For economist and Nobel Prize winner Edmund Phelps, the rise of America's "money culture," where high salaries trump all other professional aspirations, poses a significant threat to innovation and entrepreneurship in the U.S.

Whereas many young people used to be be interested in creating things, Phelps says, today, many of his economics students are singularly focused on building their fortunes working on Wall Street.

During a conversation with Inc. president and editor-in-chief Eric Schurenberg, Phelps said that America has lost much of its pioneering spirit as it pertains to entrepreneurship.

"Another thing I argue--that is perhaps tied up with the money culture--is I think CEOs have become short termist, and I think the financial sector is very short termist," he says. "There's such a preoccupation with liquidity and such an unwillingness to invest beyond the horizon of the next quarter and making sure that the CEOs hit their quarterly earnings."

For this reason, Phelps believes that corporate governance in America is due for a complete overhaul.

"In the old days this was not a problem, because even if there were a lot of shareholders whose holdings were too small to have any influence, there was a big shareholder who had decisive stakes, and that was generally the founder of the company," he says. "Now we don't have that. We have a lot of CEOs who did not create those companies."

To hear more about Phelps' take on changing corporate governance, watch the video below. 


How Can We Rebuild a Flourishing American Economy?

Nobel laureate Edmund Phelps tracks the rise and fall of dynamic economies and explains the problems facing innovation and entrepreneurship in America.