Bill Moyers interviews Paul Krugman

Here are some excerpts from the interview:

MOYERS: Welcome....  (It is) still possible for a single book to shake the foundations, rattle clichés, upend dogma, unnerve ideologues, and arm everyday people with the knowledge they need to fight back against the predatory powers that have robbed them of their birthright as citizens. This is such a book: Capital in the Twenty-First Century, by the French economist Thomas Piketty... Here’s one of its extraordinary insights: we are heading into a future dominated by inherited wealth as capital concentrates in fewer and fewer hands, giving the very rich ever greater power over politics, government, and society. “Patrimonial capitalism” is the name for it, and it has potentially terrifying consequences for democracy. For those who work for a living, the level of inequality in the US, writes Piketty, is “probably higher than in any other society, at any time in the past, anywhere in the world.” Over three decades, between 1977 and 2007, 60 percent of our national income went to the richest 1 percent of Americans. No wonder this is the one book the one percent doesn't want the other 99 percent to read... As you know, I'm no economist, but I found this book, as I said in the opening, just very readable and suddenly there would be this moment of epiphany.

KRUGMAN: Yeah, it's a real "eureka" book... The world in fact has moved on a long way in the last 25 years and not in a direction you're going to like because we are seeing not only great disparities in income and wealth, but we're seeing them get entrenched. We're seeing them become inequalities that will be transferred across generations. We are becoming very much the kind of society we imagine we're nothing like.

MOYERS: Here’s Piketty’s main point: capital tends to produce real returns of 4 to 5 percent, and economic growth is much slower. What's the practical result of that?

KRUGMAN: What that means is that if you have a large fortune, or a family has a large fortune, they can -- the inheritors of that large fortune -- can live very, very well. They can live an extraordinary standard of living and still put a large fraction of the income from that fortune aside and the fortune will grow faster than the economy. So the big dynastic fortunes tend to take an ever-growing share of total, national wealth. So once you-- when you have a situation where the returns on capital are pretty high and the growth rate of the economy is not that high, you have a situation in which not only can people live well off inherited wealth, but they can actually pass on to the next generation even more, an even a higher share... Teddy Roosevelt could’ve told you and did -- that when you have a few people who are so wealthy that they can effectively buy the political system, the political system is going to tend to serve their interests. And that is going to reinforce this shift of income and wealth towards the top.

MOYERS: Do you agree with him that we are drifting toward oligarchy?

KRUGMAN: Oh yeah... I don't see that there's any question of it. If you look at ..what we know already, and we're learning more, but what we know already about the concentration of income, of wealth, you can see that it is growing... So right now, and this is where Piketty has interesting things to say... looking forward, (he's) telling us that the story is already changing. And it's going to change more. So we are going probably, unless something gets better, we're going to look back nostalgically on the early 21st century when you could still at least have the pretense that the wealthy actually earned their wealth. And, you know, by the year 2030, it'll all be inherited. 

MOYERS: And at the same time, we can't even manage to pay workers a minimum wage of $10.10. ... Piketty makes the point, that the very size of inherited fortunes today is so great that it practically makes them invisible. Quote "Wealth is so concentrated that a large segment of society is virtually unaware of its existence."

KRUGMAN: Sure. If you have conversations with people...who are not economists, they have no idea what real wealth means in America. They think that having a million dollars makes you wealthy. They think that-- or having a salary of several hundred thousand dollars makes you wealthy. And while it's certainly true...the sheer size of those big fortunes is so far outside our normal experience that it does become invisible. You're never going to meet these people. You're never going to have any sense of what it is that they control. And most people I think have no idea just how far the commanding heights are from you and me...

MOYERS: Well why is, as you said, redistribution such a noxious word in our political system?

KRUGMAN: I think mostly it's just because there's a very effective apparatus of TV and print media and think tanks and so on who hammer against any suggestion of redistribution. It's just, they've managed to convince a lot of people that it is somehow un-American. Which actually, if you look at American history, that's not all true. But...look, we have to admit, race is always lurking under almost everything in American life. And redistribution in the minds of a lot of people means taking money from people like me and giving it to people who don't look like me...

MOYERS: But given the dysfunction of Congress, given the fact that the Supreme Court has in effect decided to enable corporations and their rich to consolidate their hold on our political system, do you have any hope of the kind of change that both Piketty and you would advocate?

KRUGMAN: I think you don't give up hope on these things. We have-- look at the American political tradition. Look...one of the interesting things that Piketty says is that serious progressive taxation of high incomes and great wealth is an American invention... 

MOYERS: You wrote something the other day that's hard to forget. You said, "We live in such an ugliness in America right now."

KRUGMAN: Yeah. This is one of the things that puzzles me actually about my own country, which is it's one thing to have disparities of income and wealth and to have differing views about what we should be doing about it. But there's a level of harshness in our debates mostly coming from the people who are actually doing very well. So, you know, we've had a parade of billionaires whining about being-- you know, the incredible injustice that people are actually criticizing them. And then comparing anyone who criticizes them to the Nazis. You know...this is very strange. And it's kind of scary...

MOYERS: The evidence keeps mounting. Just this past Tuesday...the AFL-CIO reported that last year the chief executive officers of 350 top American corporations were paid 331 times more money than the average US worker. Those executives made an average of $11.7 million compared to the average worker who earned $35,239... (And) economist Robert Reich reminded us that in addition to getting the largest percent of total national income in nearly a century, many in the one percent are paying a lower federal tax rate than a lot of people in the middle-class. You will, no doubt, remember that an obliging Congress, of both parties, allows high rollers of finance the privilege of carried interest, a tax rate below that of their secretaries and clerks. And at state and local levels, while the poorest 20 percent of Americans pay an average tax rate of over 11 percent, the richest one percent of the country pays half that rate. Now, neither nature nor nature’s God drew up our tax codes. That’s the work of legislators, politicians, and it’s one way they have, as Chief Justice John Roberts might put it, of expressing gratitude to their donors. Oh, Mr. Adelson, we so appreciate your generosity that we cut your estate taxes so you can give $8 billion as a tax-free payment to your heirs, even though down the road the public will have to put up $2.8 billion to compensate for the loss in tax revenues. All of which makes truly repugnant the argument, heard so often from courtiers of the rich, that inequality doesn’t matter. Of course it matters. Inequality is what has turned Washington into a protection racket for the one percent. It buys all those goodies from government: tax breaks, tax havens, allowing corporations and the rich to park their money in a no-tax zone, loopholes, favors like carried interest, and on, and on, and on.... Sad, that it’s come to this. The drift toward oligarchy that Thomas Piketty describes in his formidable book has become a mad dash, and it will overrun us, and overwhelm us, unless we stop it.

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For the entire interview, go to <BillMoyers.com>