,640 --> 01:36:36,610
and should we have only a limited amount
of time it will take a couple hours

1628
01:36:36,610 --> 01:36:42,89
to to really talk about what are to
begin over to a new economic thinking

1629
01:36:42,90 --> 01:36:45,130
I'll

1630
01:36:45,130 --> 01:36:48,460
the point where I agree very strongly
with Paul is that

1631
01:36:48,460 --> 01:36:51,840
there needs to be a more openness in the
way

1632
01:36:51,840 --> 01:36:55,730
the that I'll economics is approached

1633
01:36:55,730 --> 01:36:59,200
I'll I'm not sure up

1634
01:36:59,200 --> 01:37:02,219
where whether the rule really relevant

1635
01:37:02,219 --> 01:37:06,820
focus ought to be on a pier X you know a
lot of the problem is the

1636
01:37:06,820 --> 01:37:10,639
you read the with brought to be rings
seeing the world

1637
01:37:10,640 --> 01:37:14,190
led them to a look at the world through

1638
01:37:14,190 --> 01:37:18,99
the wrong appear collapse so a

1639
01:37:18,100 --> 01:37:22,690
I'll there or you know for 25 years 30
years

1640
01:37:22,690 --> 01:37:26,179
there has been a lot of empirical work

1641
01:37:26,180 --> 01:37:29,940
in economics driven

1642
01:37:29,940 --> 01:37:34,549
under you with the view that markets are
rational everybody's rational rational

1643
01:37:34,550 --> 01:37:35,820
expectations

1644
01:37:35,820 --> 01:37:40,750
so they have this very strong lands and
anything that was outside that lens

1645
01:37:40,750 --> 01:37:45,100
somehow they couldn't see and the shape
told the impure X

1646
01:37:45,100 --> 01:37:48,430
into that will the that

1647
01:37:48,430 --> 01:37:53,40
that frame up there is even even today
there's a professor at Harvard even

1648
01:37:53,40 --> 01:37:55,940
after the crisis has been writing a
paper

1649
01:37:55,940 --> 01:37:59,129
a saying that a there's this notion

1650
01:37:59,130 --> 01:38:02,469
expansionary contraction I'll that

1651
01:38:02,469 --> 01:38:06,120
that somehow austerity actually weeks to
economic growth

1652
01:38:06,120 --> 01:38:09,519
in a number of instances you know it
well but that's that's well

1653
01:38:09,520 --> 01:38:12,820
while we've had a I guess is a triumph
that

1654
01:38:12,820 --> 01:38:15,759
base nobody believes that anymore
because they've actually looked at the

1655
01:38:15,760 --> 01:38:16,750
evidence and

1656
01:38:16,750 --> 01:38:20,570
it but that's stopping for keep our here
writing papers along those lines but

1657
01:38:20,570 --> 01:38:23,820
it but yep we learn something there ya

1658
01:38:23,820 --> 01:38:28,400
but but I I guess what what it seems to
me is is that what is really am

1659
01:38:28,400 --> 01:38:32,780
important is changing the the mic set
with which we approach

1660
01:38:32,780 --> 01:38:36,750
the data and the way we see the world
within

1661
01:38:36,750 --> 01:38:40,910
the different fuels have economic me
seems to be very clear the field that is

1662
01:38:40,910 --> 01:38:41,349
done

1663
01:38:41,350 --> 01:38:45,930
miserably is macroeconomics and monetary
economics

1664
01:38:45,930 --> 01:38:51,370
I'll and forward somewhat lesser extent
but also financial economics

1665
01:38:51,370 --> 01:38:54,950
you know these were fields that
macroeconomics

1666
01:38:54,950 --> 01:38:59,250
had the view you know that bob was don't
exist

1667
01:38:59,250 --> 01:39:03,230
I that a markets are efficient

1668
01:39:03,230 --> 01:39:06,940
and it was really the central doctrine a
very large fraction of the

1669
01:39:06,940 --> 01:39:08,339
macroeconomics

1670
01:39:08,340 --> 01:39:12,600
a profession they actually have models
used by central banks

1671
01:39:12,600 --> 01:39:17,240
in which there were no banks United x3
pick you your

1672
01:39:17,240 --> 01:39:20,679
I how could a central bank I'll

1673
01:39:20,680 --> 01:39:24,150
actually talk about macroeconomics
without banks well

1674
01:39:24,150 --> 01:39:27,420
a the d.a and

1675
01:39:27,420 --> 01:39:32,280
their predictions were very bad and
their ability to respond to the crisis

1676
01:39:32,280 --> 01:39:35,550
onto her what should happen was not very
good

1677
01:39:35,550 --> 01:39:38,800
and when it happened they would make
statements like oh don't worry

1678
01:39:38,800 --> 01:39:43,90
the crisis is contained I'll when it was
obviously wasn't

1679
01:39:43,90 --> 01:39:46,940
so in my mind as we look across the
fields the

1680
01:39:46,940 --> 01:39:50,629
big failure was in macroeconomics

1681
01:39:50,630 --> 01:39:53,930
in finance with that said you know
financial markets

1682
01:39:53,930 --> 01:39:57,190
had all these efficient properties and
and

1683
01:39:57,190 --> 01:40:00,790
and you know a lot people actually
believe those models

1684
01:40:00,790 --> 01:40:04,420
and that that was really the big mistake
I'll

1685
01:40:04,420 --> 01:40:08,130
both in the public and the private
sector and and and with enormous

1686
01:40:08,130 --> 01:40:09,300
consequences

1687
01:40:09,300 --> 01:40:12,530
yellow didn't read those old books or
those old

1688
01:40:12,530 --> 01:40:15,790
the art thing is that you had a a few

1689
01:40:15,790 --> 01:40:19,230
a macroeconomics based on what was

1690
01:40:19,230 --> 01:40:23,490
widely accepted dollars before these
super rational expectations thing

1691
01:40:23,490 --> 01:40:26,550
came in I S 11 you know that

1692
01:40:26,550 --> 01:40:29,790
I think then she does spectacularly well

1693
01:40:29,790 --> 01:40:33,650
in this crisis missus been axed the a

1694
01:40:33,650 --> 01:40:37,280
that they were I was that I think myself
as well people did that but came in with

1695
01:40:37,280 --> 01:40:38,210
these

1696
01:40:38,210 --> 01:40:41,840
things that seem to cert to a lot of
people at the notion that

1697
01:40:41,840 --> 01:40:44,960
big budget deficits would not drive up
interest rates that

1698
01:40:44,960 --> 01:40:49,000
big increases in the in the monetary
base would not be inflationary that

1699
01:40:49,000 --> 01:40:52,540
that this would in fact be a much slower
recovery than normal because be up

1700
01:40:52,540 --> 01:40:54,60
against the zero lower bound

1701
01:40:54,60 --> 01:40:58,530
streets up as ulcers propositions which
it turned out to be

1702
01:40:58,530 --> 01:41:02,599
borne out by a pet sits in a funny way
this is that a period of trial for

1703
01:41:02,600 --> 01:41:03,870
macroeconomic theory

1704
01:41:03,870 --> 01:41:06,860
except its macroeconomic theory that a
lot of the profession through in the

1705
01:41:06,860 --> 01:41:08,710
wastepaper basket even though it feels

1706
01:41:08,710 --> 01:41:11,840
it was still perfectly valid and then
they refer back to

1707
01:41:11,840 --> 01:41:15,920
you mention about economic history the
notion Paul

1708
01:41:15,920 --> 01:41:19,570
their up there were no bubbles

1709
01:41:19,570 --> 01:41:23,679
up are with three quite remarkable
because anybody who

1710
01:41:23,680 --> 01:41:27,650
have read it I had a when my teachers
was Charlie Kindel burger

1711
01:41:27,650 --> 01:41:31,400
with wrote this a what it's all about
yep about

1712
01:41:31,400 --> 01:41:34,559
the Historia pat nixon hispanics

1713
01:41:34,560 --> 01:41:39,50
crash yet and that they've happened
since the beginning of capitalism

1714
01:41:39,50 --> 01:41:42,690
and one of the things that was so
interesting a in this book

1715
01:41:42,690 --> 01:41:46,89
is he describes in each battle

1716
01:41:46,90 --> 01:41:49,270
bubble CJ these booms that

1717
01:41:49,270 --> 01:41:52,969
the people in the boo knew that there
have been previous

1718
01:41:52,969 --> 01:41:56,20
bubbles that broke but they thought they
were

1719
01:41:56,20 --> 01:41:59,290
smarter than their parents I'll and that

1720
01:41:59,290 --> 01:42:03,420
they themselves were not in one of these
bubbles and

1721
01:42:03,420 --> 01:42:07,670
that was exactly what happened in this
case that a few other people

1722
01:42:07,670 --> 01:42:11,600
in the middle with the public yes of
course back in the Middle Ages

1723
01:42:11,600 --> 01:42:14,830
up twenty years ago we had bubbles but

1724
01:42:14,830 --> 01:42:18,930
a we're so much smarter than our parents
and our grandparents and

1725
01:42:18,930 --> 01:42:20,219
great-grandparents

1726
01:42:20,219 --> 01:42:24,780
so we would never ball for the kinds of
things that they felt for but of course

1727
01:42:24,780 --> 01:42:26,940
we vote for things that were just

1728
01:42:26,940 --> 01:42:31,540
a little bit more complicated but in
many ways very similar to the same kinds

1729
01:42:31,540 --> 01:42:32,719
of

1730
01:42:32,719 --> 01:42:35,910
I perhaps they come into for birdie made
of all

1731
01:42:35,910 --> 01:42:40,260
all the way onto to more sophisticated
things

1732
01:42:40,260 --> 01:42:44,140
Sol I'll take from this concluding
question

1733
01:42:44,140 --> 01:42:48,480
notion we should try to inoculate people

1734
01:42:48,480 --> 01:42:52,120
position but they only see what they
believe

1735
01:42:52,120 --> 01:42:55,630
we should try to bring to

1736
01:42:55,630 --> 01:42:58,920
believe HTC here it

1737
01:42:58,920 --> 01:43:04,950
if not I'll

1738
01:43:04,950 --> 01:43:09,750
a little bit humility here is is a is a
very powerful thing

1739
01:43:09,750 --> 01:43:13,370
a and see hookers

1740
01:43:13,370 --> 01:43:17,120
a go to a actually but the pictures that

1741
01:43:17,120 --> 01:43:21,540
accepting that maybe maybe you don't
have the truth

1742
01:43:21,540 --> 01:43:25,340
with with to capitol teams that made the
that maybe the

1743
01:43:25,340 --> 01:43:29,950
this is beautiful models that you in
teaching are not the only way

1744
01:43:29,950 --> 01:43:34,300
to see the world up we had this
tremendous

1745
01:43:34,300 --> 01:43:37,500
doctrinaire it's about about backwards a

1746
01:43:37,500 --> 01:43:40,570
amazing without any wearing ribbons

1747
01:43:40,570 --> 01:43:45,80
with that without me with only at pickle
trials to to justify it and

1748
01:43:45,80 --> 01:43:49,000
a your intellectual arrogance is is
almost certainly hands on so it was

1749
01:43:49,000 --> 01:43:49,969
quite remarkable

1750
01:43:49,969 --> 01:43:54,330
is that up some above the advocates
those

1751
01:43:54,330 --> 01:43:58,400
models that failed so badly have
actually written

1752
01:43:58,400 --> 01:44:01,660
that this is the area even now the
Triumph

1753
01:44:01,660 --> 01:44:07,90
up macroeconomics so what it shows is
that

1754
01:44:07,90 --> 01:44:10,600
I'll some parts love economics are

1755
01:44:10,600 --> 01:44:14,179
immune to a

1756
01:44:14,179 --> 01:44:17,460
I reality and and they are

1757
01:44:17,460 --> 01:44:20,880
a religion nada that a science a

1758
01:44:20,880 --> 01:44:24,130
and hopefully iiNet will be able to

1759
01:44:24,130 --> 01:44:27,929
make a dent in in that kinda armor

1760
01:44:27,929 --> 01:44:31,190
yes that's what

1761
01:44:31,190 --> 01:44:35,70
its at at at those people will never
admit

1762
01:44:35,70 --> 01:44:39,820
that they were wrong but it's that's the
old library everything about

1763
01:44:39,820 --> 01:44:42,830
for for like me everything about help

1764
01:44:42,830 --> 01:44:46,710
was much like this that science
progresses funeral funeral

1765
01:44:46,710 --> 01:44:49,760
but

1766
01:44:49,760 --> 01:44:56,760
well I think tonight

1767
01:44:57,590 --> 01:45:01,179
are from a funeral I think tonight you
brought a lot of life

1768
01:45:01,179 --> 01:45:07,30
to this audience the questions a
economics the challenge by net

1769
01:45:07,30 --> 01:45:10,170
grateful to you bowl next discussion

1770
01:45:10,170 --> 01:45:10,650
thanks all