Joseph Stiglitz on the 1%

A few years ago I wrote about the composition of the 1% -- the group of the richest Americans that has become the target and the face of wealth inequality. Only 14%, I showed, were in financial services. Another 31% were executives. The rest -- the majority -- were engineers, doctors, small-business owners, salesman, teachers, and other professionals that most wouldn't associate with harming the economy.

So why the bad rap?

I asked Joseph Stiglitz, the Nobel Prize-winning economist who has written extensively about income inequality, in his office at Columbia Business School last week. Have a look (transcript follows):

Stiglitz: The 1% is just a metaphor for saying many of those at the top. I think you have to look at what they're actually doing. I don't think anybody begrudges somebody who would have invented the laser, discovered DNA, from becoming wealthy. They've made an enormous contribution to our society. The irony is that the guys who made these discoveries are not in that top group. The people really transformed our knowledge base that have transformed our society, are not those who are in that 1%.

So I think, as you say, it's looking at the people who have actually gotten rich by exercising monopoly, by taking advantage of corporate-governance deficiencies to seize a larger fraction of the corporate pie to get them outsize benefits. That was one of the things that exposed this whole scandal of inequality when the CEOs, particularly the banks, got paid millions and millions of dollars in what they call "performance pay" for bringing the global economy to brink of ruin and bringing their companies to the brink of ruin so they had to be saved by the U.S. Government. How could you call that performance? And yet they walked home with huge paychecks, and ordinary Americans were left unemployed and paying their bills.

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