[The Nobel Prize-winning economist calls for a global tax on high
earners at 70% and a 2-3% wealth tax on large fortunes to combat
widening inequality. He also talks about war profiteering, politicians
who want more inequality and the sperm lottery.]
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CHECKING IN WITH JOSEPH STIGLITZ ON THE STATE OF INEQUALITY  
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Nadia Daar and Nabil Ahmed
January 23, 2023
Oxfam America
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_ The Nobel Prize-winning economist calls for a global tax on high
earners at 70% and a 2-3% wealth tax on large fortunes to combat
widening inequality. He also talks about war profiteering, politicians
who want more inequality and the sperm lottery. _

Joe Stiglitz is the author of many important works on inequality and
globalization, Courtesy photo

 

_A__HMED__: As I walked past my bookcase this morning, I saw_
_Globalization and its Discontents_
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book that got me into all of this. It's always great to interview
someone who's taught us all so much._

STIGLITZ: Thank you and nice to be here.

_DAAR__: Joe, I'm equally excited to have this conversation and really
grateful that you're making the time. I wanna get right into it and
ask about inequality, because that's the topic of the day. Oxfam’s
just put out our Davos report, and again, we see these shocking
figures on wealth accumulation. There's been soaring increases in food
and energy prices._ _AND I WONDER FROM YOUR PERSPECTIVE, HOW SERIOUS
IS THE STATE OF ECONOMIC INEQUALITY?_

STIGLITZ: Well, first, let me say, I always look forward to your
annual report—you put things so viscerally. IN ONE OF THE EARLIER
REPORTS, YOU SAID YOU COULD PUT HALF THE WEALTH OF THE WORLD IN A BUS,
AND THEN A COUPLE YEARS LATER YOU SAID, YOU DON'T NEED A BUS—YOU
COULD HAVE A MINIVAN. Inequality had increased that much.

WELL, WHAT'S HAPPENED SINCE COVID-19 HAS BEEN EXTRAORDINARY; IT BOTH
EXPOSED GLOBAL INEQUALITIES, AND EXACERBATED THEM. Your inequality
report focuses on the top. And, in a period where so many people found
life so difficult, with losing their jobs, now dealing with food
prices and oil prices going up, IT IS SHOCKING HOW MANY PEOPLE AND
RICH CORPORATIONS MADE OFF LIKE BANDITS.

THE INCREASE IN WEALTH IS JUST _PHENOMENAL_. From your report
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the richest 1% grabbed nearly two thirds of all new wealth created
since 2020 (worth $42 trillion), almost twice as much money as the
bottom 99% of the world's population. That is just an astounding
number.

Every time I read one of these reports, I think well, clearly, things
have to get better—but the pandemic, and the post pandemic world,
has just made things worse. THE EXAMPLE THAT I FIND MOST OUTRAGEOUS
WAS, WHILE SO MANY AROUND THE WORLD WERE FACING HIGH OIL PRICES, THE
OIL COMPANIES AND GAS COMPANIES WERE RAKING IN TENS OF BILLIONS OF
DOLLARS, THAT THEY WERE PAYING IN SHARE BUYBACKS AND ONE-TIME
DIVIDENDS AND SO FORTH.

Then proposals were made to maybe share the wealth—with a tax on
these windfall gains—they hadn't done anything to deserve it; Putin
did. The source of that particular profit was Putin's war in Ukraine.
I WOULD CALL THAT WAR PROFITEERING… But when it was proposed that
there'd be a windfall profits tax—just on the extra tax—they (the
companies) said, No way. And fought against it. Some European
countries have done it, but the US hasn't done it.

_AHMED__: You’re so right, Joe... There’s some talk here in the US
now, some people thinking maybe things are getting a little bit
better. How do you respond to that?_

STIGLITZ: It's a mixed bag, to be frank. There was a moment in 2021,
right after Biden took office and the American Recovery Act was
passed. It succeeded in reducing childhood poverty _in one year_ by
40 to 50%
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That's phenomenal.

IT SHOWED US SOMETHING THAT I'VE BEEN SAYING FOR A LONG TIME:
INEQUALITY IS A CHOICE. WE COULD HAVE REDUCED CHILDHOOD POVERTY BY 40
TO 50% ANYTIME WE WANTED TO. We had the money to do it if we'd wanted
to, but it took a person like President Biden, and a moment like the
pandemic, to get our act together.

But then the Republicans, even some of the Democrats, said, great,
LET'S HAVE MORE INEQUALITY. I couldn't believe it.

We’re putting in jeopardy our future, because, you know, children
who grow up in poverty are not going to be as productive. Discontent
is going to have adverse effects on our politics and our society and
our economy. IT IS FOOLISH, I BELIEVE, TO HAVE SO MANY OF OUR
CHILDREN GROW UP IN POVERTY.

One more example, I've been finding it amazing that the Fed has been
saying, “We want to increase the unemployment rate.” Then they go
on to say, it's going to take a lot of pain. Of
course, _they’re_ not going to be feeling the pain… WHILE IT
SEEMS LIKE A SMALL THING—INCREASING THE UNEMPLOYMENT RATE, SAY FROM
3.7% TO 5.1%—THOSE SEEM LIKE JUST NUMBERS, _BUT THEY'RE REAL
PEOPLE._

When you do that, the unemployment rate on say, marginalized groups,
on young African Americans, is not going to be 5.1%, it’s going to
be around 20%. WHAT DOES THAT DO TO OUR SOCIETY?

_AHMED__: Joe, you mentioned choices here, and one of the choices that
we can make to combat extreme inequality is taxing the
ultra-wealthy._ _AND I WANT TO GO THERE BECAUSE IT FEELS TO ME THAT
THE WORLD'S MOVED ON FROM ASKING “MAYBE WE SHOULD TAX THE RICH” TO
AN INCREASING DEBATE ON HOW MUCH WE SHOULD TAX THE RICH._

_The US has such an interesting history here. The most progressive tax
system in the world in the past—FDR to the early eighties_—_top
earners saw an average at the top margin income tax rate above 80%._

_What do you think's the right rate to tax the ultra-wealthy?
Specifically billionaires in today's era?_

STIGLITZ: I THINK WE HAVE TO REALIZE THAT MOST OF THE BILLIONAIRES
HAVE GOTTEN MUCH OF THEIR WEALTH OUT OF LUCK. They did something
positive, they created something, but there were other people doing
similar things. Take Facebook, there was MySpace. ONE OF THEM WAS
GOING TO WIN; IT WAS A LOTTERY. And you can say, they came up with a
better idea, of clicking _Like_
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was a big innovation, but is it worth $50 billion or a hundred or $150
billion?

BUT THE REAL POINT IS WOULD _THEY HAVE DONE IT ANYWAY_—IF INSTEAD
OF HAVING A HUNDRED BILLION DOLLARS, THEY ONLY TOOK HOME $5
BILLION. My view is what drives a lot of this is the drive to create,
to be successful. And if you took away a large fraction of the wealth
they get beyond five or $10 billion, they still would've done it….

Also, most of the wealthiest have gotten at least a fraction of their
wealth out of exploitation. Sometimes it's just exploitation of market
power.

Some of the billionaires … are explicitly exploitive, lying,
cheating… So the kinds of proposals that have been put forward in
the United States by say, Elizabeth Warren
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a wealth tax of 1% or 3% over 50 billion, or over 5 billion dollars,
seem to be very reasonable and would really go a long way to raising
revenues that could alleviate some of our country's problems.

LET ME MAKE IT CLEAR. IT'S NOT THAT WE'RE TRYING TO BE AGAINST
SUCCESS. IT'S REALLY A QUESTION OF SHARING THE WEALTH IN WAYS TO MAKE
OUR SOCIETY FUNCTION BETTER.

_DAAR__: I do want to push you on that, just thinking about the, the
top earners specifically on a top marginal rate. I mean, we have seen
it over 90% in the past. Is that realistic today? You know, getting up
to, to those kinds of percents?_

STIGLITZ: There have been calculations done by some of the top public
finance economists where they carefully look at the trade-offs. People
at the top might work a little bit less if you tax them more. But on
the other hand, our society gains in having a more egalitarian,
cohesive society. And, I think the general consensus is on labor
income, that a tax rate of 70% would clearly make sense.

Maybe a little higher. I don't want to fine tune it too much.

But what we're talking here is also more about wealth taxes. AND THE
IRONY IS THAT, WHILE IN MY VIEW, WE SHOULD BE TAXING WEALTH AT A
HIGHER RATE, BECAUSE MUCH OF THE WEALTH IS INHERITED WEALTH
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ONE OF MY FRIENDS DESCRIBES AS WINNING THE SPERM LOTTERY—THEY CHOSE
THE RIGHT PARENTS…

In fact, we tax at a lower rate; we tax dividends at 20% at the top.
We tax capital gains at a lower rate. And in the United States, if you
pass on assets to your children, you can escape capital gains tax
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Totally.

_DAAR__: When we think about billionaires, we think about a lot of
concentration of wealth. We think about the Elon Musk’s of the world
and the Bill Gates of the world. And, and at the same time, there's a
huge concentration of wealth also in low and middle income countries,
right?_

_It's not just these white men in the Global North, there’s a huge
concentration of wealth in other countries as well._

_And so I do wanna ask, is that also feasible? We're seeing these
mountains of debt payments accumulating in low and middle income
countries, and the proposed solution we often hear from the North is
this drive towards austerity. When you have these choked budgets,
governments are just moving towards austerity_—_obviously pushed for
by the elite, and also by the IMF as this huge dominant external
force._

_But how much is there as an alternative to austerity? How much scope
is there to tax the rich and tax wealth in those kinds of countries?_

STIGLITZ: Oh, I think there's enormous scope. ONE OF THE THINGS THAT
THE INTERNATIONAL COMMUNITY HAS TO DO, OF COURSE, IS CLOSE THE TAX
HAVENS
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A LOT OF THE WEALTH ESCAPES…. There's been enormous growth of
billionaires in China and in India. And those countries, if they
wanted to, could clearly make those who do business in their country
pay, like we do in the United States. We say that your income is taxed
no matter where you make that income. So we discourage tax havens. We
don't do it perfectly, and we ought to do it more, but HAVING GLOBAL
REACH IS REALLY IMPORTANT, AND OTHER COUNTRIES HAVEN'T DONE THAT.

It's a hidden form of corruption; a lot of the wealth is created in
these countries by political connections—that drive a lot of the
wealth accumulation in developing countries and emerging markets.

_DAAR__: And, thinking about tax havens, and how these decisions get
made in international spaces, I actually wanna move the conversation
towards there and towards multilateralism._

_You were such a tremendous force in the discussion on vaccines during
the Covid 19 pandemic… In so many of these multilateral discussions,
we've seen poor countries almost literally locked out of the room on
decisions, and then at the end of the day, getting a very, very raw
deal._

_It blows my mind that we still have such a neo-colonial dynamic
almost. How do we shift that dynamic?_

STIGLITZ: That’s a really good question; you're absolutely right.
There's been a greater effort to have what they call inclusive
frameworks on the tax. They're in the room—but not being listened
to. THE CONVERSATIONS ARE STRUCTURED IN WAYS THAT THE VOICES OF THE
POOR COUNTRIES ARE EFFECTIVELY NOT HEARD. And you see that in the
outcome of the OECD initiative on tax reform.

They wouldn't even disclose how much extra money the developing
countries were going to get. And we know why—because those who did
preliminary calculations said they're getting a pittance. So the
question you ask is the right one: how do we change that?

A new geopolitics is emerging. During the Cold War, there was a kind
of rivalry for the hearts and minds of those in the third world; then,
at the end of the Cold War in the late eighties, that competition
disappeared.

WE'RE ENTERING AN ERA OF A NEW COLD WAR, AND WE'RE SEEING A FAILURE OF
THE WEST. WHEN I LOOK AT THE RUSSIAN INVASION OF UKRAINE, I FIND IT SO
OUTRAGEOUS. It is a disappointment to me that there hasn't been the
kind of support I would've liked to have seen from developing
countries and emerging markets. But I understand their anger.

They say, when we were dying with COVID-19, you wouldn't even share
the intellectual property. And you _still_ won't share that
intellectual property. YOU'RE PUTTING YOUR PROFITS—OF PFIZER AND
MODERNA—ABOVE OUR LIVES; AND NOW THERE'S THIS WAR IN EUROPE, AND
WE'RE PAYING THE PRICE OF HIGHER FOOD AND OIL PRICES, AND YOU EXPECT
US TO SUPPORT _YOU_ IN THIS. So I understand that anger.

Then you conduct your monetary policy in ways that result in our
having to pay higher interest rates, and much of our debt is in
dollars, which is increasing the value. And then you're telling us we
have to have austerity because otherwise we won't be able to pay back
our debts.

MAYBE THE ANSWER TO YOUR QUESTION IS, THE NEW REALITIES OF THE NEW
COLD WAR WILL FORCE THE US AND EUROPE TO BEGIN PAYING MORE ATTENTION
TO THE DEVELOPING COUNTRIES THAN THE EMERGING MARKETS.

_AHMED__: Profound answer, Joe and what you say really relates also to
what we hear from folks we work with across the world. I want to get
to a final question here…_

_You've led the world to address inequality. Sometimes the fight does
feel quite hard._ _WHAT KEEPS YOU GOING, JOE, TO, TO KEEP FIGHTING
FOR A MORE EQUAL WORLD?_

STIGLITZ: I just can't accept a world with the kind of social
injustice that we see. I DON'T THINK I COULD SLEEP AT NIGHT IF I FELT
I WEREN'T DOING WHAT I COULD TO HELP CREATE A BETTER WORLD. On the
positive side, I think there has been progress. Sometimes I feel like
it's two steps forward, and then one step back.

We've been criticizing the IMF and austerity, but when I
wrote _Globalization and Its Discontents_, I think things were much
worse …Now, there is more focus on inequality.

There's been a recognition that capital controls may be a better way
of running capital markets in the midst of a crisis. THERE'S A
RECOGNITION THAT AUSTERITY HURTS, AND IS NOT THE WAY TO PROMOTE EVEN
PAYING DEBTS, LET ALONE GROWTH. There are new views on how to deal
with technical issues like debt sustainability.

I don't want to say it's unmitigated victory. I said it's two steps
forward, one step back. Maybe I'm too much of a student of the
Enlightenment where I believe in progress and reason, progress…

I come to this from a fairly academic perspective. I very much believe
in Enlightenment values, and I have to believe that if we reason
together, we get out the facts; then maybe you might say IT'S REASON
PLUS THE MORAL GOODNESS—THE EMPATHY THAT ADAM SMITH TALKED ABOUT IN
THE THEORY OF MORAL SENTIMENTS—THAT WILL LEAD US IN THE RIGHT
DIRECTION.

_DAAR__: On that note, I'm smiling, during a tough week of thinking
about the state of the world. Joe, this has been such a treat. You're
so inspiring, energizing, as ever. I'm truly grateful that you took
the time with us today. Thank you._

_AHMED__: Embracing that, embracing that moral goodness. Joe, thank
you so much._

_Nadia Daar is the head of the Washington DC office of Oxfam
International._

_Nabil Ahmed leads Oxfam's agenda on economic justice that engages
policymakers, advocates, and activists to address inequality in the US
and internationally. He is a strategic advocate and convener,
influencing policies and discourse on wealth inequality, financing,
health and worker power at the intersection of class, race and gender.
He has led alliances and teams to win policy progress with governments
and the private sector._

_Based in Washington DC, Nabil joined Oxfam America in 2022. He is a
public speaker and contributor on inequality issues, on outlets
including Bloomberg, Al Jazeera and AFP._

_Nabil was formerly Oxfam International’s Head of Executive Strategy
and Communications, based in Nairobi, Kenya, where he led strategic
influencing and public engagement efforts to tackle inequality and the
climate crisis. He was the lead author of Oxfam’s flagship global
inequality report in 2022, “Inequality Kills,”, and led Oxfam’s
work to raise attention on inequality at the Davos World Economic
Forum (WEF) since 2016. He led Oxfam’s engagement with the
International Labor Organization’s Global Commission on the Future
of Work and the G7 Gender Equality Advisory Council, and represented
Oxfam on the WEF Advisory Board on Risks._

_He co-founded the People’s Vaccine Alliance that fostered a
movement of millions of people, and led efforts with world leaders and
Nobel Laureates to challenge pharmaceutical monopolies over Covid-19
vaccines._

_Nabil was formerly a national organizer, worked in the private sector
at Unilever, and is a graduate of the University of Manchester, UK. He
is a Board Member of Amnesty International UK, and co-hosts EQUALS,
Oxfam’s global podcast about inequality._

_Oxfam [[link removed]] is a global organization that
fights inequality to end poverty and injustice. We offer lifesaving
support [[link removed]] in times
of crisis and advocate for economic justice
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equality
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and climate action
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We demand equal rights and equal treatment so that everyone can
thrive, not just survive. The future is equal._

_Inequality is the most pressing issue of our time. And for 80 years,
people like you have fueled our mission to end poverty and injustice.
From the highlands of Central America and the corn fields of Uganda to
the shores of the southern Gulf Coast in the US, Oxfam and our
supporters are fighting to guarantee a life of dignity for every
person in crisis and to challenge billionaires, corporations,
governments, and international financial institutions to do better._

_THE STORY OF OUR FUTURE STARTS WITH YOU. Join Oxfam today and let’s
build a more equal future—together._

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