Front Burner - Nobel winning economist Joseph Stiglitz on Trump, tariffs and democracy

Episode Date: March 18, 2025

Last week Jayme had the opportunity to interview Nobel Prize winning economist, and former staffer and advisor to Presidents Bill Clinton and Barack Obama, Joseph Stiglitz.Stiglitz also worked as the chief economist at the world bank, is a bestselling author many times over and remains one of the towering economic thinkers of our time. He has long been a sharp critic of neoliberalism, and trade policies like NAFTA that he believes privileged the rich and corporations, but disenfranchised workers. This was a wide ranging conversation and dealt with Trump's tariff war, the threats towards Canada and the recent arrest and attempt to deport a Columbia student who helped lead protests against Israel's war in Gaza last year. The conversation was recorded in front of an audience. It was part of a conference put on by McGill's Media Ecosystem Observatory and the Max Bell School of Public Policy.For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

The following is advertiser content from Emirates. When you're boarding the Emirates A380 with your Emirates Business Class Ticket, you can be assured that you're in good hands. The spacious lie-flat seats are designed with comfort and relaxation in mind, all so you can stretch out and unwind. On board, you'll have the opportunity to indulge in a world-class dining experience. The gourmet menus on board are all regionally inspired, ensuring that you'll be tasting dishes crafted with the freshest of ingredients and paired with a curated selection of fine wines. Complementary Wi-Fi allows you to stay connected if you so choose, or you can disconnect and embrace award-winning entertainment options. And if you have a stopover in Dubai, you'll have access to one of the world's most vibrant

and exciting cities. It's the sort of city you could visit countless times and always explore and experience something new. There's Business Class and then there's Emirates Business Class. Book now on emirates.ca. This is a CBC Podcast. Hi everyone. I'm Jamie Poisson. Last week I had the opportunity to interview Nobel Prize winning economist and former staffer

and advisor to presidents Bill Clinton and Barack Obama, Joseph Stiglitz. Stiglitz also worked as the chief economist at the World Bank, is a bestselling author many times over, and remains one of the towering economic thinkers of our time. He has long been a sharp critic of neoliberalism and trade policies like NAFTA, that he believes privileged the rich and corporations,

but disenfranchised workers, and in many ways, helped to create the conditions for our current Trump moment. This was a wide-ranging conversation. We talked about Trump's tariff wars, of course, how seriously he thinks Canada should take the threats coming from the US, and about what is taking place at Columbia University, where he currently teaches, including the recent arrest and attempt to deport a

student who helped lead protests against Israel's war in Gaza last year. The conversation was recorded in front of a live audience. It was part of a conference that I was at last week dealing with threats that democracies are facing around the world, especially from our online spaces. And it was put on by McGill's Media Ecosystem Observatory and the Max Bell School of Public Policy. All right, here's the conversation. Professor Stiglitz, it is such a pleasure to speak with you today.

Nice to be here. I wonder if we could begin with the moment that we find ourselves in today, especially here in this country. Canada has spent the last two months or so in varying levels of panic over a trade war with our closest ally. And what is your reaction to Trump's economic and trade policy regarding Canada? Is it something that you had ever conceived of an American president doing?

I couldn't conceive of a normal American president doing, but Trump is not normal. And I think one of the things we all said during his first administration is we can't normalize his kind of behavior. But in the second administration, he's gone way over the top. So take the issue of tariffs alone. Most economists would say he totally misunderstands the role of trade policy.

In particular, one of his motivations is a concern about trade deficits. He thinks that trade deficits are a reflection of other countries taking advantage of the United States. Anybody that takes an elementary macroeconomic course knows that the multilateral trade deficit, the difference between our exports and imports, is related to the disparity between aggregate domestic savings and aggregate domestic investment. If you don't change those numbers, you don't change the multilateral trade deficit.

So all the tariffs may change who we buy what from, and where we sell what, but it doesn't change the multilateral trade deficits. The irony is that his own policies with respect to, for instance, increasing the deficit so he can give a tax cut for the billionaires and for the corporations, almost surely will increase the multilateral trade deficit. So from a pure economic point of view, it's nonsense. And then he has this further idea, which causes some amusement that we ought to have the Department of External Revenue rather than the Department of Internal Revenue having foreigners pay

our taxes rather than Americans paying. Well, I think it's a great idea if you could get foreigners to contribute, if you want to send a check in to the US government. I mean, obviously all Americans would welcome that. But the fact is that for the most part, tariffs are paid by American citizens. They increase the price, they increase inflation, and the timing couldn't be worse because we're just getting over an inflationary episode and to put this inflationary pressure back on is really crazy. Commerce Secretary Howard Letnick recently told CBS that aggressive tariffs would be

worth it. These policies are the most important thing America has ever had. tariffs would be worth it. These policies are the most important thing America has ever had. So it is worth it. It is worth it. I think he means because they would chore up jobs, like back to the US, even in the event that they lead to a recession.

And how would you respond to Mr. Lednick? I wish he had taken my economics course. I would begin there, maybe if he wants I'll give him a tutorial. But he forgets about the possibility that there will be retaliation. And there will be retaliation. You know, countries around the world have to, even if they didn't want to, their citizens are demanding that these countries stand up. And we know where these kinds of trade wars lead, lowering standards of living. And, you know, it was an important contributor to the Great Depression. That wasn't a creation, a job creation program.

It was a job destruction program. So I think it's going to have the same impact. It's going to lower standards of living in the United States, not in the end going to create jobs. One more element, the Federal Reserve responds to increases in inflation by raising interest rates. Raising interest rates dampens the economy. There's no evidence that they would respond to this any differently than they have in the past.

So that will be another dampening on the economy. And again, the timing for another reason couldn't be worse, because at the same time he's doing all of these things that are weakening the economy, he's also having this campaign against immigrants. And we depend very heavily on our immigrants in sector after sector of our economy. So that's going to be inflationary and depress our economy. And then there are the massive government layoffs that are triply the effects of going throughout the economy. The uncertainty that he's created, tariffs on, tariffs off, tariffs on, tariffs off, businesses can't do investment in this chaotic world that he's created.

So if you take in context that all the things he's done, I think prospects for the American economy are not very good. [♪ music playing, no lyrics, only drums and bass guitar playing. I realize this next question requires you to kind of get in the mind of Donald Trump, which is quite an ask. But do you think that this administration that he's in is willing to tolerate the kind of pain that you are describing that could be coming, right? Do you think they have that pain threshold?

Yes, and a normal, even Republican administration would be very sensitive to the reactions of their electorate. Those reactions have not been very positive. And so what was the response of the Republican throughout the country, stop town halls. So you don't hear the reaction. There's been a lot of discussion going on about how he has seized control of the Republican Party with almost no dissent. There are lots of rumors about how he's done it. Primaring, that is, you know, having someone else stand in the primary

is part, but it's gone beyond that. There are rumors about intimidation of families. This is, you know, the kind of thing you would expect in a mafia kind of, or in Russia. Not in the United States, but those kinds of rumors are clearly going on right now. Is he a fascist? He does not act in a way a democratic leader acts. And the way that Musk and he have trampled the rule of law is what you'd expect out of a fascist. And the set of actions that he's taken looks like it's taken out of the fascist playbook. You know, there have been several books

that have described how fascists get into power and read those books and you see what is going on in the US government, you can't feel very relaxed. I wanna come back to Elon Musk with you a little bit later, but I would be curious to get your reaction to a quote from Warren Buffett. Mr. Buffett was talking about the tariffs and he said, quote, Tariffs are actually, we've had a lot of experience with them. They're an act of war to some degree.

Do you see these aggressive tariffs as tantamount to an act of war? Originally, I did not. Originally, I thought they were just the result of misguided understanding of economics, the idea that it would bring jobs back to the United States, you know, just bad economics. But over the last couple of months, where he has explicitly said Canada ought to be the 51st state, where he is explicitly, you know, he signed the free trade agreement with Canada and Mexico not that long ago. Yes. And that was his signature, I mean, his agreement.

And he demanded certain changes in the previous agreement, NAFTA. And so what he has shown is a willingness to violate international rule of law, just like he's trampled on domestic rule of law, a whole set of provisions about safeguards and provisions of what the executive branch can do. He's done that now internationally, but it's easy to see this as part of a strategy of making Canada knuckle under to become the 51st state. If you didn't hear him say it, it would be hard to believe. You are a person who has been around

the Oval Office a few times. You have worked in government. You've been in the room where decisions are made and power is brokered. How do you think the Canadian government should be responding right now? And particularly when it comes to the 51st state rhetoric, how seriously do you think officials here

should take that, what actually started as something that sounded like a joke to a lot of people just a few months ago? Yeah, I think they need to take it very seriously. This is just my own, nobody knows how to get inside his mind and he goes from one position to another. But the way I've been coming to understand is a little bit of a Napoleonic vision, that he has a

vision of a new global geopolitics, geoeconomics, where this hemisphere is US. There's China's domain and you sort of divide the world up. It's sort of a 19th century view that we thought we had moved beyond. But I think he wants to see himself as a great president. And when he says, make America great again, you know, there was that, when we were in school, we learned about America's manifest destiny and involved genocide of the Native Americans, but there it was. We attacked Mexico.

We annexed Mexico's territory, and so this is another step in that kind of manifest destiny. None of us could believe that we would be seeing this in the 21st century, but there we have it. So I think one should take it seriously, and probably while one should think about what kind of deals you can make as part of a part of the strategy, part of the tactics, the other thing you have to think about is how do you respond smartly to the tariffs and there are several elements in responding intelligently to tariffs. First is, I said before, tariffs hurt the country. So for

you to impose tariffs, one has to be very selective because there is the risk that they will harm you. Right. So one of the things, it was very clear that he, Trump understood that tariffs on the importation of natural resources from Canada would hurt. So he's exempted them. Well, the response to do for Canada is to impose export levies on the export of these natural resources that will hurt the United States. Right. You know, I don't want the United States to be hurt, but I over in the global scheme

of things, one has to restore a global balance and respect for international rule of law. I think the kinds of things that Canadian citizens are doing of boycotting American products, sending a strong signal that we don't like this. The following is advertiser content from Emirates. When you're boarding the Emirates A380 with your Emirates Business Class Ticket, you can be assured that you're in good hands. The spacious lie-flat seats are designed with comfort and relaxation in mind, all so you can stretch out and unwind. On board, you'll have the opportunity to indulge in a world-class dining experience. The gourmet menus

on board are all regionally inspired ensuring that you'll be tasting dishes crafted with the freshest of ingredients and paired with a curated selection of fine wines. Complementary Wi-Fi allows you to stay connected if you so choose or you can disconnect and embrace award-winning entertainment options and if you have a stopover in Dubai, you'll have access to one of the world's most vibrant and exciting cities. It's the sort of city you could visit countless times and always explore and experience something new. There's Business Class and then there's Emirates Business Class. Book now on emirates.ca.

The TikTok Juno Fan Choice Award is back. Who's Canada's favorite artist? You decide. To vote, search Junos on TikTok. The winner will be revealed at the Junos, hosted by Michael Mublay. Live, March 30th at 8 Eastern on CBC and CBC Gym. You are a professor at Columbia University and I'd be remiss to not bring this up. And also, since we're talking about the erosion of rights, recently a 31-year-old, Mamoud Khalil, who is a recent graduate of Columbia and helped lead protests against Israel last year, was arrested by federal immigration officers in an attempt to deport him,

even though he is a green card holder and not charged with a crime. You're going to have to come with us. No, I'm coming with you. Trump posted about his attention saying Kalil's arrest was the first arrest of many to come. He added his administration knew of many more students who engage in quote, pro-terrorist, anti-Semitic, anti-American activity. How are you thinking about all of this right now? It's terrible. I think one has to, and I think the last thing, anti-American, helps put us in the context

of where we were in the 50s with the House Un-American Activities Committee, McCarthy, trying to instill fear throughout academia, but this is actually much broader than academia, but obviously academia is being targeted in the same way that it was under McCarthy. Other sources of influence like Hollywood were also targeted, and I'm sure it will go after them. I think you have to see what this particular arrest as this broader pattern of intimidation and see it more broadly in a whole variety context in which there is you know not only intimidation, weaponizing anti-Semitism, conflating anti-Israel, in particular Israel policies of ethnic cleansing and, you know, the number of children that have been

killed, just what is happening in Gaza, conflating that with anti-Semitism. And it's clearly not. Conflating support for the Palestinians with support for Hamas. Those are two different, you know, you can be against ethnic cleansing and still say, I think what Hamas did was wrong and You don't support terrorist organizations It's the same kind of thing that happened under McCarthy where guilt by association And what there's one more element of this they are very anti universities and anti science

for me, it's just so amazing that a country whose strength has been based on technology and whose acting assistant president, whatever you call it, Musk, has made his money out of technology would be attacking science and technology. And the universities, which are the major producers of science and technology, over the long run, this will do enormous destruction for America and for our American economy, let alone all the other values that we talk about. Elon Musk has understandably come up a few times in this conversation. Let's do that.

A lot of people have compared this moment to the Gilded Age, an era dominated by the likes of billionaires like Nelson Rockefeller and Andrew Carnegie, who had incredible access to power over the US federal government. It's a time that Trump has actually also expressed nostalgia about. What are the through lines that you see connecting that moment to today? How is it different though, too?

Yeah. So, you know, there's a lot of discussion reference to to America becoming an oligarchy. That said, in a disparaging way, we think of Russia annex oligarchs, and Russia didn't really have a real democracy, and it was always fragile, and didn't last, whatever they had didn't last very long. And we are, when people talk about the oligarchs, there's that same kind of undue influence of a few very, very rich people. And that discussion began even before Musk took And that discussion began even before Musk took the position he has in the US government with his team just stripping away the US government, firing people at will, violating law after law, you know, we have Supreme Court decisions that say that the executive

branch cannot impound funds that have been allocated by Congress. Congress controls the purse strings. You can't spend money when they don't appropriate it, but when they appropriate it, your job as the executive branch is to spend it. And if you don't like that, go to Congress and change the law. And so the Supreme Court has come out on that. And he says, I'm not going to obey the law of the land. We have conflict of interest laws to protect Americans against

influence of corporate power. He's ripped those aside. So, in my mind, it's much worse than it was in the Gilded Age. These individuals never were running government in the Gilded Age, these individuals never were running government in the way that Musk is running government. And there's one more difference. In the end, people like Rockefeller and Carnegie had a public interest side to them. They may have been ruthless monopolists, but they also had a side in them that was really interested in public interest. You had the Carnegie Foundation, the Rockefeller Foundation, the gifts that Rockefeller gave to

universities, you know, these were a legion and actually played a very important role in our country. If we're thinking about the similarities and the differences you know, these were a legion and actually played a very important role in our country. If we're thinking about the similarities and the differences with the Gilded Age, it strikes me that one difference is that a lot of these billionaires right now, they don't just own industry, but they own our dominant modes of discourse and public information, X, Metta, even Bezos and the Washington Post. I think the latest is that he has instructed

his opinions section at the Washington Post to write only about free markets and personal liberties. And so is this sustainable? Well, I think the point that you raise is that is a fundamental difference between Rockefeller, Carnegie. They didn't own the, you might say, the town halls of the time.

There was concentration of media power, the Hearst, and that had consequences. There's a widespread view that it was because of them that we went to war in 1898 and acquired our colonies, Philippines and Puerto Rico. So it had consequences, the media concentration there, but it wasn't the joining together of these Algarq's monopolists of the 19th century and the control of the media. And that's what's particularly dangerous today. And combined with the fact that they brought into a libertarian ideology that they are so selfish. And they have an amazing cognitive dissonance.

Musk can claim to be a libertarian, but accept billions and billions of dollars from the US government. And have one of his companies basically be dependent on the US government. Now how you hold those ideas of a libertarian and being dependent on government money, I don't know.

It strikes me right now that there doesn't seem too much of a resistance to this current administration. I'm just curious like what you think they should be doing and maybe specifically not necessarily people that they should be putting forward but policies that they should be touting right now to try and punch back against this to try and get some sort of traction. Yeah well I mean first this is not a debate about fine tuning policies right now. Right. This is a war to try to preserve our democracy. And to me,

if it were just about policy, that would be one thing. You know, elections, as they say, matter. And when another side wins, you expect a change in policy. But what disturbs me so much is the destruction of our democracy. That's not a question of policy. You know, do you violate international treaties? Agreements? That's not a policy. It shouldn't be a question that we should be debating. We should all believe that there's a law, an international law, you need to obey it.

We have laws about conflicts of interest, safeguards about inspector generals that can't be fired, I mentioned before, impoundment, all these things that have created over 250 years to make our democracy work, and they're trampling all of them. That's what concerns me. And that should be the message, I think, hopefully, that the Democratic Party can say that, you know, we can all disagree about details of policies or even policy frameworks, but this is really, really dangerous for our democracy. I'm just curious.

I don't even know if you would even agree with this, but for me, it seems to me like what's happening right now is just like the culmination of So much of your life's work kind of coming home to roost. Do you feel that way? Yes I mean roost in the wrong way I'll give you two examples of I entered... I had been a physics major at Amherst College, and in my junior year, our society, racial segregation,

income inequality just kept bugging me. And I said, you know, really, what I want to do is not physics, but economics and to do something about it. And so, you know, just reflection of that, you know, I was went down at March with Martin Luther King in August of 1963, went down in 62 down to to Georgia to help integrate. You know, so so there was that civil rights and activists. I went into economics

maybe a little bit as an activist. And my thesis was about inequality in a period in which nobody was writing about inequality. Yeah, it wasn't cool then. It wasn't cool then. And so I, after writing the thesis, I worked on other things like economics of information and other obscure topics, but, and here we are 60 years later, and we have a president who is actively trying

to roll the clock back on the limited advances that we have made in inequality, on inclusion, and diversity. in inequality, on inclusion, and diversity. So you sort of felt it a little bit over my lifetime. It made a little progress, much less than I had hoped. But then to see this rollback is, how can I say it? It really almost brings tears to your eyes. Final question for you. What does America look like in four years? Well, what I hope it looks like is that we will have gone through a trauma

from which we emerge healthier. We realize how precious our democracy is, how fragile it is, how we have to build much stronger safeguards, that part of the safeguards you cannot have a well-functioning democracy when you have the extremes of wealth and income inequality that we have and that where we went off the track. So that's my hope. Professor Stiglitz thank you very much for this. All right. That is all for today. I'm Jamie Poisson. Thanks so much for listening. Talk to you tomorrow.