One of the central theories of classical economics is that markets respond quickly and efficiently to changes in demand. But the pandemic clearly demonstrates that the markets aren’t the efficient adapters that classic economists believe them to be. Nobel laureate economist Joseph Stiglitz explains why the tendency to believe in the market is one of the most deeply rooted trickle-down myths, and why government intervention is the best way forward through this economic downturn.
Joseph Stiglitz is a Nobel laureate economist and a professor at Columbia University. He is also the co-chair of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD, and the Chief Economist of the Roosevelt Institute. In 2011, Stiglitz was named by Time magazine as one of the 100 most influential people in the world. Known for his pioneering work on asymmetric information, Stiglitz focuses on income distribution, risk, corporate governance, public policy, macroeconomics, and globalization. His most recent book, People, Power, and Profits, was just released in paperback.
Twitter: @JosephEStiglitz
Further reading:
People, Power, and Profits: Progressive Capitalism for an Age of Discontent: https://www.indiebound.org/book/9781324004219
Four Priorities for Pandemic Relief Efforts: https://rooseveltinstitute.org/four-priorities-for-covid19-pandemic-relief-efforts/
Why Our Affluent Society Is Facing Shortages in the Face of the Coronavirus Pandemic: https://time.com/5811505/affluent-society-shortages-coronavirus-pandemic/
Deficit Lessons for the Pandemic From the 2008 Crisis: https://prospect.org/economy/deficit-lessons-pandemic-2008-crisis/
How the Economy Will Look After the Coronavirus Pandemic: https://foreignpolicy.com/2020/04/15/how-the-economy-will-look-after-the-coronavirus-pandemic/
Top economist: US coronavirus response is like ‘third world’ country: https://www.theguardian.com/business/2020/apr/22/top-economist-us-coronavirus-response-like-third-world-country-joseph-stiglitz-donald-trump
Website: https://pitchforkeconomics.com/
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
Nick Hanauer:
When we talk about markets, we’re not talking about the convenient store down the street or the local Safeway?
Joe Stiglitz:
There are stories of farmers destroying food, destroying milk, because the restaurants no longer are buying them. And yet we have in our society people who are going hungry every night. The market clearly is failing.
Nick Hanauer:
Joe also is a big believer in markets, but shares our view that they have limits and that there has to be a big role for government in harnessing the power of markets for public good.
Announcer:
From the Offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer, where we explore everything they forgot to teach you in econ 101.
Nick Hanauer:
I’m Nick Hanauer, founder of Civic Ventures.
David Goldstein:
I’m David Goldstein, Senior Fellow at Civic Ventures. So Nick, sometimes our critics accuse us of being socialists because we’re often dissing the market. But we’re pro-market, right?
Nick Hanauer:
We are deeply pro-market because we know that markets are the best social technology ever created for evolving new solutions to human problems. But markets are super good at certain kinds of things, but collapse in the face of other challenges, and the pandemic is a great example of how the market has to fail in the face of this. No individual company could put aside enough inventory, or whatever it is, if you’re a face mask manufacturer, to anticipate a pandemic. You’d go bankrupt if you tried to do it. The only solution to that is for government to solve that collective action problem by either requiring every company to put a little aside, or collectively buying enough face masks from every company and putting them aside on behalf of the rest of us as an insurance policy.
David Goldstein:
Yeah. Because the market actually tells the individual companies not to produce excess supply.
Nick Hanauer:
Exactly.
David Goldstein:
A smart N-95 face mask manufacturer is going to try to manufacture just as many face masks as the market needs at the moment, no more, no less. You want to maximize sales and minimize the amount of excess inventory, and that is how you make the most profits from your capital investment. And to be clear Nick, when we talk about markets, we’re not talking about the convenient store down the street, or the local Safeway, we’re talking about this generic institution in which firms and individuals compete with each other for customers?
Nick Hanauer:
Correct, correct.
David Goldstein:
Which is different from a state-down, Stalinist, Soviet Union-style controlled economy?
Nick Hanauer:
Correct. We definitely prefer the market, but with limitations.
David Goldstein:
Right, we prefer the market where the market works best, and the government where the government works best, and you end up with what we have in most of the world, a mixed economy.
Nick Hanauer:
Correct. Works pretty well if you do it right. Today we get to hear from Nobel Prize winning economist, Joe Stiglitz, about the limits of markets. Joe also is a big believer in markets, but shares our view that they have limits and that there has to be a big role for government in harnessing the power of markets for public good.
Joe Stiglitz:
I’m Joe Stiglitz, university professor at Columbia University, and my book, People, Power, and Profits: Progressive Capitalism for an Age of Discontent just got issued in paperback this month.
Nick Hanauer:
Joe, we wanted to explore a couple of different threads with you, starting with market failure and the challenges, our country in particular faces around a set of embedded ideologies that inform our policies and our practices that basically say that the market will figure everything out and that’s all … You don’t need government, you don’t need collective action, the markets will solve all problems. I think the pandemic makes it clear that that may not be true. What are your thoughts?
Joe Stiglitz:
You’re absolutely right, it’s sort of a textbook example of showing that markets don’t work. One of the problems in markets is they don’t deal with what we call externalities. Externalities are, an example is where one person’s action has effects on others that are not reflected in the prices they receive or pay. Climate change has always been viewed as the quintessential example of an externality. If I engage in pollution it leads to more carbon dioxide in the atmosphere with consequences for people in Bangladesh, rising of sea level, more extreme weather events. But global health is another big example of an externality. If I’m contagious and I walk around I can contaminate you and you can die, that’s a real example of an externality.
Now, individual’s incentives are not aligned with societal incentives, and that’s particularly the cast when you have examples of people without paid sick leave, with no money in the bank amount, living paycheck to paycheck, and their employer selfishly doesn’t provide paid sick leave. So they get sick, and if they’re able to work they’ll go to work. They won’t take into account the externalities that they impose on others. And that’s why government has to come in and say, “No, no, no, you have to provide paid sick leave to your employees, because otherwise the disease will spread.” That’s one example of a major market failure. We’ve seen other examples of market failures that are quite dramatic. You would’ve thought that a well-functioning market would’ve been able to supply the tests that we wanted, the masks that we need, but it’s not, and it’s totally failed.
And a third example that it’s been in many ways, devastating, is there are stories of farmers destroying food, destroying milk, because the restaurants to which they used to sell, no longer are buying them. And yet we have in our society people who are going hungry every night. The market should be able to connect the producers with the people who need it so badly, and yet the market clearly is failing.
David Goldstein:
It’s interesting when you talk about the failure to provide things like the supplies for test kits and PPE. We can’t even produce the cotton swabs needed to conduct the tests. You point out that a lot of that comes from the way we’ve globalized our supply chain. That in this pursuit of efficiency it’s actually left the system a lot less resilient. If you could expand on that a little bit?
Joe Stiglitz:
One of the concerns I’ve had about the market economy for a long time is that it’s excessively short-sighted and doesn’t balance correctly the risks of the future versus the profits today. We saw that in 2008 where the banks undertook massive risk to increase their profits a little bit in the short run, but in the long run it resulted in a global financial crisis that has cost the world trillions and trillions of dollars. There’s a way I like to illustrate this, is to talk about how our car manufacturers decided they could save a little money by not putting a spare tire in the trunk of your car. You save a little money, I mean how much does a spare tire cost? Not a lot. But they were trying to get the price down focusing on the short run. And they’re absolutely right, most of the time you don’t need a spare tire. But when you have a flat tire, boy do you need a spare tire. And the cost of not having the spare tire can be an order of magnitude greater than it would’ve cost to put the spare tire in the car in the first place. We’ve created a whole system focusing on short run efficiency and not thinking about resilience, the ability to address the risks that we face.
America, even though it spends more on healthcare than any other country per capita by a long measure, for all that money we prided ourselves on not having any spare capacity in our hospitals. We didn’t have a wasted bed, and that’s all fine and well and good as long as you don’t have a crisis. But we have fewer beds per thousand population than most other advanced countries, that means when we have a crisis like this we are in a much worse position than other countries. A few people do a little bit better as a result, but our society does a lot worse.
Nick Hanauer:
Joe, would you try to explain a little bit more the sort of intellectual construct that we variously call neo-liberalism or neoclassical economics, that leads people to draw the conclusions that we have that have put us into this box? And then maybe we can talk about how you move away from some of those mistakes and ideologies.
Joe Stiglitz:
I think there were a couple critical moments in the history of economic thought. One was Adam Smith, and he put forward an idea, an idea that he actually argued against, but he put it forward anyway and it had enormous influence. It was the idea called the invisible hand, that the pursuit of self-interest would [inaudible 00:11:13] as if by invisible hand to the well-being of everybody in society. That idea that the pursuit of profits and the pursuit of self-interest has had an enormous intellectual influence. He put that idea forward in 1776, and let me make it very clear, he rejected that idea. He was worried about monopoly. He knew that you needed government to stop monopoly. He realized that employers would exploit workers and he said the government has to stop that. He believed in regulation. But this basic idea was picked up by people on the right and pushed for all it was worth.
Now, as I said, he wrote in 1776, about 175 years later in the 1950s, two great economists, Ken Arrow and Gerard Debreu, finally were able to formalize and say, “What were the conditions under which Adam Smith was right?” It turned out that those conditions were very restrictive. No externalities for instance. Competition had to be extraordinarily intense, something called perfect competition. And then, about a quarter century after that, working with a colleague of mine here at Columbia, Bruce Greenwald, we showed that whenever information was imperfect, whenever risk markets were imperfect, which is always, markets are not efficient, we showed that there were a whole array of market failures.
The intellectual foundations of those who believed that the market can deliver efficient outcomes has been totally devastated in the last 70 years, and yet a lot of people are continuing in that line of thought. There’s one other aspect of that neo-liberalism, I think that had a lot to do with why it proved so popular among some people. The question was how do we justify the inequalities that you were seeing around everywhere? In the era of the industrial revolution and the era after that? Almost as if this set of ideas, neo-liberalism, said that people got their just deserves, it was a theory called Margin of Productivity Theory, that people’s rewards were commensurate with their social contributions.
There was another theory that said, “No, no, no, much of the wealth at the top is a result of exploitation, and it isn’t because of just contributions, it’s about power. Market power, exploiting individual’s vulnerabilities, and so forth.” Interestingly in the last 10 years there’s an increasing consensus among economists that this theory of exploitation and power provides a much better description of what is going on than that neo-liberal theory. That’s one of the main themes in my book, People, Power, and Profits in Progressive Capitalism, it says that inequalities we have are a result of exploitation, including exploitation of market power, and progressive capitalism has to [inaudible 00:14:59] the power of markets but with regulations to make sure that there’s not the kind of exploitation that we’ve seen so much in recent years.
David Goldstein:
Okay, so playing devil’s advocate, obviously there’s market failures. Markets couldn’t prepare for this, it makes no sense you point out, for example mask manufacturers to warehouse the enormous number of masks that would be necessary just in cast this happens. Because it might never have happened. But the other side would argue that, “Oh, but government. Government always does things worse than the private sector. So we’re better off with 27 million uninsured and fewer hospital beds per capita than other developed nation. But if the government ran the health care system, now that would be a disaster.” What’s the role of government in all this?
Joe Stiglitz:
Economists have explored why it is that there is need for collective action, and that collective action can occur at many different levels. It can be local government, state government, national government, international government, it can be collective action in the form of unions, civil society. Many aspects where coming together we can do things that individually we couldn’t do. Government actually does a very good job at a lot of things. All human institutions are fallible, so it is right that sometimes governments do mess things up, but so does the private sector. So let’s not have this view of the perfect market versus an imperfect government. The reality is all institutions are imperfect and we have to work to make them better. I’ve studied a lot, the patterns of growth around the world, and I can tell you the only countries that have been successful are countries where the government has played a very important role.
East Asia, fastest rates of economic growth ever. But the United States, what are we doing right now? We’re using the internet. Who made the investments that were the basis of the internet? The government. We’re fighting COVID-19, one of the main tools we use is the understanding of DNA, RNA, these viruses, who paid for that? The government. Now, the government isn’t some abstract dark phenomena, the government is putting up money to support our universities, to pay our teachers, our fire departments, our police departments, our national parks. All these things that are so important to our society. What was the response to the disease? It’s the Center of Disease Control, and it has responded to epidemics before. The problem was that under Trump it was defunded.
In fact, the irony was the very group that studied the movement of viruses from animals to humans, that particular group was targeted for defunding. We’ve under-invested in the public sector and that is what is the major problem today.
David Goldstein:
Right, so the problem isn’t government, the problem is this particular government?
Joe Stiglitz:
That’s right. Anybody who has watched this government understands government failure. We’re not pretending that governments always work, but what we want to have is a system where the private sector, the media, civil society checks the government, and they all check the private sector. That’s what the system of checks and balances that is the cornerstone of the evolution of our institutions since the enlightenment. That’s what we need. It’s having multiple institutions, all of which check each other.
Nick Hanauer:
I think that as Americans we … Thing about a democracy is you get what you deserve. I think American’s broadly share a responsibility for having bought this sort of anti-collective action, anti-government, live free or die libertarian nonsense that has dominated our politics for so long. We collectively defunded our shared capacity to deal with these issues. It’s not just at the federal level, Washington State where we live is, I think by most measures, an extremely well-run place. But definitely if people weren’t so anti-government, even here, we would’ve had a bigger capacity to have addressed this problem. But Joe, let’s pivot a little bit to global supply chains, and globalization, and trade, because this is something that you have thought very deeply about, have been a critic of globalization over many years. That’s been a very interesting thing, is how in the interest of efficiency, which basically means more profits for rich people, we have created an incredibly fragile system that has become highly problematic.
Joe Stiglitz:
Oh, you’re absolutely right. Again, it’s the same principle that we saw in 2008, and we talked about my example of the spare tire. We look to save pennies, and pennies, and pennies here and there by creating global supply chains that were totally un-diversified and therefore un-resilient. So we found the best place to make one particular thing, and another best place for making another, and we worked very hard to get the costs down as low as possible. We developed production processes called just-in-time production so you didn’t waste any money on excess inventories. As long as that system worked, as long as there were no interruptions, it was very efficient, we saved a few pennies. But it was a very fragile system. A breakdown in the supply chain, a disease in China, a disease in some other place, political problems in any place, the whole thing could come tumbling down.
You said I’ve studies globalization in many of its manifestations, and one of the other aspects that’s so interesting about this crisis is that it’s on the one hand saying, “We went to far in hyper economic globalization,” as some people put it. On the other hand, the pandemic has made it so clear that we need global cooperation. That this disease, this virus, doesn’t carry a passport, doesn’t respect Visas, it goes across boundaries. And we’ll only emerge from the pandemic and from the global slowdown associated with it through a global effort in which the disease is eradicated from every country and every country is back to functioning.
So unfortunately, one of the hallmarks of this administration is undermining multilateralism, undermining the institutions like the World Health Organization that are established. Again, imperfect, but established in trying to deal with pandemics, and they’ve done overall a fairly good job. We need global cooperation to prevent a global financial crisis, and a global economic crisis resulting from the pandemic. Again, because of the lack of cooperation of this administration, that kind of assistance isn’t coming forward and I worry about the shape of things to come and whether for instance we’ll have a global financial crisis as one country or another defaults on its debts.
David Goldstein:
Let’s move on from what we’ve done wrong to what we need to do right. You wrote a paper for the Roosevelt Institute outlining four policy choices for pandemic relief. Could you go through those and explain why they’re so important?
Joe Stiglitz:
The core of the idea was we ought to have a clear view of what we’re trying to do, and what we’re trying to do is make sure we have policies that first address our health needs. Do what they can to contain contagion. Secondly, protect the vulnerable. And thirdly, setup the preconditions for a recovery once the pandemic is under control. And of course fourth, when the pandemic is under control, make sure we do have that recovery. On the first we failed. We realized, I mentioned before that if people don’t have paid sick leave they’re going to go to work even when they’re sick, and that’s going to spread the disease. So Congress recognized the importance of this, they passed a law mandating paid sick leave. But then under the influence of our big corporations they exempted all workers working for corporations over 500. The very corporations who could afford it the best. And that means 48% of our workers were exempted.
David Goldstein:
Right.
Joe Stiglitz:
Amazing. They recognized the problem, and then they got the lobbyists from the richest, richest corporations in America say, “We don’t care, we’d rather the disease spread than give up some of our profits.”
David Goldstein:
And these are disproportionally low paid workers, women, and people of color, and so we see those outbreaks in the meat processing plants that are just downright criminal what’s gone on there.
Joe Stiglitz:
Downright criminal, you’re absolutely right. I mean, as another example, we have a department of the government called OSHA that’s supposed to put forward safety and health requirements. They should’ve said. “You can’t go to work at a meat plant without protective gear, without masks.” They didn’t do that. They refuse even now to issue the kind of requirements that they ought to be doing. To me it’s unconscionable. And we talk about a minimum wage, we ought to be talking about minimal working conditions. A minimal condition is, as a condition of going to work you shouldn’t have to expose yourself to the threat of death.
David Goldstein:
One would think.
Joe Stiglitz:
That’s one. The second one is trying to keep people connected with their jobs. Other countries have done a really good job at that. We have done the worst. Our unemployment, the last seven weeks increase in unemployment is 33 and a half million, 20% of our labor force has entered into the unemployment pool in the last seven weeks. Can you believe that? And it’s so much more than other countries because we had a failed program. And for the United States, where so many people depend on employer-provided health insurance, this is not the time to have them lose their health insurance. They’re going to wind up on Medicaid, and Medicaid won’t be able to cope, and that’s because the state revenues are plummeting. In 2008, tax revenues went down twice as fast as GDP. The states have a balanced budget framework, and that means they have to cut expenditures and employment in tandem. But the states didn’t have the kind of lobbyists that the airlines had.
David Goldstein:
Yeah.
Joe Stiglitz:
We got almost no money to the states, and the Republicans are now resisting any assistance to the states. This by itself is enough to keep us in a recession, let alone to think about what it’s going to do to our healthcare system, to our education systems, and the basic fiber of our society.
David Goldstein:
If you were a benevolent dictator would you just make the states whole?
Joe Stiglitz:
Yes. We had a program that I argued back in 2008 and I would do the same now, where basically the Federal Government says, “We will make up for the loss of revenue as a result of this economic downturn, plus your additional expenditures for dealing with unemployment and the healthcare associated with COVID-19. We’re not giving you a free ride if you may have had problems with your pension funds in the past, that’s your problem. But we will take care of you because we, the Federal Government, didn’t secede in maintaining the economy of full employment, we are ultimately responsible for that. And we didn’t do what we should have to stop the spread of the disease, and so you’re confronting that problem.” If I were a benevolent dictator that’s precisely what I would do.
David Goldstein:
What about bailing out households? We bailed out American Airlines, which sent 14 billion dollars in dividends and stock buybacks to its shareholders at the same time it was adding 14 billion dollars in debt to its balance sheet. How about these households where 40% didn’t have $400 in savings prior to the pandemic recession? Unlike 2008 should we be directly dealing with the debt of individuals and households?
Joe Stiglitz:
I think what you’ve illustrated is how unbalanced the assistance, that almost three trillion dollars has gone to people who really shouldn’t be needing help, but it didn’t go to the people who really do need the help. Delta Airlines used every trick in the book, didn’t pay any taxes in 2018. New York Times wrote an article about the companies that were in the forefront of taking advantage of all the tax loopholes, companies with big profits and no taxes, and yet we’re bailing them out too. So the companies who could’ve used that huge corporate tax cut of 2017 could’ve used that money to build up capital buffers-
Nick Hanauer:
Shore up their balance sheet, whatever, right.
Joe Stiglitz:
And what they did was they got themselves, as you said, more in debt so they could pay out more dividends, buy back more share, and now we have to bail them out without putting on conditions like, they should certainly make a greener fleet of airplanes. But meanwhile we’re not giving enough help to the poorest Americans. One of the things that disturbed me so much is that $1,200 is not enough to live on for very long. The idea was that it was going to be a short downturn. We now know that was a fantasy, that it’s going to be a long, long downturn. And the administration said it could get the checks in two weeks. Another fantasy. But now they say for the poorest Americans, those who didn’t fill out tax returns this year or last year, for some of them it’ll be September before they’ll get their $1,200 check. How they’re supposed to live for these months and months is anybody’s guess.
David Goldstein:
Well, it takes time to put Trump’s signature on all those checks.
Nick Hanauer:
If you were in charge, what are the three or four big things you would do?
Joe Stiglitz:
My vision is very much focused on how to use the money that we’re spending to help create the kind of economy after the pandemic that we would like. Government has never poured as much money into the economy, except in wartime, but not had any thought about where we want to come out. One of the things that is very clear is we want to be a knowledge economy. Knowledge is absolutely essential, we’ve come to realize that with this pandemic. But we’re not providing any support to our research institutions, to our universities, and so we’re letting them fend for themselves. So that’s one priority.
The second one I mentioned before, state [inaudible 00:32:35], the base of our healthcare system, our education system, elementary, and local, and universities, again not doing anywhere near enough to protect them. We ought to have automatic triggers for this aid and our unemployment insurance system, so long as the economy is not recovered and the disease has not abated. And there’s pushback even on doing that basic. It’s really, really important because if there’s uncertainty, that will lead to more precautionary behavior, that will lead to less consumption, less investment, that will lead to a much weaker recovery. Having that kind of assurance that the government is going to be there, so long as the economy is not back to health and our society is not back to health, is very important.
Nick Hanauer:
Yeah.
Joe Stiglitz:
This disease has exposed the inequalities in our healthcare system, in our society, and it is unfortunately making them all the worse. It seems to me that we have to make sure that the expenditure programs of our rescue and our recovery don’t create a more unequal society. For me, that means we have to do a lot better job of getting money down to the smaller businesses, the most vulnerable, as opposed to what we’ve been doing, which is they’re having a really hard time and the money is going to American Airlines, the big airlines, the big companies. Even in the program called the Small Business Program, the PPP program, the money went to those that were the richest of the small businesses, the ones that were most connected with the banks. The construction industry was never listed as one of the most vulnerable industries, but it was the sector which got the most money in the PPP program in the first round.
Nick Hanauer:
That’s because you can’t be in that business without a big banking relationship.
Joe Stiglitz:
Exactly. It’s whoever had the best relationships with the banks were the ones who got the most money. That’s not the way we should be prioritizing the allocation of money when we’re talking about 2.7 trillion dollars.
David Goldstein:
I’ve got a final question kind of. I don’t know if you want to answer it or not. There aren’t a lot of economists that I trust to make predictions, you might be one of the few. How bad and how long do you think this will be?
Joe Stiglitz:
I think it will depend to a large extent on what policies we put into place. Policies both in respect to economic policies, but also you might call it our broader health policies. If we open up too quickly, high likelihood of a second wave, high likelihood of episodic breakouts in various parts of the country, fear will return. We won’t emerge out of the pandemic smoothly in any sense of the term. I think in the best of cases it’s going to be a very deep recession. But if we don’t manage things well, then I say the evidence so far is that in spite of all the money, we are not doing things very well. This will be the deepest downturn in living memory. The 20% unemployment is echoing numbers we saw in the Great Depression, but we never have seen anything like that since the Great Depression. I am not expecting a V-shaped recovery, a quick bounce-back. I’m seeing much more of a hard slog to return to normal.
Nick Hanauer:
Yep.
David Goldstein:
Well, I hope you’re wrong.
Joe Stiglitz:
So do I.
Nick Hanauer:
Well Joe, thank you so much for spending this time with us, and it’s great to see you snug and safe in New York City.
Joe Stiglitz:
Nice to see you.
Nick Hanauer:
Thanks for joining us.
Joe Stiglitz:
Thank you.
Nick Hanauer:
Okay, take care Joe.
Joe Stiglitz:
Okay.
Nick Hanauer:
Bye-bye.
Joe is such an awesome person, I’m lucky enough to have spent a little bit of time with him. He’s really just a remarkably brilliant and also incredibly kind and funny man. But I think the conversation does really highlight how corrosive our country’s reflexive belief that markets are good and will solve all problems, and government is bad and will just make things worse. Right?
David Goldstein:
Right.
Nick Hanauer:
When you talk to Joe it just becomes so obvious why that is not true, and why if you want to have a fair, resilient, and stable economy you need both government and markets to be well-organized and strong. Right?
David Goldstein:
Our neo-liberalism, this market fundamentalism that we’ve had for the past 40 years has both left us more vulnerable to pandemics and less resilient in its face, and it’s also harming our ability to respond to both the health crisis and the economic crisis that we’re facing.
Nick Hanauer:
That’s right.
David Goldstein:
We started with an employer-based healthcare system that already left 27 million Americans without health insurance, and with 33 million now having filed for unemployment, that’s surely gotten much worse. We have had the fastest rising inequality in the developed world. The top 1%’s income share has doubled over the past 40 years. Folks like you in the top .1%, you’ve gone from a 7% share to 22%. And that’s left the vast majority of Americans without savings. So they enter a recession without any cushion to survive more than a few weeks, and we have this shredded social safety system where the employees that need paid sick leave the most don’t have any. The people who need unemployment insurance, the most see it run out the quickest and paid at the lowest level. And a government that lacks the automatic stabilizers to respond to an economic downturn. The spending that should have been in place automatically to make up for this lost income, it’s just going to leave us recovering slower than the rest of the developed world. It’s tragic and it’s depressing, and it all was avoidable.
Nick Hanauer:
This sort of religious belief that markets work and government doesn’t is very much at the center of why this country has the dimensions of the problem that we do today, and why in many ways the responses Congress has come up with are inadequate and lacking. The great example being bailing out the airline industry but not people. We have a lot of work to do to get this thing back on track. It will be very hard to do if Donald Trump continues to be president in November.
Announcer:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate, and review us wherever you get your podcasts. Find us on Twitter and Facebook @CivicAction and @NickHanauer, follow our writing on Medium at Civic Skunk Works and peek behind the podcast scenes on Instagram @PitchforkEconomics. As always, from our team at Civic Ventures, thanks for listening. See ya next week.