hello everyone and welcome back to conversations with Tyler today I'm with Joseph stiglets he has won a Nobel prize in economics and if they did such things he could have won several Nobel prizes in economics he has a 153 page VA online which is neither complete nor really has any shaft uh most notably today he has a
new book out called the road to Freedom econom I and the good Society Joe welcome nice to be here I'd like to talk about just how your career has evolved so there's an anecdote I read your breakthrough peace we're going back now to about 1970 you're writing with Michael Rothchild on the issue of
increasing risk and I read that this these two pieces they actually came from an eight- hour lecture you gave in Japan is that true well actually not those two pieces but a series of pieces on corporate govern and market value ma value maximization came from an 8- hour lecture I gave in in uh hakone Japan how can you lecture
for eight hours uh it's easier to lecture than to listen for eight hours that's I didn't understand that then but I I Now understand it a little bit better uh easier to talk than to listen did your audience even understand you did you have that sense oh I did I did I I did have an uh a sense they understood me um
they understood the major themes uh much of what I was talking about was mathematical and it was a a a more mathematically trained audience so they could follow the scribbles uh but I I also think they could follow uh the idea uh one of the ideas was whether uh a firm that maximized value if all firms
did that uh would that lead to um the well-being of society the well-being of of welfare uh and uh the result of that was H uh that shareholder value maximization did not in general lead to uh welfare maximization and in those talks did you outline what sometimes called the unanimity theorem yes when shareholders
agree yes that was that was one of the ideas in that long long lecture uh and the lecture then got published in about four or five different papers and one of the papers uh with Sandy Gman was an articulation of that unanimity theorem that theorem said uh what were the conditions under which all shareholders
would agree with each other uh regardless of what their beliefs were or uh perceptions uh just like if they knew what prices were and the answer was very very restrictive conditions so when you're presenting ideas to an audience do you find that as you talk about the idea that you actually develop the idea
itself or is it simply something prepackaged and it stays as it was no ex uh every lecture is a learning experience for me uh I learn often questionings will stimulate me to think uh how to other ways of uh other developments of the idea uh other aspects I hadn't thought of most importantly uh I come to
understand better uh the mindset of The Listener uh how they think about the topic and then what are the difficulties obstacles they have to understanding my perspective and in future lectures then I can adapt my presentations uh to better reflect how they're seeing the world and uh hopefully do a better job of of
explaining this is really part of the art of pedagogy the art of teaching how did being a debater earlier in your life influence your intellectual career oh it had an enormous influence uh debating uh is a you know was a very valuable skill in terms of organizing ideas uh making you see both
sides of the topic because the peculiar way that debating is organized in our high schools is you have to take both sides uh you don't know until you go to a debating tournament are you on one side or the other and of course after you study a topic you may wind up on one side but you have to be able to think to understand the other
side so well that you can even present their argument and so that's a really important skill the other aspect of debating that was really important for me as as I was growing up is it really got me interested in economics and public policy issues I still remember one of the issues that we debated way
back in the 50s was should the government be providing support to the agricultural sector subsidies and that's an issue that we are still debating UH 60 years later okay so you were a debater when you were at Amherst you were also head of student government right and you you voted to abolish fraternities isn't there good evidence
that fraternities raise wages that was uh unions raised wages uh fraternities uh I was opposed to to fraternities because uh Amis was a small College thousand boys men uh and uh they had the effect of dividing the community the philosophy that I had was that we should be one community and the
fraternities tended to uh interfere with that uh students from one fraternity would always sit to dinner uh at dinner at the same tables with the members of their fraternity uh there were uh class uh aspects of fraternities uh they were just I thought very divisive in a small community and it turned out that my
perspective eventually prevailed uh a number of years later Amis did abolish the fraternities uh it's a important lesson to me in my political life sometimes you begin a campaign knowing that in the next year two years while you're actually there you may not succeed but sewing the sees of discussion
debate uh maybe in five sometimes 10 sometimes 15 20 years uh things turn out and you and and you wind up uh uh winning the debate so you didn't think it was efficient TBO clustering for networks if you hang out with a bunch of people you get to know them very well they recommend you for jobs right that's
why the wage is higher uh well uh my view is you can hang out you can form networks but the way the fraternities were organized was more divisive than the positive benefits that you talk about am with a th000 kids 250 in a class our objective was to have a network of all all the kids uh working together and of course within that
there'll be tighter clusters there are the physics Majors there are the kids that are intered in sports there are multiple networks within that uh small group and it was try to Foster Foster that kind of diversity of networks that we wanted uh to emphasize the late 1960s for how long are you in Kenya and
where are you spending your time uh the late 1960s I got invited by the Rockefeller Foundation uh to go to Kenya just a few years after uh the end it got independence uh in fact uh uh if you remember the history uh before independence there was the mama uh uh attacks a lot of uh Europeans uh
colonialists got got killed one night I looked under the bed I was sleeping at in uh Karen uh which was a suburb of Nairobi and found a machetti under there that the people who had who had lived there had kept there to protect themselves uh it was striking it was a eye openening uh uh uh visit uh teaching research um because uh
it when saw both the colonial Heritage uh the fact that there weren't enough civil servants uh people trained to run the government uh that the colonial Masters have failed in uh their uh duty to enable it to be a well-functioning uh uh government um and the legacy of colonialism was very present but it was
also very interesting to see what it was like to live in a developing country and to think very deeply about what one could do to promote development you know I went back to Nairobi 50 years later to give a lecture at the University of Nairobi and uh what had happened in those 50 years was so striking uh
Nairobi had grown from a small City to a a huge metropolitans metropolitan area one of the largest in Africa um the university had grown to be a a very large University it was a a a really heartwarming event my lecture the response the uh the engagement of the students so 50 years was a big
transformation what was it that had puzzled you about Kenyan sharecropping back then back then one of the one of the issues that of course as Public Finance economists we worried about was um uh uh the adverse incentive effect on Taxation and that if government takes 50% of your product we say oh that's a terrible system it
discourages uh uh work and uh what general sense in the United States is that even the top rate shouldn't be higher than 40% I think that's wrong but that was uh certainly a sentiment very strong sentiment well here you have sharecropping not only in Kenya but many other countries around the world where
one half to 2/3 of the produce was taken by the landlord that was equivalent to a tax of 50 to 606 uh 67% and yet this was a prevalent form of tendency a way that people the arrangement that they had with a landlord and when had to ask uh why was that how could this seemingly inefficient system persist for thousands of years and that
was what motivated one of my most influential papers uh that was the idea that there was a uh risk incentive tradeoff that in the absence of perfect information and presence of a lot of risk uh Farmers uh couldn't bear the risk of land ownership they owned the land or rented the land more accurately they
rented the land they'd have to absorb all the residual of the fluctuations in the weather and and all the other uh fluctuations disease uh that would uh they would confront and with sharecropping they divided that risk and a lot of the risk was born by the landlord and that was a a model of what came to to be called the principal Asian
problem it's part of the incentive model that now is really fundamental it was a first formalization of that basic incentive model that is now basic to modern economics and is some of that that the land owner was providing fertilizer Machinery that there's a principal agian problem on both sides and you need to
weigh off the marginal incentives or was it just monopolization of the land oh no it included uh I had a separate paper where I looked at this issue several papers where I looked at uh the role the landlord in providing seed fertilizer and uh and credit and um what was called uh interlinking of
markets uh you might ask again why not have separate markets for credit separate markets for seed for Milling the the grain at the end of the Harvest and the answer was that uh in the presence of these incentive problems uh it turned out to be efficient to have this kind of integration of these various activities
and that for instance by providing the right kind of seed substit iding the seed maybe subsidizing the fertilizer the landlord could elicit more effort on the part of the tenant and that was a good thing because on his own the tenant had less incentive to work because he was being taxed
effectively by 50% because 50% of his effort went to the benefit of the landlord so it it became the whole theory of rural organization what is it you think of Henry George and Georgia economics today well that was another uh set of articles that I wrote uh in the late 70s um concerning uh the uh uh land ranks
associated with the cities um you have a city uh you have transportation costs uh it's expensive to go from the fringes of the city to the center where economic activity occurs and people want to pay more for being closer to the center Center and I developed a whole theory of of the rents that would arise in that kind of a
context as people with facing cost of Transportation would bid up the price of land and then I asked the question how how was it what is the relationship between the optimal size of the city the optimal spending on public goods by the city and the rinks that were generated in the way I just described
and there was a remarkable theorem that came out came about which was that if you have optimal siiz cities the and you tax the ranks 100% that would be exactly the right amount to finance the optimal amount of public goods it was a very theoretical idea but it was it was it captured an important idea that Henry George who was
one of the great economists of the 19th century had enunciated it which was taxing land ranks was the efficient way the most efficient way for raising revenues and is that true today for a given level of Taxation do you think we should take more of it from landlords yes I I think uh the ownership
of land still provides a one of the most important bases of Taxation and we almost surely do not tax it uh uh as much as we should uh when the government say in the New York City builds a Subway uh those near the Subway have enormous increased windfall gain from the value of their land you can actually
document the land goes up the city is paying every all the citizens are paying for it and yet the owners of the land get a windfall now what one of the difficulties in practice is the following that the theory apply to the round rent the the the real value of the land and property taxes apply both to
the land and the buildings that are built on top of them and uh differentiating between the two is not always an easy matter so this is a general principle in taxation again something the my economics of information try to clarify that uh one of the principles of taxation is to try to it's often difficult to identify the
real variables that you would like to tax and this is an example of that do you favor the deregulations of the current yimi movement allow a lot more building um no that goes actually to one of the themes of my book uh one of the themes of my book is uh one person's freedom is somebody person's unfreedom
and that means what I can do uh I I talk about Freedom as as what uh uh what somebody could do his opportunity set his choices that he could make and when one person exerts an externality on another by exerting his freedom he's constraining the freedom of others so if you have unfettered uh building for instance uh
uh you don't have any zoning you can have a building as high as you want uh the problem is that your high building deprives another building of light uh there may be noise uh you don't want your children uh exposed to say uh a brothel that is created next door uh and uh some people in the book I actually
describe talk about uh uh one example Houston is a city with relatively little zoning and I have some quotes from people living there describing some of the challenges that uh that results in now when you're young you spend some time at Cambridge University what was it like being tutored by Joan Robinson uh uh Joan Robinson was one of
the uh uh great Economist uh of the um last century uh she was uh uh you might say very idiosyncratic uh she uh had uh A peculiar set of beliefs that got more peculiar as she got older when she was younger she did some fantastic economic work theory of monopol Monopoly uh trying to understand the role of
monopolies in our uh economy um but as she got older she got more uh she was very supportive of the cultural revolution in China so uh you could imagine uh when I went to Cambridge as a full briak scholar uh she was assigned as my uh tutor one of the reasons she was assigned as my tutor was that when I
went to Cambridge on this full brigh uh the department uh of Economics uh had to discuss whether I would be accepted and uh her view was that my mind had been ruined by two years at MIT and two rightwing right for her I was two rightwing and I had to start not as a graduate student I had to be
deprogrammed by beginning as a first year undergraduate and there had been a a Fierce fight in the faculty at Cambridge about whether I should be accepted as a uh as a uh Fullbright graduate student and uh those arguing uh on that that I should prevailed but the quit bro was that she would be my tutor uh well you
can imagine I learned a lot from her I came to understand better her way of thinking uh but after uh eight weeks we we uh parted and I got another tutor Frank Han one thing that's striking to me about the Arc of your career if I think geographically where you've been well you start in Gary Indiana there's Amherst there's MIT there's Kenya
there's Yale there's Cambridge there's Oxford there's Princeton there's Boston University there's Columbia there's seven years in Washington I'm sure I've left some out but being in so many different places how has that influenced what you've produced and what you've thought and why didn't you just say stay
at MIT your whole life surely you had that option yes but you could have asked why didn't I just stay in Gary uh as a little uh as a young person I I sort of read about this big world outside of Gary and I just wanted to see it and as I went to amorist my eyes opened up more and I wanted to see more I just had this
thirst for for seeing more and more of the world and the more I saw it the more I wanted uh and that had an enormous uh influence I think coming from Gary Indiana gave me a kind of empathy for uh those who uh didn't start at the top in life uh it g certainly made me much more interested in in development
Gary was beginning to go through the process of D development uh that we see over the next uh uh 30 years after I left uh it was sort of the epitome of deindustrialization in in the United States um so uh I think it it it affected me made my career very different it affected my economics in a
lot of ways I was more concerned about inequality uh than most of my colleagues I wrote my thesis on inequality uh um it's been a a Thrust a threat throughout my career I I uh wrote in 2012 the book the price of inequality and a couple years later the price of uh The Great Divide um the good news is with that
long Arc uh we are finally the economics profession our society is finally catching up on coming to terms recognizing uh the importance of studying inequality and the important role that inequality plays in creating the great Dives in our society and Paul Samuelson also was from Gary right and the Jackson 5 that's right that's right
it was a impressive you might say impressive uh Trio in the library in Gary Indiana there's a mural that they made recently uh I went back to Gary uh just a few years ago and uh they were very proud to show me the rural in which the Jackson by Paul Samson and me are both are all all on that mural something
else striking about your career that I noticed reviewing for this podcast this is especially at a time when co-authorship is not nearly as normal as it is now the number of distinct co-authors you have and they're each famous in their own right so there's Michael Rothchild there's aanish Dixit
uh Sandy Grossman Tony Atkinson Carl Shapiro Andrew Weiss Greenwald I'm sure there's others uh I've forgotten about I don't see anyone else doing that there's people who have standing co-authors like their sergeant and Wallace for a while but what led you to have this pattern of co-authorship and how how has that
shaped your thought well quite frankly I like interacting with other people I think I'm a social person and uh uh I've been lucky uh you might say to Bubble up with ideas uh and I uh share those ideas with other people uh you know over dinner over lunch uh uh in the coffee room and then we start talking and and those ideas
start jelling and uh we wind up writing a paper together and and I've always felt that that uh each of us have something to contribute uh many of my co-authors bring uh a lot of mathematical skills uh to the table uh but many of them bring other skills uh empirical skills uh so uh I've been
just very very lucky some of these uh like uh Andy Weiss uh uh uh having students of mine uh Ain as braan uh uh we we're students and and we would start talking about ideas as I try to guide them in their PHD and and when they finish their PHD uh there are a whole set of other ideas that we haven't fully
developed uh in their thesis and so we start working together in a in a whole set of uh papers that follow on if I think about your 1980 piece with Sandy Grossman what are your current views on why trading volume is so high it seems to violate a lot of rationality theorems well if someone's trading with
you you might plausibly assume they know at least as much as you do fiser black famously said we just need to put trading in the utility function that's a kind of De Machina what do you think now 44 years later well I think the the basic idea of uh that paper is still obviously correct the title of that paper was the
impossibility of informationally efficient markets and uh the the uh it was an argument against uh the view that was held by uh people like Eugene F that uh Market were informationally efficient that they transmitted efficiently all the information from the informed to the uninformed I we made the obvious
observation that if that were the case there would be no incentive for anybody to gather information so the market might be transmitting information but it would be all free information it would be information that nobody had done any work uh to collect um and uh that idea actually in another context
worries me very much today that with uh Google and AI scraping so much information off of our newspapers off of our uh uh podcasts off of everything they can get a hold of uh they're trying to appropriate the value of the knowledge that's been created by other people uh without paying for it so
uh if they succeed in doing that of course that will decrease the incentives for others to produce information of high quality and of value so it's that kind of interaction that was at the heart of uh our 1980 paper and uh the themes that we talked about there are still the critical themes that we're
talking about today do you think today that liquidity from market makers is oversupplied or undersupplied relative to a social Optimum say in New York well the the the issue here turned out turns out to be the measurement of liquidity uh is very difficult uh a lot of the liquidity are these uh uh fast Traders
flash Traders people are in the market for a moment and we saw that in in uh a couple of the uh crashes that we've had uh it seems like there's a lot of liquidity but then all of the sudden when you have a big event that liquidity rise up part of what is going on let's be frank is computers trading with other
computers and so it's not informed people trading with uninformed people it's really computers with one body of data trying to make a micro scent from another Trader and they each are are going back and forth very fast they're trying to trying to elicit information uh it's not trading uh for holding a position it's trading to elicit
information but as the spreads widen why doesn't someone with a lot of capital just step in and earn that spread it would seem there's a self-correcting aspect to this if you have high enough capitalization well what what I was going to say is what what happens is that at those critical moments when we really need
liquidity uh the market freezes we've had some very bad days of that kind and uh uh that at that particular moment uh markets may not even clear and actually they seize to function and when they seize the function function nobody wants to come in so uh it's not just that there's a spread they're just not functioning uh
and you don't know when you make a trade whether it actually will be you think you made a trade but it may not actually eventually be executed so uh we are in this very precarious world where uh most of the time the market Works lot of seeming liquidity but it's a a liquidity that can dry up just when
we need it now you have a very famous 1977 paper with Dixit and one of the things you show in that paper is there's a coherent way to model firms that a face downward sloping demand curves but B don't have to worry very much about what other firms are doing a kind of monopolistic competition people have
since used that as a rationale for strategic trade policy do you agree with that use of the model or what qualifications would you add well I I think uh that model is a a way of uh thinking about as you said uh the ability the a a world in which there's some Market power but limited market power uh each of the firms themselves
doesn't have to worry about strategic interaction uh in my mind the the more critical issues in strategic trade policy that we're facing today are not those that Paul Krugman uh argued for based on our monopolistic competition model some quarter century ago and for which he got the Nobel Prize uh working off of our
model um it's really about Dynamics learning and resilience so today the critical issue in uh trade policy is us uh uh chips act the IRA uh the chips Act was uh worried about we had lost the uh ability to make ships uh that meant that if anything happened to Taiwan or Korea we were in a very vulnerable
position um markets don't take into account that kind of Defense concern uh or the even the resilience and that act goes back to some of my earlier work that markets aren't very good at assessing risk and pricing in Risk into the decision-making process and so here we are uh 2023 2024 and uh we feel very vulnerable
for because of this lack potential lack of resilience which would be disastrous if there were a war between Taiwan and China so that is the argument for our current industrial policies which are a almost clear violation of the WTO rules and then the IRA act um is another example uh where we have uh strategic
trade policy uh to help move the economy towards a green transition uh uh and worry that we were falling behind in learning about the new green technologies now there are couple of important issues on this that are very much related to the themes of my book and that is what one person does or one
country does can harm another person or another country so here we're trying to grab more jobs for us in this green transition but the developing countries and Emerging Markets don't have the resources to engage in that kind of policy and even Europe has complained about the fact that we seemingly are succeeding in getting
uh firms that were going to build factories in Europe shifted to the United States so our success in some of these areas comes at the expense of others so the the old model of trade was everybody can benefit some of the things we're doing are clearly benefiting us at the expense of others and that's why you
need a rules-based order this point about trade aside at a conceptual level what do you think would be the biggest difference between you and Paul Krugman two very well-known writers you know broadly you would each be placed on the left but how do you two think about the world differently I think uh I think that he
thinks that monetary policy has a bigger role than I think it does and you think it's credit or you think it's real factors at this point in time I think it what matters is not the money supply not the interest rate it's the credit availability of monetary policy so it's the mechanism and that uh what we saw in
2008 that providing so much liquidity to the banking system didn't help that much uh that uh uh the banks were very reluctant to lend out that money and therefore the recovery was a very slow recovery we would would have been better off if we had relied more on fiscal policy than on monetary policy uh so
that I think is maybe from an analytic point of view the main distinction in that I think I've discovered in our work now your bests sited piece is your 1981 article with Andy Weiss on credit rationing which is a macroeconomic idea but do you think that since then the real problem has more often been we've
thrown too much credit at things so the housing bubble the student loan crisis wouldn't we have been better off with a lot more credit rationing well the issue here was that we weren't very good at credit allocation and that we thought let the market rip we lowered interest rates we deregulated so we didn't look at where
the credit was going uh the bank supervisors the Federal Reserve is supposed to oversee and there are actually several other o supervisors that are supposed to oversee the riskiness of the lending and that's where the fault came now one of the things that I've uh when I was at the World Bank uh uh and since
then been very have emphasized very heavily one of the signs that there's a problem in the credit allocation is when you see a very rapid increase in the credit in one particular area uh you sign probably people aren't paying enough attention and when particularly when we saw the increase in
credit to housing we should have been worried and uh as it turned out uh the kind the banks weren't doing the kind of diligence that they should have done they were passing on these uh uh mortgages onto investors uh effectively lying committing fraud and there have been a lot of cases of this where they
said well we've been very careful uh these are we've inspected these are mortgages of originating in owner occupied homes uh people with this income they hadn't done anything any of that and all of that contributed to the financial crisis of 2008 so uh the issue isn't uh uh the amount of credit it was
the allocation of credit uh if they had used that credit for productive uses how much better our economy would have been well we built a lot of homes right it's turned out we we've needed them the home prices that looked crazy in 2006 now seem sowhat reasonable a lot of them were built in the wrong place uh and uh
were shoddy you know I I I used to joke that there were huge number of uh homes built uh in the Nevada desert and the only good thing about them is they were built so shily that they they won't last that long your 1984 piece with Carl Shapiro on efficiency wage Theory looking back at that now 40 years later
do you think of that mainly as a contribution to understanding organization an explanation of unemployment a claim about sticky wages or how do you frame that article because in the piece itself right the wage is actually flexible at least the real wage is well actually it really isn't a an argument that to understand how labor
markets work uh or any market for that Mark well uh because we we look at the labor market but we we point out it's through product markets uh one has to uh take on board the fact that there is imperfect information and in that particular case imperfect monitoring of what workers are doing and that you have to have uh an
incentive uh to make sure that they work well and that one aspect of the the incentive is that there have to be consequences when they don't work well and one of the uh thesis of that paper is that the standard articulation of what free markets like are just wrong so for instance uh the standard view was that demand for labor
was equal to the supply of labor there's no unemployment and what we point out is if you couldn't monitor labor at every moment of time workers would have an incentive to Sherk the worst that could happen to them is they would be fired but if they were fired with no unemployment they'd
be hired the next moment so there'd be no incentive to work so that as part of that equilibrium there had to be some unemployment uh to induce people not to Sher now there are many other mechanisms and in a later work we try to talk about there are other uh aspects of what was called the efficiency wage model where you have
to pay enough to induce people to uh produce and to work hard um that uh uh there are other aspects of the labor market as an institution where where uh the rewards are done over the long term um I think I maybe me overemphasize the role of unemployment as an incentive device but the critique of the standard
model I think is still there and uh the importance of of taking a a broader view of the labor market is still there from 1986 until about 1990 you wrote a series of papers with saw on information architectures hierarchies versus polyarchies type one versus type two errors then the 1990s come and you spend
I think about seven years working in different roles in Washington DC how did that cause you to revise what you had done with s well um I had never been in a real hierarchy uh at the time I wrote those papers uh th those papers were asking the question uh what are the relative merits in decision making when you have a a
hierarchy where a decision has to be proved by one person after another or versus what we often think of as the Merit of a decentralized economy where you have many many many different decision makers and uh you you know you let each of them try take their chance and underneath this was the idea
that all human decision made all humans are valuable all there's going to be some cases of proving good projects uh of of disapproving good projects and some cases of approving bad projects and how do you balance the two and how different systems uh uh strain out bad projects without straining out good project
projects well uh when I came to live in a world of hierarchy which was what I saw in Washington uh I came to both uh appreciate uh why in some circumstances you had that hierarchy but I think I came to appreciate even more the virtues of decentralization of uh what I call polyarchy um and uh I guess I I I became
more of a critique critic of of hierarchy um I I saw too many cases where um there was too much fallibility built in and too many good ideas got screened out screened out uh by the hierarchy and hierarchy when the guys at the top are not good decision making makers are particularly problematic should the world bank right
now be emphasizing climate change as they seem to be doing a lot of the poorer Nations have complained they say it's not their priority they actually want to use more energy some of which will be dirty energy what's your view on that uh I think the world bank's emphasis on climate change is important
uh is critical uh climate is a public good from which everybody it's a global public good from which all of us uh will uh benefit uh and most especially those in the developing world and Emerging Markets which disproportionately are located along the tropics and those are going to be most
adversely affected if we have the kind of climate change that will occur if we don't curb the emissions of carbon uh uh of greenhouse gases so uh uh it's in their interest that these be curbed now we are at a lucky time for them because over the last 15 years the price of renewable energy has come down 90% more
so in fact at the current time uh by moving to renewable energy which is actually more decentralized you have few few are these big Mega projects developing countries actually I think can do more uh smaller projects better uh I think it it they're really advantaged by going more and more towards uh renewable uh
energy one of the things that I've done uh a more recent paper uh that I Britain with uh Nick Stern uh uh been uh head of the Stern report which FOC written at the UK about moving them along the green transition was that uh growth and a green transition are very compatible that um uh actually uh making
an early move to the green transition is actually a progrowth move for developing countries and Emerging Markets so to me that kind of tension which they argue I think is a misframing of the issue I understand their view that this is the whole issue is inflicted on them because the advanced countries put so much
carbon into the atmosphere since the in beginning Industrial Revolution uh so I understand there sense of grieving but right now actually the developing countries in am Mercury markets are the larger emitter emitter of uh greenhouse gases so they really have a responsibility and we're not going to address climate change unless
they're on board climate change is a real example of the major theme of my book on the road to freedom on it's it's a real case where one country's Freedom imposes a cost on others where the freedom to pollute really does constrain what others can do if we have more pollution we're going to get more
desertification uh we're going to get uh more floods more drugs and so uh it is prob probably the uh one of the most important examples of of how the expansion of Freedom by some constrains that of others what's your current view of Hugo Chavez who is not himself in every way PR green uh well I he's no longer on the scene
but uh but should we be glad he's gone I'm very glad he's gone I think he was terrible he he contributed to ruining a whole country that that's right I think I think he has and uh uh the cost to his Society um particularly even more of his successor has been enormous and I actually think it's had an enormous cost
to the whole I would say Western Hemisphere because the flood of uh uh migrants from Venezuela just finding a place to live a decent life uh has created problems of migration uh and affected the politics of much of North and South America Poland is now converging on Western European living standards does
that show that shock therapy simply can work if you stick with it I mean that would be my conclusion can you say that again Poland is now converging on Western European living standards does that show that shock therapy can work provided you stick with it no I think uh it shows quite the opposite and I've had a lot of
discussions with with the architecture architects of of of polling's you might call Miracle um the reason Poland is the most successful of uh the Eastern European countries uh are several uh but uh it wasn't the shock therapy that uh had such a negative macroeconomic effect it was the fact
that after that moment of shock they began a very a gradualistic policy of Reform of creating the institutional infrastructure that is the basis of the market economy uh they were lucky that the EU embraced them and the EU as they became part of the EU they got you might say the legal framework
that is necessary for a well-functioning market from the EU uh uh they had a lot of uh migrants from Poland that went to UK and around Europe uh that then uh brought back skills and and money back to Poland and um it was really their their uh walking away from shock therapy after a very short period and moving to this
gradualist policy uh that was the foundation of their success uh in this now three decades since the beginning of the transition from communism to a market economy you're known as a big fan of reading fiction is there a work of fiction you would care to recommend to us all something you've been reading
lately uh that's a good question um Mo most recently I've been I've been reading uh I've been busy writing this book and and and uh and uh as you may know writing a book takes a lot of time uh um I suppose uh some books that uh uh I've always found reading books from the the third world uh uh authors uh
writing about Kenya about uh uh Nigeria um really uh ones that I find uh particularly interesting uh because they give me insights into um the countries that I've been so engaged in in in my uh in another way through my economics final question what will you do next oh sure write another book but on what well I I think there
are many themes in this book uh and in my previous book people power and prog uh and profits uh where I didn't have time uh or space to fully articulate uh uh My Views um I think the problem of rank seeking which I talked about in the price of inequality and I talk about uh in people power and profits has become a
uh an increasingly uh important issue um and it has meant that there's a big Divergence of what gives rise to The Wealth of Nations and what gives rise to the wealth of particular individuals and trying to understand uh what is in the 21st century the basis of The Wealth of Nations and what gives
rise in the 21st century to the wealth of individual and how they're similar and how they're different seems to me a a a very interesting question that I want to think about just to repeat for our audience the new book is the road to Freedom economics and the good Society Joe stiglets thank you very much nice to be here