 In 2008, the bankers who brought the global economy to the brink of ruin, their social margin contribution was unambiguously very, very negative. Their contribution to their own firm was very negative. They brought their enterprises to the brink of ruin. And yet they walked off with bonuses in the millions, tens of billions, hundreds of billions of dollars. It was very clear that there was no connection between their compensation and social contribution. Well, the other justification of all this was an idea called triple downward economics. So if you're worried about what is going through the top, that's what one of our presidential candidates, Ben Rodney once called the politics of ending. What you want to know is what's happening to all society. They put the word idea called triple downward economics. That the benefit, money to the top benefits everybody in society. The idea is, I wish triple downward economics were true, because if it were true, the average in the United States would be between very well. But you saw those numbers I gave you before, and they showed the, basically, the average income of about 90% has not changed. And triple downward economics has not been working. And another way of looking at is looking at median income, which today is lower than it was 17 years ago. Median income looks at, obviously, an average over all households, more telling is looking at particular demographic groups. And if you looked at the election in this year, some of you may have seen some of the primary debates. In the primary debates, you saw a lot of angry white males, middle-aged males. And questions, you know, why, what was going on? Well, this graph shows you why there was such anger. The median income of a full-time male worker, and remember many of these were getting a full-time job is really hard for people in their 40s and 50s. So this exaggerates how well they're doing. Those who have a full-time job, their median income is lower than it was 40 years ago. So when we've been told every generation is going to do better than the last, and for two generations now, it's been going down, there is a real sense of frustration, a sense that the system is breaking, the system is unfair, something is wrong. They've been working hard, at least they believe they've been working hard, but the system has not been delivering for them. The pictures in New York are a little better, but not much better, median income has been going down, they're all just a further place. At the bottom, though, as I said, things are much worse. At the bottom of New York State's real wages, the elderly compensation with real wages at the bottom are lower, are at the same level that they were 60 years ago. Give this kind of talk in China, they can't believe it. 60 years ago there were capital income, 40 years ago the capital income was $150. Their world has changed in 40 years, it's a different world. When I say America at the bottom of their income is lower than the same level as 60 years ago, in a period that they moved 800 million people out of poverty, they say, what's wrong with your economic system? And the fact is increasingly that the Marylandings are coming to the view that an economic system that doesn't deliver for a very large fraction of the population is obviously an economic system that is not working. Trying to understand why it's not working is really the core of the issue, but these data should make you convinced that it's not working. Well, there are multiple aspects of this inequality. When I was chief county to the World Bank, we did a survey of 10,000 people who were in poverty in the past and know what were the aspects of poverty that were most at this rate and most harmful to them, obviously lack of income. Two other things that they talked a lot about, everybody talked about, was insecurity. They were based on vulnerability and carelessness. But the other thing was lack of voice. The fact is that they didn't have any say of the things that were affecting them. And that really, really concerned. And that is really a problem in the United States today and in many other banks' countries, which is why the voter turnout is so low. And the last election illustrates that from got fewer votes than Romney who lost in the previous election. In some of our congressional elections, we have a voter turnout, the youth voter turnout in some of our elections is comparable to our youth unemployment rate when it was at the peak. 20% was the voter turnout of young people. And obviously, why is that? These are people who would have thought at the most at risk of making sure the system was working for them. But they've become convinced that our democracy doesn't work. Antisemitic justice is another important aspect. The United States has 5% of the world's population, 25% of the world's prison population, one out of four people who are in the United States, overwhelmingly African-American, a real example of lack of access to justice. And mass evictions in the last crisis where we threw out people who didn't even own the money. The banks decide the statements, or more accurately, we have local senators where they decide the statements saying that the banks, they, that these individuals owed money when they came, and they would be thrown out of their homes without really any recourse. Well, wealth and equality is greater than income and equality. I tell my students, there is one really important decision that you can make in your life. If you made that decision wrong, things are over. And that decision is choosing the right parents. And I'm going to describe 8 of the narratives that made the right decision for the two families. And so they worked hard to choose wealthy parents and inherit their money so they didn't actually do anything. And those are two of the wealthy families of Walmart, famous for their gender discrimination, bad baby relations, and in the case of Mexico, a massive corruption. And the Pope brought it to famous for intervening and trying to make sure that the United States exceeds China in air pollution. So far, you know, we've stuck in the second. We are number one in carbon dioxide per capita, but China has a more capita outweighs the United States. But Koch brothers are working very hard to make sure that we reassert our number one position. Well, these eight people have more, have as much wealth as the bottom 44% of America. 45 million Americans. Which is in part testimony to how much wealth there is at the top, but also help with the wealth at the bottom. And I'll give it in a few minutes some numbers at the global level which are even more devastating. Not surprisingly, when you have a society that is that divided and that is that materialistic, it's not easy to be poor. And it opposes a lot of stress. And the United States is the only country that doesn't recognize access to healthcare. I should make one exception to the trachea. Also does not recognize the right of access to healthcare and is doing a very effective job of destroying healthcare systems in Spain and Greece and putting them into a developing country's status. But the consequence of this has been devastating in the United States. And these are some studies result by Anne Price and Angus Leach and Angus Leach got the Nobel Prize in 2015. It's an interesting study because for those who are graduates, because quite often you think that you have to get a special data set and you work very hard to get a data set. What they did is decided to look at the CDC, which is the website provided by the US government, publicly available data. And they said, let's look at the data. Nobody looked at the data before in the way they did. And the results were devastating. What the results were showing is that the mortality rate of whites in the United States were rising dramatically. Mortality rate is the probability of dying is the opposite of life expectancy. So the same life expectancy was decreasing. So mortality rates of whites with a high school degree, only a high school degree. And those mortality rates had risen to the point that they were actually higher than the average for African-Americans, which had a very strong outcome. As they looked at this kind of thing, it was getting much worse in every age toward. The third comment there shows contrast with what's been happening to whites in America, comparison to what's happening in every other civilized country where it's going down. And so it's really sharply in contrast. And the final section there identifies why the death rate is going up. These are deaths of despair. These are suicides, alcoholism, and drug overdose. And these are such magnitude that we're talking about millions of people and it's showing up in the macro data. So much so that by 2015, the average life expectancy in the United States went into decline. So these are dramatic. Again, when I was chief economist of the World Bank, there was one other case where we saw something like that. And that was at the moment of the dissolution of the Soviet Union. We had income data that said that the incomes were going down by 25%, 30%. We were not sure about our data because it's very hard to get good income data. Demographic data is often more reliable. And when we got demographic data that said that life expectancy was going down by two years, particularly for meals, particularly for alcoholism, we knew that society was falling apart. And this, to me, is next to the election of Trump, the most convincing evidence that something is wrong in our society. Well, as I said, there are many other aspects of inequality. And to me, the most ambiguous is opportunity. Because Americans like to think of themselves as American green, land-based opportunity. And others think about America that way. But the data is increasingly showing that that's a myth. Like you said today is a myth. These are stories that are told, but they're told they're not based on that. Now, everybody knows somebody that has made it from the bottom to the top. Newspapers write about it all the time. But when you think about it, newspapers write about things that are unusual. They don't write about dogs that buy people, but they do write about people that buy dogs. That's newsworthy. And for somebody to make it from the bottom to the top isn't newsworthy. It happens very seldom. But as a social scientist, what do you mean by that? What do you mean by the quality of opportunity? What do you mean is what is the probabilities? What is the mobility matrix? What are the correlations across generations? And in those terms, the life opportunities of the young Americans are more dependent on the income and education of his parents than in almost any other advanced country. And in a way it's not a surprise because there is a lot of intergenerational transmission of advantage and the ratio. Make sure that their children do better. The rums of the latter in a more unsociety of effort and it's harder to make it up those rums of the latter. So this is a graph that was done by a mile historian who's done some of the best work in this area. And on the horizontal axis is income and equality measured in the usual way in the uniform condition. And on the vertical axis is a measure of generational earnings less than the correlation between parent and the children. And what you see there is two things. There are a group of countries that have a lot of equality in Scandinavian countries. And those are countries with the highest equality of opportunity. At the other extreme, you have the countries with the highest levels of inequality in the United Kingdom and the United States and the lowest level of equality of opportunity. And there is one other country up there in that corner which is Italy which some of you should try to explain. So let me finally talk a little bit about global equality. What the chart that I just showed had one important location. There are very big differences of inequality across countries and inequality of opportunity across countries. And these countries are all the economic laws that economic forces are very similar. They're not exactly the same, they're very similar. What explains the differences is differences in the choices they make, the policy frameworks that they make. And next, while I've said that hitting wall is globally as if there were no borders and asked which groups have done well and which groups have done very poorly. And there are two groups that have done very well. One of them is the 50th percentile, 50, 60th percentile. That's the middle class in China and India in the emerging markets. That's the newly created middle class and they've done very well. The other group that's done very well are the global 10th of 1% of global billionaires. Now for those of you who are feeling compassionate about the global billionaires that they aren't doing as well as the global middle class, their income has only gone up 60%. You have to remember that 60% of a multibillion dollar income is a lot more than 120% of a $7,000 income. So that although in percentage terms the global billionaires have not been doing as well, in absolute terms the global billionaires are not suffering a great deal. They've actually been doing in absolute terms better than anybody else. Well there are two groups that are doing very badly. Those are the bottom. Those are people, farmers in Africa, India who have been hurt by Europe's and America's agricultural substance. So we've really contributed to their suffering. But the other group that is doing very badly, the worst group is that in the 80% of the amount, that's the middle class in Europe and America. So you get a global picture, the anger that you see in this middle class, working class, depending on the language you use, the working class, these are the groups that are doing very badly. If you look at it in terms of wealth, you get the same picture. Every year at Davos, the Oxfam, a very powerful report where they describe a bus that has as much wealth as the bottom 3.5 billion people. And when they first did the study in 2014, the size of the bus was 85. 85, people have as much wealth as the bottom 3.5 billion people. About half of them were at that meeting. Some countries implies that it is not a result of inexorable economic forces, but of the choices countries have made. The third, I haven't been able to show what is the whole point of my book called The Price of Inequality, that economies with less inequality and less inequality are going to form better. And there are many reasons for this that I lay out of my book. But the point I want to make is this, you might say, is a natural position of the left wing, but I want to emphasize this is no longer viewed as a left wing position. The item after this has been very good empirical work in this area. They've made this conclusion that more inequality leads to poor economic performance, both in terms of growth and instability, a central part of their policy message. And for those of you who don't know, the IMF International Monetary Fund is not a left wing organization. And the evidence for them was so compelling that they've made this important part of their message. The final point is Cousin is small. Cousin is writing in this period that I described earlier in my talk in the 1950s. What I described before is the golden age of capitalism. And I've described how in the early stages of capitalism there's growth of inequality, but then there's a decline. And there are good theoretical reasons for this and wealth of empirical evidence for that. But of course, he could not have anticipated in 1955 what was going to happen in 1988. That was instead of the decline in inequality continuing in the first. And the result is that there's been enormous increase in inequality. So I say, you know, Cousin's law has been repealed. Laws and economics are different from laws and physics. They can't be repealed. Or easily. There's a music story about you know, Trump doesn't believe in laws and economics either. And but in that part of it, there are parts of the country in the United States that also have a skeptical view like he does of science. And the one in the state's legislature decided that it was a misuse of their students' time to learn that Pi was 3.1416 and that it was such a complicated number that it was using the brain power that could be used for a more useful function. And so the state legislature passed a law that Pi would only be 3.14. Well, of course, it didn't change the value of Pi to those who know how Pi is formal. It didn't. But they felt better as a result. Anyway, let me now come to explaining the change. The key question is, why has this Cousin's law that declining quality of life have been reversed? What's happened? And there are a couple of alternative explanations. I'll put them in a couple of different ways. One is that the period after World War II was a beautiful period. It was a period of people had fought together, a period of enormous solidarity. At that time in the United States when people were coming back we were told everybody fought in order. It was every male and many women. You could have as much free education at the best school that you can get into for as many years as they'll pay as on the statute. So if Harvard will keep you in school for 15 years the U.S. government will pay back tuition. And then 70 years later America's a much richer country. But when Obama proposed that we would provide two years free college education in our poorest schools, our community colleges, which are at least expensive the conclusion was we couldn't afford it. Now obviously we could afford it. It was a matter of choice. So the view was that after the World War II there was a sense of solidarity that this was important. So one argument is that something happened to social education. The other view and that in this sort of Tiffany's view that 30 years after the war was a return to a normal state and the normal state of it capitalism is roaming inequality and that's what we're experiencing today. The other view which is the view that I have is that actually what happened in 1998 was not the natural workings of capitalism but a version of the marketing economy that what happened was living in the United States and many other countries in the UK and rewrote the rules of the market economy in ways that led to a more poorly performing market economy and a more unequal society. So the the markets don't exist in the vacuum they have to be structured and the way we structure them is through our legal system and the way we re-structure them led to this greater and greater inequality. So I'll try to explain I won't be able to do it completely why I strongly believe in the current theory but another way of looking at this is the in terms of the standard models what standard model one that is basically taught is the competitive model then that says that factories get paid their marginal product therefore we want to understand changes in equality we have to understand changes in ownership of assets and changes in debt for prices and understanding these underlying driving forces leads us to an understanding of the growth of inequality I think his model is an example as he has an analysis of an increase of localization and technology that made it what it should have led to re-enactment of certain antitrust laws or redesigning antitrust laws but instead we go out there and get bigger greater urbanization and globalization and they're making examples of these rents and the best way of understanding the data that Piketty presents which is an increase in the wealth income ratio in the context of data that looks at national income account which shows that he declined in the capital income ratio so you have this strange the wealth income ratio is going up for the United States and for many other countries the wealth income ratio is going up with the capital income ratio is going up what's the difference between the value of land and the capitalized value of rents and with the increased capitalized value of rents as the explanation you have actually a diminution in capital labor ratios and helping to explain a reading of wages there's also rent savings there already gave an example of CDO pay I'm going to bring this back to the title of knowledge systems have been intellectual property rights get raised in knowledge ranks IPR gives you a monopoly over the use of knowledge knowledge has become more important but it's also clear there's been very good changes in the legal frameworks of intellectual property and the consequence of those too interactive is that knowledge ranks have become more important and knowledge ranks then amplify market power and you see that very dramatically in the case of say Microsoft they have a little bit of knowledge of rent a little bit but they amplify that into massive market power and they were found guilty in Asia in United States in abuse of their market power but that market power derived originally from was their ability to leverage market power and they were geniuses at that so the ability to use white market power was an innovation but was an innovation that led to a less efficient economy a less productive economy but more rents that go to Microsoft so that is an example of how you can wind up with more men's and a less productive economy let me just give one example I'll mention in this quickly one example that I think is really important we have a controlled experiment in a way in the United States that I was personally involved in the question is how do we impact it's not obvious this really illustrates that our legal frameworks are man-made social constructions and what is an election property what can't be happened you may have thought that you own your own genes but in the United States the death novice decided no, that was not true and they gave a pass to a company in Utah called Miria that there was a global effort to decode the human genome and in Cambridge and there was a base that targeted to decode the whole genome and they realized that if they rushed they could get a patent on some important genes and if they could get a patent on some important genes they could make a lot of money and the particular genes that they got a patent on were called the brat genes Miria women have these two brat genes the probability that breast cancer is more than is 70% or more and so it's obviously important that you know that you have these genes and they had a monopoly they used that monopoly to say if you want to be tested you have to pay them several thousand dollars the cost of these genes is a test it's very little but they were very operable but they really wanted the data Yale University developed a much better test NGOs were willing to fund that test and give it away free in America we don't have access to free testing they were willing to give it away free but Miria said no we own the gene and the result of that of course was an inferior test even people who could afford it had to take the inferior test and some people died from the result and of course if you were poor you couldn't afford the test it was in the thousands of dollars and many of those people died and so with the ACLU the American Civil Liberties Union we brought a suit that went eventually to the Supreme Court and we said you know there's a basic rights issue as well as an economic issue and the Supreme Court said you could not issue a patent on your gene an interesting decision but the economics what happened after that was also interesting because after that we had suddenly changed the legal framework and what happened was prices got lower dramatically it went down 90% and the test got much more accurate it had stifled innovation of harm well there were multiple reasons for innovations reduced by intellectual property rights the importance of this can't be overemphasized because knowledge is at the core of of our increases in standards of living and increases in life expectancy and if we have a intellectual property regime that stifles innovation it will cause large consequences well let me just try to conclude what I was trying to convey here by this one example is that and just one example with everyone in the other aspects of our legal framework to show a decision in one area creates a less productive economy and a more unequal society and a more unequal economy and so that leads to the most important including those choices these problems are deep and fundamental some of the alternatives have to improve their value over decades and we should learn from these experiences to reshape our economy and and if we do that I think we can construct a new world where the economy performs better for all or at least for the vast majority of our citizens and that brings me back again to Frank Hahn who really did believe that economics was an important tool for reasoning about a better society for you could call it a grammar for arguing now analyzing alternatives and I think he set an example of a kind of rigor I kind of I apologize for some of the sloppiness of this discussion but I thought it would be better to try to articulate the basic framework that could go into the details I'm not sure if Frank would approve but I think he would approve the bottom line of what I thought was my stance and say your name and I'll just say a little about your teaching in August some people say that we entered a several no longer proof you agree? good, yeah as the question and fundamentally we can't answer that question because this is almost an indisimilogical if we knew about the innovations that we were about to have we would already know that so we cannot know about what we were going to discover so there's no way that we can really answer that the question relates to a debate that's been going on in the economics profession and it goes on in two different levels one of them is at the level of innovation and that is Joe Bulkier who is on one side Bob Gordon on the other Bob Gordon is a technopessivist and says that we all know that Facebook and Google think this is an age of innovation but in fact it doesn't show up in our productivity numbers and Facebook says well maybe our measurement is wrong and undoubtedly our measurement is wrong but it's not that wrong and I Bob Gordon says that electricity and toilets were far more important than social media and toilets because they're held as a symbol of health standards I think I think he's right on that but that doesn't say that there will be another big innovation going forward and Joe Bulkier is on the more optimistic side saying he thinks it is more likely that there's more bytes in the numbers and more optimistic about going forward but the issue of secular stagnation is not somewhat different and that relates to the slow growth that we've been experiencing recently that slow growth is a result of a lack of aggregate demand that is to say that the economy has been operating below its potential and if we had stronger aggregate demand we would be growing more rapidly and that pushes back the question why do we have lack of global aggregate demand and I think there are several reasons growing inequality is one of them because people at the top consume smaller fraction income and those at the bottom redistributed income towards the top so that's the city of Albany when I mentioned before that's one of the reasons that is one of the reasons a second reason is austerity in most countries in many countries around the world there is unnecessary austerity and Europe has walked into austerity more than any other region and suffers more than any other region but even the United States has a mild form of austerity and you see that in the weak economy performance and even though we've had a visually low unemployment rate the low labor force participation the lives it really says that we are not operating at our full potential so to me it is results of not the laws of nature but the laws of man and if they ask me to run our economy I think we would have the end of this kind of secularist nation I think that's a good answer from Seattle how do you explain the fact that in democracy there are a majority of poor people voting for rich people who are basically against the rationalization this is a bit against the rationalization as Ugo mentioned in his introduction I never really believed the rationality of the hypothesis and it is always interesting that we spend so much of our time in ordinary conversation talking about how everybody that we know is acting irrationally how many conversations he probably had today talking about how somebody acting in the job or in a day-to-day life was doing something stupid irrationally so I think that irrationality is pervasive and one of the advances in economic science over the last 35 years is the behavioral economics of many ways in which we act irrationally but I think it goes beyond that in my book the price of inequality I devoted two chapters to precisely this kind of question I don't know if I fully answered it in the United States is the attack against the Enlightenment the certain values about how we tell the truth how we can distinguish what is true and what is not we have the beauty science has a particular but we can also tell what are false statements and the attempt by Trump to undermine those kinds of distinctions is an extraordinary dangerous for our society because we can't tell what is true and what is not we have no way of talking about systems of justice or systems of due process and so it's to the point where in fact you have to re-litigate the Enlightenment every day and I think that's enormously gross of a part of society you can come here to make your place Professor what is the future of globalism I'll be the question what is the future of globalism with the French election on Sunday what does it say that someone with a bad week get as far as you get better Trump than Brexit happened was 2016 just a hit ground or was it in trouble well globalization is in trouble and in part this is because globalization was oversold or missold so it goes back to the notion of triple-dominant economics the idea that globalization one of the oldest developments in international trade is the Samuelson-Stohlberg theorem and the factor price equalization theorem which said that taking down trade barriers globalization would lead to a decrease in wages among skilled workers even taking down that goods are more some goods would be cheaper that you could import them so the argument was always very clear it would have massive distribution consequences globalization would only be a cradle of movement if there were redistributions from the winners to the losers and those redistributions did not occur and back in this period of globalization the tax system became less progressive in the United States it actually became regressive with taxes that were lower than those further down and it was argued that because of the competition and globalization that it brought you had to have cutbacks in government spending that was nonsense but the result of that is not only did they have more real wages but they also faced cutbacks in public services that they received so the way we structured globalization resulted in large fractions of our society being worse off as a result but this is an example of what I meant by rewriting the rules of the market economy none of this was inevitable you could have re-structured globalization in ways that would have made everybody better off we chose not to do that and the point of my book was that argued how you could do it and I'm coming out with a new version of globalization and it's just a dense revisited where I sort of updated in terms of focus on tax countries and argued how we could make globalization succeed how we could make the euro succeed but it's not under the current rules I have a simple question I think that the point is with the main example which is the pay of the CEO as compared to the average worker so I always wanted to have holders and wards to pay these people so much and I was just curious to know your view of that that's a good question and that is an aspect of corporate governance corporate governance are the rules by which corporations make decisions and those rules basically enable the CEO to appoint the board that then approves the CEO pay so it is a deeply corrupt system in the United States we had a discussion of a couple of reforms one of the reform was called save pay and the idea was that the shareholders should have a direct say in the pay of the CEOs and you would have thought if somebody works for you you should have some say in what they get paid well the CEOs when we proposed this idea went crazy they said this would destroy capitalism it would destroy capitalism as they knew it because I understand why they hate this idea but and they used all their money and they controlled the CEO of the corporate money to lobby against it another example and it just goes to something as weak as information in Don Frank there was a provision that said that required corporations to disclose the ratio of the CEO pay and the top executives to the average worker just a disclosure it took 5 years to get the regulations to implement that because the corporations were furious they said oh we will confuse our shareholders and some of my people what we were doing is not so good anyway these go straight why is it so difficult and it's not to me it's not only the level that amount that I talked about but the structure of the pay because the structure of the pay not only did not incentivize them to work hard it actually created perversive incentives and I described in my book I wrote a book called Rory 90s about how these incentive compensation schemes I have one chapter called Creative Accounting where I showed it did not lead to more incentives on the part of CEOs except for inventing ways to increase reported profits not real profits and they were extraordinary clever in doing them some of them were so clever that they went to prison but I always joke that at the business school we try to teach them how to be clever but not to go to prison we don't want our students to be so clever as to go over the line so we say how do you maximize but within the law a few other questions okay my name is Rory I'm a master's student and I'm going to be here at Siena and if you've spoken about low aggregate demand and I've also said that one of the reasons when the government says they don't have money to finance pre-university in the United States for two years I'll just start right now this is about modern money theory the potential for individual guarantee or universal basic income to redress these sort of problems and I'm just curious about your thoughts on a lot of things like that well universal basic the UBI which is a flat ramp to everybody in society is an idea that is getting increasing attention particularly interestingly among the very rich people so kind of valid and I think the reason is they're building not so much guilt but fear I in one of my books The Great Divide I describe a dinner party that I was at where there were billionaires and I get invited to sort of report a gesture and one of the themes that came out many times during that dinner was remember the guilt team and it was very clear that this is very much on their minds if we have too much inequality we may get a social revolution or somebody like Trump these are the kinds so it's clear that there's a worry but to me the UBI is not an adequate solution and the reason is that even in a rich country like United States and Switzerland the magnitude of what one could raise for social redistribution is limited and so if you divide with that amount equally whether they need it or not the amount each person gets is not enough to sustain a decent standard of living or if somebody who is saying disabled so to me it's more important to have more targeted programs but programs like that can be an important part of stimulating aggregate demand that would help the economy strengthen the overall economy okay I see a couple of questions and then we close this guy is at the door hello professor or international student what do you think about our official intelligence and how does it you know the impact it has on industry how would it affect inequality in the future and also how do human challenges like climate change affect in New York studies on inequality so don't just think about climate artificial intelligence there is a great deal of worry that as severe as the problems of unskilled climate issues today and low wages of unskilled workers they could get much worse the a few years ago at what I call technology if you raise the question of artificial intelligence and innovation don't worry we had innovation before we had the car and we lost jobs and muddy whips but we got more cars and more jobs and on-bill repair so we solved that problem before you always create new jobs more than two places in the last couple years that techno-optimism has moved to much more of a techno-professivism and the reason in part is that the base of innovation has increased artificial intelligence these computers are not only robots are stronger than us, we know that they've been stronger for a long while but they can process a lot of information more rapidly and the one example of that that's been used to exemplify the challenge that we're facing is driverless cars driverless truck drivers trucks in particular truck driving is something like the largest employer of people who are not college who have only a high school men who have only a high school it's been several millions and the forecast from those in the industry is that within five years all trucks will be automatically driverless and this whole occupation will disappear there's a little bit of hype because you still have loaded trucks loaded trucks but there's no doubt that there's a real threat to what we're going to do the unskilled workers the answer we will train them and upskill them is not a persuasive answer because not everybody can have a PhD and even if everybody did have a PhD what would they be doing so people are not persuaded that is the answer why my answer to globalization a few minutes ago globalization moved the utility possibility out so this in other words in principle everybody could be better off if you had the right redistributions and the same thing but the competitive equilibrium developed in a majority of citizens and in particular unskilled people with limited skills actually being worse off and we've had that happen in the past for those of you who follow the literature this is called unskilled labor saving innovation and there is no reason to believe that this is not going to be happening and so unless we put it in place of policies that deal with this we could have not only an anti globalization movement but an anti type of change movement and again after the right response is not to be anti globalization but to argue for the redistributions that we need to make everybody's better off and more productive means that we could all be made better off the direction in which the American society is moving is clearly very different from that and that's why I think it is a real source of worry for the United States we collected two more questions and then one and one of them I want to stress when you were presenting your presentation you gave some advantages of inequality because inequalities might have some advantages in that in a community where there is inequality for instance in the company for example most of the CEOs we have now the one billion CEOs are their innate abilities and our emphasis was more of the loss of men but not nature so I wanted to find out first of all do we have some advantages about inequality and then also we can't be focused more on the natural abilities so that when there is inequality in the grounds people can build their own natural abilities and loss thank you my question is among the reasons you indicated for the big separation between property and real wages there was a weekend in the trade unions but they didn't say much about that is there some place where one can find a good description of how the labor was changed each weekend so on the first question advantages of inequality obviously many people in the top one tenth of one percent think they have some advantages for them I take it the question meant what are societal advantages let me make it clear that I don't think we will ever and I'm not advocating a regime of complete equality you almost need some inequality providing incentives you know this is not a utopian argument that a world where everybody is just motivated by a social sense of obligation but the argument of my lecture was that we have gotten to an extreme of equality and a source of equality it was not only the weight it was generated I mean not only the magnitude but the rent-seeking aspect of it and the fact that the weight gets generated that rent-seeking the intergenerational transmission of advantages all of that lead to a actually more poorly performing economy so that when one says it's not a blanket it's sensitive to the sources of inequality and the instruments that we have to deal with that equality and it's interesting you know I think this view that I can afford is now becoming a mainstream view not only is that I'm not adoptative but the Economist magazine which also is not way right has also recognized that inequality in the extreme that it's become and in the manner in which it's being generated is that for economy for our society, for our democracy now as the union represents one of the important dimensions of mechanisms just like the way we talked before about the CEOs that was an important mechanism and the weakening of the unions was an important mechanism one of the books that I did in the last couple of years was a book called rewriting the rules of the American economy an agenda for shared prosperity and it was written basically as a platform for the Democratic party sure they have one and he still is but we go through there all the major ways in which it's changed and we talked about for the kings of the United States the ways in which labor legislation changed in ways that we can unions economy forces and when you structure globalization in the way we structure globalization then also we can unions because the corporation could come to the workers and say we will take the factory away and the union could do nothing about it and that meant the union could deliver the way we structure globalization undermined the ability of the unions to do what they provide the kind of protection that unions have traditionally done so we're doing now a book about rewriting the rules of the European economy in this one chapter we'll hopefully deal with the problem of how unions have been weakened one way has been the restructuring and bargaining process in Europe away from we are the unions very strong in Scandinavia where they have nationwide bargaining or sectoral bargaining but in many countries they weaken those kinds of sectoral bargaining and with regional bargaining and that is going to undermine the bargaining power of unions and that then is part of the vicious circle because when unions can't deliver as much there's less support and they are one of the few voices that institutions in our society that have been a voice for ordinary workers and so one way of thinking about this line is these are collective action problems that what we're talking about is how do groups in our society get together and take actions, express voice and talk about the inequality of voice and the 1% can they have no brothers they don't have to get together with anybody from the Maltes or themselves they have enough money that they can by themselves intervene in a significant way with the process assume a worker can't and so for the workers to have voice there has to be some form of collective action and the underlining of this has undermined an important source of collective action voice on the part of workers on both sides of the planet okay I think we can stop there we need to thank Professor Steven