Joseph Stiglitz on How He'd Fix the Economy

Last month, I sat down with Nobel Prize-winning economist Joseph Stiglitz in his office at Columbia Business School.

Stiglitz has well-known criticisms about the country's high rate of wealth inequality. I asked him what three things he'd do to fix the problem. Here's what he had to say (transcript follows):

Joseph Stiglitz: Well, I would begin with education, because to me, opportunity is really important, and we are not giving opportunities. And when I say "education," I mean preschool. I mean access to health care so that you can take advantage. If you don't have adequate health care, you're not going to be able to do well at school. Nutrition for children, so I'd put a lot of emphasis on children and opportunity.

Second thing, our tax law. I really do think our tax law distorts our economy and is unfair and has wider consequences, because if Americans think that the tax system is unfair, they lose confidence in government. I think government is very important providing certain basic services to our society.

And thirdly, there's a whole set of regulations that distort our economy and lead to more inequality and more inefficiency. More effective enforcement of antimonopoly laws, antitrust laws, more effective regulations so that the banks can't take advantage of the poor with predatory lending and abusive credit card practices and manipulation of markets.

Doing something about the too-big-to-fail banks, which give them access to credit, to funds at a lower rate because providers of funds know that the government will bail them out. Corporate governance laws that allow the CEO to take away bonuses, even when the companies do poorly. So those are the three things that I would, if I had my agenda.

The last chapter of my book, I list actually a 21-point program that would make, I think, significant inroads in our inequality and make our economy more efficient.