Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts

of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org

where you can subscribe, find other episodes, comment on this podcast, and find links to

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My guest today is William Bernstein, his latest book, History of Trade, titled A Splendid

Exchange. Was the subject of an e-contalk podcast we did back in April? Bill, welcome back

to e-contalk.

Glad to be here, and once again, I'm more than a little intimidated. You know, Bob Schiller

is one heck of an act to follow.

Well, I think you'll do just fine. Our topic today is inequality. Bill is concerned about

it, and I am not. It should be a lively conversation. Bill, let's start off with your basic perspective.

What worries you about inequality in the United States, and in particular?

Well, what worries me, Russ, is that I don't believe that we fully understand the cost

of it, and the more we learn about it, the more alarming the picture becomes. You know,

according to the standard economic model, the parable of the pie that you talk about so

often on this show, and so well, you know, if someone's wife gets relatively smaller,

it shouldn't matter if the overall pie is getting bigger and the smaller piece of the

pie is bigger than it was before.

Smaller fraction.

Yeah, exactly. In other words, if you're a piece of the pie relative to everybody else's

goes down by 10%, but if that actual piece is 20% bigger than what you had before because

...