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Fareed Zakaria GPS

Hotel and Churches Bombed in Sri Lanka, Killing Hundreds; Mueller Report Raises New Questions About Trump's Presidency; How the Mueller Report is Viewed in Moscow; Why China Wins the 5G Race; Bill McKibben Discusses Climate Change; Joseph Stiglitz Talks about Rebuilding the American Middle Class. Aired 10-11a ET

Aired April 21, 2019 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[10:00:00] COMSTOCK: From Tulsi Gabbard to Steny Hoyer to Republicans have said we should celebrate that Mueller found that there wasn't any conspiracy.

TAPPER: All right. That's all the time we have. Happy Easter to everyone. Thank you so much.

Fareed Zakaria picks up our coverage of the breaking news out of Sri Lanka right now.

FAREED ZAKARIA, CNN HOST: This is GPS, the GLOBAL PUBLIC SQUARE. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria, coming to you live from New York.

Today on the show, the Mueller report. Twenty-three months after Mueller's appointment, the public now knows much of what he has discovered. Is the president in the clear?

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: No collusion. No obstruction.

(END VIDEO CLIP)

ZAKARIA: And what is Russia's response? I'll ask the experts.

And in London this week, thousands of climate change activists protested. On Wednesday the Pope told young environmentalist Greta Thunberg to keep up her fight. And Monday is Earth Day, but do we have time or are we at the beginning of the end for a habitable planet?

That's what author Bill McKibben asks in his new book. I'll talk to him about it.

But first, here's my take. Around the democratic world there's a power struggle taking place that might end up being the most damaging and long-lasting consequence of this area of populism. Elected leaders from Donald Trump to Turkey's Erdogan to India's Modi have been steadily attacking the independence of their nation's central banks. As the economists points out, politicians in the 1970s would routinely

use central banks to goose the economy to help them win elections. This helped create a wave of inflation that paralyzed economies and cost untold misery. As a result over the last three decades, countries have given central banks must greater independence.

The United States was one of the leaders in this regard with Paul Volcker asserting the Federal Reserve's independence and breaking the back of the stagflation that had crippled the American economy in the 1970s. Today it is Trump who is leading the charge in the opposite direction. He is attacking the Fed and asking it not only to cut rates but to actually engage in emergency measures to boost the economy at a time of robust growth and low unemployment.

To ensure that the Fed complies with his wishes, Trump plans to nominate who candidates to its board whose main qualification appears to be a slavish devotion to the president. But Trump is not alone. Last year Erdogan issued a decree allowing him to directly appoint the country's central bank leadership. In March, Turkey's central bank spent $2 billion trying to prop up the lira in advance of local elections.

In India, Prime Minister Modi pushed out two central bank governors so he could find a more pliable one. He has succeeded. The bank cut rates apparently to help him in the national elections that are now under way. In addition, he essentially raided the central bank's coffers for $4 billion to buy the votes of poor farmers.

In South Africa, the governing party is moving to change the structure of its central bank long private and fiercely autonomous. In the Philippines the president appointed a close political ally to head the bank. The Italian populist governing coalition has been attacking the central bank's leadership in Italy and questioning whether the bank really should be the steward of the hundred billions of dollars of gold reserves that Italy has.

To get a sense of how much the intellectual mood has changed, consider this. Alan Blinder, a Princeton economics professor who had served as vice chair of the Federal Reserve wrote an essay in 1997 arguing that the Fed was to obviously successful at policy making that government should adopt that model in all kinds of other areas like tax policy. This would shield policy from the overt political influence of elected officials.

Today Trump wants the opposite. He would like to infuse the short- term passions of partisan politics into the Federal Reserve. Trump senses that the country's mood has changed, and he's right. The financial crisis, the bank bailouts have all eroded the Fed's credibility.

It's not just in America. Across the world central banks are seen as having failed to rescue Main Street while being too generous to Wall Street. Some of this criticism is justified, though not really in the United States where the actions of the Feds in the Bush and Obama administrations worked much better than anywhere else. But even where the critique has merit, the solution should not be to destroy the entire institutional structure of central bank independence.

[10:05:04] The assault on central banks will not have an immediate effect but over time their credibility will be eroded, their effectiveness will wane, and then one day when the next crisis hits, we will all wish we had institutions that could weather the storm, but by then it will be too late.

For more go to CNN.com/fareed and read my "Washington Post" column this week, and let's get started.

The holiest week of the year for many Christians began with the fire at Notre Dame. It is ending with Pope -- the Pope called cruel violence in Sri Lanka. The island nation that sits off the southern tip of India was hit this morning Easter Sunday with a series of deadly bombings. The targets were churches and hotels. More than 200 people have died and around 500 are injured.

Joining me now is CNN national security analyst Peter Bergen.

Peter, this is a tragic terrorist attack but also a somewhat puzzling one, is it not? Sri Lanka has had a lot of terrorism but it was generally speaking ethnic terrorism, Sinhalese versus Tamils. Here you have what appears to be an attack on a Christian population. Sri Lanka's Christian population is tiny. I think about 7 percent of the country's Muslim population is even smaller. What's going on?

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: Well, I think that's exactly right, Fareed. This is puzzling and there are a lot more questions than answers right now. No claim of responsibility. The government has said that this is the work of religious extremists, they said they've arrested seven people who appear to be part of a group.

Certainly, you know, if you think back to the Mumbai attacks which you know so well, Fareed, you know, this kind of multiple kind of attacks on hotels and other locations, that was the work of Lashkar-e-Taiba, but Lashkar-e-Taiba is a Pakistan-based group opposed to India and doesn't really have any interest in Sri Lanka.

There have been a very limited number of Sri Lankans who joined ISIS so, you know, that's not out of the question. But it does appear to be, with what we know now, an Islamist group that would be responsible, by which one I have no idea. And Sri Lanka has not been kind of a place where we've seen this kinds of attacks in the past.

ZAKARIA: And is there a pattern here, Peter, in terms of the nihilism of the violence? There's no claim of responsibility so far. There is no demand as far as we can tell. You know, it used to be said about terrorism you want a few people dead and a lot of people watching because you're trying to publicize some demand. But now we're seemed to be in a world where the point is just mayhem and chaos.

BERGEN: Well, that's right. And I -- you know, 9/11 was a kind of exemplar of that, which is the most watched event in human history arguably. And a lot of people died. So yes, I mean, this is kind of what we've seen since 9/11. This was probably one of the most lethal terrorist operations since 9/11 with 207 dead and the number will certainly rise with 560 injured or wounded.

But yes, no demand. We may get a claim of responsibility from ISIS which will be hard to pass immediately because they've claimed responsibility for events that they had nothing to do with and they've also claimed responsibility for events that they've been behind. But I would certainly anticipate ISIS saying something about this in the next 24 hours or so, Fareed.

ZAKARIA: Peter Bergen, thank you. A reminder that this is in fact the worst attack since 9/11 in terms of the number of lives lost. Thank you.

Now to the Mueller report. Many questions still swirl some 72 hours after the release of the redacted version. We've all learned that term, redacted. But perhaps the most important is what is next for the president? Will the Democrats attempt to impeach him? Is he at risk of indictment after he leaves office?

To discuss two people who know these issues very well, Robert Bennett is a lifelong Washington lawyer who represented Bill Clinton in the Paula Jones and Lewinsky matters. And Laurence Tribe is a professor of constitutional law at Harvard.

Professor Tribe, you have written in the past very eloquently about the dangers of the talk of impeachment. Now having read the Mueller report, you have reached the opposite conclusion. You feel that the House has no alternative but to begin impeachment proceedings. Explain why.

LAURENCE TRIBE, PROFESSOR, HARVARD LAW SCHOOL: Well, I've always been cautious about impeachment. I've always realized that too much impeachment talk can backfire. I've always realized that we have to take it seriously. But taking it seriously and not pursuing it even when the evidence is as overwhelming as this report makes clear, and I've read it carefully from cover to cover with the appendices.

[10:10:05] Even as redacted, what it makes clear is that this president sought the help of a foreign adversary in trying to become president. He accepted that help. He pursued it. Her pursued it assiduously. Yes, there was no evidence of conspiracy but it is a lie to say that the Mueller report clears him of collusion.

And if you read the framers from Hamilton to Madison to Mason, the main reason they designed the impeachment power in the first place after the experience with France and England, the main reason they designed it was fear that a foreign power would gain influence over our presidency.

On top of that, there are at least 10 carefully documented instances of obstruction of justice. They need to be laid out in front of the American people because smoking guns tend to generate so much smoke that they obscure the truth until you clear the air with visual testimony of firsthand witnesses.

The Mueller report is written as an essential invitation for the House to take up its constitutional responsibility. I continue to be cautious. I don't think that they should vote tomorrow on impeachment resolutions but they need to expose to the American people what a corrupt, dangerously criminal presidency we now have. And it seems to me vital that that begin as soon as possible.

ZAKARIA: Bob Bennett, you have in a sense watched this movie before with Bill Clinton. What happens is the House in a fit of moral righteousness has impeachment proceedings, votes to impeach the president, and then we all discovered at the time that was not the end of the process. The Senate then has a trial and it acquitted Bill Clinton and the result was Clinton's approval ratings soared because it was seen that he was the victim of a kind of wrongful persecution.

Is that likely to happen again?

ROBERT BENNETT, FORMER LAWYER FOR BILL CLINTON: Well, I think so. Let me say I agree with Professor Tribe, one of the great constitutional lawyers in our country, that a very ugly portrait has been painted by Mr. Mueller.

I have some concerns about impeachment because, first, it will be incredibly divisive in our country. But secondly, I mean, I'm a trial lawyer so I kind of look at it from that more narrow perspective. You're not going to win an impeachment trial. Impeachment are just really charges. And the Senate would be a Republican Senate would be the trier of fact. And the Chief Justice Roberts would be the presiding judge.

And so, you know, if you lost it, which is 95 percent certain, in my opinion only, you know, the president will claim victory and we've had all this divisiveness. But sometimes you should rise -- you know, I don't know. There is an argument as Professor Tribe says to go all the way but I'm inclined to say not to go all the way.

ZAKARIA: Professor Tribe, you think that one of the crucial issues here is going to be the testimony of witnesses like the White House Counsel Don McGahn, people who -- Michael Cohen, who explained what it was the president did, what the president ordered them to do to obstruct justice.

TRIBE: I think that's right. It was only live testimony of people like John Dean in the Nixon case that brought us to the very end of that troubled presidency. Now Bob Bennett is right, it will be divisive but we are already deeply divided. I think he's probably right, though I don't pretend to have a crystal ball, that even after the live testimony the Senate will still be in Donald Trump's hip pocket and will acquit.

But for goodness sake, if this isn't enough to establish the need to put every senator on record as to whether they take their oath to uphold the Constitution seriously I can't imagine what would be. Keep in mind the dangerous precedent that would be set if the House basically says, well, we've heard the evidence, never mind. That would really mean that Donald Trump in a potential second term or any future president would know that there is essentially no limit to what that president can get away with.

[10:15:09] I think it's time to stand up for principle and not focus entirely on the political fallout.

ZAKARIA: Bob Bennett, let me quickly ask you. We've got about 30 seconds left so I'm sorry to do it this way. But what about the president's legal jeopardy and 15 -- roughly 15 legal cases that are being pursued now, many of them based on information from Mueller's office?

BENNETT: Well, I think this presents the greatest jeopardy to the president because in those cases or at least what we know about a couple of them, others have -- are sort of under seal, is they're going to be following the money such as, you know, the Trump Tower issue. What did the president say when he wanted to barrow hundreds of millions of dollars? Does that comport with his tax returns? I think the president is at real risk in that area.

But if I could comment on one thing, and this -- I know this sounds terrible but I think sometimes for the benefit of the country, you have to rise above principle. And I think this just might be one of those occasions. All these nasty facts and ugly truths can come out other ways.

ZAKARIA: Fascinating conversation. I really thank both of you for shedding light on this complicated subject. Thank you.

Next on GPS, sweeping and systematic. That is how Robert Mueller's report described Russia's interference in the 2016 election. How does Russia respond? We will hear from Moscow when we get back.

(COMMERCIAL BREAK)

[10:21:14] ZAKARIA: The Russian government interfered in the 2016 election in sweeping and systematic fashion. That is a direct quote from the Mueller report. In response Kremlin spokesman Dmitri Peskov told reporters there was no interference and the publication of the Mueller Robert confirms it. Hmm. Hopefully my next guest can help us understand.

Andrey Kortunov joins us from Moscow where he is director general of the Russian International Affairs Counsel, and Susan Glasser is here with me in New York. She is a staff writer for the "New Yorker" and a former Moscow bureau chief for the "Washington Post."

So, Susan, isn't it fair for the president to claim, on this issue, exoneration? That is the Mueller report does say that there was no active collusion between the Russians and the Trump campaign, or am I wrong?

SUSAN GLASSER, CNN GLOBAL AFFAIRS ANALYST: Well, you know, I think it's a little bit -- I think that's what Trump himself has claimed. His attorney general has taken a very aggressive interpretation of the report. Having sat down and spent the last couple of days going through the report, however, seems to me the Mueller team has concluded that there was no criminal conspiracy that they were able to determine.

But in fact there are many, many data points of potential collaboration or collusion that we simply are left not knowing what to do with. I think the "New York Times" had a great review today of it as a literary document and said the ultimate headline could be, he didn't not do anything.

(LAUGHTER)

ZAKARIA: Andrey, when you look at it from Moscow, what do you think happened? What -- because there is pretty sweeping evidence of Russian interference. What do you think happened? What do you think the Russian government was trying to do?

ANDREY KORTUNOV, DIRECTOR GENERAL, RUSSIAN INTERNATIONAL AFFAIRS COUNCIL: Well, I think that the Russian government might wanted to teach a lesson, to give a lesson to Hillary Clinton in particular, assuming that the United States had been interfering into Russian domestic affairs for a long period of time. The message was clear that you shouldn't do that. If you do that, keep in mind that you're also vulnerable to a foreign interference.

I don't think that the idea was to support Donald Trump because no one in Moscow really believed that Donald Trump could be elected. I don't think that the idea was to erode American political institutions. Maybe because here in Moscow we are more confident in the resilience of the U.S. political institutions than you are back in the United States. So I think that this entirety of this issue was not properly appreciated in Moscow.

ZAKARIA: That's a very interesting point. The real animus for Putin was against Hillary Clinton, and remind people why. This is something people forget. Hillary -- Putin really disliked Hillary Clinton.

GLASSER: Well, that's right. He also had a real issue with U.S. policy in the Obama administration. People tend here in the United States to focus on Obama at the beginning of his presidency and the reset with Russia. But in reality U.S. policy and not of Europeans have changed very dramatically after the Russian takeover -- annexation of Crimea in 2014 and the subsequent launch of armed hostilities in Eastern Ukraine, which continues to this day in Ukraine and so there were sanctions imposed.

Even before that the Kremlin as you said really took a personal dislike toward Hillary Clinton, blamed her for anti-Putin protests that really disrupted his return to the Russian presidency. And so interestingly, Mueller in his report and also in indictments actually dated the Russian campaign in the U.S. 2016 election to the post-2014 period, and so before Donald Trump was a real factor.

So I think that's true. However, it is a very significant finding in the Mueller report that confirms U.S. intelligence agencies' conclusion that this was done on behalf of Donald Trump.

[10:25:08] And that I think is something that has gotten lost in the finger-pointing between the president and his former White House counsel and the like. But it's very significant.

ZAKARIA: Andrey, what does it mean for U.S.-Russian relations that Mueller has come out with these conclusions. The president certainly is claiming vindication.

Do you think as a result the president will feel less pressured to be tough on Russia? The administration has actually been quite tough on Russia, expanding sanctions, arming the Ukrainians. Do you think now there's a real rapprochement between Russia and the United States?

KORTUNOV: I hate to bring bad news but I don't think that we see any light in the end of the tunnel. I think that Russia remains toxic. It is still a problem for Donald Trump. And I think I don't see how Trump can exercise anymore flexibility on Russia under the current circumstances. For example, I cannot see how we can put together another Putin-Trump summit without Trump having many, many problems back at home.

ZAKARIA: Finally, Susan, just in the "New Yorker" commentary on this, you point out perhaps the most extraordinary part about this whole Mueller report is the chaos at the White House, the way in which the president seems to operate. You know secretly telling one aide that he's going to fire the other aide. I mean, that really is quite extraordinary.

GLASSER: Well, that's right. And if nothing else, I feel like I'm frustrated as a Russia hand with having these data points that I don't yet feel have been resolved into a clear and consistent narrative of what actually happened. However, on the functioning of the Trump White House, I feel that this is a document that will stand for a long time as a record. It's not just another anonymous op-ed. It's not just a bestselling book with accounts that we're not sure what to make of.

This is the dysfunction and chaos and lying inside the Trump White House as documented by prosecutors. There's contemporaneous notes, there's phone records. There's other information. They've gone to great length to show I think a devastating portrait, and again it shows how inured we are and how we've become almost complicit in the shattering of norms by a president. It's amazing.

ZAKARIA: Fascinating. Susan Glasser, Andrey Kortunov, pleasure to have you on.

Next up, the battle over 5G and why China is going to win.

(COMMERCIAL BREAK)

[10:31:30]

ZAKARIA: Now for our "What In the World" segment. All of a sudden it seems 5G is everywhere, from TV ads to presidential tweets. The next generation of mobile technology, 5G, promises speeds up to 100 times faster than our current networks. That means Internet so fast it could spur the growth of automated factories, smart cities and driverless cars.

But Americans must not be fooled by the ads. The U.S. doesn't have 5G at any sort of scale. According to a new report by the Defense Innovation Board, an advisory committee to the Department of Defense, China is winning the race for 5G dominance. That's not just because of its giant telecom companies or the power and vision of Xi Jingping.

As the report argues, it's primarily because of Spectrum, the airwaves that deliver data from cell towers to cell phones. Spectrum is the foundation of mobile Internet. Its frequencies determine how much data can be transferred and how fast. It's a national asset. It's in limited supply.

Earlier this month Trump announced that the U.S. was opening up for auction the most Spectrum of any country in the world. But these air waves the government is opening up for 5G may well be the wrong kind. They are high frequency, enabling a huge amount of data to be transferred incredibly quickly, but they operate at a minuscule range, as limited as a few hundred feet.

As the Defense Innovation Board report notes, 5G built for such frequency would require many millions of base stations and all kinds of other infrastructure. That would take time to build as well as lots of money, $400 billion, the authors estimate.

And the U.S. isn't China. The government isn't going to lavish funds on digital infrastructure. Today, already, China has nearly 10 times as many 5G base stations as the U.S., and it plans to launch the first widespread 5G commercial network by 2020.

Huawei is becoming expert at 5G networks, which could make it one of the world's leaders in that technology. And China has already assigned air waves for 5G at a mid-level frequency to its three state telecom companies. This mid-range frequency is at the sweet spot of range and speed, requiring fewer base stations and enabling a faster, cheaper rollout of 5G.

So if middle-frequency Spectrum would translate to a quicker rollout of 5G in the U.S., why isn't Trump announcing its auction? Because much of it is already used by the Pentagon. And while possible, it's a bureaucratic headache to get the government and the commercial sector to share Spectrum; 5G represents a huge economic opportunity. Think about our current 4G networks. The U.S. led the world in 4G's development and rollout.

In 2016, 4G added $100 billion to America's GDP. It flooded American tech companies with revenues. From 2011 to 2014, industry jobs increased by 84 percent. A much more intense version of this transformation will happen with 5G. And unless the U.S. government acts fast, the main beneficiary will be China.

[10:35:00]

Next on "GPS," in the last year alone, paradise has become an inferno, or at least a town called Paradise in California. Glaciers have been melting at a rapid pace and Mozambique got hit with a cyclone that is said to have been one of the largest ever natural disasters in the entire Southern Hemisphere.

So how are you going to celebrate Earth Day tomorrow? I'll talk to one of the most spirited intellectual activists on this issue, Bill McKibben. (COMMERCIAL BREAK)

ZAKARIA: Forty-nine years ago on April 22nd, 1970, millions of Americans celebrated the first Earth Day. All these years later, Monday's Earth Day will see many more people noting the day and in many more places around the Earth.

The first message of that first Earth Day was "Act or die." Today scientists tell us we are nearing the point of no return. But has time run out?

Bill McKibben is asking that question in his new book, "Falter: Has the Human Game Begun to Play Itself Out?"

[10:40:00]

Thirty years ago McKibben published "The End of Nature," which has been called the first major book to warn about climate change.

Welcome, Bill McKibben.

MCKIBBEN: Fareed, so good to be with you.

ZAKARIA: Let me ask you what you think has changed since you first wrote that book 30 years ago?

MCKIBBEN: Two things really have changed. One, 30 years ago, we were issuing a warning about something that was still a little ways off and still a little abstract. The three decades since has seen the scientific prediction not only come true but come true faster and harder than we could have guessed.

What was once a warning is now everyday life, everyday brutal life for tens, hundreds of millions of people around the world who deal with things we couldn't have imagined, storms on a new scale, a rising ocean that's 30 percent more acidic. The world has shifted in profound ways. There's half the sea ice in the Arctic.

The other thing that's remarkable about that 30 years is how little our societies and governments have done to respond to what's the greatest threat we've ever faced. I could not have predicted 30 years ago that we would have stood here now having done next to nothing about this problem.

ZAKARIA: You know, there are people -- I'm thinking of somebody like Bjorn Lomborg -- who argue climate change is happening; it's real, but you're exaggerating the effects; you're trying to rouse people and scare them and spend vast amount of money doing things that will not ultimately have that much effect because we don't have new technologies to replace the old ones. What do you say to that argument?

MCKIBBEN: Well, first of all, the scientific community is now in a state of rare and robust consensus about just how dangerous this is. And they are telling us in no uncertain terms that -- I mean, we're not in a position anymore to stop global warming. All we're trying to do now is slow it down enough that it does not threaten our ability to have civilizations like the ones we've known.

And even that, at this point, is, you know, not an absolute certainty we can still do it. The good news is that the engineers have done their job as well as the politicians have done theirs badly. The last 10 years the price of a solar panel, a wind turbine has dropped 90 percent.

This is the cheapest way to generate power around the world now. If we wanted to get this done, we could. What that means, ultimately, is figuring out how to break the political power of the fossil fuel industry because that's the thing that's kept us paralyzed all these decades.

ZAKARIA: You pointed out that we can't really stop global warming. There's enough CO2 in the atmosphere right now already that, you know, some of it is -- I mean, I hate to put it this way, but baked into the system already.

MCKIBBEN: Baked in.

(LAUGHTER)

ZAKARIA: Are you -- do you believe that we should be aggressively looking at geo-engineering?

You know, we've had people on who argue everything from pump sulfur dioxide into the air, put reflectors on the ocean. I mean, are those worthwhile endeavors?

MCKIBBEN: People were proposing these 30 years ago when I was writing "The End of Nature," and they have never really passed the sniff test.

ZAKARIA: You -- you describe this as a kind of time test for human beings -- and the emphasis on time, that the acting now is very important, you argue, more important than any other kind of public policy challenge we face. Explain why?

MCKIBBEN: Well, because it is the first time test. You know, Dr. King always used to say "The arc of the moral universe is long, but it bends towards justice." This may take a while, but we're going to win. The arc of the physical universe, by contrast, appears to be short and bend toward heat. If we don't win soon, then we never win, because there's no plan for how we're going to re-freeze the Arctic once we've melted it, or all the other things that we're doing.

So this is the question that makes most other questions moot if we can't get them right. And at the same time, it's the place where we may be able to begin dealing with some of the other crises that we face. In "Falter," one of the things that I talk about is the way that the same time period that we saw this rise in temperature, we also saw a rise in profound inequality and hence political power. We can't solve either of these overnight, but the process of moving towards sun and wind is a process of moving towards a world that is somewhat more democratic, somewhat more local.

An awful lot of the imbalanced power on our planet now is held by people who just happen to have control of the small deposits of coal and oil and gas, the perfect example being the Koch brothers, who have used their position as our biggest oil and gas barons essentially to purchase one political party and intimidate the other.

[10:45:15]

So there will still be rich people in a solarized world, but there won't be Koch brothers rich people.

ZAKARIA: Bill McKibben, pleasure to have you on. Thank you, sir.

MCKIBBEN: A real pleasure, Fareed. Thank you.

ZAKARIA: Up next, a good education, decent decent job, health care for all, mortgage system for the 21st Century, a comfortable retirement. My next guest says we need all of those in order to rebuild America's middle class and we can do it, he says. No, he isn't running for president. He's just a Nobel-Prize-winning economist.

(COMMERCIAL BREAK)

[10:50:00]

ZAKARIA: The middle class, always seen as the backbone of America, has not had a good few decades. The rich have gotten richer, the very rich, much, much richer, while the middle class has stagnated.

The anger over this neglect helped bring Donald Trump to the White House, and that anger won't go away until the underlying problem is fixed. The question is, how to do it?

My next guest has the answers, and he is a Nobel-Prize-winning economist. Joseph Stiglitz is a professor of economics at Columbia University and the author of a new book, "People, Power and Profits: Progressive Capitalism For an Age of Discontent."

So let me ask you first, you know, centrally, a lot of people say, "Look, these forces that are causing the inequality to widen -- and it's happening all over the world within countries from China to Sweden to the United States, they're happening because of these broad structural reasons, technology, globalization, things like that, and so there's a limit to what any government can do."

What do you say to that?

STIGLITZ: Well, what I says is I do look over the world. And you see, while these forces are global; they're affecting everybody, particularly globalization and technological change, the way they play out is very different in different places. Norway, Sweden, Scandinavian countries more generally have had some increase in inequality, but the level of inequality is so much less than in the United States, so much more opportunity to move, you know, from the bottom to the middle. The American dream is still there, but it's not here in America.

ZAKARIA: So presumably your answer is the government needs to get much more involved and there needs to be, frankly, more redistribution, right?

STIGLITZ: That's right. It's -- it's been matter of choice, you might say, the choice of the policies that we've introduced, and those policies have led America to have the distinction of being the most unequal of the advanced countries and among the countries, among the advanced countries with the least -- least equality of opportunity.

ZAKARIA: And, again, the social mobility being the key index, which is, if you're poor, what are your chances of moving to the middle class?

STIGLITZ: Yeah, and the life chances of a young American are more dependent on the income and education of his parents than in almost any other advanced country in the world.

ZAKARIA: So your argument would be, you know, spend the money you need to; it doesn't matter the debt-to-GDP ratio will go up to 150 percent; it's worth it and you'll get the growth that will eventually reduce that debt?

STIGLITZ: Well, I think that's true, but that's not the prescription that I would put forward. I would say we need to change our tax system. There are -- you know, we tax people at the top at a lower rate than we tax people further down. We don't tax capital. Somebody -- you know, one of the wealthiest Americans said he was taxed at a lower rate than his secretary and he said that was, you know, not right; it was almost un-American.

So it seems to me that there's a lot that we could do to create a fairer tax system and a tax system that would actually make the country more dynamic.

ZAKARIA: Overall, would you describe your -- your proposals as pushing America more toward the kind of European model, much more state involvement in the economy?

STIGLITZ: It's more state involvement than we've had in the last 30 or 40 years. And one of the points of my book is to restore the balance, that the lack of balance is why our economy is growing slower, why the -- most of the benefits of the limited growth we have are going to the people at the very top. It's why we are -- have more monopoly power today.

We need a government, both in regulation to make sure you don't have excesses of monopoly power, that you don't have excesses of environmental pollution. So we need a regulatory -- we need government regulation. I always say, when people criticize regulation, here in New York City, if we didn't have stoplights, we'd be in gridlock. And stop lights are a simple regulation. Who goes first and then who -- you know, it's a way of taking turns.

So we need more regulation to prevent some of the abuses that we have seen, as in the financial sector, but we also need government to provide some of the things where the private sector isn't and often can't do. Basic research -- it didn't provide the kind of health care for the aging. That's why we have Medicare. It didn't provide social security for the aging, and that's why we have Social Security. It didn't provide disability and that's why we have disability.

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So if you think historically why the government entered these areas, it wasn't because it was crowding out the private sector; there were failures of the private sector. Now I think the big advance, we know better how to have them work together.

So it's very much about capitalism, about a market economy, but restoring the balance between -- and I say not only the government, the private sector, but also civil society, an important component of the way we today work as a society.

ZAKARIA: Joe Stiglitz, pleasure to have you on.

STIGLITZ: Pleasure to be here again.

ZAKARIA: And we will be back.

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ZAKARIA: Thanks to all of you for being part of my program this week. I will see you next week.

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