To help us answer some of the
biggest questions right now about the
U.S. economy, the recovery
and the jobs market.
We're talking to Nobel
Laureate Joseph Stiglitz.
Where's the economy
headed right now?
No one thinks that it's
a v shaped recovery.
You have to be worried that the pandemic
will be with us for a long
time. But then even after the
pandemic is put under control, whatever
that means, the economic recovery is
not going to be easy.
What do you see as sort of
the worst case scenario for the economy?
The worst case scenario
is another Great Depression.
We are already at the levels
of unemployment associated with the
Great Depression.
People without income are going to
be using up their savings account.
Companies are balance sheets are
going to be worsened.
Many companies will go bankrupt.
Banks will find that many of the
loans they may will not be repaid.
And that's the kind of cascade of
effects from which it's very hard
to emerge without
government assistance.
If you look at the stock
market, it's doing pretty well.
I mean, stocks have been up over the
past month even as we had these
terrible unemployment numbers.
Can the market continue to go up
while the economy is is so bad.The
government has put almost three trillion
dollars of money into the
economy. It's clearly not
going to expanding demand.
And right now, people are using some
of that money to build up cash
buffers to protect themselves because they
don't know how long this
pandemic is going to last.
And as they think about where to
put their money that's put into cash
buffers. One of the places
will be the stock market.
Do you think that all those trillions
of dollars in stimulus from both
Congress and the Fed have done enough
to help the economy get through
this time?
No, clearly not. The problem wasn't just
the amount of money, it's how
the programs were designed.
The money didn't go to
where it was most needed.
It was supposed to go
to protect the most vulnerable.
The most vulnerable won't be
getting checks until September.
The PPP program, the program
for small business, was particularly
badly designed because you had to
apply through the banks, the
businesses with the best connections with
the banks got at the head
of the line. And those
weren't the smallest businesses.
They weren't the people who
needed it the most.
They were the richest businesses.
What's happened in the United States
compared to other countries like
Denmark and New Zealand who did design
the programs in the way that I
would have recommended.
They design programs where the money
went to corporations directly to
the workers. Each company will make
up for your shortfall of revenue,
for your expenditures, for your workers
who are paid under, say,
ninety thousand and will pay eighty
five percent of that amount.
So long as you keep those on
and we'll give you some money for
overhead. Those have succeeded in keeping
the tie between the workers
and the companies. So they've avoided
the soaring unemployment in the
United States. Our programs have failed
and we have to admit that.
How can you get the money into
the hands of small businesses and
workers who are
struggling the most?
The irony is it's more important United
States than it is in other
countries because in the United
States, American workers depend on
health insurance provided
by their employers.
And if they lose their jobs, they're
going to wind up on Medicaid.
Another example, we could have used
the data processing companies a
lot more. These are
just administrative details, implementation.
They have a lot. They
have all the data.
The data is not that complex.
So we have all the data.
Why do we have to go through the
banks, you know, other than to give
them a bailout? We saw
the stimulus checks to individuals.
Do we need another
round of stimulus checks?
Is it time for a
longer term universal basic income?
Yes, I think we do need that.
I'm not a big fan of you
beyond universal basic income over the long
run, because I think our society needs
a lot of things to be done.
People want to work.
Work is part of
meaning, meaning in life.
But right now there isn't work.
And we have to recognize that
reality over the long term.
We have to make that
transition to a green economy.
We're making a transition
to a knowledge economy.
We need infrastructure.
You know, I can think of all
so many things that our society needs
and when you have unmet needs
and workers who want to work.
Why not put those two together.
When we talk about inequality, there was
a study by the FED that
showed that households that made
under forty thousand dollars were
the ones who were laid off.
So how do you help those workers
and how do you address that growing
economic gap. You figure
in a family
Most of these workers, whether you
know, two earners, maybe both of
them, have lost their jobs.
The devastating devastation that
that is bringing about.
You know, I've heard lots of problems
of people not being able to get
their unemployment insurance benefit, not
being able to register
first, taking weeks to actually get
registering, then after they get
registered, taking weeks and weeks
to get the payments.
And that's even in the better run
states, let alone in some of the
states that are not well-run.
So we clearly have a problem.
And that's one of the things that
we should be allocating money is to
fix those problems quickly, because asking
these people to depend on
soup kitchens for survival
just isn't right.
We've also seen childcare kind of collapse
as many workers have had to
stay home and take care of
their children or essential workers have
gone to work and not had childcare.
There's no paid sick leave.
You know, is there a broader policy
shift that needs to happen to
protect some of those those
essential workers and workers more
broadly? Congress recognized the problem and
say we don't want these
workers there. We want give
them paid sick leave.
But they have COVID 19.
They passed a law. And then
under the lobbying of our largest
corporations, the richest corporations, those
with more than 500
workers, they said we're going
to exempt those companies.
So the result of that is that
they exempted on that one provision, 48
percent of all workers.
So what does that do?
Not only is it cruel to these
workers making them face the hard
choice of coming down with the disease
or food for their family, it's
unfair that in a civilized society,
you make people make that life
and death choice. But since some of them
are going to go to work, it
helps spread the disease.
What does the future
of education look like?
Should tuition be lowered
as classes are online.
How does the system look to you.
In our bailouts.
We didn't help the universities.
We gave money to some dying industries,
but not to the industries of
the future, including higher education
and higher education is being
devastated because every major source
of revenue is going down.
And so I think we're going to
probably be moving more to a mixed
models where we use more distance
learning, but also smaller class
interaction. What kind of education and
training is going to be
necessary for the workforce
after the pandemic?
I mean, are there certain jobs that
are never going to come back?
And how do we
see that workforce changing?
Those graduating from high school and
college right now are facing a
very tough job market.
They're not eligible for unemployment
insurance, so they're caught in
between. And one of the things
that I've proposed is something that
Europe has done is to say every
young person should be either in
school on a job or
in training in some way.
You know, these are valuable years.
You shouldn't be wasting those
years feeling disconnected, resentful.
So I would put it really a high
priority on that kind of a program.
We will still have
an important service sector.
You know a lot of people have
commented that you can't do dentistry
by remote. There's certain things where
you actually have to get in.
And so we are still going to
have to have lots of service training.
So a lot of that can be done
remotely even if you can't practice it.
I mean, in the end, you you
will have to have practicals, get your
hands dirty, as we say.
Is it time for policymakers to
just forgive that one point five
trillion dollars student
loan debt altogether?
What should we do
with student loans?
We will need to have ways of
reducing the burden of those loans.
You know, Australia has a very
good system based what they call
income contingent loans, where the amount
you repay is related to
your income. And after 20 years, if
you've had the bad glossary or
you made a choice to go into
the ministry or education or some other
sector, that doesn't pay very well,
then they forgive the loans.
You've also warned
about protectionism.
You know, we're hearing increasingly
about moving supply chains back
to the U.S., limiting immigration.
What would this do for the economy?
The pandemic has made it very
clear we need more global cooperation,
not less. We have gone through
what I sometimes called hyper
globalization. We didn't focus on the
importance of resilience in our
supply chain. This is not only
true in global supply chains, but
every aspect of our economy.
We make cars without spare tires.
But as we bring jobs back, much of
that work will be done by robots.
And so we shouldn't think of this.
As a job program,
it's a resilience program.
And in fact, many aspects of the
of this kind of protectionism are
going to backfire
if others reciprocate.
Our exports will go down.
We import so many, much more
medical supplies than we export.
So if we if others reciprocate with
the same kind of ugliness, we are
going to be in a really bad shape.
