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Speaker 1: This is Bloomberg Surveyance. We're seeing slow but steady growth

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Speaker 1: in the European economy. It's just simply moving forward at

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Speaker 1: a very sluggish paste. The good trends that are happening

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Speaker 1: in the job market are starting to spread, and I

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Speaker 1: see that in our surveys of our smaller businesses, people

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Speaker 1: who vote via the stock market, even though this political

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Speaker 1: environment really doesn't have much to do with medium and

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Speaker 1: long term earnings growth prospects. Bloomberg Surveillance your link to

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Speaker 1: the world of economics, finance, and investment on Bloomberg Radio.

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Speaker 1: Good morning, I'm Michael McKee. It's seven am in New

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Speaker 1: York and in Washington, where the Fed begins a two

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Speaker 1: day policy meeting this morning. The decision two pm tomorrow.

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Speaker 1: Nothing is forecast to happen, actually, but we are still

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Speaker 1: trading on it and the Bank of Japan meeting on Thursday.

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Speaker 1: We're looking at European shares Hired today, breaking a three

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Speaker 1: day losing streak. The stock six hundred up by a

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Speaker 1: point two tents of eight percent. The day accent Germany

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Speaker 1: is off a little bit seven points less than a tenth,

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Speaker 1: but the Footsie trading higher seventeen points three tents of

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Speaker 1: eight percent. Here in the U S SMP features are

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Speaker 1: up by three points a tenth, DOW EVENI features up

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Speaker 1: twenty two points. That's also a tenth NASDAC features at

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Speaker 1: the moment are flat. Interesting moves in the bond market today.

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Speaker 1: Right now we're looking at the ten uere note yield

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Speaker 1: lower by a basis point one point nine one percent,

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Speaker 1: five year one point three eight percent, the two years

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Speaker 1: higher eighty five basis points. We've got a little bit

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Speaker 1: of flattening going on. We're also seeing some reaction in

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Speaker 1: the currency markets. Interestingly enough, the dollar index lower again

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Speaker 1: today ninety four point five seven five, but the Euro

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Speaker 1: trade stronger on eighty four, the yen trade stronger one

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Speaker 1: ten ninety two. In the department of not what they

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Speaker 1: want to see, uh. The oil markets, West Texas Intermediate

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Speaker 1: forty three oh three is up nine tenths of eight percent,

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Speaker 1: Brent crude forty four nine d three up one per cent.

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Speaker 1: I should mention that Bloomberg surveillance has always brought you

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Speaker 1: by investco don't settle for average in your portfolio to invest.

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Speaker 1: The right approach means investing with high conviction. Find out

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Speaker 1: more at investco dot com slash high conviction. In just

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Speaker 1: a moment, when you hear her voice, you're going to

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Speaker 1: realize that Tom Keen is not here today. I'm gonna

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Speaker 1: do my best impression. Tom is on vacation. Lisa brown

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Speaker 1: Witz wearing a bow tie. Uh here to fill in. Hi,

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Speaker 1: good morning, good morning. I'll try. I'll t best job. Yes, well,

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Speaker 1: good morning. What is what is the best Tom? I

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Speaker 1: don't know anyway. Um, we have to get straight to

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Speaker 1: our guests because we have to continue our conversation with

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Speaker 1: Joe Stiglets. We were just talking with him on Bloomberg

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Speaker 1: Surveillance on television, and we had just begun talking about

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Speaker 1: US politics, which, of course you're gonna have some interesting

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Speaker 1: views on, given Joe's long, long, long involvement in how

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Speaker 1: the economy affects those who are less advantaged. Your new book,

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Speaker 1: The Great Divide on Equal Societies and what we can

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Speaker 1: do about them? Uh now out in paperback with an

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Speaker 1: updated version. Uh. The US political campaign continues. We were

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Speaker 1: just talking about how Bernie Sanders and Hillary Clinton have

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Speaker 1: talked a lot about inequality, your favorite subject. I want

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Speaker 1: to repeat that the question I asked you, there is

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Speaker 1: this going to be a subject that uh moves to

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Speaker 1: moose front and center for American politics after the inauguration

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Speaker 1: of the next president or or the candidates just running

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Speaker 1: around trying to pander to the voters, and once we

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Speaker 1: get back, once we get back to governing, nothing happens.

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Speaker 1: I think it's gonna represents a fundamental shift in in

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Speaker 1: the discourse and in policies. I think, you know, what

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Speaker 1: people have discovered is that for a third of a

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Speaker 1: century we were pursuing a set of policies that were

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Speaker 1: promised to bring greater economic growth. It was understood that

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Speaker 1: there would be more inequality, but the gain from growth

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Speaker 1: would far outweigh the slight increase inequality, so that everybody

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Speaker 1: would be a winner. And after a third of a

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Speaker 1: century we can declare that experiment of failure. That is

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Speaker 1: to say, the bottom have basically seen their income stagnate

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Speaker 1: over a third of a century, while the country as

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Speaker 1: a whole of their GDP the country's GDP has gone up.

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Speaker 1: And so there are a lot of people who say

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Speaker 1: something's wrong with an economic system where you know, one

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Speaker 1: half two thirds are not really participating in the in

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Speaker 1: the fruits of the economic growth. That is that is occurring,

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Speaker 1: and the economy is not growing as fast as it

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Speaker 1: was in the decades after World War Two, where when

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Speaker 1: we did have shared prosperity. Well, go ahead. So are

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Speaker 1: done with Trump and Vernie Sanders indication that we've reached

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Speaker 1: some kind of tipping point or do you think that

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Speaker 1: sort of the dissatisfaction with the way that the current

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Speaker 1: society is set up is going to boil up even

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Speaker 1: more into a more dramatic tipping point. I think it's

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Speaker 1: going to continue to boil. And you know, showing up

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Speaker 1: not just in these income statistics, of showing up in

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Speaker 1: in all kinds of health statistics and life expectancy, and

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Speaker 1: and people who are not men, who are not college

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Speaker 1: graduates women as well, Uh, showing up in increasing suicide

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Speaker 1: deaths from all kinds of social you know, social disease, drugs. So, uh,

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Speaker 1: there's so many things about America that have become you

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Speaker 1: might say unique. The fact that we have much higher

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Speaker 1: rates of incarceration than any other country. Uh, these are

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Speaker 1: things we shouldn't be proud of. We have the highest

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Speaker 1: level of inequality of any of the advanced countries. We

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Speaker 1: have among the lowest levels of equality of opportunity. So

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Speaker 1: when you start looking at these statistics, you have to

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Speaker 1: be worried. And it is not a surprise that finally

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Speaker 1: it's beginning to show up in our political not only

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Speaker 1: a political landscape, both in the discourse and in the

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Speaker 1: feelings that are being reflected in large parts of the electorate.

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Speaker 1: Do you expect anything to sort of prompt change? Are you?

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Speaker 1: Do you see that sort of in the cards? Are

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Speaker 1: not really well? I do think policies can change, but

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Speaker 1: it's going to be a very long road, um, because

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Speaker 1: inequality as we have it today in the United States

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Speaker 1: is the result of a large number of decision It's

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Speaker 1: not just one thing. So we have an education system

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Speaker 1: that's serving to perpetuate the inequality. We have a tax

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Speaker 1: system that serving to perpetuate their inequality. America's again unique,

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Speaker 1: UH in having those at the very top pay a

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Speaker 1: lower percentage of their income in taxes than those who

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Speaker 1: are somewhat better that a regressive tax system. There's some

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Speaker 1: debate always about how progressive tax systems should be, but

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Speaker 1: that no one advocates a regressive tax system, and yet

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Speaker 1: that's what the United States has wound up with. UH.

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Speaker 1: If you look at one of the very disturbing features

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Speaker 1: of our economy is this prevalent short termism. Corporations are

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Speaker 1: focusing on the quarterly returns. We are focusing on the

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Speaker 1: quarterly returns. You aren't focusing on investments in technology, uh,

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Speaker 1: plant and equipment, but almost so, you're not focusing on

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Speaker 1: investments in people that are leading to a more productive

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Speaker 1: labor force. And without a more productive labor force, you're

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Speaker 1: not going to get long term economic growth. Give me

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Speaker 1: a one or two things that could be done next

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Speaker 1: year if you had the proper president and the proper Congress,

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Speaker 1: because you're still going to have at least half the Congress.

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Speaker 1: They didn't even want to do anything. Well, there are

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Speaker 1: some things that I think that are so egregious. I

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Speaker 1: think there there could be agreement. UH. For instance, UH

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Speaker 1: a provision what it's called carried interest taxes. The people

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Speaker 1: who are making their money out of taking apart companies

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Speaker 1: and and and uh destroying jobs that they should pay

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Speaker 1: lower taxes than those people who are doing research creating

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Speaker 1: new businesses. A lot of people think that it's outrageous.

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Speaker 1: I think there's a broad consensus that could change overnight. Uh.

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Speaker 1: There are there's a whole agenda on what you might

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Speaker 1: call UH trying to change the focus of American companies

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Speaker 1: to be more long term. You know, this is not

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Speaker 1: just a left agenda. Larry think has been advocating that UH.

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Speaker 1: If you look at what is causing that, it's related

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Speaker 1: to our excessive emphasis on UH stock options, UH disclosure requirements, UH,

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Speaker 1: a whole set of provisions that would make our economy,

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Speaker 1: I think, more efficient and more equal. You know, there

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Speaker 1: is an argument that the U. S economy has gotten

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Speaker 1: less equal as the rest of the world has gotten

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Speaker 1: more equal, and that part of the reason why you

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Speaker 1: have seen this sort of outflow of middle class jobs

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Speaker 1: is that there has been a lot of outsourcing UM

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Speaker 1: factories to other countries. You know, So do you do

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Speaker 1: you buy this argument? I mean, it's sort of difficult

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Speaker 1: to change policies in the US if it's an international

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Speaker 1: kind of global hyndm. There, globalization is undoubtedly playing some role,

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Speaker 1: and you you pick that up and in in in

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Speaker 1: the debate, and I think there's some truth in that.

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Speaker 1: And I think President Obama's argument that just another trade agreement,

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Speaker 1: and particularly a bad trade agreement like TPP or we

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Speaker 1: don't know what t tip is like, is going to

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Speaker 1: make things better? He's absolutely wrong. Halt that hold that thought.

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Speaker 1: We're gonna have to take a quick break here because

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Speaker 1: we've got to uh pay the bills. But uh we will,

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Speaker 1: we will give you equal equality. Answering the question, and

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Speaker 1: just a woman. Joe Stiglets from Columbia University, Nobel Prize

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Speaker 1: winning economists is our guest here on Bloomberg Surveillance Bloomberg

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Speaker 1: Radio Worldwide. This hour of Surveillance is brought to you

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Speaker 1: by BMW BoNT Kisco. Is that BMW mot Kisco dot com.

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Speaker 1: Here's Michael Barr with the latest news headlines. Mike Lisa,

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Speaker 1: thank you for much. Republican front runner Donald Trump is

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Speaker 1: looking to do well in today's primaries. Five states Pennsylvania, Delaware, Maryland, Connecticut,

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Speaker 1: and Rhode Island hold presidential contest today. Democratic front runner

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Speaker 1: Hillary Clinton is also looking to have a good day

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Speaker 1: in the primaries. A strong showing could put her very

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Speaker 1: close to clinching the nomination. South Korea's defense ministry says

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Speaker 1: it has no intelligence to back up a media report

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Speaker 1: that the North maybe getting set for another missile launch.

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Speaker 1: South Korea's John Happ News Agency reports North Korea is

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Speaker 1: believed to have placed a new powerful mid range missile

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Speaker 1: on standby. Real service in France has been happened today

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Speaker 1: because of a strike over work conditions. About half of

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Speaker 1: the high speed trains and about a third of local

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Speaker 1: trains are running today. Global News twenty four hours a day,

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Speaker 1: powered by our twenty four hundred journalists. I'm Michael Barr,

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Speaker 1: Mike Lisa. Thank you, Michael. Well. We're seeing the markets

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Speaker 1: move a little bit higher this morning since we began.

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Speaker 1: S ANDP features are up some three points higher, two

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Speaker 1: tents of a percent. This is Bloomberg Radio. Bloomberg's Avalanced

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Speaker 1: the future of funding administration. SS and C there the

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Speaker 1: future of fund administration. Global Business News twenty four hours

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Speaker 1: a day at Bloomberg dot com, the Radio plus mobile app,

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Speaker 1: and I'm Karin Moscow. This updates rot to you by

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Speaker 1: cbo E vix Options and Futures. Volatility can be harnessed

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Speaker 1: VIX a busy morning for earning SPIAT Chrysler's profit rising

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Speaker 1: in the first quarter, lifted by demand for Jeep sport

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Speaker 1: utility vehicles in Europe and the US procturing Gamble posting

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Speaker 1: fiscal third quarter profit that topped analysts estimates held by

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Speaker 1: cost cutting campaign and Eli Lily raised its profit in

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Speaker 1: sales forecast for the year after receiving a tax benefit

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Speaker 1: in the first quarter. Snp emny future is up three

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Speaker 1: points and Dowie mini futures of twenty eight Nasadaki mini

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Speaker 1: futures up three The decks in Germany is little changed

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Speaker 1: and your treasury up one thirty second. The yeld to

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Speaker 1: one point nine zero percent. Nim X screwded oil up

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Speaker 1: one point four percent or sixty cents to forty three

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Speaker 1: twenty three A barrel go my school down four ten

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Speaker 1: percent or five dollars forty cents at twelve thirty four

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Speaker 1: eight announced the euro a dollar twelve eighty one, the

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Speaker 1: en one ten point nine one, and that's a Bloomberg

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Speaker 1: business flash. Mike and Lisa, thank you very much. Karen

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Speaker 1: Moscow Um we're speaking with Joe Stiglitz, the Columbia University

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Speaker 1: economics professor, Nobel Prize winner. UH. And just before the break,

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Speaker 1: you were saying some not so very nice things about

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Speaker 1: the TPP trade agreement and I interrupted you. So with

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Speaker 1: the caveat this is a family program, you want to

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Speaker 1: continue your analysis. Well, Uh, there's been a lot of

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Speaker 1: discussion of the role globalization and inequality UH, And in

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Speaker 1: my book The Great Divide, I actually UH spend several

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Speaker 1: chapters talking about that issue. And I'm very convinced that

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Speaker 1: the way we've managed globalization UH hasn't led to greater inequality,

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Speaker 1: and that uh particularly globally, but even in the United States. So,

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Speaker 1: for instance, TPP UH will make it more difficult to

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Speaker 1: get access to generic medicines. Remember, back in the eighties,

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Speaker 1: we reached an agreement between peak farma, pharma and generics

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Speaker 1: what's called the Hatchwaxman Act. And TPP undermines that basic

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Speaker 1: accord about the balance. And the net effect is that

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Speaker 1: it will raise drug prices. And I find that so

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Speaker 1: ironic because Obama's signature achievement is Obamacare supposedly increase access

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Speaker 1: to drugs and lowering prices. And yet and yet in

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Speaker 1: this rate agreement, he's going exactly in the opposite way.

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Speaker 1: The most invidious part of the trade agreement, though, is

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Speaker 1: the investment agreement. UM. Another area where Obama's you know,

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Speaker 1: trying very hard is climate change. And yet in the

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Speaker 1: investment agreement, UH, there are provisions that will make it

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Speaker 1: much more difficult uh to pass UH legislation that will

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Speaker 1: UH have regulations dealing with global warming, regulations to protect

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Speaker 1: the environment, health safety. Only one area of regulation was

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Speaker 1: carved out, and that was tobacco. Yes, you know what

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Speaker 1: was going on tobacco was outrageous what they were trying

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Speaker 1: to do in stopping that regulation. But you know, we

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Speaker 1: need climate change regulations, we can need banking regulations. We

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Speaker 1: can talk about the TPP for an hour. Unfortunately, only

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Speaker 1: have a few more minutes, so I've got to quickly

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Speaker 1: shift years. Here. You were just in Japan. The Bank

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Speaker 1: of Japan meets on Thursday. The prescription you offered to

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Speaker 1: the Prime Minister and to coronas on, Well, my prescription

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Speaker 1: was that they need to stimulate the economy. Uh. That's

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Speaker 1: a prescription. I think that's fiscal stimulus, and that you

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Speaker 1: know they've done a lot with monetary stimulus. That what

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Speaker 1: they called their first arrow. Uh. They shot it very strong.

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Speaker 1: But there's a limit to what you can do. The

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Speaker 1: scheduled increase in the sales taxes, I said, really you

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Speaker 1: ought to be uh put aside. Uh, if you're going

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Speaker 1: to have an increase in tax as I said, you

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Speaker 1: need to have a carbon tax. Uh. A carbon tax

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Speaker 1: has the advantage that at the very time that it

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Speaker 1: raises revenue and encourages investment, encourages investment because verbs have

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Speaker 1: to retrofit themselves to respond to the challenge a globe

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Speaker 1: were warming. So it's one of those few taxes that

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Speaker 1: simultaneously raises taxes and stimulates investment. Do you think that

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Speaker 1: at this point that the stimulus programs in Japan and

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Speaker 1: in Europe have reached, uh, the point of being actually

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Speaker 1: detrimental to growth and actually hampering growth at this point

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Speaker 1: rather than stimulating. I mean, that's one argument is if

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Speaker 1: you've got if you've got companies like Unilever, which just

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Speaker 1: borrowed money with a zero percent coupon in Europe, you know,

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Speaker 1: why would they go out and invest in anything riskier

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Speaker 1: when they could just invest in something that's you know, uh, mature,

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Speaker 1: you know, slight slightly higher yielding. Well, the old theory

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Speaker 1: was that they would use that low interest rates and

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Speaker 1: do more real investment. Unfortunately happening. Unfortunately, more and more

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Speaker 1: of the data say they're taking that low interest loans

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Speaker 1: and paying out dividends. They're they're they're not using the

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Speaker 1: money that they're ra using the financial markets for increasing

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Speaker 1: their investment. That's true in the United States as well.

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Speaker 1: And this is a major change in perspective about uh,

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Speaker 1: the way financial markets work. It used to be that

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Speaker 1: firms borrowed money for investment. Now they borrow money to

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Speaker 1: distribute more money to their shareholders, and so that kind

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Speaker 1: of stimulus effect isn't working. And that's why I've argued

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Speaker 1: that one of the conditions ought to be if you

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Speaker 1: have access to the FED window, access to the windows,

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Speaker 1: you know, the Central Bank, you have to show that

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Speaker 1: you're actually that money is going for real investment, uh,

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Speaker 1: not to pay out dividends, uh, not to buy back shares,

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Speaker 1: share back buybacks in the United States, you know, each

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Speaker 1: huge levels uh and so um that's you know, that's

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Speaker 1: one of the reasons why monetary policy has been relatively

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Speaker 1: ineffective and it goes back to the theme that you

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Speaker 1: asked me about. What did I advise in Japan? It

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Speaker 1: was unique fiscal policy, and in the context of Japan,

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Speaker 1: they were thinking of actually restraining going the other direction

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Speaker 1: with a rise in the tax, in the sales tax,

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Speaker 1: and that would have dampen the economy, just like the

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Speaker 1: previous rise did. And they saw that. Everybody said when

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Speaker 1: they rose it increased it before they said, don't worry, uh,

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Speaker 1: the economy, we know how to manage it. It turned

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Speaker 1: out that it did have the negative effect that I

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Speaker 1: and others anticipated, very unfortunately, Joe Stiglets. Unfortunately, that's all

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Speaker 1: we could go for hours, and so we want to

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Speaker 1: make a deal with you. When you have ours, come

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Speaker 1: back here to Bloomberg Surveillance to continue the conversation. His

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Speaker 1: last book, the updated edition. You can get it out

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Speaker 1: of the Great Divide on equal societies and what we

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Speaker 1: can do about them. Uh. Joe Stiglets from Columbia University,

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Speaker 1: thanks for being with us here on Bloomberg Radio. This

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Speaker 1: is Bloomberg Worldwide. Bloomberg Surveillance bought you by Mercedes Benz.

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