- Joseph StiglitzNobel Prize-winning economist, Columbia University professor and chief economist for the Roosevelt Institute. He served as chair of the Council of Economic Advisers under President Bill Clinton.
In the updated edition of Nobel Prize-winning economist Joseph Stiglitz’s new book, “Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump,” he argues that when Trump became president, he “threw a hand grenade into the global economic order.” We speak with Stiglitz about the impact of free trade agreements that Trump has criticized.
AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman, with Nermeen Shaikh. We’re speaking with Nobel Prize-winning economist Joseph Stiglitz, Columbia University professor, chief economist at the Roosevelt Institute, served as chair of the Council of Economic Advisers under President Bill Clinton.
NERMEEN SHAIKH: Joseph Stiglitz is the author of numerous books, including, most recently, Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump, which is an update and expansion on his landmark book that played a key role in the debate over globalization, which was published in 2001.
The introduction to the new book begins, quote, “Donald J. Trump became president of the United States on January 20th, 2017, and threw a hand grenade into the global economic order.” So, Professor Stiglitz, could you elaborate on that? What precisely did Trump do that threw a hand grenade into the global economic order?
JOSEPH STIGLITZ: Yeah, for 60 years, since World War II, we’ve been trying to create a rules-based system, a global economic system. We understand that what makes our economy function is what we call the rule of law, and what is true domestically is also true internationally. It’s important to have rules by which we govern our relations with other countries.
What he has announced, that he is going to not obey those rules, he’s going to reject the treaties that we’ve had in the past. He’s going to go from what is called a multilateral system, where we all work together, to trying to deal country by country, and basically throw out what has been achieved over a 60-year period.
NERMEEN SHAIKH: Well, one of the things that you also note in the book is that many people—there are very good reasons that many people have been disenchanted with globalization in the form it took, especially because of the resulting inequality. And you write that Trump took advantage of this discontent, crystallized and amplified it. So could you talk about the nature of the discontent that globalization engendered and how Trump took advantage of it? I mean, what precisely did he use to make himself and his platform so popular?
JOSEPH STIGLITZ: Well, you know, the basic thing is that he blamed others for the problems that we have in the United States. We have a problem, you know, let’s face it. The typical income, median income, of a full-time male worker—and the workers who have a full-time job are the lucky ones—is at the same level it was 42 years ago. At the bottom, real wages in the United States are at the same level they were 60 years ago. So, our economy has not served large fractions of our population.
He grasped that. And rather than saying, you know, “What have we not done right?” he said, “It’s those foreigners. Let’s build a wall.” He says globalization is unfair to the United States. I wrote in the original version of my book that globalization was unfair to the developing countries. I saw it with my own eyes, as I was chief economist of the World Bank. You know, you go to sub-Saharan Africa. You see other places where we took advantage of others. And so you ask the question: How could it be unfair to the United States and unfair to those in the developing countries? That was one of the reasons—one of the reasons I wrote the book, to grapple with that question.
NERMEEN SHAIKH: Well, also, the United States was the main architect of the global economic order after the Second World War.
JOSEPH STIGLITZ: Well, that was the irony. He said we got snookered, that these treaties, these agreements, like NAFTA, were the worst agreements ever, and suggested that our trade negotiators were snookered by these smart negotiators from Mexico or Africa. Let me—it’s laughable. You know, I’ve watched these trade negotiations. We got what we wanted.
The problem was with what we wanted. And there, the agenda had been set by our corporations. So, what is true is that workers in the United States and workers in the developing countries were often disadvantaged. They were worse off. The big winners were our corporations.
And so, then this fits back with our tax discussion. Who is getting the tax cut? The corporations. So they won on globalization, and he’s identified globalization as a problem and says, “What am I going to do? Give the people who shaped it against the interest of workers—we’ll give them a big tax cut and raise the taxes on ordinary workers who are struggling so hard.”
AMY GOODMAN: You were the chair of the Council of Economic Advisers for President Clinton. It was President Clinton, to the horror of many, who pushed through NAFTA, that then Donald Trump campaigned against very successfully, saying, “This doesn’t advantage workers.” I mean, whether he’s doing that now, of course, that’s another story. But what about that, this laying of the groundwork?
JOSEPH STIGLITZ: Yeah, that was a problem. And there was a hope then, by some people, that what we call trickle-down economics would work, that if you made the economy pie bigger, everybody would benefit. Twenty-five years after NAFTA, we know that that’s not true. We should have known then that it was not true.
AMY GOODMAN: And many did. Many fought it tooth and nail.
JOSEPH STIGLITZ: And many did. Yeah, and many did. But now we’re 30 years later, 25 years later, and it’s unambiguously clear trickle-down economics doesn’t work. But what does that mean? That means we have to structure our economic policies to make sure that we have shared prosperity. And you don’t do that by giving a tax cut to the big winners and raising taxes on those who have not done very well. So, you know, your economic policy has to respond to the way our economic system has been working.
AMY GOODMAN: Professor Stiglitz, before we go, you said President Trump is unfit to serve. Why?
JOSEPH STIGLITZ: Well, the decisions about where the economy is going are very complex. He doesn’t understand them. And rather than approach this with analysis—so, for instance, if you began trying to analyze the problem, you would say, “OK, there’s a problem of inequality, and we have to help those who are not doing very well. There’s a problem with the trade deficit. It’s not a trade deficit with any”—
AMY GOODMAN: You don’t think he does understand—
JOSEPH STIGLITZ: No, no.
AMY GOODMAN: —but wants to just advantage himself?
JOSEPH STIGLITZ: No, I really think he deeply does not understand that. For instance, the tax cut that he is proposing, which will result in one-and-a-half trillion-dollar deficit over 10 years, is what he says, but the real numbers are probably twice that number—they’re going to increase the trade deficit. There’s a clear relationship between the fiscal deficit: When that goes up, the trade deficit goes up. And the way this happens is through the increase in the value of the exchange rate. So, the problem which he is arguing, the trade deficit, he’s going to make worse. All that the trade agreements determine is which country we have the deficit with.
AMY GOODMAN: We only have 20 seconds. And are you making a bigger point when you say he’s unfit to serve?
JOSEPH STIGLITZ: Well, he is particularly unfit to serve because he approaches these without any view of what the truth is, and he approaches these with enormous amount of prejudice. You can’t begin saying we want to solve the problem, when you have a mindset that is against the Mexicans, against Islamists.
AMY GOODMAN: Do you think he should be impeached?
JOSEPH STIGLITZ: We would then have a problem with Pence. And that is really difficult.
AMY GOODMAN: We’re going to leave it there. I want to thank you so much for being with us, Nobel Prize-winning economist Joe Stiglitz. His new book, Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump.
I’m Amy Goodman, with Nermeen Shaikh. And a very happy birthday to Deena Guzder.