- 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 and as chief economist of the World Bank. His latest book is People, Power and Profits: Progressive Capitalism for an Age of Discontent.
The coronavirus relief package signed by President Trump Wednesday provides unemployment benefits and free coronavirus testing to millions of Americans suddenly out of a job, but guarantees paid sick leave to less than 20% of American workers. Earlier this month, Trump signed into law an $8 billion coronavirus response package and has laid out the first details of a third, $1 trillion economic package and invoked the Korean War-era Defense Production Act to allow the government to direct industrial production. For more on those bailouts and who benefits, we speak with Joseph Stiglitz, Nobel 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 and as chief economist of the World Bank. His latest book is “People, Power and Profits: Progressive Capitalism for an Age of Discontent.”
AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman. President Trump Wednesday signed a coronavirus relief package providing unemployment benefits and free coronavirus testing to millions of Americans suddenly out of a job. The aid package guarantees paid leave to less than 20% of American workers. It does not apply to companies with 500 or more workers, and workplaces with fewer than 50 workers can request to opt out. On Wednesday, the White House also ordered the suspension of evictions and foreclosures through April. On Wall Street, the Dow Jones plummeted 7% at midday, triggering an automatic halt to trading for the fourth time in the last two weeks. The market crash has wiped out nearly all stock market gains since President Trump took office in 2017. Earlier this month, Trump signed into law an $8 billion coronavirus response package. At a White House press conference Wednesday, Trump laid out the first details of a third, $1 trillion economic package and invoked the Korean War-era Defense Production Act to allow the government to direct industrial production.
PRESIDENT DONALD TRUMP: In a sense, a wartime president. I mean, that’s what we’re fighting. … You have to close parts of an economy that six weeks ago were the best they’ve ever been. We had the best economy we’ve ever had. And then one day you have to close it down in order to defeat this enemy. … We’ll be invoking the Defense Production Act just in case we need it. In other words, I think you all know what it is, and it can do a lot of good things if we need it, and we will — we will have it all completed.
AMY GOODMAN: The person in charge of the bailouts [is] Treasury Secretary Steven Mnuchin, formerly of Goldman Sachs. He ran OneWest Bank after the 2008 financial crisis and oversaw so many foreclosures, he was called the “foreclosure king.”
Well, for more on these bailouts and who benefits, for more on the legislation that has been passing and for what’s happening in the world today in this pandemic, we’re joined by Joseph Stiglitz, Nobel Prize-winning economist, Columbia University professor, chief economist for the Roosevelt Institute, served as chairman of the Council of Economic Advisers under President Bill Clinton and as chief economist of the World Bank. His latest book, just coming out, hopefully, depending on what this world looks like, is People, Power and Profits: Progressive Capitalism for an Age of Discontent.
We thank you so much for joining us, Joe. And I just want to let our viewers and listeners know you’re joining us from your home, because here in New York and all over the country we’re being told that it is safest for people to isolate. Before you talk about the bailout, just talk about your thoughts right now on what’s happening in this city, New York, and the world.
JOSEPH STIGLITZ: Well, this is a time of crisis. In the 2008 crisis, Rahm Emanuel, who was the chief of staff of Obama, said, “You shouldn’t let a crisis go to waste.” But they did let that crisis go to waste. We needed to reform our financial system. We needed to reform our economy. And we didn’t. The money went to the big banks, and we didn’t get the money to the people who really needed it. So, the question is, as your very — as your excellent clip from Naomi Klein said, “What will we do with this crisis? Will this reinforce the ugly tendencies we’ve had for growing inequality, for corporate welfare, or will it actually succeed in reforming our economy?” You know, it’s remarkable. Just a little while ago, people said we couldn’t afford this program helping college students with immense debt, or we couldn’t afford providing healthcare for everyone. And all of a sudden, the president is talking about a $1 trillion, $2 trillion bailout. We always could have afforded these things. It was just our prioritization was wrong.
AMY GOODMAN: I wanted to go to the Treasury Secretary Steve Mnuchin describing the administration’s proposed economic relief package.
TREASURY SECRETARY STEVEN MNUCHIN: We’ve put a proposal on the table that would inject a trillion dollars into the economy. That is on top of the $300 billion from the IRS deferrals. Now, let me just say, this is a combination of loans. This is a combination of direct checks to individuals. This is a combination of creating liquidity for small businesses. … I think Congress right now should be concerned about the American workers and small business. You know, interest rates are incredibly low, so there’s very little cost of borrowing this money. And as I’ve said, in different times, we’ll fix the deficit. This is not the time to worry about it.
AMY GOODMAN: So that’s Treasury Secretary Steve Mnuchin, formerly called the “foreclosure king.” Talk about what he is laying out right now.
JOSEPH STIGLITZ: Well, the one part that is good is sending checks to everyone. I think the amounts that they’re talking about are inadequate, and it’s not just a one-time thing. If, as many epidemiologists say, this is going to last for several months, there will have to be a second and third and fourth conscious of those checks. If we don’t do that, people whose income is collapsed, people who are left unemployed — remember, we have the worst unemployment system of any of the advanced countries — all these people who are not going to be able to pay their bills, and we’ll have a cascade of problems. And while it’s a good thing that the Trump administration has ordered federal agencies to stop evictions and foreclosures, it doesn’t apply to the private sector banks. And their evictions and foreclosures may well go on. And that’s where most of the evictions and foreclosures will occur. So we need to get that money into the system, and we need to get the money to ordinary individuals. So that part, I think, is good. It needs to be taxed at the rate that individuals normally pay, so that in a year from now, two years, when we return to normal, those at the top who’ve gotten money and didn’t need it, that money will go back to the Treasury. So, this ought to be treated as ordinary income. And a significant part of that money that was going to the top should be recuperated.
But the other part is really not the way we ought to be going. The part of giving money to the airlines or the cruise ships. Yeah, the airlines had a huge bonanza from the tax bill of 2017. And rather than use that money to build up buffers in times of emergency, they had billions and billions of share buybacks. So, if we give them money, we have to make sure that they satisfy certain conditions, conditions corresponding to the environment, to governance, to labor. And we need warrants. That’s a way of making sure that the American taxpayer is protected against the risk.
And then there are whole set of things that the bailout — that the package doesn’t address. Our state and localities are going to be facing a very difficult time. Their revenues are plummeting. They don’t have the luxury of running deficits. Most of them have what are called balanced budget frameworks. So, if their revenues go down, there’s going to be a cutback in education, in health, in the basic ingredients of making — that ordinary people need so much. So, a higher priority than bailing out the cruise ship companies is helping the states and localities. So we need a massive revenue-sharing program between the states and localities.
AMY GOODMAN: So, you know, one of the voices that we don’t hear, or the voices overall that we don’t hear at the White House, as we see this stream of CEOs surrounding Trump or the conversations he’s having in the last few weeks, are the people, the workers directly affected. I wanted to bring in Sara Nelson, a clip of the president of the Association of Flight Attendants union.
SARA NELSON: We have told Congress that any stimulus funds for the aviation industry must come with strict rules. That includes requiring employers across aviation to maintain pay and benefits for every worker; no taxpayer money for CEO bonuses, stock buybacks or dividends; no breaking contracts through bankruptcy; and no federal funds for airlines that are fighting their workers’ efforts to join a union.
AMY GOODMAN: So, that’s Sara Nelson, head of the flight attendants’ union. Joe Stiglitz, if you can talk about what is actually happening here, and what would a bottom-up bailout actually look like? What would it mean if the workers were guaranteed everything from the paid leave — it keeps on being repeated, “Now workers will have paid medical leave,” but we hear that it’s well less than 20%, and that was reduced and reduced over the weekend through negotiations with Mnuchin.
JOSEPH STIGLITZ: So, first let me say, the Trump proposal is another instance of trickle-down economics — give money to the corporations, and maybe, maybe, it will trickle down to ordinary citizens. And we know from the past it’s not going to happen. The 2017 tax bill did not lead to more investment, did not lead to significantly higher wages. It led to bigger — almost a trillion dollars of share buybacks.
And so, as you say, what we need is a bottoms-up approach. And what she was pointing out is that if you give money to these industries, they aren’t going to necessarily behave well. And you see that so clearly in the fight that the big companies fought against paid sick leave. And let me say why that’s really important. It’s not just helping the workers; it’s helping all of us, because if they don’t get sick leave, they’re going to go to work. And if they go to work, it will help transmit the disease. So, we need a system that people can say, “If I’m sick, I don’t need to go to work.” And the decision of the Trump administration to fight having universal sick leave is another example of their contributing to the spread of the virus and making the pandemic all the worse.
AMY GOODMAN: Joe Stiglitz, can you talk about what this looks like globally? And what is happening with this pandemic, laying bare the growing wealth inequality in the world?
JOSEPH STIGLITZ: Well, what we’ve created over the last 50 years is a highly globally integrated economy. There are some other aspects of this economy that we’ve created. We created economy without resilience. I illustrate that by the cars today that don’t have spare tires. You save a little money in not having a spare tire. The fact is that when you get the flat tire, you realize what a mistake that was. Not having a spare tire makes — in short run, it looks like you’ve saved a little money; in the long run, you really suffer. And we’ve created a whole economic system that is extraordinarily fragile — just-in-time production with no inventories. And as we’ve created this system, where you try to squeeze every ounce out of the — of waste out of the system, you’ve also squeezed ordinary workers. And that is what’s contributed to this growing inequality. And those two are the same — you know, different sides of the same coin.
So, our growing inequality and our increased fragility are issues that — hopefully, the lessons that we learn from this crisis is we need to construct a different kind of capitalism, a different kind of economy, that I call in my book “progressive capitalism,” but it recognizes that the market doesn’t work very well in addressing the major problems our society faces — resilience, inequality, climate change, you name it. They haven’t done a good job on it.
AMY GOODMAN: I wanted to go back to what’s happening here. You have Whole Foods CEO John Mackey under fire after he sent out an email to employees saying workers could donate accumulated paid time off to fellow workers with medical emergencies or a death in the family during the pandemic. Your thoughts, Joe Stiglitz?
JOSEPH STIGLITZ: Well, this is an example of encouraging charity from others. Why don’t these people at the very top say, “Well, at this moment of crisis, we’re all in it together. I’m going to cut off my multimillion-dollar pay. I’m going to go make a major sacrifice, and I’m going to give everybody paid sick leave, paid family leave. I’m going to show that from the top down. And, of course, I hope that you will be equally generous”? But it should start from the top. And that’s what’s so bad about both the administration and the example that you just gave. Leadership should start from the top by example. And obviously, we’re not getting that in this country.
AMY GOODMAN: Can you talk about how it works when they say people will get unemployment — the reports of people trying to apply online, the server is crashing repeatedly because so many people are out of work — and how thousand-dollar checks will be sent out, how you ensure if there is a law that says your employer has to give you paid medical leave, how you enforce this?
JOSEPH STIGLITZ: Well, I mean, you’ve put your finger on a major problem that has not gotten sufficient attention. Because of the devastation of our administration, of our government, that has occurred in recent years — you know, they disbanded the White House pandemic task force; they defunded the Centers for Disease Control, which is the basis of getting us information and developing our response to a crisis like this — we are less able to respond. And that means it’s almost a fantasy to believe that we can get checks out in two weeks.
That’s why some of the other things I talked about are so important. We have to make it absolutely clear that nobody is going to be evicted, there’s going to be no foreclosure, not only on the part of the government, but on the part of the banks, landlords. People can’t have their utilities cut off, because those checks won’t be there, and there’s a lot of Americans living on the edge. Data I talk about it in my book about the fraction of the population, a very large fraction of the population, that has reserves of less than $500 or $1,000. They’re living from paycheck to paycheck. And right now there are no paychecks. So, this inability to respond is going to be a major problem.
And then the other point that you made has gotten a lot of attention more recently, that even companies that have said that they have sick leave policy, when employees ask for the sick leave, they get punished. And so, we have to set up administrative mechanisms that say, “We will hold the companies that don’t grant their workers these benefits — we’re going to hold him accountable.” Of course, with the president saying, “I’m not responsible,” you might ask, “What does that mean?” But what that means is that there needs to be significant fines on any company that deprives any worker of his basic rights, including the right to sick leave.
AMY GOODMAN: So, this whole issue that Naomi Klein raises of disaster capitalism, of, in this moment of upheaval, that it depends who moves forward fastest and most strategically in moving forward with their ideas, your thoughts, as we move forward in this election year — unclear even if this election would be held in November — Trump amassing the kind of powers that he is? And, even still, I’m wondering if you could comment on his position right now — on the one hand, supporting giving $1,000 to each American — and I’m not exactly sure what that means, who gets it and who doesn’t — and you combine that with his ultranationalist politics — kids in cages, the wall, the racist “Chinese virus” language that he uses. Can you comment on this kind of economic populism?
JOSEPH STIGLITZ: Well, I think the point that this crisis makes clear is that we’re all in it together. The virus doesn’t discriminate. Just like the virus doesn’t have a nationality, the virus doesn’t discriminate on the basis of nationality, of race, of religion. And so we’re all in this together. So this is a moment — it should be a moment of national unity.
And as Naomi pointed out, there are two directions we can go. We could either exacerbate the divisions, or we can say there’s another direction. One of the reasons I wrote my book, People, Power and Profits, on progressive capitalism, was to lay out that alternative agenda, to make it clear that we — there are a lot of ideas about how to transform our society into the kind of society that deals with the problems that we’re facing — the problem of inequality, climate change, the moral turpitude that we’ve seen, so pervasive in the financial sector, Dieselgate, in the drug companies, in the food companies. There is an alternative. And so I actually think we have the ideas with which to respond. And they’ve been articulated in the primary contest, many of these critical ideas.
So, my hope is that as Americans realize how badly things have gone, how the kind — that this crisis, we didn’t turn to the private sector to solve it. We turned to the government. We realize that we have to do this collectively, that if we’re all on our own, it won’t work. The private sector did not provide the masks, did not provide the tests on its own. And a failed government — and the Trump administration is a failed government — didn’t work. But there is a different kind of government that can work, and we’ve seen that in a number of countries, where things are going much better. So, we can see that if we pull together, there is an alternative, and one which will protect us against this disease, but also — also — can create a society with greater shared prosperity and address the climate crisis.
AMY GOODMAN: Well, Joe Stiglitz, I’m going to ask you to stay after the hour so that we can have an extended conversation. I want to ask you about how your progressive capitalism compares to Bernie Sanders’ democratic socialism and more. But right now we have to break. Joe Stiglitz, Nobel Prize-winning economist, Columbia University professor, chief economist for the Roosevelt Institute. He served as chairman of the Council of Economic Advisers under President Bill Clinton and chief economist of the World Bank. His latest book, People, Power and Profits: Progressive Capitalism for an Age of Discontent.
When we come back, Trump doubles down on his use of the racist term “Chinese virus.” Stay with us.
AMY GOODMAN: “Dear Dr. Bonnie,” an ode to Canada’s provincial health officer, Dr. Bonnie Henry, in British Columbia, who has been giving daily updates on the spread of COVID-19. The song is sung by two members of her new fan club. You may recognize the music. It’s from the song “Dear Theodosia” in the Broadway show Hamilton. All of Broadway is shut down right now. And the prime minister of Canada is in self-isolation because his wife has tested positive for COVID-19.