The Top 1% Should Create Value for Others: Conrad

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Jan. 28 (Bloomberg) –- University of Chicago Professor of Economics Austan Goolsbee and American Enterprise Institute Visiting Scholar Edward Conrad discuss income inequality and the economics of a widening income gap with Tom Keene and Betty Liu on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

Welcome back.

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Just that simple.

Tonight state of the union speech shows wrought agreement that income inequality is a problem.

There is very sharp differences on how to address the politics of economics of it you -- in.

Something demonstrated very clearly.

It really got interesting.

Emily chang, the most interesting hombre station with thomas perkins.

That happening last night.

A lot of heat from the letter.

He broke it likening the progress of on the american one percent to the 1930s and persecution of jews in nazi germany.

While he apologized for his indelicate choice of words, he did not regret the underlying message.

He said the one percent are the job creators.

The capitalist that make top scope.

He has been disassociated with kleiner perkins.

Here he is.


It is an herbal issue.

I really felt that.


Here we are struggling with that struggling with history.

-- i really felt that in davos.

Ed conner with us.

Interesting discussion points on inequality.

Alan murray of you research talking the one percent as fiction.

Much more like seven percent.

How do you respond as an academic when we go simplistic for one percent in 99%? what i think is it is not wrong for anybody to say what we ultimately need to do is grow, what is the secret or what are the secrets to getting the growth rate higher in the country?

I guess i disagree with the viewpoint that he espouses, i do not think there is a revolutionary vanguard of the few people that if you make sure they get tons of money to cut taxes as much as they have ever been cut, that that leads to growth.

Well said.

This is the heart of the matter.

This goes to argentina.

The belief is, there is belief that tech crew have their own playbook.

Do the elite's of technology feel they are separate and apart from other capitalist creating jobs?

Perhaps they do.

I would say the one percent represents a successful people and a large group of people failed trying to be the one percent.

So we cannot look backwards to say we want to tax the one percent.

What you're really doing is taxing the payoffs from those that make you the one percent.

We are not living in a manufacturing-based economy where we sit around waiting for consumers to fill up the factories with good.

We need talented people to get the training and take the risks that reduce innovation and we need the equity to finance the risks those people take.

If we did not get those things, that is what limits growth in the economy.

You said that you disagree that there is a vanguard of evil there to create jobs.

Listening in on the perkins interview, it seemed more that he was saying just leave us alone.

Leave us alone, but let us not fund education, which in my worldview, where the growth comes from that is sustainable.

It comes from fraud a skills of the workforce tom and that we have had experience with cutting high income taxes, and it was not great.

The 2000 was a very weak recovery.

A different recovery from our childhood.

Not about one percent or 10% and nine percent but the dynamic between those.

Doug elmendorf and others have written about the lack of mobility and the aspiration around it.

Are we losing the mobility in elasticity?

I think when you look at the mobility data you see it has not changed for fit the years.

Second of all him a when you dig deeper, you find the place we are not holding up relative to denmark and other countries that have very high income equality is in the bottom 20%. you say the mobility is still there?

Use a single motherhood, high dropout rates, high crime rates and things like that.

For everyone else, the probability of earning $100,000 has gone up.

The idea is how responsible are the top one percent responsible for the bottom 20%. we will talk more about that in a moment with ed conard and austan goolsbee.

A serious topic.

Betty liu and i are not on speaking terms.

It is about the super bowl.

You are totally up to speed -- speed on this and i have no clue . we will get briefed on super bowl economics.

Also, what if wall street were in charge of the super bowl?

That would be a different case to say the least.

The vix 15.91. good afternoon.

? they got into a discussion about the idiocy of rolex watches and why does anyone need a rolex watch.

A symbol of comparable values and etc.

Etc.. well, i think that is a little silly.

This is not a rolex.

I could buy a sixpack for the x -- but so what?

That was a highlight from the interview with tom perkins and emily chang.

Welcome back.

Still with us is austan goolsbee, who i know enjoyed the interview as well.

What is interesting about this debate is you can laugh at him and ridicule him all you want about the sixpack of rolex watches, but i think what was getting lost here is is there a moral responsibility for the top one percent to take care of the bottom 20-30, 50% of not only this country but the world essentially?

You have bill gates and warren buffett who believe it, and then tom perkins comes out and says where did this come from?

Different people have different points of view.

I believe absolutely, yes.

The question is how best to do that.

Do you give away the capital or du roll up your sleeves and get to work and try to produce things that will grow the economy.

I will point out the support of an over 80-year-old man.

A very exclusive.

I hate to say it, but i have been clumsy.

It is hard.

I know it is hard for you to believe.

It was challenging.

The paint came off the white house when he spoke.

Seriously, people in strong support of what mr.

Perkins said about protection of the initiative of the nation.

Why are we having this discussion?

I do not think we should have the discussion in the of about charity.

It is a charitable contribution that should pay for everyone else's problems.

That is in some way the interpretation people put on it.

I think that is wrong.

I think when you have growth that is concentrated among a very small amount of people, that growth is prone to bubbles.

It is prone but if you like the swiss watches, hitler's watch, you see the prices going way up.

The thing that drives growth on a sustainable basis is rod-based skill in the workforce, solid economic infrastructure and good ideas.

I will point out that silicon valley is not in a low tax place.

It is in california, a place that has high reiki laois -- high regulations and high taxes.

What happens is the minutes of the labor union in california taxes the value of the cluster in silicon valley.-- municipal valley.

Why are they not there?

For circumstantial reasons.

Great weather and scanning nearby.

The value of those.

The commonwealth of massachusetts had to change the tax laws recently because the exit of entrepreneur from massachusetts out west to get things done.

Because you cannot afford to be there.

The common man got no value from the taxation.

If you look at what is happening in california, do they have better income distribution or better education?


-- no.

Stanford university, berkeley, ucla, great private universities -- the reason why these places are compelling places for businesses to be, even though they are high regulation, high tackx is something that is fundamental.

Risk-taking is higher in california despite the higher taxes.

Flex i want to bring this down to people watching who do not have a rolex.

How do you teach the dispersion of the wealth or net present value of the income?

How do you teach that will be distributed to the american public?

The fact is we have witnessed in the past 20 years of further concentration of the gains among the elite.

How do we distribute that to a broader part?

Most of what has happened with income inequality in the u.s. you have seen happen and many other incomes in the world, the return to skill, the payoffs.

They are ever higher.

What i object to is the notion that while these forces are moving one way and are having some of the greatest decades that have ever been had by anyone in the history of the world, but we would then turn the tax policy to accentuate that even greater than what has already happened i find crazy.

Look at the comparison to the u.s. versus japan.

We grew 77%. they have grown half as much.

We have increased the workforce by 50%. they have increased a half as much.

We have pulled 50 plus immigrants into the workforce.

We have been able to create enormous value.

E norman value where the gap has grown wider and wider.

We are higher than europe and japan.

We are equal to them.

Not because of economics but the government policy we choose to distribute to them.

Not an economic issue but a government policy.

What should be the republican response or policy to this front and center issue of the dispersion of income and wealth and lack of inequality?

How should your party respond?

This is a comfortable issue for democrats.

Not comfortable for your party.

How do they respond?

I believe it to show the success of the united states relative to japan who have killed innovation by reducing the payoffs for the top one percent or top 10% and over time that has been accumulating effect.

These are some of the biggest consumers.

Are you wearing a rolex?

Actually i am.

I guarantee you i am in the bottom -- [laughter] all right, thank you so much for joining us on this.

Ed connor, author of " unintended consequences." we will be back.

? bloomberg television.

State of the union address tonight.

Who does the president need to sell tonight?

I would say if the president will make the case that inequality is depressing economic issue.

I think he needs to sell the notion it is not about charity but about broad-based growth.

Thank you.

Really and.

Back thank you for joining us.

Bruce ratner joining us tomorrow.

Trish regan and adam johnson continues.

? hello, everyone.

I am trish regan.

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