During my three years as chief economist of the World Bank, labor market issues were looked at through the lens of neoclassical economics. A standard message was to increase labor market flexibility. The not-so-subtle subtext was to lower wages and lay off unneeded workers.

In a globally integrated economy, the biggest challenge is to make sure there is adequate global aggregate demand, achieved through spending, when countries like China feel they must save high levels of dollar reserves to protect against international currency volatility.

As I noted in my Nobel lecture, an early insight in my work on the economics of information concerned the problem of appropriability - the difficulty that those who pay for information have in getting returns.

I think in part the reason is that seeing an economy that is, in many ways, quite different from the one grows up in, helps crystallize issues: in one's own environment, one takes too much for granted, without asking why things are the way they are.

Governments can enhance growth by increasing inclusiveness. A country's most valuable resource is its people. So it is essential to ensure that everyone can live up to their potential, which requires educational opportunities for all.

Similarly, payments for a dead soldier amount to only $500,000, which is far less than standard estimates of the lifetime economic cost of a death. This statistical value of a life in the US amounts to circa $6.5 million.

People at the top spend less money than those at the bottom so when you have redistribution toward the top, aggregate demand goes down. Unless you intervene, you're going to have a weak economy unless something else happens. That something else could be a bubble. The United States tried a tech bubble and a housing bubble, but those were not sustainable answers. So I view inequality as a fundamental part of our macroeconomic weakness.