Goldman Sachs (NYSE: GS) employees make a lot of money. Some people look down on them for that. They were a prime target of Occupy Wall Street two years ago.
Mark Zuckerberg of Facebook has made far more than any Goldman Sachs employee. Yet he's admired. He's beloved. He was TIME's Person of the Year.
Why is some wealth despised and other wealth admired?
I asked Nobel prize-winning economist Joseph Stiglitz last week in his office at Columbia Business School. Here's what he had to say (transcript follows).
Joseph Stiglitz: Disproportionate efforts are being made to seize a larger fraction of the economic pie. The most dramatic example of that is perhaps the financial sector, where so many got rich by engaging in predatory lending, abusive credit card practices, market manipulation, like the LIBOR scandal. All of these things were not making the economy work better; in fact, they were interfering with the way the economy worked, but they were enabling money to move from the bottom of the pyramid to the top, and that of course was weakening the economy.
Another example is if you look at the people at the top, a disproportionately large number have made their money out of market power, monopoly. Monopolies make their money by restricting output, not expanding output. So those are examples of rank seeking that have become pervasive in the American economy.