Capitalism is in deep trouble—here's how to fix it

University of Chicago economist and Professor Luigi Zingales has been studying capitalism for nearly 40 years, ever since he moved to the United State from Milan, where he had become disillusioned with the crony capitalism and economic unfairness in his native Italy. But he pretty quickly discovered that the U.S. version of capitalism was no bargain either. He’s been trying to fix it ever since, through his books—which include “Saving Capitalism from the Capitalists” and “A Capitalism for the People: Recapturing the Lost Genius of American Prosperity”—and his work as director of the Stigler Center at the UChicago Booth School of Business, which under his leadership has focused on regulatory capture and other distortions that special interest groups impose on capitalism. Zingales earned his Ph.D. in economics from MIT, has been named one of Foreign Policy magazine’s list of Top 100 Global Thinkers, and hosts his own podcast, “Capitalisn’t,” with journalist Bethany McLean. He joins Economics for Inclusive Prosperity host Ralph Ranalli to talk about why maximizing what he calls shareholder welfare is better than maximizing shareholder returns; how the erosion of institutions and norms and the runaway accumulation of wealth have combined in a dangerous downward spiral; why anti-trust and pro-competition regulation are better tools to fix capitalism than taxation; and practical ways populist anger can be channeled into corporate governance reform. 

Our Guest:

Luigi Zingales' research interests span from corporate governance to financial development, from political economy to the economic effects of culture. He co-developed the Financial Trust Index, which is designed to monitor the level of trust that Americans have toward their financial system. In addition to his position as Robert C. McCormack Distinguished Service Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business Zingales is currently a faculty research fellow for the National Bureau of Economic Research, a research fellow for the Center for Economic Policy Research, and a fellow of the European Governance Institute.  In 2014 he was the President of the American Finance Association. He also is the co-host of the podcast Capitalisn't. In July 2015 he became the director of the Stigler Center at the University of Chicago which he is refocusing on promoting and diffusing research on regulatory capture and the various distortions that special interest groups impose on capitalism. His research has earned him the 2003 Bernácer Prize for the best young European financial economist. His work has been published in the major economic and finance journals, but he has publications also in Science and the Proceedings of the National Academy of Science. Born in Italy, Zingales received a bachelor's degree in economics summa cum laude from University Bocconi in Italy in 1987 and a PhD in economics from the Massachusetts Institute of Technology in 1992. He joined the Chicago Booth faculty in 1992.

Economics for Inclusive Prosperity (EfIP) is a network of academic economists from Harvard, Princeton, Columbia, and other leading universities who are committed to an inclusive economy and society. EfIP members are working to transform their field around a new vision of prosperity—a vision that includes traditional economic metrics, but also expanded measures of wellbeing including access to health, to democratic participation, and to a livable planet. They’re also highlighting the important changes in economics that are already underway.

Host Ralph Ranalli is a podcaster, entrepreneur, and former journalist, who has also hosted “HKS PolicyCast,” the award-winning flagship podcast of the Harvard Kennedy School. He holds a BA in political science from UCLA and a master’s in journalism from Columbia University.

The Economics for Inclusive Prosperity Podcast is recorded at the Malcolm Wiener Center for Social Policy at the Kennedy School of Government at Harvard University. The show is co-produced by Ralph Ranalli and Tony Ditta.