this week on "moyers & co," it's our policies and our politics that have shaped our economy and shaped it in ways that have not served most americans. and an important part of those policies are our tax policies. >> funding is provided by -- ann gumowitz, encouraging the renewal of democracy. carnegie corporation of new york. supporting innovations in education, democratic engagement and the advancement of international peace and security at carnegie.org. the ford foundation. working with visionaries on the front lines of social change worldwide. the herb alpert foundation, supporting organizations whose mission is to promote compassion and creativity in our society. the john d. and catherine t.

macarthur foundation. committed to building a more just, verdant and peaceful world. more information at macfound.org. park foundation. dedicated to heightening public awareness of rigcritical issues. the kohlberg foundation, barbara g. fleishmann and by our sole corporate sponsor, mutual of america, designing customized, individual and group retirement products. that's why we're your retirement company. >> welcome. the nobel laureate joseph says the situation in america is grave. that's his exact word for it, grave, inequality too great, unemployment too high, public investments too meager, corporations too greedy and the tax code too biased toward the very rich. strong medicine from one of the world's most influential thinkers. he's been the economist most cited by his colleagues in the field. but don't despair, he says. the barriers to solving our

problems are political, not economic, and we can change what's wrong if enough of us insist. our tax code, for example, wasn't handed down from the gods on mt. olimb bus. human beings devised. and they can revise it, this time getting it right as he said on our broadcast last week. >> we have a tax system that reflects not the interest of the middle. we have a tax system that reflects the interest of the 1%. and what i want to do is create a tax system that has snept tifs to create jobs. and if you tell the corporation, look it, if you don't create jobs, you're taking out of our system. you're not putting back. you're going to pay a high tax. but if you put back into our system by investing, then you can get your tax rate down. they're willing to take but not to give back. >> so argues joseph, let's change the tax code to make it fair. he shows us how in this new white paper prepared for the roosevelt institute here in new

york, a clear, concise and coherent plan to reform our tax system. and rebuild our country. it's his latest contribution to an extraordinary range of work that has earned joseph a worldwide following that includes presidents, prime ministers and grass-roots advocates working for justice. joseph, welcome back. >> it's nice to be back. >> you said in a recent speech, an economic system that only delivers for the very top is a failed economic system. you were pronouncing judgment, america's economy has failed. has our system failed? >> unfortunately, that's what the numbers say. the median income of the american, median means half above, half below, median american today is lower than it was almost a quarter a century ago. our economy has grown over the quarter century. let's be clear about that. in a particular sense.

but all of that growth has gone to the top. so you look at the middle. they've stagnated. and if you look at, say, an important demographic group, male, median income of a full-time male worker today is lower than it was 40 years ago. >> 1972, i think you said. >> that's right. >> amazing. >> it's amazing. and americans have not yet grasped the reality of where we are. our economic system has not been delivering for most americans. and the fact that this has been true and that we have no longer a country where there's opportunity, where the prospects of the young person are so dependent on the income and education of parents means that our view of the way our economic system works has to change.

my view is that these are not inevitable. these are not just the result of the laws of economics. you know, but it's just inevitable. it's just the laws of economics. you say, well, that's the way it is, you know. that's nature didn't deal us a good hand. but it's the policies and the politics that have shaped our economy and shaped it in ways that have not served most americans. and an important part of those policies are our tax policies. >> can you fix a point where inequality becomes unconscionable? >> it's not just level the inequality. it's the form of inequality, the nature of inequality, the sources of inequality. so the problem is that inequality of outcome, typically translates into inequality of

opportunity. america likes to think of itself as the land of opportunity, the american dream. the statistics show that america is among the advanced countries with the least equality of opportunity. something that's hard for us to accept. it's something hard for others to accept. but that's what the numbers show. >> so this is why thomas picketing in his book, "capitalist of the 21st century," is concerned about this transfer of wealth that's about to happen transferring their money to the next generation. >> that's right. and a quite legitimate concern th we are creating a new plutocracy. and so what i've been trying to argue in this paper is that doesn't have to be. we can have a tax system that can help create a fairer soci y

society, only ask the people at the top to pay their fair share. it's not asking a lot. it's just saying, you know, those in the top 1% shouldn't be paying a lower tax rate than somebody much further down the scale. shouldn't have the opportunity to move his money offshore. >> wouldn't they be arguing that, well, they pay a lot more taxes because they do make this money, and why shouldn't they be able to keep as much as they have are keeping after they've paid their share? >> that's the problem. they haven't paid their share. the point is that they're getting, say the top 1%, gets 22.5% of the income. that doesn't really fully include all of these unrealized capital gains, so it really doesn't really capture the full degree of inequality. the question is, because they are so wealthy, they have the ability to pay an even larger

share of the taxes to our country. but instead, they're using their money to avoid paying taxes. you know, these offshore tax havens are not something that we need to make our economy grow. >> you say that we could stop these tax havens overnight. how? >> well, you know, we did that, very similar after 9/11. we realized that these tax havens were also being used for funneling money to terrorists. and we started figuring out what they were doing. and we put the pressure on them. and that stopped almost overnight. now, i was giving a talk on one occasion to -- in one of these tax havens. and i don't know why, but they

sometimes invite me to give a lecture. maybe they think that it's penance for their sin. so i was telling them how bad it was for the global economy, especially bad for developing countries because these tax havens are also used for corruption, money laundering, narcotics, you know, all of these kinds of things. and after my talk, a couple of the bankers came up to me and said, you know, you got us wrong. we don't do money laundering. we don't do corruption. we don't do narcotics. we just do tax avdance. and that was their business motto. it gives a mindset of what this is about. and totally unnecessary. these offshore tax havens exist to avoid taxes and to avoid

regulations and the other things. so it's avoiding responsibility. let me put it in a broader context. corporations, people, should we treat -- you know, the point is that the supreme court decision of saying corporations have the right to contribute to campaigns as if they were people, but the interesting thing is while we give them those rights, we haven't given them those responsibilities. if when corporations do misdeeds, we typically don't hold them accountable. work with the corporati look s what the banks did to ou economy in 2008. were they held accountable? not really. oh, free speech, they have the right to contribute unlimited

amounts to distort our politics. but by the way, once they do something wrong like create a global financial crisis, we'll just give them more money. we won't make them accountable, or their officers accountable for what they did. >> there was a remarkable moment in an interview that jon stewart did recently with timothy geithner about geithner's new book. there's a moment in which geithner said we had to save them from their mistakes. they didn't pay for their mistakes. the country did. >> exactly. and you know, he makes a very good point about saying they paid back all the money. well, first of all, there was a shell game. money at close to zero interest rates. they'd lend the money back to the government at much higher interest rates.

if the government lent me hundreds of billions of dollars at a zero interest rate, i, too, could become wealthy person by just investing in government bonds. this doesn't take a genius. a 12-year-old could do it. yet they walked off with bonuses to for doing that, and they used that money to help pay back the government. this is the kind of shell game that would do any con artist proud. but when somebody, you know, commits an accident, somebody gets injured, what we did was analogous to -- we take the perpetrator, the guy who was the drunk driver to the hospital, but we leave the guy that has been hit on the street, and then we say oh, by the way, you don't have to pay for any damage that you've done. so even after they pay back the government, the real question

is, who's responsible for all the damage that's been done towards the economy? people have lost their job, that lost their home. the banks haven't paid back a cent of that liability. and that's a real corporate responsibility. >> so how did you come to bring this sense of moral responsibility to the study of economics? this notion of a social contract? was there a defining fork in the road? >> the problem was no defining fork in the road. i had the good fortune, you might say, of growing up in gary, indiana, industrial town. most people say that's not good fortune. it was good fortune in that it exposed me to the real america. my mother was a primary schoolteacher dedicated -- they were both very dedicated. but gary was an industrial city marked by a lot of poverty, discrimination, episodic

unemployment, business cycle going up and down. you couldn't help but feel that the market economy capitalism wasn't working quite the way that some of the people say this wonder of wonders. when i was an undergraduate at amherst college, i thought i was going to be a physics major, theoretical physics. i really loved mathemati, tried to understand how the world worked. in my junior year, i said, you know, what really motivates me is trying to understand our social problems, our economic problems. i wanted to become an economist. and then i went to m.i.t. i never lost that original motivation for being an economist. even as i was working on some very abstract mathematical

economics issues about the consequences of asymmetry as information. it was all partly to try to understand why did we have so much unemployment? why did we have discrimination? why is the world that some economists depict? something that works like a clock, beautifully. why is that not right? why is that so inconsistent with the world that i see? and so that was always in the back of my mind as i was working on these more abstruse theories. >> so is that at the heart of what you call asymmetrical information that contributed to your receiving in the work that brought about the nobel prize? >> that's right. >> the asymmetrical information.

what is that? >> it's that some people know something that other people don't know. a very simple idea. but the whole theory of perfect market markets that adam smith and the melton friedman and all of these people who think the markets were perfect, totally ignored. so the idea was that markets where people have different information where some people know more than others, where markets work imperfectly are fundamentally different from this world that they had described where there was perfect information. you know, worlds with perfect information, there wouldn't be any discrimination. there wouldn't be any of the monopolies, you know, those kinds of perfections are not part of the world that we live in. and so what my research did is to help clarify, with other

people's research, helped clarify why our economy doesn't work quite so smoothly as the advocates of free markets have claimed. why we had a crisis in 2008. you know, that's not the way market economies are supposed to operate. why it is, you know, the basic law of economics is you have supply and demand. law of supply and demand. there's not supposed to be unemployment. yet we have 20 million americans who would like a full-time job and can't get one. we have an economy where, you know, in 2009/'10, we were throwing people out of houses. we had homeless people in empty homes. that's not the way an american economy is supposed to operate. there's so many aspects that are so central to our economy that seem out of sync with that theory of perfect markets. and the evidence is so

overwhelming that our markets don't work perfectly. that markets can and are an important force, but we have to shape markets. come back to our theme of taxes, taxes are one of the ways we shape markets. if our tax system says speculation is going to be taxed at a lower rate, you'll get more speculation. if our tax system says if you keep your money abroad, you don't have to pay taxes. you're going to get more money abroad, and you're going to get less job creation. inside america. if your taxes say we want to encourage real investments in arica, then you can get more investment in america. so i'm an economist who believes that incentives matter, but i also believe that you have to shape incentives and that

markets on their own don't necessarily shape them the right way. and that when we have a distorted tax system, distorted by a distorted political system that has given a huge amount of weight to the upper 1% or to a corporation, then that kind of distorted political system leads to a distorted tax system which leads to a distorted economic system, which leads to an economy that is not performing as well for most americans. >> there's a quiet urgency in this white paper. i also read an excerpt of your speech when you received the daniel moynihan prize for social science research. and you said in that speech that this country is another pivotal moment in history. what do you mean by that? >> what i was referring to at that moment was there have been two periods in our history where

inequality had risen to what i thought was an unckoconscionabl era. the gilded age and the roaring '20s right before the great depression. in both of those instances, we stepped back from the brink. we realized where we were going as a country. we said, that's not where we want to go. and the gilded age was followed by the progressive era, antitrust policies, trying to get at the monopolies, getting at some of the sources of inequality that was undermining our society. the roaring '20s was followed by the legislation of created social security, created labor legislation that, you know, minimum wages, maximum hours, lots of things that we take for granted now but are part of our social fabric. the question i asked was,

inequality has now gotten back to the level, that peak that it had back in 1928 before the great depression. got back to that same level back 2008. so the question i posed at that point was will we again pull back from the brink like we did at the end of the 19th century like we did in the roaring '20s? i'm hopeful, but there's one note of caution. and that is have our politics changed? have decisions like citizens united changed the power of money? so that the inequalities in income and wealth that are so great tday translate into more political inequality than they did. that's an open question. and in my mind, that's what this battle is about.

>> so there's a lot more in these 27 pages than we have touched on in our time together. and we have posted your paper, "reforming taxation to promote growth and equity" on our website and urge people to download it and read it whole. meanwhile, thank you for joining me and sharing your time and your ideas. >> thank you very much. >> at our website, billmoyers.com, we'll link you to more of my conversation with joseph stigletz and to his white paper tax reform. you'll also find startling numbers on the public goods and services that america could purchase with all that money being hidden away by corporate tax dodgers. that's all at billmoyers.com. i'll see you there. and i'll see you here next time.

>> don't wait a week to get more moyers. visit billmoyers.com for exclusive blogs, essays and video features. >> funding is provided by -- ann gumowitz, encouraging the renewal of democracy, carnegie corporation of new york, supporting innovations in education, democratic engagement and the advancement of international peace and security at carnegie.org. the ford foundation. working with visionaries on the front lines of social change worldwide. the herb alpert foundation, supporting organizations whose mission is to promote compassion and creativity in our society.

the john d. and catherine t. macarthur foundation. committed to building a more just, verdant and peaceful world. more information at macfound.org. park foundation. dedicated to heightening public awareness of critical issues. the kohlberg foundation. barbara g. fleishmann. and by our sole corporate sponsor, mutual of america, designing customized, individual and group retirement products. that's why we're your retirement company. >> welcome to "first."

this week we look at the 60th anniversary of brown versus board of education and its impact on the delaware school system. >> also this week, the 70th anniversary of d-day. the invasion turned the tide of world war ii. we connect with "delaware" magazine for reflections and personal stories. ofand the personal story matt haley. "first," your public media newsmagazine, starts right now. ♪ >> the school year around the region is winding down, and it is a good time to look back on accomplishments. 60 years ago, the supreme