[ APPLAUSE ]
>>> GOOD EVENING. I AM PROFESSOR LLOYD AMBROSIUS.
IT'S MY PRIVILEGE AS CHAIR OF THE THOMPSON FORUM PROGRAM
COMMITTEE TO WELCOME YOU TO THE E.N. THOMPSON FORUM
ON WORLD ISSUES.
FOUNDED BY E.N. JACK THOMPSON AND LATER NAMED IN HIS HONOR,
THE FORUM IS DESIGNED TO ENGAGE BOTH THE UNIVERSITY OF NEBRASKA
COMMUNITY AND THE GENERAL PUBLIC IN IMPORTANT ISSUES THAT AFFECT
ALL OF US IN THE CONTEMPORARY WORLD.
WE'RE GRATEFUL TO THE THOMPSON FAMILY AND THE COOPER FOUNDATION
FOR THEIR GENEROUS SUPPORT FOR THIS LECTURE SERIES.
WE ALSO THANK THE LIED CENTER, NEBRASKA EDUCATIONAL
TELECOMMUNICATIONS, CABLE TV CHANNEL 21, KRNU RADIO, AND THE
UNIVERSITY BOOKSTORE FOR THEIR SUPPORT.
THIS EVENING'S LECTURE, "WHO STOLE THE AMERICAN DREAM," IS BY
HEDRICK SMITH.
AS A REPORTER, HE SPENT 26 YEARS AT "THE NEW YORK TIMES,"
INCLUDES SEVERAL YEARS AS MOSCOW BUREAU CHIEF AND ELSEWHERE
ABROAD.
HE WON TWO PULITZER PRIZES, ONE FOR HIS ROLE ON THE TEAM OF
JOURNALISTS WHO PUBLISHED THE PENTAGON PAPERS AND THE OTHER
FOR HIS INTERNATIONAL REPORTING FROM RUSSIA AND EASTERN EUROPE.
HIS BOOKS INCLUDE "THE RUSSIANS," AND "THE POWER GAME:
HOW WASHINGTON WORKS."
SINCE 1989 MR. SMITH HAS CREATED MORE THAN TWO DOZEN PRIMETIME
TELEVISION SPECIALS FOR PBS FOR WHICH HE HAS WON NUMEROUS
AWARDS.
HIS LATEST BOOK AND THE TITLE OF HIS LECTURE THIS EVENING IS "WHO
STOLE THE AMERICAN DREAM."
AFTER THE LECTURE, YOU WILL HAVE THE OPPORTUNITY TO ASK QUESTIONS
OF TONIGHT'S SPEAKER BY WRITING THEM ON CARDS PROVIDED BY THE
USHERS.
NOW, JOIN ME IN WELCOMING HEDRICK SMITH BACK TO NEBRASKA.
[ APPLAUSE ] >> THANK YOU VERY MUCH, LADIES
AND GENTLEMEN.
THANK YOU, DOCTOR.
IT'S A PLEASURE TO BE BACK IN LINCOLN.
I WAS HERE, I THINK, 15 YEARS AGO GIVING A SIMILAR LECTURE,
AND MY REPORTING FOR PBS ON A PROGRAM CALLED "CAN YOU AFFORD
TO RETIRE" BROUGHT ME SIX OR SEVEN YEARS AGO TO LOOK AT THE
NEBRASKA RETIREMENT SYSTEM AND INCLUDED IN THE PROGRAM.
SO I'VE BEEN HERE BOTH AS A SPEAKER AND AS A REPORTER.
I APPRECIATE YOUR COMING OUT TONIGHT, AND I TAKE IT AS A SIGN
THAT YOU, LIKE ME AND LIKE MANY OTHER AMERICANS, ARE VERY
CONCERNED ABOUT THE STATE OF AFFAIRS IN OUR COUNTRY, OUR
CHERISHED COUNTRY.
IT'S A DEEPLY TROUBLING TIME NOT JUST BECAUSE OF THE 16-DAY
SHUTDOWN OF THE GOVERNMENT IN WASHINGTON, BUT BECAUSE OF MANY
OTHER THINGS THAT LEAVE US FEELING UNEASY ABOUT THE
COUNTRY.
I JUST SAW A POLL ON MY WAY OUT HERE EARLIER THIS WEEK THAT SAID
THAT ONLY 18% OF THE PEOPLE THINK THE COUNTRY IS ON THE
RIGHT TRACK.
63% OF THE PUBLIC IN AMERICA NOW THINKS AMERICA IS IN DECLINE,
PROBABLY ONE OF THE HIGHEST PERCENTAGES I'VE SEEN IN ALL THE
TIME I'VE SPENT REPORTING.
THE FAITH IN THE AMERICAN POLITICAL SYSTEM IS AT ONE OF
THE TWO LOWEST POINTS IN THE LAST 40 YEARS.
I WISH I COULD BE SORT OF LIGHT-HEARTED ABOUT THIS AND SAY
THAT THIS ALL REMINDS ME OF ONE OF MY FAVORITE CARTOONS, THE ONE
WITH CHARLIE BROWN WHERE LUCY HAS PUT UP A CARD TABLE IN THE
BACKYARD, AND IT SAYS, PSYCHIATRY, 1 CENT.
CHARLIE BROWN WALKS UP, OF COURSE.
HE PUTS HIS PENNY DOWN, AND LUCY SAYS TO HIM, CHARLIE, BEFORE I
CAN GIVE YOU ANY MENTAL ADVICE AND ANALYSIS, I NEED YOU TO
THINK OF LIFE AS A VOYAGE ON A GREAT OCEAN LINER.
THERE'S ONE GROUP OF PEOPLE THAT TAKE THE DECK CHAIRS INTO THE
BOW AND LOOK INTO THE FUTURE TO SEE WHERE THEY'RE HEADED.
ANOTHER GROUP TAKES THEIR DECK CHAIRS TO THE STERN TO SEE WHERE
THEY COME FROM.
WHICH GROUP DO YOU BELONG TO?
CHARLIE THOUGHT A MOMENT AND SCRATCHED HIS HEAD AND PAWED THE
DIRT WITH HIS TOE AND SAID, LUCY, I'M HAVING TROUBLE GETTING
MY CHAIR UNFOLDED.
THAT'S ONE WAY OF LOOKING AT IT.
CERTAINLY WASHINGTON IS HAVING TROUBLE GETTING ITS CHAIR
UNFOLDED, BUT THE MORE SOBER WAY OF LOOKING AT IT IS NOT JUST TO
CITE THE NUMBERS, BUT I WAS STRUCK BY A CHANT MADE BY JOHN
GARDNER BEFORE HE DIED SEVERAL YEARS AGO.
BACK IN 2004 HE MADE THIS COMMENT.
HE SEEMED PERTINENT TO ME, SO I WANT TO SHARE IT WITH YOU.
IT'S AN ELEGANT COMMENT.
WE'RE TREADING THE EDGE OF A PRECIPICE HERE.
CIVILIZATIONS DIE OF DISENCHANTMENT.
IF ENOUGH PEOPLE DOUBT THEIR SOCIETY, THE WHOLE VENTURE FALLS
APART.
WE MUST NEVER LET ANGER OR CYNICISM OR POLITICAL
PARTISANSHIP BLUR OUR VISION ON THAT POINT.
WE MUST NOT DESPAIR OF OUR REPUBLIC.
I SUPPOSE ONE REASON WE'RE DISTURBED AND UNEASY IS THAT WE
SEE NOW THAT AT A MINIMUM WE'RE TWO AMERICAS.
WE'RE DIVIDED BY POWER.
WE'RE DIVIDED BY MONEY.
THERE'S A DISCONNECT BETWEEN WASHINGTON AND THE COUNTRY.
THERE'S A DISCONNECT BETWEEN THE ENORMOUS PROFITS OF AMERICA'S
MIGHTY MULTI-MILLIONAIRE COMPANIES AND THE STAGNANT
PEOPLE IN THE MIDDLE AND THE PERSISTENT UNEMPLOYMENT AND
UNDEREMPLOYMENT WE HAVE IN THE COUNTRY.
AS I GOT TO THINKING ABOUT THIS AND WORKING ON THIS BOOK, I WAS
TAKEN BACK TO MY YEARS AS OXFORD AS A STUDENT AFTER I FINISHED
COLLEGE.
THAT GREAT BRITISH HISTORIAN ARNOLD TOYNBEE.
TOYNBEE WRITES ABOUT THE HISTORY OF 21 CIVILIZATIONS IN THE WORLD
OVER 6,000 YEARS.
HE TALKS ABOUT THEIR RISE AND FALL IN TERMS OF THE PROCESS OF
CHALLENGE AND RESPONSE.
HE SPEAKS ABOUT ANCIENT EGYPT AND PERU AS HAVING THE CHALLENGE
OF A HOSTILE ENVIRONMENT.
HOW DIFFICULT IT WAS FOR THOSE SOCIETIES TO BUILD AN
AGRICULTURAL ECONOMY TO SUPPORT LARGE NUMBERS OF PEOPLE AND THEN
LEAVE BEHIND SUCH MONUMENTS AS THE PYRAMIDS AND THE TEMPLES IN
LATIN AMERICA.
THAT WAS ONE KIND OF CHALLENGE.
THOSE TWO CIVILIZATIONS FELL VICTIM TO ANOTHER KIND OF
CHALLENGE, AND THAT IS A MILITARY CHALLENGE FROM OUTSIDE.
THE OTTOMAN TURKS CONQUERED THE EGYPTIANS AND THE SPANIARDS
CONQUERED THE INCANS.
THEY FELL VICTIM TO THAT AND WENT INTO DECLINE.
THAT'S THE KIND OF CHALLENGE WE'RE USED TO IN AMERICA.
WE'RE USED TO THE CHALLENGE OF AN EXTERNAL MILITARY CHALLENGE.
WE FACED HITLER DURING WORLD WAR II AND THE AXIS POWERS, AND THEN
IN THE LONG COLD WAR PERIOD WE FACED SOVIET COMMUNISM AND THE
CHALLENGE OF THE SOVIET IDEOLOGY AS WELL AS THE MILITARY POWER.
WE FACED THAT DOWN.
WE WERE SUCCESSFUL AND OVERCAME THAT.
TOYNBEE THEN STARTS TO WRITE ABOUT SOMETHING THAT'S REALLY
INTRIGUING AND SEEMS TO BE VERY RELEVANT TO US TODAY.
HE TALKS ABOUT THE CHALLENGES FACED BY TWO CIVILIZATIONS THAT
WE ADMIRE GREATLY, ANCIENT GREECE AND ANCIENT ROME.
THE CHALLENGES THAT FINALLY DID THEM AND UNDID THOSE SOCIETIES
WERE CHALLENGES FROM WITHIN.
TOYNBEE CALLS THEM SCHISMS IN THE SOUL OF THE SOCIETY.
IN THE BODY SOCIAL.
WE SHOULD SAY IN AMERICA IN THE BODY POLITICS.
INTERNAL DIVISIONS.
THE KIND OF DIVISIONS WE SEE TODAY PLAYED OUT IN WASHINGTON,
PLAYED OUT ON THE ECONOMY, PLAYED OUT IN THE ARGUMENTS WE
HAVE AMONG OURSELVES, PLAYED OUT IN THE FRICTION, THE SENSELESS
FRICTION AND INSECURITY THAT WE HAVE IN OUR SOCIETY.
WE ALSO GOT THE WARNING OF THE SAME KIND OF THING
FROM ABRAHAM LINCOLN.
LINCOLN SAID A HOUSE DIVIDED CANNOT STAND.
HERE WE ARE IN A HOUSE THAT FEELS VERY DIVIDED, NOT JUST AT
THE MOMENT, NOT JUST BECAUSE OF THE SHUTDOWN, BUT BECAUSE OF
TENSIONS WITHIN OUR SOCIETY THAT HAVE BEEN BUILDING FOR
QUITE A WHILE.
YOU KNOW, WHAT TROUBLED ME AS A REPORTER WHEN I SAT DOWN TO
START WORKING ON THIS BOOK WAS HOW DO WE GET HERE?
HOW DID WE GET HERE?
I BEGAN WITH A BUNCH OF QUESTIONS.
I DIDN'T BEGIN WITH A TITLE "WHO STOLE THE AMERICAN DREAM."
I ACTUALLY BEGAN WITH THE TITLE "THE DREAM AT RISK."
IT DIDN'T TAKE MUCH GENIUS IN 2009 WHEN I BEGAN THE WORK TO
SEE WITH 500,000 JOBS LOST EVERY MONTH AND PEOPLE FORECLOSED OUT
OF THEIR HOMES, WALL STREET COLLAPSING AND THE COUNTRY MAYBE
HEADING FOR ANOTHER DEPRESSION THE DREAM WAS CERTAINLY AT RISK.
HOW DID IT HAPPEN?
WAS I MISREMEMBERING HOW THINGS WERE BEFORE?
HOW DID WE MOVE FROM A PLACE THAT I REMEMBERED THAT WAS MORE
WIDELY SHARED PROSPERITY, THERE WAS A FUNCTIONING POLITICAL
SYSTEM.
HOW DO WE MOVE FROM THERE TO HERE?
WHAT I WANT TO SHARE TONIGHT IS VERY MUCH A REPORTER'S STORY.
A STORY OF MY DISCOVERIES ALONG THE ROUTE TO WRITING THIS BOOK.
MY DISCOVERIES ABOUT AMERICA AND THE WAY I'VE PUT THE NARRATIVE
TOGETHER IN A WAY THAT MAKES SENSE TO YOU AND I HOPE MAKES
SENSE TO YOU.
IN THE BOOK IT'S FULL OF ORDINARY PEOPLE, SMALL BUSINESS
PEOPLE, A COMPUTER PROGRAMMER, ALL KINDS OF PEOPLE.
I MENTIONED THE NEBRASKA RETIREMENT SYSTEM.
THAT'S IN THERE, TOO.
IT'S ACTUALLY UNTIL THE BOOK AS WELL.
TALKING TO ANNA SULLIVAN AT THE NEBRASKA RETIREMENT SYSTEM.
I BEGAN TO FIND THINGS THAT TOTALLY ASTONISHED ME.
THE FIRST THING I FOUND -- I STARTED WITH THE HOUSING CRISIS,
BECAUSE IT WAS THE HOUSING CRISIS THAT KIND OF GOT US INTO
TROUBLE.
SO I THOUGHT I BETTER UNDERSTAND THAT.
I'D NEVER DONE A DOCUMENTARY ABOUT HOUSING, SO I THOUGHT I
BETTER UNDERSTAND THAT.
WHAT I FOUND WAS VERY QUICKLY THE MAIN VICTIMS OF SUBPRIME
LOANS IN AMERICA WERE NOT SUBPRIME BORROWERS OR POOR
PEOPLE THAT SHOULDN'T HAVE GOTTEN INTO THE HOUSES AND THE
LOANS IN THE FIRST PLACE.
THEY WERE PRIME BORROWERS.
MORE THAN HALF THE PEOPLE WHO GOT HIT BY HIGHER LOANS WITH
HIGH FEES AND INTEREST RATES WERE PEOPLE WHO DIDN'T BELONG IN
THOSE LOANS TO BEGIN WITH.
THEY'D BEEN TALKED INTO THEM, CONJOLED INTO THEM, TRICKED
INTO THEM, BAMBOOZLED INTO THEM.
THEN THE NEXT SURPRISE I FOUND WAS AMERICAN HOMEOWNERS LOST $6
TRILLION OF THE ACCUMULATED VALUE OF THEIR HOMES AS THE
HOUSING BUBBLE WAS GOING UP.
NOT WHEN IT CAME DOWN.
THAT'S ASTONISHING TO ME.
IN THE LATE 1980s AMERICANS OWNED 70% OF THE VALUE OF THEIR
HOMES, AND BY 2009 THEY OWNED 30%.
SO MANY HAD REFINANCED THEIR HOMES, SO MANY HAD TAKEN OUT A
SECOND MORTGAGE AND BOUGHT HOMES WITH 100% LOANS THAT THEIR SHARE
OF THE OWNERSHIP HAD DECLINED.
INSTEAD OF OWNING 70% OF THE HOMES, THEY OWNED 30%.
INSTEAD OF BANKS OWNING 30% OF THE LOANS, THE BANKS SUDDENLY
OWNED 60%.
$20 TRILLION IS THE VALUE OF THE HOUSING IN AMERICA.
30% SHIFTED FROM PEOPLE TO BANKS.
$6 TRILLION.
ASTONISHING.
AN ENORMOUS SHIFT OF WEALTH.
I THOUGHT, THERE'S SOMETHING GOING ON HERE THAT IS BIGGER
THAN SOMETHING JUST HAPPENING.
THIS DIDN'T JUST HAPPEN.
IT'S BEING DONE TO PEOPLE.
THEN I GOT INTO THE 401(k) PROGRAM AND THE RETIREMENT
SYSTEM.
WHAT I REALIZED WAS THAT THE 401(k) REPRESENTED AN ENORMOUS
SHIFT OF THE ECONOMIC BURDEN FROM THE CORPORATE BOOKS TO THE
POCKETBOOKS AND THE CHECKBOOKS OF ORDINARY PEOPLE.
HUNDREDS OF BILLIONS OF DOLLARS A YEAR WERE BEING SHELLED OUT BY
ORDINARY PEOPLE, AND THEY USED TO BE PAID FOR BY THE
CORPORATIONS.
ANOTHER BURDEN.
LOSS OF HOUSING WEALTH, AND THEN THE LOSS OF RETIREMENT WEALTH.
I BEGAN TO THINK THERE'S A BIGGER PATTERN HERE.
I GOT TO LISTENING TO THE DEBATE GOING ON, A WAY TO GET THE
ECONOMY GOING AGAIN IS TO LOWER THE TAX RATES.
LOWER THE TAX RATES, AND THE ECONOMY WILL GO AGAIN.
I WENT BACK INTO THE HISTORY BOOKS, AND I STARTED TO TAKE A
LOOK.
I'D FORGOTTEN THIS, BUT UNDER EISENHOWER IN THE 1950s, THE
MAXIMUM MARGINAL TAX RATE ON THE WEALTHIEST PEOPLE IN THE COUNTRY
WAS 92%.
92%.
IT FELL TO 77% UNDER JOHN F.
KENNEDY, AND YET, DURING THAT PERIOD, EVEN THOUGH WE HAD UPS
AND DOWNS IN THE ECONOMY, EVEN THOUGH WE HAD POVERTY, THAT WAS
A PERIOD WHEN WE HAD GROWTH RATES OF 3% OR 4% A YEAR ON
AVERAGE.
STRONG GROWTH, HIGH TAX RATES.
SOMETHING DIDN'T FIT.
THEN COME FORWARD TO THE 2000 DECADE.
THE MAXIMUM MARGINAL TAX RATE UNDER BARACK OBAMA AND GEORGE W.
BUSH WAS 35%.
WE HAD THE WORST GROWTH RATES IN SEVEN DECADES.
SO IT DAWNED ON ME, THERE'S NO CONNECTION BETWEEN THE MARGINAL
TAX RATES AT THE TOP BRACKETS OF THE AMERICAN TAX SYSTEM AND
GROWTH.
THAT'S NOT THE WAY TO GET GROWTH AGAIN.
THAT ISN'T WHAT THE SECRET OF GROWTH HAS BEEN.
THEN I THOUGHT, I BETTER GO BACK AND FIND OUT, BECAUSE I
REMEMBERED COMING OUT OF COLLEGE AND SPENDING MY FIRST DECADE OR
MORE IN THE WORK WORLD AND SEEING A MUCH GREATER SHARING OF
PROSPERITY IN THE COUNTRY.
A MUCH STRONGER SENSE OF ECONOMIC SECURITY BY AVERAGE
PEOPLE.
I THOUGHT, SMITH, YOU'RE GETTING WHITE-HAIRED.
PEOPLE WHO GET WHITE-HAIRED REMEMBER IT WAS REALLY GREAT IN
THE OLD DAYS.
THAT'S WHY EVERYBODY WAS -- EVERYTHING WAS ABOVE AVERAGE IN
THE OLD DAYS, AND SMITH, YOU BETTER GO BACK AND CHECK.
I HAD THIS ONE VERY VIVID MEMORY.
I DON'T KNOW IF ENOUGH OF YOU WERE AROUND.
I REMEMBER IN 1959 RICHARD NIXON WENT TO MOSCOW ON THAT FAMOUS
KITCHEN DEBATE WITH THE SOVIET COMMUNIST LEADER.
THE RUIN THEY CALL IT THE KITCHEN DEBATE IS AMERICANS HAD
A DISPLAY OF KITCHEN APPLIANCES.
WE HAD STOVES AND REFRIGERATORS AND MICROWAVES, VARIOUS
DIFFERENT KINDS OF TOASTERS AND WASHING MACHINES AND DRYERS, AND
NIXON WAS BRAGGING ABOUT WHAT A WONDERFUL STANDARD OF LIVING AND
AMERICANS OWNED THEIR OWN HOLMES.
CREW SHOVE IS GETTING MORE ANGRY.
HE BUTTS IN AND SAYS, UNDERSTAND IN THE SOVIET UNION WE'RE
BUILDING A CLASSLESS SOCIETY.
NIXON WITHOUT SKIPPING A BEAT PUT HIS FINGER IN HIS EYE AND
SAID, WE ALREADY HAVE A CLASSLESS SOCIETY IN AMERICA.
NIXON WAS WRONG.
HE WAS EXAGGERATING.
CHARLIE WILSON, THE HEAD OF GENERAL MOTORS IN THOSE DAYS, HE
MADE ABOUT 40 TIMES AS MUCH AS THE AVERAGE WORKER, SO WE HAD
INEQUALITY.
WHAT NIXON GOT AT WAS SOMETHING VERY IMPORTANT.
THERE WAS WHAT ECONOMISTS CALL THE GREAT CONVERGENCE.
THE DIFFERENCE BETWEEN INCOMES AT THE TOP AND THE MIDDLE AND
THE BOTTOM WERE NOT THAT GREAT.
THERE WAS A CONVERGENCE BETWEEN THEM.
ECONOMISTS HAVE ALSO GONE BACK AND LOOKED AT THAT PERIOD, AND
IF YOU LOOK AT THE TIME BETWEEN THE END OF WORLD WAR II AND
THE MIDDLE 1970s, 30 YEARS, THE PRODUCTIVITY OF THE AMERICAN
WORK FORCE ROUGHLY DOUBLED.
PHENOMENAL ACHIEVEMENT.
ROUGHLY DOUBLED, WENT UP 97%.
AND THE INCOME, THE STANDARD OF LIVING OF THE MIDDLE AMERICAN
FAMILY, THE MEDIAN, THE AVERAGE AMERICAN FAMILY WENT UP 95%.
IN OTHER WORDS, ALMOST DOLLAR FOR DOLLAR THE GAINS OF THE
ECONOMY, THE PROFITS OF THE BIG COMPANIES, AND THE EFFICIENCY OF
THE AMERICAN WORK FORCE WERE BEING TRANSLATED INTO HIGHER
LIVING STANDARDS FOR EVERYBODY, NOT JUST THE PEOPLE AT THE TOP,
BUT FOR EVERYBODY.
ECONOMISTS LIKE TO DIVIDE THE COUNTRY U AND THE PEOPLE UP
INTO QUINTILES DOWN TO THE BOTTOM 20%.
IF YOU LOOK AT THAT PERIOD FROM 1945 THROUGH THE LATE '70s, ALL
FIVE QUINTILES MOVED UP.
IT'S LIKE A WAVE MOVING UPWARD.
THEY MOVED UP ALMOST IN TANDEM WITH EACH OTHER.
IN FACT, THE BOTTOM TWO QUINTILES GAINED MOST IN INCOME
IN THE MIDDLE AND THE ONES ON TOP GAINED LESS.
THERE WAS A SLIGHT NARROWING.
THAT'S WHAT I REMEMBERED WITHOUT KNOWING THOSE NUMBERS.
IT WAS A SENSE THAT EVERYBODY WAS PARTICIPATING IN THE GAINS
OF THE AMERICAN ECONOMY, AND THE GAINS WERE BEING WIDELY SHARED.
SO WHEN I WENT BACK AND LOOKED AT IT, I THOUGHT WHITE HAIR OR
NOT, YOU'RE RIGHT ABOUT THAT.
THEN I THOUGHT, WHY?
WHY WAS THAT GOING ON THEN, AND WHY ISN'T IT GOING ON NOW?
WHAT WAS GOING ON THEN THAT ISN'T HAPPENING NOW?
HOW DO WE EXPLAIN IT?
ONE OF THE MOST INTERESTING THINGS THAT I FOUND OUT, AND I
MUST SAY AS A YOUNG PERSON I DIDN'T FOCUS ON THIS.
WHAT'S REALLY INTERESTING IS WE HAD BUSINESS LEADERS IN THE
1940s, '50s, '60 AND '70s AND WE STILL HAVE SOME TODAY.
THE PREPONDERANCE OF BUSINESS LEADERS AT THAT TIME, PEOPLE
LIKE CHARLIE WILSON HEAD OF GENERAL MOTORS AND OTHERS, THEY
BELIEVED IT WAS THE JOB OF THE CEO TO BALANCE THE ECONOMIC
INTERESTS OF ALL THE STAKEHOLDERS IN THE CORPORATION.
STAKEHOLDERS, A VERY IMPORTANT WORD.
ECONOMISTS USE THE WORD STAKEHOLDER CAPITALISM.
WHAT THEY MEANT BY THAT IS THAT ALL THE GROUPS HAD A STAKE IN
THE SUCCESS OF THE CORPORATION.
OBVIOUSLY, THAT INCLUDES THE STOCKHOLDERS AND THE OWNERS, BUT
IT ALSO INCLUDES THE MANAGERS AND RANK AND FILE EMPLOYEES.
IT INCLUDES THE SUPPLIER AND CREDITORS, THE BANKS THAT LOAN
MONEY TO A COMPANY DON'T WANT TO SEE IT GO OUT OF BUSINESS.
THE PARTS SUPPLIERS FOR GENERAL MOTORS, THEY'VE GOT A STAKE IN
THE SURVIVAL OF THE SUCCESS AND THE CUSTOMERS.
THEY DON'T WANT TO BUY A CAR OR CELL PHONE OR REFRIGERATOR AND
HAVE THE COMPANY GO OUT OF BUSINESS AND NOT SERVICE IT.
THEY WANT THEM TO STAND BEHIND THEIR PRODUCT.
THESE GUYS BELIEVED AND THEY ACTUALLY USED TERMS LIKE THIS.
IT WAS A MORAL RESPONSIBILITY.
IT IS OUR SACRED TRUST.
IT IS OUR JOB TO BALANCE THESE INTERESTS.
SO ONE OF THE REASONS WHY THE WEALTH WAS BEING SHARED IS
BECAUSE THEY THOUGHT IT WAS FAIR.
THEY THOUGHT IT WAS RIGHT.
THAT WAS PART OF THEIR ETHIC, THEIR BUSINESS ETHIC IN RUNNING
THE BUSINESS.
THE OTHER THING THEY THOUGHT WAS IT WAS SMART ECONOMICS.
SMART ECONOMICS TO SHARE THE WEALTH.
WHY?
BACK IN 1914 HENRY FORD INTRODUCED THE $5 DAY IN
AMERICA.
AT THAT TIME $5 WAS AN UNHEARD SUM TO PAY AN AVERAGE WORKER.
FORD HAD TO PAY THAT BECAUSE HE WAS LOSING WORKERS.
FORD HAD ANOTHER REASON.
HE SAID IF I PAY THEM $5 A DAY, THEY CAN AFFORD TO BUY THE MODEL
T CARS THAT FORD MOTOR COMPANY IS MAKING.
THAT'S EXACTLY THE SAME THING THAT CHARLIE WILSON AND RICK
JONES AND FRANK ABRAMSON AND THE OTHER CEOs SAID.
IF WE PAY OUR WORKERS WELL, THEY'RE GOING TO BE ABLE TO
AFFORD THE PRODUCTS THAT WE'RE PRODUCING.
THAT'S GOING TO KEEP OUR BUSINESSES GROWING AND
PROFITABLE.
IT'S A WAY OF SHARING THE WEALTH AND DRIVING THE ECONOMY.
ECONOMISTS CALL THAT THE VIRTUOUS CIRCLE OF GROWTH.
IMPORTANT BECAUSE EVERY PART OF THE PROCESS PUSHES THE NEXT PART
OF THE PROCESS, THE VIRTUOUS CIRCLE OF GROWTH.
PRODUCE THINGS, PAY TENS OF MILLIONS OF MIDDLE CLASS WORKERS
AND EVERYBODY ELSE GOOD SALARIES.
MIDDLE CLASS AMERICANS DON'T SAVE A LOT OF MONEY.
THEY SPEND IT.
95% OF IT, SOMETIMES 96%, SOMETIMES 102% OF IT, BUT THEY
SPEND A LOT OF MONEY.
THAT BIG SPENDING GENERATES ROBUST CONSUMER DEMAND, AND THAT
IS THE DRIVER OF THE AMERICAN ECONOMIC.
THE REAL JOB CREATORS IN THE AMERICAN ECONOMY ARE SITTING IN
THIS ROOM TONIGHT AND WATCHING ON THIS TELEVISION SCREEN THIS
EVENING.
IT IS ALL OF US, OUR COMBINED PURCHASING POWER THAT DRIVES THE
ECONOMY.
ONE OF THE REASONS WHY WE'RE HAVING SUCH A WEAK RECOVERY
TODAY IS THAT WE HAVE WEAK PURCHASING POWER, AND ONE OF THE
REASONS IS WE'VE UNCOUPLED THAT FAMOUS VIRTUOUS CIRCLE OF
GROWTH.
WE'VE DONE IT BY ALLOWING ENORMOUS VARIATIONS, ENORMOUS
INEQUALITIES OF INCOME AND LETTING MIDDLE CLASS PEOPLE AND
MIDDLE CLASS WAGES AND SALARIES STAGNATE.
THERE ISN'T ENOUGH PURCHASING POWER TO DRIVE THIS ECONOMY
WELL.
THE GUYS RUNNING BUSINESS BACK THEN AND SAD TO SAY IT WAS
ALMOST ALL MEN AT THAT POINT, THEY UNDERSTOOD THAT IT WAS IN
THEIR ECONOMIC SELF-INTEREST TO PAY AVERAGE WORKERS WELL SO
THERE WOULD BE A STRONG DEMAND TO DRIVE THE ECONOMY.
SO ONE THING THAT WAS ESSENTIAL TO THE STRONG ECONOMY THAT WE
HAD AT THAT TIME PERIOD WAS THIS BELIEF ON THE PART OF THE
LEADERSHIP IN STAKEHOLDER CAPITALISM
CAPITALISM.
THE OTHER THING WAS THE EXERCISE OF PEOPLE POWER BY THE AMERICAN
MIDDLE CLASS.
IT'S VERY INTERESTING TO GO BACK AND LOOK AT THAT ERA.
I BEGAN MY REPORTING CAREER IN THE LATE '50s, AND ONE OF THE
MOST DRAMATIC PERIODS OF MY LIFE WAS 1960, FEBRUARY IN NASHVILLE,
TENNESSEE, WHICH WAS THE BEGINNING OF THE SIT-INS AND THE
MODERN CIVIL RIGHTS MOVEMENT REALLY EXPLODING AROUND THE
SOUTH.
CIVIL RIGHTS MOVEMENT WAS ONE OF THE PRIME EXAMPLES OF PEOPLE
POWER AFFECTING AMERICAN POLICY AND ACTUALLY WIDENING THE
CIRCLE, WIDENING THE POSSIBILITIES OF AMERICAN
DEMOCRACY IN THE POLITICAL REALM.
IT WASN'T JUST THAT.
THERE WAS A WOMAN'S MOVEMENT.
THEY WROTE THE FM ANYONE MYSTIQUE 50 YEARS AGO THIS YEAR.
WOMEN PROTESTED.
THEY WERE MAKING 41 CENTS ON THE DOLLAR FOR DOING THE SAME WORK
THAT MEN WERE DOING.
THEY THOUGHT IT WAS UNFAIR, AND THEY BEGAN TO PROTEST AGAINST
THAT.
THERE IS AN ACTIVIST WOMEN'S MOVEMENT.
NOT MAYBE HAVING AS MANY VISIBLE MARCHES, BUT NONETHELESS ASSIST
A CIVIL RIGHT MOVEMENT BUT THEY WERE VERY ACTIVE.
THERE WAS A CONSUMERS MOVEMENT.
RALPH NADER WROTE THAT FAMOUS BOOK "UNSAFE AT ANY SPEED" IN
THE EARLY 1960s SAYING THAT THE AMERICAN AUTO COMPANIES MADE
CARS WITH MECHANICAL DEFECTS.
BRAKES THAT DIDN'T WORK.
STEERING COLUMNS THAT DIDN'T WORK RIGHT.
WHEELS THAT CAME OFF AND TIRES THAT EXPLODED.
THEY WERE CAUSING ACCIDENTS TO MECHANICAL DEFECTS, AND DETROIT
HAD TO CLEAN UP THE ACT.
THAT REQUIRED MORE OVERSIGHT TO MAKE SURE PRODUCTS WERE SAFE.
IT SPREAD INTO ALL KIND OF THINGS.
PHARMACEUTICALS AND FOOD.
YOU SAW A GREATER EMPHASIS BY THE FOOD AND DRUG ADMINISTRATION
OR THE AGRICULTURAL DEPARTMENT TO INSPECT PRODUCTS.
YOU SEE THE ASSISTANCE ON PRODUCT LABELING.
GO INTO A GROCERY STORE AND TURN THE PRODUCT ON THE BACK AND LOOK
AT THE LABEL.
IS IT SAFE?
IS IT HEALTHY?
DOES YOUR DOCTOR RECOMMEND IT OR TELL YOU SHOULDN'T BE DOING IT?
YOU CAN THANK THOSE PEOPLE BACK THERE IN THE '60s AND '70s WHO
WERE OUT PROTESTING AND SOMETIMES MARCHING ON THE MALL
AND SOMETIMES GOING TO CONGRESS IN WASHINGTON, SOMETIMES MEETING
WITH THEIR REPRESENTATIVES AT HOME DEMANDING BETTER PROTECTION
OF CONSUMERS.
THERE WAS A STRONG LABOR MOVEMENT THAT NEGOTIATED WITH
MAJOR CORPORATIONS FOR STRONGER WAGES, FOR HEALTH BENEFITS, FOR
RETIREMENT BENEFITS.
IN 1980, 84% OF THE PEOPLE THAT WORKED FOR COMPANIES WITH MORE
THAN 100 EMPLOYEES HAD LIFETIME PENSIONS AND HAD A CHECK FROM
THE EMPLOYER FROM THE DAY THEY RETIRED TO THE DAY THEY DIED
FROM THEIR EMPLOYER.
TODAY THAT'S DOWN TO 37%.
70% HAD HEADLIGHT BENEFITS AND TODAY IT'S DOWN TO 18%.
IT WAS A STRONG MOVEMENT PUSHING TO SEE THAT THE MIDDLE CLASS GOT
SOME KIND OF ECONOMIC SECURITY.
WHEN YOU BEGAN TO PUT IT TOGETHER, I BEGAN TO SEE THAT
THERE WAS THIS STRONG PUSH, THERE WAS INFLUENCING DECISIONS
IN THE PRIVATE SECTOR AND INFLUENCING PUBLIC POLICY
UNDERPINNING THE GOOD LIVING STANDARD OF MIDDLE CLASS
AMERICANS AND SPREADING WEALTH ACROSS THE COUNTRY.
THERE WAS AN ENVIRONMENTAL MOVEMENT.
THINK OF IT.
BIRTHDAY 1970, APRIL 22nd.
20 MILLION AMERICANS WENT INTO THE STREETS AND ON COLLEGE
CAMPUSES LIKE THIS ONE.
THEY WENT INTO SHOPPING MALLS AND MARCHED IN THE STREETS.
I'VE GOT VIDEO PICTURES OF IT.
I DID A DOCUMENTARY ON ENVIRONMENTAL ISSUES, CLEAN AIR
AND CLEAN WATER ACT SEVERAL YEARS AGO.
THE DEMONSTRATIONS JUST BLEW MY MIND.
I COULDN'T REMEMBER THERE WAS THAT MANY PEOPLE INVOLVED.
WITHIN A YEAR CONGRESS HAD PASSED SEVEN MAJOR PIECES OF
ENVIRONMENTAL LEGISLATION.
THE CLEAN AIR ACT, THE CLEAN WATER ACT, THE SAFE DRINKING
WATER ACT, THE TOXIC SUBSTANCES ACT, ON AND ON AND ON.
ALL OF THEM SIGNED BY THE GREAT ENVIRONMENTALIST, THE REPUBLICAN
PRESIDENT RICHARD NIXON.
YEAH.
YOU GOT IT.
I HAPPEN TO KNOW -- BUT THINK ABOUT IT.
THINK ABOUT IT.
I TALKED TO BILL RUCKELHAUS WHO WAS THE FIRST HEAD OF THE EPA
APPOINTED BY NIXON.
I DID AN INTERVIEW WITH HIM ON MY DOCUMENTARY ON THE CLEAN
WATER ACT.
I SAID, BILL, WHY DID NIXON SIGN THAT STUFF, THAT LEGISLATION?
DID HE BELIEVE IN PROTECTING THE ENVIRONMENT?
HE SAID, RICK, NIXON IN ALL THE YEARS I WORKED FOR HIM NEVER
ONCE ASKED ME, BILL, IS IT REALLY BAD OUT THERE?
IS IT TRUE THAT THE CUYAHOGA RIVER IS LITERALLY BURSTING INTO
FLAMES BECAUSE THERE'S SO MANY CHEMICALS INTO THE RIVER, OR IF
YOU PUT YOUR ARM IN THE POTOMAC RIVER AT WASHINGTON, D.C. IT
WILL COME OUT COVERED WITH GREEN SLIME BECAUSE THERE'S SO MUCH
ALGAE BECAUSE OF THE POLLUTION?
HE SAID, THE ONE THING HE DID SAY TO ME WAS, BILL, WHEN YOU
GET OVER THERE, HE SAID, DON'T GET CAPTURED BY THOSE
BUREAUCRATS AT EPA.
HE SAID TO ME, NIXON WAS THE ONLY PERSON IN WASHINGTON WHO
THOUGHT THE NICKNAME FOR THE EPA WAS EPA.
HE SAID THAT'S HOW SERIOUSLY HE BELIEVED IN THE ENVIRONMENT.
I SAID, SO WHY DID HE SIGN ALL THE LEGISLATION?
HE SAID, THE PEOPLE DEMANDED IT.
WE HAD TO RESPOND.
THAT'S HOW DEMOCRACY IS SUPPOSED TO WORK.
WOW.
WHAT A STATEMENT WHEN YOU THINK ABOUT THAT TODAY.
THAT'S THE POINT.
IN THAT ERA YOU HAD PRESSURE FROM THE MIDDLE CLASS, FROM
WOMEN, FROM CONSUMERS, FROM THE LABOR MOVEMENT, FROM THE CIVIL
RIGHTS MOVEMENT, FROM THE PEACE MOVEMENT FROM THE VIETNAM WAR,
FROM THE ENVIRONMENTAL MOVEMENT PUSHING POLICY IN WASHINGTON TO
RESPOND TO THE DEMANDS OF AVERAGE AMERICANS.
TO MAKE THIS PLACE FAIRER, CLEANER, SAFER FOR EVERYBODY.
SO WHAT HAPPENED?
WHAT'S INTERESTING IS WHAT HAPPENED IN BOTH THE POLITICAL
SPHERE AND IN THE ECONOMIC SPHERE.
IN THE POLITICAL SPHERE THERE WAS A POWER SHIFT THAT BEGAN IN
THE LATE 1970s.
BELIEVE IT OR NOT IT WAS UNDER THE DEMOCRATS BEFORE REAGAN GOT
INTO OFFICE.
IT WAS CONTINUED BY REAGAN.
TO MY SURPRISE, IT ACTUALLY STARTED UNDER THE DEMOCRATS.
THERE WAS A POWER SHIFT IN THE WAY WASHINGTON WORKS, AND I'M
GOING TO TALK TO YOU ABOUT IT IN A MINUTE, AND THERE WAS A CHANGE
IN THE ECONOMIC PHILOSOPHY.
FROM STAKEHOLDER CAPITAL ITCH TO SHAREHOLDER CAPITALISM.
LET ME SHARE WITH YOU FIRST THE POLITICAL STORY.
THERE WAS A REACTION, THERE WAS A REVOLT OF THE BOSSES AGAINST
THE VERY FORCES THAT I JUST DESCRIBED TO YOU.
THERE WAS FRUSTRATION BUILDING IN THE SEA SUITE AS THEY CALL IT
NOWADAYS IN AMERICA, THE CEO EZ, THE TOP EXECUTIVE SUITE IN MANY
BIG CORPORATIONS.
THEY WERE RESENTING THE POWER OF THE WOMEN'S MOVEMENT, CONSUMER
MOVEMENT, THE ENVIRONMENTAL MOVEMENT AND LABOR MOVEMENT.
THEY WANTED TO FIGHT BACK U-BUT IT WAS IN COURT.
A FELLOW NAMED LOUIS POWELL WHOSE NAME IS FAMILIAR TO YOU
BECAUSE HE WAS NAMED TO THE SUPREME COURT IN 1972 BY RICHARD
NIXON.
A SOFT-SPOKEN SOUTHERNER FROM RICHMOND, BUT AN ARDENT BELIEVER
IN THE FREE ENTERPRISE SYSTEM.
A STRONG SUPPORTER OF CORPORATIONS.
AN ENEMY OF LABOR UNIONS.
HE WAS A GUY WITH ACCESS TO PEOPLE ALL OVER THE COUNTRY, AND
PARTICULARLY THE PEOPLE IN POWER AT THE U.S.
CHAMBER OF COMMERCE.
HE WAS COMPLAINING IN 1971 ABOUT HOW BUSINESS WAS BEING HURT IN
THE POLITICAL ARENA TO SOME OF THE HIS FRIENDS IN THE CHAMBER
OF COMMERCE.
THEY SAID, YOU'RE A LAWYER.
WHY DON'T YOU WRITE A BRIEF OR A MEMO, RIGHT SOMETHING UP.
THAT'S WHAT HE DID.
POWELL SAT DOWN AND WROTE WHAT THEY CALL THE LOUIS POWELL
MEMORANDUM OF AUGUST 1971.
IN IT HE BASICALLY -- HE WAS A PAUL REVERE.
IT WAS A CALL TO ARMS TO BUSINESS.
HE SAID SIMPLY, YOU'RE DOING A GREAT JOB IN THE ECONOMY, BUT
YOU GET KILLED IN THE POLITICAL
ARENA.
YOU HAVE TO GET INTO THE FIGHT.
YOU HAVE TO GO OUT AND ORGANIZE.
YOU HAVE TO POOL YOUR RESOURCES FINANCIALLY AND HAVE A LONG-TERM
PLAN.
YOU NEED TO IDENTIFY YOUR ENEMIES AND PUNISH THEM
POLITICALLY.
TAKE THE HIGH GROUND.
GET INTO WASHINGTON AND FIGHT.
WHAT'S ASTONISHING IS THAT'S EXACTLY WHAT HAPPENED.
I DIDN'T REALIZE IT.
THE WASHINGTON BUREAU CHIEF OF THE "NEW YORK TIMES" IN THE LATE
'70s AND I SAW SOME OF THIS UNFOLDING, BUT I DIDN'T KNOW
WHAT WAS CAUSING IT.
IT'S LIKE SEEING THE WAVES ON THE WATER AND THE WIND, BUT YOU
DON'T UNDERSTAND WHAT WAS GOING ON IN NATURE.
SOMETHING BIG WAS GOING ON.
WHEN POWELL WROTE HIS MEMO, THERE WAS NO SUCH THING AS THE
BUSINESS ROUNDTABLE.
THE BUSINESS ROUNDTABLE IS THE ORGANIZATION OF PROBABLY 180 OF
THE LARGEST, MOST POLICY CORPORATIONS IN AMERICA, GM,
PROCTER & GAMBLE, ACROSS THE BOARD, MICROSOFT, ON AND ON.
IT DIDN'T EXIST.
WITHIN FOUR MONTHS OF THE MEMO THEY FORMED THAT.
IRVING SHAPIRO AT DUPONT AND JONES AT GENERAL ELECTRIC AND A
NUMBER OF OTHERS.
THEY BEGAN TO LOBBY WASHINGTON IN THE LATE '70s AND ONWARD.
THE CEOs WOULD GO DOWN -- THEY DON'T TALK TO THE AVERAGE
CONGRESS PERSON.
THEY STAY IN THE LINCOLN BEDROOM.
YOU'VE SEEN STORIES ABOUT THAT, I'M SURE.
THEY TALK TO THE SPEAKER OF THE HOUSE AND THE MAJORITY LEADER OF
THE SENATE AND THE COMMITTEE CHAIRMAN.
THEY TALKED TO THE PEOPLE THAT MOVED THE LEGISLATION.
THAT'S A VERY POWERFUL LOBBYING ORGANIZATION THAT DID NOT EXIST
UNTIL POWELL WROTE THIS MEMO.
WHAT'S INTERESTING IS WHEN HE WROTE HIS MEMO, THERE WERE ONLY
175 COMPANIES THAT EVEN HAD OFFICES IN WASHINGTON.
EIGHT YEARS LATER THERE WERE 2,425.
THERE WERE 50,000 PEOPLE BY 1980 WORKING FOR BUSINESS TRADE
ASSOCIATIONS IN WASHINGTON.
THERE WERE 9,000 REGISTERED CORPORATE LOBBYISTS, THERE WERE
8,000 CORPORATE P.R. PEOPLE.
IT WAS AN ARMY.
I CALL IT POWELL'S ARMY, AND THEY WENT TO WORK.
WHAT'S INTERESTING IS WHAT I JUST SAID.
THE MOST PIVOTAL CONGRESS IN THE LAST 50 YEARS, BUT NOT 1981 WHEN
REAGAN CAME IN.
THE TIDE HAD ALREADY TURNED.
IT TURNED IN 1978.
THE DEMOCRATS IN CHARGE OF BOTH HOUSES OF CONGRESS AND WITH
JIMMY CARTER IN THE WHITE HOUSE.
HERE'S WHAT HAPPENED.
POWELL'S ARMY WENT TO WORK.
THE CONSUMER MOVEMENT UNDER RALPH NADER THOUGHT WITH THE
DEMOCRATS IN CHARGE OF EVERYTHING THEY'D GET A CONSUMER
PROTECTION BUREAU WHICH THEY LONG WANTED AND DIDN'T GET IT
WHEN THE REPUBLICANS WERE IN THE WHITE HOUSE.
THE BILL NEVER GOT OUT OF THE HOUSE OF REPRESENTATIVES.
POWELL'S ARMY WENT TO WORK AND SNUFFED IT OUT.
THE LABOR MOVEMENT THOUGHT IT WOULD GET IMPORTANT LABOR
LEGISLATION TO MAKE IT EASIER FOR LABOR TO ORGANIZE IN VARIOUS
STATES.
ROLL BACK GRIFFITH AND TAFT HARTLEY AND LEGISLATION THAT
CONTROLLED WHAT THEY CAN DO.
THAT GOT OUT OF THE HOUSE AND NEVER OUT OF THE SENATE.
THEN THE BUSINESS COMMUNITY AND THE ARMY WENT TO WORK POSSIBLY
TO GO AFTER WHAT THEY COULD GET.
THE FALLEN KID PROGRAM WAS WRITTEN INTO LAW IN 1978.
NOW, UNDERSTAND ALMOST NOBODY KNEW WHAT THE 401(k) PROGRAM
WAS.
CAN YOU IMAGINE ANYBODY NAMING A PROGRAM 401(k)?
IT'S IN THE TAX CODE.
IT'S PAIR GRAY 401 AND SUB PARAGRAPH K.
IT WAS DESIGNED TO BE BURIED, AND IT WAS NEVER DESIGNED TO BE
A NATIONAL RETIREMENT PROGRAM.
IT WAS A TAX SHELTER OR PROFIT PROFIT-SHARING BONUSES PAID BY
KODAK, AND IT WAS A SMALL FOE AT
A TIME TOES OPERATION.
ONLY LATER ON DID IT EXPAND, BUT IT WAS REVOLUTIONARY IN WHAT IT
DID.
THE SAME CONGRESS PASSED A CHANGE IN THE CORPORATE
BANKRUPTCY LAWS, WHICH GAVE CORPORATE MANAGEMENT MORE POWER
IN THE PROCESS OF BANKRUPTCY.
NOW, WHEN WE LOOKED AT THAT BACK AT THAT TIME, WE HAD NO
UNDERSTANDING OF WHAT IT WOULD BE, BUT WHEN THE BANKRUPTCY
STARTED TO ROLL THROUGH THE STEEL INDUSTRY IN THE 1990s AND
THE AIRLINE INDUSTRY IN THE 2000s AND LOTS OF OTHER
COMPANIES AS WELL, YOU GOING TO SEE COMPANY AFTER COMPANY GOING
INTO BANKRUPTCY TO DO WHAT THEY CALL RESTRUCTURING.
BASICALLY WHAT RESTRUCTURING MEANT TO A GREAT DEGREE IS
WRITING OFF SOME DEBT THAT BASICALLY REWROTE THE CONTRACTS
THEY MADE WITH THE LABOR UNIONS.
RANK AND FILE WORKERS GAVE UP ALL KINDS OF PAY AND HEALTH
BENEFITS AND RETIREMENT BENEFITS.
I FOLLOW THE UNITED BANKRUPTCY IN MY BOOK, THE EMPLOYERS OF
UNITED LOST ABOUT $4 BILLION IN THE UNITED BANKRUPTCY, AND SOME
ARE STILL SUFFERING FROM THAT TODAY WITH MUCH LOWER RETIREMENT
PAY THAN THEY HAD EXPECTED AFTER LONG YEARS OF WORK.
THAT WAS CHANGED.
WALL STREET SAID, WE CAN'T LOAN TO PEOPLE WHO ARE BAD RISK,
BECAUSE THERE ARE LAWS THAT PUT A LIMIT ON THE INTEREST RATE WE
CAN CHARGE.
WE NEED TO BLOW THE LID OFF INTEREST RATES.
THEY GOT CONGRESS THAT YEAR TO PASS A BILL THAT SUPERSEDED THE
LAW AND TOOK THE LID OFF INTEREST RATES.
GUESS WHAT?
THAT WAS AN ABSOLUTELY ESSENTIAL FOUNDATION FOR THE SUBPRIME
CRISIS OF THE LATE '90s AND 2000s WE LIVED THROUGH.
THAT BEGAN THEN.
JIMMY CARTER WANTED TO RAISE THE CORPORATE TAX RATE A LITTLE BIT
TO HELP BALANCE THE BUDGET.
WHEN POWELL'S ARMY GOT DOWN WITH IT, THE CORPORATE TAX RATE WAS
LOWERED A BIT.
THEN THE CAPITAL GAINS TAX, WHICH ALL INVESTORS PAY WHEN
THEY CASH IN THEIR STOCK, DROPPED FROM 48% TO 28%.
BIGGEST CHANGE IN THE CAPITAL GAINS RATE IN THE LAST 50 YEARS,
AND IT OCCURRED UNDER CARTER AND THE DEMOCRATS.
NOW, EVERYONE WHO INVESTS BENEFITS FROM THAT.
YOU NEED TO KNOW MORE THAN 50%, A LITTLE BIT MORE THAN 50% OF
ALL CAPITAL GAINS IN AMERICA ARE ACHIEVED BY THE TOP 1%.
SO ONCE AGAIN, IT BENEFITED PEOPLE AT THE TOP.
THAT CONGRESS OF 1978 FOLLOWED BY '79 AND '80 BEFORE REAGAN GOT
INTO OFFICE WAS A TURNING POINT AND A GAME CHANGER.
IT CHANGED THE DIRECTION OF AMERICAN POLITICS AND POLICY.
IT'S BEEN WITH US EVER SINCE.
THE SITUATION HAS GONE ON.
THE TAX RATES I'VE ALREADY TOLD YOU CAME DOWN FROM 92% FROM
EISENHOWER, 77% UNDER KEN BY AND DOWN TO 28.
THE STATE TAX CAME DOWN VERY SHARPLY.
THE PAYROLL TAX THAT EVERYBODY PAYS, EVEN MINIMUM WAGE WORKERS
PAY THE TAX, IT DOUBLED FROM 3.5% TO A LITTLE OVER 7.5%.
THE MINIMAL WAGE, WHICH BENEFITS PEOPLE AT THE BOTTOM OF THE DME,
HAS NOT KEPT UP WITH INFLATION OR AVERAGE WAGES.
SO THE POLICY CHANGES THAT BEGAN THERE IN THE LATE '70s
ACCELERATED IN THE '80s BECAUSE OF THIS POWER SHIFT.
IT'S CONTRIBUTED GREATLY TO THE ENORMOUS INEQUALITY OF INCOME WE
HAVE TODAY.
THAT'S NUMBER ONE.
WHAT CHANGED?
THE POWER SHIFT AND THE DIRECTION OF AMERICAN POLICY.
THE SECOND THING THAT HAPPENED IN THE CHANGE WAS THERE WAS A
CHANGE IN THE PHILOSOPHY OF AMERICAN BUSINESS LEADERS.
THEY WENT FROM STAKEHOLDER CAPITALISM TO SHAREHOLDER
CAPITALISM.
THEY WENT FROM BELIEVING EVERYBODY SHOULD SHARE IN THE
WEALTH AND IT WAS THEIR JOB TO MAKE SURE IT HAPPENED TO
BELIEVING THEIR JOB WAS TO MAXIMIZE RETURN TO SHAREHOLDERS.
IT WAS MILTON FRIEDMAN, THE FAMOUS UNIVERSITY OF CHICAGO
ECONOMIST, WHO FIRST CALCULATED THAT IN A BOOK IN 1960.
IT DIDN'T TAKE OFF UNTIL THE 1980s, BUT THAT BECAME
EVENTUALLY THE BY-WORD OF BUSINESS LEADERS.
WHAT IT SAID TO ME WAS IF THERE WAS A WEDGE DRIVEN BETWEEN THE
GAINS OF ECONOMY AND THE PROFITS OF THE BIG CORPORATIONS AND THE
LIVING STANDARDS OF AVERAGE AMERICANS, NOBODY TOLD YOU THAT
FROM THE END OF WORLD WAR II UNTIL THE MID-'70s PRODUCTIVITY
WENT UP 97% AND MEDIAN HOUSEHOLD INCOME WENT UP 95%.
IN THE NEXT 30 YEARS OR SO, FROM 1970 TO 2011, PRODUCTIVITY WENT
UP 80%.
NOT QUITE AS MUCH, BUT STILL A LOT.
THE MEDIAN HOUSEHOLD INCOME WENT UP ONLY 10%.
80% AND 10% IS A BIG DIFFERENCE.
THE MAIN REASON IT WENT UP 10% IS MORE WOMEN WERE WORKING MORE
HOURS.
.
CENSUS BUREAU SAID LAST YEAR IF YOU TOOK THE AVERAGE MALE IN THE
MIDDLE OF THE AMERICAN ECONOMY OR THAT BELT OF MALES AND YOU
COMPARED THEIR HOURLY COMPENSATION, THE WAGES AND
BENEFITS IN 2011 TO 1978, IT WAS EXACTLY THE SAME ADJUSTED FOR
INFLATION.
THREE DECADES OF GETTING NOWHERE, OKAY?
NOW, REMEMBER, IF YOU SAY, WELL, THEY KEPT UP WITH INFLATION,
THAT MEANS THEY KEPT UP WITH THE COST OF FOOD AND CLOTHING AND
GASOLINE.
THEY DIDN'T KEEP UP WITH THE COST OF COLLEGE EDUCATION THAT
HAD SKYROCKETED.
THEY DIDN'T KEEP UP WITH THE COST OF MEDICAL CARE, WHICH
SKYROCKETED, AND THEY DIDN'T KEEP UP WITH THE COST OF
HOUSING, WHICH SKYROCKETED.
THEY HAD THE ADDED BURDEN OVER THIS 30-YEAR PERIOD PAYING FOR
RETIREMENT.
IF YOU WONDER WHY THE MIDDLE CLASS IS UNDER STRESS TODAY, YOU
HAVE TO UNDERSTAND IF YOU GO BACK 30 YEARS, THEY WERE MAKING
THE SAME MONEY BUT NOT PAYING FOR THEIR RETIREMENT AND IT
DIDN'T COST AS MUCH ON THE BIG TICKET ITEMS, HEALTH CARE,
HOUSING AND COLLEGE EDUCATION FOR YOUR KIDS.
SO IF WE GO BACK AND THINK OF THE AMERICAN DREAM IN THAT HAY
DAY THE MIDDLE CLASS, IT WAS A STEADY JOB, A SENSE OF ECONOMIC
SECURITY BECAUSE YOU HAD HEALTH CARE AND RETIREMENT BENEFITS,
AND ENOUGH PAY TO PUT DOWN A DOWN PAYMENT ON YOUR HOME AND
THEN MAKE THE MONTHLY PAYMENTS FOR THE REST OF THE 30 YEARS YOU
PAID OFF THE LOAN SO WHEN YOU RETIRED YOUR OWNED YOUR OWN
HOME, AND THEN THE DREAM THAT YOUR KIDS WOULD BE BETTER OFF
THAN YOU WOULD BE IN THE NEXT GENERATION.
THAT'S THE DREAM THAT I BELIEVE HAS BEEN STOLEN, AND IT'S BEEN
TAKEN AWAY BY SOME OF THESE POLICY DECISIONS AND BY THIS
RISE OF WEDGE ECONOMICS.
I TOLD YOU THAT THE AVERAGE MALE MADE THE SAME ADJUSTED FOR
INFLATION AT THE END OF THIS PERIOD AS AT THE BEGINNING.
DURING THAT SAME PERIOD, THE AVERAGE FORTUNE 500 CEO PAY ROSE
350% TO 400%.
THE AVERAGE INCOME OF PEOPLE AT THE TOP 1% ROSE 600%.
SO HERE WE ARE AT MIDDLE, AND YOU'RE EVEN.
YOU'RE A BIT UP AND YOU'RE DOING BETTER.
YOU'RE WAY UP, YOU'RE DOING REALLY BETTER.
IF YOU'RE AT THE TOP, YOU'RE GOING THROUGH THE ROOF.
FROM 1979 LISTEN TO THIS NUMBER.
IT'S AN UNBELIEVABLE NUMBER.
FROM 1979 UNTIL 2011, 84% OF THE NATION'S ENTIRE GAINS OF
NATIONAL INCOME, THE INCOME OF THE ENTIRE COUNTRY FROM 1979 TO
2011, 84% OF IT WENT TO THE TOP 1% OF THE POPULATION.
NOT JUST PAUL KRUGMAN AND LIBERALS SAY THIS.
CITI GROUP, CONSERVATIVE INVESTMENT BANK ON WALL STREET,
PUT OUT A STUDY IN 2005 TO IT'S WEALTHIEST INVESTMENT CLIENTS
ADVISING THEM TO INVEST BASICALLY IN COMPANIES THAT
CATERED TO AND PRODUCED PRODUCTS FOR AND BUILT HOMES FOR GATED
COMMUNITIES FOR THE WEALTHIEST PEOPLE IN THE COUNTRY.
CITIGROUP SAID THAT THE WORLD HAD NOT SEEN IN ANY MAJOR POWER
THAT SUCH GREAT INEQUALITY OF INCOME AS THERE WAS IN AMERICA
TODAY SINCE 16th CENTURY SPAIN.
SO WE'RE TALKING ABOUT 500 YEARS.
THAT'S CITIGROUP'S ESTIMATE.
YOU CAN SAY WELL, MAYBE THEY DESERVE IT.
CERTAINLY THAT ISN'T SOMETHING THAT MOST AMERICANS ARE
COMFORTABLE WITH.
AMERICANS ARE COMFORTABLE WITH THE IDEA OF ECONOMIC INEQUALITY.
DURING THE PERIOD WHEN I MENTIONED SHARED PROSPERITY, I
SAID CHARLIE WILSON MADE 40 TIMES WHAT THE AVERAGE WORKER IN
HIS FAMILIES MAKE.
NOW IT'S CLOSE TO 400, IT'S 380 TIME FOR THE FORTUNE 500 CEOs.
IT'S OUT OF WHACK.
>> IT'S NOT JUST A QUESTION OF FAIRNESS HERE.
THIS ISN'T SMART ECONOMICS FOR THE COUNTRY.
THIS ISN'T SMART ECONOMICS FROM THE COUNTRY.
THEY SHOW HIGH INEQUALITY OF INCOME WHETHER IN AMERICA OR
ANOTHER COUNTRY MEANS SLOW ECONOMIC GROWTH.
HIGH IN EQUALITY OF INCOME MEANS SLOW ECONOMIC GROWTH.
I READ STUDIES THAT SAY IT IS DESTRUCTIVE TO ECONOMIC GROWTH.
THE RYAN IS THE VIRTUOUS CIRCLE THAT I TOLD YOU ABOUT BEFORE.
PAY LOTS OF PEOPLE REASONABLY WELL, AND THEY GO UP OUT AND
SHOP.
THAT DRIVES THE ECONOMY.
COMPANIES HAVE TO BUY MORE EQUIPMENT AND BUILD MORE PEOPLE
AND PLANTS.
THAT KEEPS THE CIRCLE OF GROWTH GOING.
WHAT WE DID IS HAVE A HIGH INEQUALITY OF INCOME IS TO BREAK
THAT CIRCLE AND GET IT GOING AGAIN.
EVERY SINGLE TIME WE HAVE A DOWNTURN STARTING FROM 1990
UNTIL TODAY, IT TAKES LONGER FOR THE ENGINE TO GET BACK UP THE
HILL.
PRIOR TO 1990 IT TOOK US ABOUT 19 OR 20 MONTHS ON AVERAGE TO GO
FROM BOTTOM OF A RECESSION BACK TO WHERE WE WERE BEFORE IN TERMS
OF EMPLOYMENT.
IN 1991-93 IT TOOK 26 MONTHS, AND IN 2001 TO 2003 IT TOOK 46
MONTHS.
LADIES AND GENTLEMEN WE'RE IN THE 55th MONTH, AND WE CAN'T SEE
THE MONTH WHEN WE'RE GOING TO HAVE THE SAME LEVEL OF
UNEMPLOYMENT IN THIS COUNTRY THAT WE HAD BACK IN 2007.
SOMETHING IS STRUCTURALLY WRONG.
IT ISN'T JUST THE FIGHT IN WASHINGTON.
IT IS A POLITICAL DIFFICULTY.
IT'S A COMBINATION OF POWER IN WASHINGTON THAT ARE HEAVILY
TILTED IN FAVOR OF THE FINANCIAL AND CORPORATE ELITE AND
DECISIONS ARE MADE BY POET ENTITIES BUT NOT ALL ABOUT WHERE
THEY WANT TO HAVE THEIR JOBS AND HOW TO CUT UP THE ECONOMIC PIE
AFTER THEY'VE MADE THEIR PROFITS.
THIS IS GOING TO CONTINUE UNLESS WE DO SOMETHING ABOUT IT.
NOW, THE DANGER HERE IS THAT THERE'S A SPILLOVER EFFECT OF
THE ECONOMY INTO THE POLITICAL SYSTEM.
IT WAS LOUIS BRANDEIS THAT SAID BEFORE HE WENT ON THE COURT A
CENTURY AGO, HE SAID, WE MUST MAKE OUR CHOICE.
WE CAN EARLY HAVE DEMOCRACY OR WE CAN HAVE WEALTH CONCENTRATED
IN THE HANDS OF A FEW.
WE CAN'T HAVE BOTH.
WHAT WE FOUND OUT IN THE POLITICAL SYSTEM IS THE DECLINE
OF THE MIDDLE.
IF WE SEE THE ECONOMIC SYSTEM AND THE DECLINE OF THE MIDDLE
CLASS AND THE POLITICAL SYSTEM, WE SEE A DECLINE OF THE
POLITICAL MIDDLE.
PROBABLY ONE OF THE MOST IMPORTANT REASONS AND THIS MAY
NOT BE SOMETHING SO IMPORTANT HERE IN NEBRASKA, BUT IT
CERTAINLY IS IN MORE POPULOUS STATES IS GERRYMANDERING.
WE HAVE SOME GOOD EQUIPMENT AND SOFTWARE, THAT THE LEADERS OF
THE POLITICAL PARTY HAVE CONTROL OF THE SEAT AND LEGISLATURE
AFTER EACH CENSUS, WE RESHUFFLE THE SEATS EVERY TEN YEARS, AS
YOU KNOW.
THEY ARE ABLE TO DRAW THE LINES OF THE CONGRESSIONAL DISTRICTS
AND THAT STATE LEGISLATIVE LINE IN WAYS TO BENEFIT THEIR PARTY
TO THE MAXIMUM.
IF YOU TAKE A STATE LIKE MICHIGAN AND TAKE REPUBLICAN
GOVERNORS, THEY DON'T CLAIM THEY'RE GOING TO GRAB ALL THE
SEATS.
THEY LOOK AT DETROIT, AND THEY SAY, WE'RE GOING TO LOSE IN
DETROIT.
DEMOCRATS WILL WIN THERE.
MORE WOMEN AND MINORITIES, NOT WHAT WE DO WELL.
YOU CONCEDE SEED THEM THREE OR FOUR SEATS.
THEN YOU GRAB ALL THE ONES YOU CAN FROM AROUND DETROIT.
THE DEMOCRATS DO IT TOO.
IT'S NOT ONE PARTY OR ANOTHER.
IN MASSACHUSETTS IN CONNECTICUT THE DEMOCRATS ARE GERRYMANDERING
LIKE CRAZY.
REPUBLICANS GET A THIRD OF THE VOTE IN MASSACHUSETTS AND
CONNECTICUT.
THERE ARE 15 CONGRESSIONAL SEATS FROM THOSE TWO STATES IN THE
LAST SEVERAL ELECTIONS, THE REPUBLICANS HAVE GOTTEN ZERO
SEATS.
DEMOCRATS GET ALL THE SEATS.
I'M NOT BLAMING ONE PARTY OR THE OTHER, BUT BOTH PARTIES PLAY IT
DISASTROUSLY FOR AMERICAN DEMOCRACY.
WHY DO I SAY THAT?
TWO BASIC REASONS.
ONE IS MODERATES PEOPLE IN THE MIDDLE, INDEPENDENTS NOT
AFFILIATED TO ANY PARTY THIS WAY OR THAT WAY -- THAT INCLUDES ME.
I VOTED FOR BOTH REPUBLICANS AND DEMOCRATS OVER MY LIFETIME
SEVERAL TIMES, AND THERE ARE MILLIONS OF OTHERS LIKE THAT.
IN SOME STATES IT SWINGS THE ELECTIONS.
IN COLORADO IT'S A THIRD, A THIRD, A THIRD, SO IT'S
IMPORTANT.
INDEPENDENTS GET DISCOURAGED.
IF THERE'S A SAFE DEMOCRATIC DISTRICT OVER HERE AND
REPUBLICAN DISTRICT OVER HERE, YOU KNOW THE OUTCOME.
WHY BOTHER?
IT'S A CITIZEN'S DUTY, WE SAY.
IT'S THE SAME PEOPLE GETTING ELECTED AGAIN AND AGAIN, OKAY?
WHAT HAPPENS IS THE TURNOUT GOES DOWN.
THE INFLUENCE OF PEOPLE AT THE EXTREMES OF BOTH PARTIES BECOMES
MORE AND MORE IMPORTANT IN THE PARTY PRIMARY.
BILL GOT A TURNOUT IN CONGRESSIONAL CAMPAIGNS.
IN A PRIMARY WE'RE LUCKY IF WE GET 25% TO TURN OUT.
THE MAJORITY OF THEM IS 11%, SO EFFECTIVELY WE HAVE 11% OF THE
VOTERS WOUND UP PICKING THE PERSON FOR CONGRESS.
A SMALLER AND SMALLER MINORITY IS EXERCISING HOW ON BEHALF OF
EVERYBODY AND HOW OTHER PEOPLE FEEL DISENFRANCHISED.
THEY CAN GO BOTH, BUT IT DOESN'T MATTER.
THEY KNOW IT.
THEY LOSE FAITH.
THAT'S TERRIBLE FOR AMERICAN DEMOCRACY.
WHAT HAPPENED TO THE IDEA OF COMPETITION?
STATE DISTRICTS ARE DESIGNED TO ELIMINATE COMPETITION.
IT WAS ABOUT THE MARKET, THE COMPETITION.
THE DEMOCRACY, THE POLITICAL MARKET AND COMPETITION.
THE PARTIES HAVE GOTTEN TOGETHER SORT OF BACK-TO-BACK, AND
THEY'VE PLAYED A GAME THAT ELIMINATED COMPETITION.
WE NEED COMPETITION IN ORDER TO HOLD POLITICIANS ACCOUNTABLE AND
TO HAVE DISAGREEMENT WITH THE POLICIES.
WE NEED TO FLUSH AND WASH THINGS IN AND OUT A LOT.
THAT'S A DESPERATION MOVE.
IT'S BECAUSE COMPETITION ISN'T WORKING.
WE NEED COMPETITION AND NOT TERM LIMITS, OKAY?
WE NEED TO BRING THE CHANGE ABOUT.
YOU DON'T BRING THE CHANGE ABOUT WHAT HAPPENS IS -- LISTEN TO
THIS NUMBER. IF YOU TALK TO ANY GOOD
POLITICAL REPORTER IN WASHINGTON TODAY, HE WILL TELL YOU THAT
90% -- HE CAN PREDICT OR SHE CAN PREDICT 90% OF THE OUTCOME OF
THE ELECTIONS IN 2014.
WHY?
BECAUSE 90% OF THE DISTRICTS HAVE BEEN DESIGNED TO BE SAFE IN
THIS COUNTRY.
OKAY.
SO THAT COMPETITION HAS BEEN ELIMINATED.
THEY GET SAFER AND MORE EXTREME AND MORE EXTREME AND MORE
EXTREME.
WHEN THEY GET TO WASHINGTON, THERE'S NO MIDDLE.
THEY CAN'T TALK TO EACH OTHER.
THERE'S A FRANKED CANYON.
IF YOU WONDER WHY YOU HAVE THE VIBE THAT CREATED THE SHUTDOWN,
THEY PASTED THE BUDGETS IN THREE OR FOUR YEARS.
THEY USED TO PASS BUDGETS ALL THE TIME, PASS THE APPROPRIATION
BILL AND PASS MEDICARE AND SEVERAL BILLS AND ALL KINDS OF
LEGISLATION NOW.
ONE OF THE REASONS IS WE HAVE A STRUCTURAL PROBLEM IN THE
POLITICAL SYSTEM THE SAME WAY IN OUR ECONOMIC SYSTEM.
WE NEED TO FIX THAT.
THE NEXT THING THAT HAPPENED IS THE POWER OF MONEY.
ENORMOUS AMOUNTS OF MONEY.
THE AMOUNTS OF MONEY HAVE A BIGGER EFFECT ON CONGRESSIONAL
RACES THAN ON THE PRESIDENTIAL RACE.
THE AMOUNTS OF MONEY IN THE PRESIDENTIAL RACE ARE SO HUGE,
WHEN YOU HAVE 800 MILLION AND THE OTHER SIDE AT 1.1 BILLION,
IT DOESN'T MATTER THAT MUCH.
YOU'RE WAY THE HECK UP THERE.
IN A CONGRESSIONAL DISTRICT IF YOU'RE RAISING MONEY AS HARD AS
YOU CAN AND SOMEBODY CAN COME IN FROM THE OUTSIDE AND SAY, WE'LL
PLUNK DOWN $2 MILLION TO BACK A CANDIDATE TO RUN AGAINST YOU,
THEN YOU'RE TERRIFIED.
THIS PROCEEDED THE TEA PARTY.
THIS IS NOT A NEW VERB IN THE AMERICAN POLITICS.
IT'S CALLED PRIME RATE.
THAT IS HAVING SOMEBODY IN AND PURGE YOU, AND THE PURGING IS
GOING ON IN THE REPUBLICAN PARTY.
IT HASN'T HAD TO SO MUCH IN THE DEMOCRATIC PARTY.
YOU CAN SEE IT NOW.
THE WHOLE FIGHT WITH TED CRUZ AND OTHER ESTABLISHED
REPUBLICANS THAT WILL FIGHT BACK.
WHAT HAPPENS IN THE REPUBLICAN PRIMARIES THIS COME YEAR.
VERY STRONG.
IT TRULY BEGAN IN THE EARLY 2000s.
A CLUB FOR GROWTH WAS BEHIND IT BEFORE THE TEA PARTY AND OTHERS.
THEY WERE GOING AFTER THE RHINOS,
REPUBLICANS IN NAME ONLY, R-I-N-O.
ARLEN SPECTER WAS THE REPUBLICAN SENATOR FROM
PENNSYLVANIA.
THEY WENT AFTER HIM IN 2004.
THE CLUB FOR GROWTH DUMPED $1.8 MILLION INTO THE REPUBLICAN
PRIMARY IN PENNSYLVANIA, AND THEY NEARLY BEAT SPECTER,
BUT THEY DIDN'T.
THEY WANTED TO PURGE HIM NOT JUST TO PURGE HIM BUT, AND THEIR
QUOTES IN THE RECORD TO THIS EFFECT, THEY WANTED TO SCARE,
INTIMIDATE AND DISCIPLINE OLYMPIA SNOW, THE MODERATE
REPUBLICAN IN MAINE, THE REPUBLICAN CENTRIST AND SORT OF
CONSERVATIVE FROM OHIO AND A WHOLE BUNCH OF OTHERS.
IN 2010 THEY WENT BACK AFTER SPECTER AND DROVE HIM OUT OF THE
REPUBLICAN PARTY AND HE BECAME A DEMOCRAT AND MOVED OVER TO THE
OTHER SIDE.
YOU HAVE GERRYMANDERING AND POLITICAL PURGING GOING ON.
IT'S PUSHING AMERICA TO THE EXTREMES.
YOU NEED TO BRING THE MIDDLE BACK IN.
I DON'T KNOW YOUR STATE REAL WELL, BUT I KNOW CHUCK HAGEL,
AND I KNOW ROMAN HRUSKA AND HEARD SOME THINGS ABOUT YOUR FORMER
GOVERNOR WHO IS NOW A SENATOR.
IT SUGGESTS THEY'RE ALL MAINSTREAM REPUBLICANS WHO
BELIEVE STRONGLY IN FREE ENTERPRISE BUT DON'T WANT A
BLOATED GOVERNMENT.
WE NEED TO KIND OF GET BACK TO THAT KIND OF REPUBLICAN IF I'VE
GOT THE NEBRASKA STORY FROM WHAT OTHER PEOPLE HAVE TOLD ME.
THAT'S KIND OF WHERE WE ARE.
WE'VE GOTTEN OURSELVES IN A TERRIBLE BIND.
WE'VE GOTTEN OURSELVES COMING -- TRYING TO FIND MONEY.
WE'VE COME OUT OF TWO WARS THAT COST IN THE END 3
APPROXIMATELY $5 TRILLION.
WE DIDN'T PAY A CENT OF TAXES TO PAY FOR THOSE WARS.
$3.5 TRILLION.
ANOTHER ESTIMATE IS $4.5 TRILLION IN THE END FROM IRAQ
AND AFGHANISTAN.
DIDN'T PAY A PENNY, AND WE'RE TALKING ABOUT WHETHER OR NOT WE
SHOULD CUT FOOD STAMPS AND PEOPLE SAY MAYBE IT'S TIME FOR A
PEACE DIVIDEND.
PEOPLE ARE SAYING MAYBE WE OVERSTRETCHED AND WENT TOO FAR.
OBAMA HELD BACK AND DIDN'T GO INTO SYRIA AND GOT INVOLVED IN
LIBYA IN A SMALL WAY.
THERE'S A PULL-BACK THAT NEEDS TO BE DONE.
WHAT DO WE TO GET BACK TO THE KIND OF AMERICA I WAS DESCRIBING
BEFORE?
MY EDITOR SAID THAT TO ME WHEN I TURNED IN MY BOOK.
SHE SAID, RICK, YOU HAVE IN THE MESS YOU DESCRIBED.
YOU HAVE TO TELL US HOW TO GET OUT.
I SAID, KATE -- HER NAME IS KATE.
KATE, I'M A REPORTER.
I DON'T DO THAT STUFF.
THAT'S POLICY WONK STUFF AND UP TO THE UNIVERSITY OF NEBRASKA
AND THE EXPERTS ON GOVERNMENT AND IT'S UP TO THE THINK TANKS
AND SO FORTH.
I SAID, I CALL BALLS AND STRIKES AND TELL THE RECORD THE WAY IT
IS AND PEOPLE MAKE UP THEIR MINDS.
SHE SAID NO, DO IT.
WE WENT BACK AND FORTH.
MY SUPREME EDITOR, A WOMAN NAMED SUSAN AND I LIVED WITH HER FOR
THE LAST 30 YEARS.
SHE SAID TO ME, RICK, KATE'S RIGHT.
THERE'S THE HANDY DANDY 10-POINT PROGRAM TO SAVE AMERICA IN THE
BACK OF THE BOOK.
I'M GLAD YOU LAUGH, BECAUSE I FEEL AWKWARD ABOUT IT.
THE TRUTH OF THE MATTER IS THERE'S ODDLY THINGS FOR US TO
DO, AND THEY'RE EVEN THINGS THAT PEOPLE IN BOTH POLITICAL PARTIES
AND IN DIFFERENT PARTS OF THE ECONOMIC SPECTRUM AGREE ON.
WE CAN'T SEEM TO GET TO THEM IN OUR NATIONAL DEBATE AND
CERTAINLY NOT IN OUR POLITICAL DEBATE.
WE NEED TO RICHEST CIRCLE GOING AGAIN.
WE NEED TO GET THE AMERICAN JOBS AND GROWTH MACHINE GROWING
AGAIN.
I MAY SURPRISE YOU, BUT I WOULD BE ONE WHO WOULD SAY WE OUGHT TO
LOWER THE CORPORATE TAX RATE FOR CORPORATIONS THAT OPERATE IN
AMERICA.
WE OUGHT TO CLOSE THE CORPORATE TAX LOOPHOLES FOR CORPORATIONS
THAT MOVE PRODUCTION ABROAD.
DO YOU KNOW THAT COMPANIES THAT MOVE PRODUCTION ABROAD PAY A
LOWER TAX RATE THAN COMPANIES THAT OPERATE IN AMERICA?
IS THAT A STUPID POLICY OR NOT?
TO ME IT IS ON THE FACE OF IT.
WHY WOULD YOU EVER DO THAT?
THAT'S AN INCENTIVE FOR PEOPLE TO MOVE JOBS OUT OF THE COUNTRY.
BRING THE RATE DOWN FROM 35% DOWN TO 30%.
LEAVE THE COMPANIES IN NEBRASKA, NEW HAMPSHIRE, OHIO, CALIFORNIA,
AND TEXAS AND SO FORTH BASICALLY DOING THEIR WORK THERE, LET THEM
HAVE MORE MONEY, AND MAYBE THEY WILL SPEND THAT MONEY TO EXPAND
EQUIPMENT OR DO MORE RESEARCH OR BRING MANUFACTURING BACK TO THE
COUNTRY.
THOSE WHO ESCAPE AND TAKE THE JOBS OVERSEAS AND PUSHING THE
PRODUCTION OVERSEAS AND PAYING A LOWER TAX RATE, THAT'S CRAZY.
YOU HAVE TO CLOSE THOSE LOOPHOLES.
I'M GOING TO COME BACK TO THAT ANYWAY IN A MINUTE.
THE INFRASTRUCTURE IS ACHING.
I CAN TELL YOU THAT THE U.S.
CHAMBER OF COMMERCE SAYS THE FACT THAT OUR AIRPORTS, OUR
RAILROADS AND BRIDGES AND HIGHWAYS ARE SO OUT OF DATE WE
HAVE LOST A TRILLION DOLLARS WORTH OF GROWTH.
THE CHINESE AND JAPANESE AND SINGAPORE AND SO FORTH, THEY
HAVE BULLET TRAINS.
THE CHINESE HAVE PORTS THAT HAVE MUCH MORE MODERN COMPUTERIZED
EQUIPMENT THAN OUR PORTS DO.
IDENTIFY BEEN IN THE PORT IN SHENZHEN NEAR HONG KONG.
IT'S MUCH MORE MODERN THAN SEATTLE.
THAT'S CRAZY.
YOU NEED TO INVEST IN YOUR OWN FUTURE.
WHERE DOES IT COME FROM, SMITH?
THE OTHER PICKERS AND WINNERS AND LOSERS.
BY THE WAY, THE GOVERNMENT HAS BEEN DO INFRASTRUCTURE IN
AMERICA FOR THE LAST 200 YEARS.
WASHINGTON, JEFFERSON AND HAMILTON FUNDED THE BUILDING THE
ERIE CANAL.
LINCOLN AND THE CONGRESS IN THE CIVIL WAR FUNDED THE BUILDING OF
THE TRANS CONTINENTAL RAILROAD ACROSS THE UNITED STATES.
DWIGHT EISENHOWER BUILT THE INTERSTATE HIGHWAY SYSTEM THAT
IS NOW 50 YEARS OLD.
NOTICE I PICKED ONLY REPUBLICAN PRESIDENTS, OKAY?
SO THERE'S NOTHING UN-AMERICAN ABOUT TO GO THAT.
THE QUESTION IS WHERE DO YOU GET THE MONEY?
IT HAS TO BE A MIX OF PRIVATE AND PUBLIC MONEY.
I HAVE AN IDEA.
WHEN COMPANIES EARN MONEY OVERSEAS AND MAKE PROFITS, THEY
DON'T PAY ANY TAX AT ALL, ZERO TAX ON THAT MONEY UNTIL THEY TRY
TO BRING IT BACK TO THIS COUNTRY.
THEN THEY HAVE TO PAY 35%, BUT THEY NEVER DO IT.
THEY'RE VERY CLEAVER.
THEY ORGANIZE AND LOBBY WASHINGTON.
THEY DID THAT AND THEN PRESIDENT BUSH, I TELL
YOU WHAT, WE HAVE A TRILLION DOLLARS OF OVERSEAS.
WE'LL BRING THEM BACK AND CREATE JOBS IN AMERICA IF YOU GIVE A
TAX BREAK.
THE GOVERNMENT AGREED, AND THEY BROUGHT IT HOME.
THE TAX RATE THEY PAID WAS 5.5% AS OPPOSED TO 35%.
NOW, TODAY, AMERICAN COMPANIES ACCORDING TO JP MORGAN CHASE
HAVE $1.7 BILLION OVER SEAS AND THEY WANT TO BRING IT BACK
AND ANOTHER TAX HOLIDAY.
THEY SAY WE WILL HELP YOU GENERATE JOBS IN AMERICA.
SOUNDS GREAT.
A FEW PEOPLE SAID, ECONOMISTS IN WASHINGTON SAID WHY DON'T WE GO
BACK AND SEE BEFORE WE MAKE THE NEW DEAL.
LET'S SEE WHAT HAPPENED TO THE TRILLION DOLLARS THAT CAME BACK
IN 2005?
WHEN THEY WENT BACK AND TOOK A LOOK THEY FOUND 92% WENT TO THE
CEO AND OTHER TOP EXECUTIVES AND SHAREHOLDERS AND ONLY 8% HAD
GOON TO JOBS.
SO PEOPLE WOULD SAY, LET'S GO IN THERE.
WHAT I SAY IS, LET THEM BRING BACK THE 1.7 TRILLION AND CHARGE
THEM 20% OR 17.5%.
GIVE HIM A HALF-OFF TAX RATE, BUT MAKE HIM PUT THE $1.7
TRILLION INTO REBUILDING THE INFRASTRUCTURE.
INVESTIGATE IT AND NOT TAX IT.
MAYBE GET A PROFIT ON IT.
THAT'S WHERE YOU GET THE CAPITAL.
WE HAVE TO GET SMART AND DO THINGS TO REBUILD AMERICAN
MANUFACTURING.
THERE'S STILL 10 MILLION PEOPLE CAUGHT IN UNDERWATER HOUSES
AND BAD HIGH-INTEREST RATE LOANS.
IF WE WOULD REFINANCE THEIR LOANS, THAT WOULD GENERATE
HUNDREDS OF BILLIONS OF DOLLARS OF THE CONSUMER PURCHASING PURE
IN THE AMERICAN ECONOMY RIGHT AWAY.
WE COULD RAISE THE MINIMUM WAGE SO THE PEOPLE AT THE BOTTOM CAN
GET OUT OF POVERTY.
PEOPLE ARE MAY BEING $7.25 AN HOUR WORKING IN FAST FOOD
RESTAURANTS AROUND THE COUNTRY.
YOU'RE WORKING 30 HOURS A WEEK.
DO YOU KNOW WHAT THAT IS?
$210 A WEEK OR $11,000 A YEAR.
THAT'S POVERTY WAGES.
THOSE PEOPLE NEED FOOD STAMPS.
WHY DO WE GIVE THEM THOSE?
THEY PAY MORE AND THEY DON'T NEED THE GOVERNMENT PROGRAM.
I THINK THERE ARE A BUNCH OF SENSIBLE THINGS TO DO, BUT THEY
WON'T HAPPEN IN WASHINGTON UNLESS WE MAKE IT HAPPEN.
THE PEOPLE WHO -- THE POWER STRUCTURE TODAY, THE POWERS THAT
BE LIKE THE SYSTEM THE WAY IT IS.
IF YOU LIKE IT, STICK WITH IT.
IF YOU DON'T LIKE IT, IN MY EXPERIENCE, THERE'S AN AWFUL LOT
OF PEOPLE UNHAPPY WITH IT, WE HAVE TO CHANGE IT.
WE HAVE TO CHANGE THE GERRYMANDERING SYSTEM.
WE HAVE TO OPEN UP THE PUBLIC PRIMARIES AND REDUCE THE
INFERENCE OF MONEY BY INCREASING THE POWER AND INFLUENCE WITH
SMALL DONORS.
MAYBE WITH TAX CREDITS THEY'RE WORTH MATCHING PUBLIC FUNDS.
WE HAVE TO BALANCE THE INFLUENCE OF HEAVY MONEY, BUT NONE WILL
HAPPEN LADIES AND GENTLEMEN UNLESS YOU GET INVOLVED.
UNLESS WE GO BACK TO THE ERA OF THE MIDDLE CLASS PEOPLE POWER OF
THE '60s AND '70s, WHICH IS ONE OF THE REASONS I TOOK SO LONG
TALKING ABOUT IT BEFORE, WE'RE HERE NOW AT THE PRECIPICE.
JOHN GARDNER TOLD US WE WERE HERE.
60% OF THE PUBLIC HAS ALREADY DECIDED IN DECLINE.
IT'S GOING TO DO THAT.
IT'S GOING TO KEEP GOING THE WAY IT'S GOING UNLESS WE DECIDE IN
THIS ROOM TONIGHT.
THERE'S ONES LIKE THIS AGAIN AND AGAIN ACROSS THE COUNTRY DECIDE
WE HAVE TO CHANGE SOMETHING AND START THE WORK ON IT NOW.
WE HAVE TO DO WHAT THE ROSA PARKS DID WHEN THEY SAID GO TO
THE BACK OF THE BUS.
LADIES, THAT'S WHAT JIM CROW REQUIRES.
WE HAVE TO SAY, I'M NOT GOING TO THE BACK OF BUS.
I'M NOT BUYING THIS POLITICAL SYSTEM ANYMORE.
I'M GOING TO WORK WITH FRIENDS AND NEIGHBORS TO IMPROVE THINGS
IN OUR AREA AND REACH OUT.
THIS IS NOT TO SAY THAT NEBRASKA IS NOT A GREAT STATE, BUT YOU
KNOW, EVERY STATE HAS SOME IMPERFECTIONS, AND YOU HAVE
INFLUENCE WITH PEOPLE IN WASHINGTON.
IF YOU HAVE THE RIGHT PEOPLE IN WASHINGTON, YOU HAVE A BETTER
INFLUENCE ON WHAT'S GOING ON IN WASHINGTON.
WE HAVE TO GET THE MIDDLE AND OUR COUNTRY BACK.
THE LAST SIX WORDS OF MY BOOK.
WE THE PEOPLE MUST TAKE ACTION.
THANK YOU.
[ APPLAUSE ]
>> NICE TO SEE YOU.
THE LIGHTS ARE SO BRIGHT, I DIDN'T KNOW IF ANYBODY WAS
OUT THERE.
>> IF YOU HAVE QUESTIONS FOR HEAD RICK GET A CARD FROM AN
USHER AND WRITE THE QUESTION QUICKLY AND GIVE IT BACK AND
THOSE WILL BE BROUGHT OVER HERE TO ASK THE QUESTIONS.
LET ME BEGIN WITH ONE QUESTION THAT CAME FROM ONE OF THE
STUDENTS IN THE THOMPSON
SCHOLARS.
HOW CAN WE REARRANGE AND MANIPULATE OUR BUDGET TO KEEP A
GLOBAL PRESENCE AND AVOID IMPERIAL OVERSTRETCH?
>> WELL, THAT'S A PART OF MY BOOK I DIDN'T GET INTO.
AS MY FRIEND THE HISTORIAN NEXT TO ME REMINDED ME, A JAIL
HISTORIAN BY THE NAME OF PAUL KENNEDY WROTE A BOOK CALLED "THE
RISE AND FALL OF GREAT POWERS."
HE MADE THE POINT THAT WAS PERSUASIVE TO ME.
I LIKE HISTORIANS.
I QUOTE TOYNBEE AND PAUL KENNEDY.
HE SAID IT IS CHARACTERISTIC OF GREAT EMPIRES AND GREAT POWERS
AT SOME POINT IN THEIR HISTORY, USUALLY LATE IN THEIR HISTORY,
TO GO EXTEND THEIR REACH AROUND THE WORLD, PUT BASES OR COLONIES
OR MILITARY POWER STRETCHED OUT IN THE WORLD TO A DEGREE THAT
THEIR DOMESTIC ECONOMY CAN NO LONGER SUPPORT IT.
POWER GETS BUILT UP IF THE ECONOMY IS ON A STEEP CLIMB, AND
THEN THE ECONOMY STARTS TO SLOW DOWN, DOESN'T GO AS FAST.
BUT THE MILITARY POWER KEEPS RIGHT ON GOING, AND THAT'S THE
POINT MADE BY KENNEDY.
HE WROTE THIS BOOK IN 1987, AND HE SAID THAT WAS ALREADY
HAPPENING TO US AS IT HAPPENED TO 16th CENTURY SPAIN AND 19th
CENTURY BRITAIN AND EVEN THE ROMAN EMPIRE LOOKING BACK A LOT
FURTHER THAN THAT.
I THINK PART OF WHAT WE HAVE TO DO IS TO BE SMART ABOUT WHETHER
OR NOT OUR INVESTMENTS IN THE USE OF MILITARY FORCE OVERSEES
MAKES SENSE ECONOMICALLY.
EISENHOWER -- LET ME QUOTE YOU.
THIS IS MY FAVORITE EXPERT ON THE SUBJECT.
EISENHOWER, FIVE-STAR GENERAL, COMMANDER OF OUR FORCES IN WORLD
WAR II SAID, IF I CAN FIND THE QUOTE QUICKLY, TO A MASS
MILITARY POWER WITHOUT REGARD TO OUR ECONOMIC CAPACITY WOULD BE
TO DEFEND OURSELVES AGAINST ONE KIND OF DISASTER BY INVITING
ANOTHER.
IN OTHER WORDS, SPENDING TOO MUCH ON THE MILITARY WHEN OUR
ECONOMY DOESN'T HAVE ENOUGH UMPH AND STRENGTH AND MUSCLE AT HOME,
AND OUR MANUFACTURING CAPACITY IS DECLINING.
TO INVITE AN ECONOMIC DISASTER BY TRYING TO PUT TOO MUCH
MILITARY WEIGHT ON IT.
YOU NEED TO KNOW THAT OUR MILITARY BUDGET TODAY IS ABOUT
$100 BILLION A YEAR HIGHER THAN IT WAS AT THE PEAK OF THE COLD
WAR.
TERRORISM IS A SERIOUS THREAT, AND WE NEED TO DO SOMETHING
ABOUT IT.
WE CAN'T LAY DOWN OUR ARMS, BUT IT'S NOT AS SERIOUS AS MILITARY
THREAT AS A NUCLEAR ARMED SOVIET UNION WITH HUNDREDS OF BOMBERS
AND MISSILES ON SUBMARINES AND IN THE GROUND.
WE GOT TO BRING SOMETHING BACK INTO PROPORTION HERE.
WE NEED TO DO IT.
I'M ACTUALLY GRATEFUL THAT CHUCK HAGEL IS A SECRETARY OF DEFENSE.
HE'S THE KIND OF GUY THAT CAN BALANCE THOSE THINGS.
[ APPLAUSE ] >> A QUESTION FROM SOMEBODY IN
THE AUDIENCE.
TALK ABOUT THE IMPACTS OF CITIZENS UNITED AND TALK RADIO
ON ELECTIONS.
CAN WE MAKE CHANGES WITH THE CURRENT SYSTEM?
>> WELL, YOU NEED TO KNOW, I'VE JUST COME FROM COLORADO.
IN THE 2012 ELECTION COLORADO HELD A REFERENDUM ON ROLLING
BACK CITIZENS UNITED AND CALLING FOR A CONSTITUTIONAL AMENDMENT
TO EMPOWER CONGRESS TO BE ABLE TO REGULATE SPENDING DURING
POLITICAL -- CONTRIBUTIONS AND SPENDING DURING POLITICAL
CAMPAIGNS.
THAT'S COLORADO AND NOT NEW YORK OR MASSACHUSETTS OR A CRAZY
LIBERAL STATE.
COLORADO IS A PURPLE STATE.
IT'S NOT BLUE OR RED BUT PURPLE.
70% OF THE PEOPLE WHO VOTED IN FAVOR OF THAT
REFERENDUM.
THERE ARE NOW 16 STATES IN THE COUNTRY THAT HAVE PASSED
RESOLUTIONS EITHER IN THE LEGISLATURE OR THROUGH
REFERENDUM AND MISH ACTIVES THAT HAVE GONE ON RECORD NOW CALLING
FOR A CONSTITUTIONAL AMENDMENT OR LEGAL ACTION TO OVERTURN
CITIZENS UNITED AND GIVE CONGRESS THE POWER.
IT'S UP TO YOU WHETHER OR NOT YOU THINK THAT'S THE WAY TO GO
IN NEBRASKA, BUT THERE'S CERTAINLY A NATIONAL MOVEMENT
THAT IS UNDER WAY.
IT MAY BE THAT AMERICAN POLITICS ARE AND I HOPE IT'S TRUE, THAT
THE POLITICS AND THE POLITICAL INITIATIVE IS GOING TO COME FROM
THE STATES NOW.
WASHINGTON IS SO STUCK IN THE MUD THAT ENOUGH OF US ARE FED UP
WITH THAT WE START TO SEE WE HAVE TO DO IT HERE, AND WE'VE
HAD THOSE ERAS IN THE PAST.
THERE'S THE GREAT PROGRESSIVE ERA OF THE 1920s WHEN NATIONAL
POLICIES WERE FORMULATED IN STATES.
THIS MAY BE ANOTHER ERA, SO I THINK THAT'S AN ISSUE RIGHT IN
FRONT OF YOU TODAY.
[ APPLAUSE ] >> WHY DID OCCUPY WALL STREET
FAIL IN ITS OBJECTIVE?
WHY IS IT HARDER TO PROTEST?
>> I'M GLAD TO GET THAT QUESTION.
I DEAL WITH "OCCUPY WALL STREET" IN MY BOOK AS WELL AS THE TEA
PARTY.
I THINK YOU CAN TELL I'M NOT SYMPATHETIC TO THE TEA PARTY,
BUT AS A POLITICAL ANALYST, I NEED TO SAY THAT THE TEA PARTY
HAS BEEN AN EFFECTIVE GRASSROOTS MOVEMENT.
IT HAS HAD VERY CLEAR OBJECTIVES.
IT'S HAD A VERY CLEAR PHILOSOPHY.
IT HAS ORGANIZED ITSELF WELL.
IT HAS FOUND FINANCIAL BACKERS, AND THE TEA PARTY NOW HAS ABOUT
60 MEMBERS OF THE HOUSE OF REPRESENTATIVES.
"OCCUPY WALL STREET" IN MY OPINION WAS NOT A SIMILAR
MOVEMENT.
IT WAS A CRY OF PROTEST.
IT WAS A CRY OF ANGUISH.
IT WAS A CRY OF DISSATISFACTION AND CONDEMNATION OF THE WALL
STREET BANKS.
IT'S INTERESTING WHEN WE TALK ABOUT IT TODAY, IT'S INTEREST
THE QUESTION SAID "OCCUPY WALL STREET."
MAKE PEOPLE SAY "OCCUPY."
THAT'S NOT THE SLOGAN I'D WANT THEM TO REMEMBER.
I'D LIKE THEM TO REMEMBER WALL STREET OR BANKS OR MONEY.
IT WAS A PROTEST THAT PUT IN A POLITICAL LEXICON, IN OUR PUBLIC
MIND THE IDEA OF THE 99% AND 1%.
I'M TALKING ABOUT THE 1% TONIGHT, PART OF WHAT I'M SAYING
IS YOU CAN ACCEPT MORE READILY BECAUSE "OCCUPY" WAS AND THERE
AND GOT THE IDEA POPULAR.
WHAT IT DIDN'T DO IS WHAT THE CIVIL RIGHTS MOVEMENT OR
ENVIRONMENTAL MOVEMENT OR CONSUMER MOVEMENT OR THE TEA
PARTY MOVEMENT HAVE DONE.
IT DIDN'T HAVE CLEARLY ARTICULATED GOALS.
IT DIDN'T SAY, LIMIT THE SIZE OF THE BANKS.
PUT A CEILING ON THE -- THEY COULD HAVE SAID ANY OF THESE
THINGS.
I'M NOT ADVOCATING BUT I'M SAYING FOR GOALS, LIMIT THE SIZE
OF BANK OR BREAK THEM UP.
PUT A LIMIT ON THE CEILING OF THE SALARIES OF CEO.
STOP PEOPLE FROM FLUSHING AND SELLING STOCK ALL THE TIME, AND
ALSO RAISING MONEY FOR SOCIAL PROGRAMS.
THEY COULD HAVE HAD A BUNCH OF THOSE GOALS.
THEY NEVER ARTICULATED THEM.
THE SECOND THING THEY DID THAT CAUSED THE MOVEMENT TO PETER OUT
WAS THEY DIDN'T HAVE LEADERSHIP.
IF YOU WANT TO GO TALK -- LET'S SAY YOU'RE ON WALL STREET AND
YOU'RE ONE OF THE BANKERS.
YOU THAT IT THESE PROTEST, AND I WANT TO TALK THEM.
BY THE WAY, THERE ARE PEOPLE IN CORPORATE AMERICA HIGH UP, AND
EVEN IN SOME OF THE BANKS WORRIED ABOUT SOME OF THE ISSUES
I'VE BEEN TALKING ABOUT TONIGHT.
THERE'S SMART PEOPLE CONCERNED ABOUT THESE THINGS.
IF THEY WERE READY TO TALK TO ANYBODY AT "OCCUPY WALL STREET"
THERE WAS NO ONE TO TALK.
IT WAS ORGANIZED LIKE A VERMONT TOWN MEETING.
EVERYONE WAS EQUAL, BUT YOU CAN'T NEGOTIATE WITH A
MOVEMENT THAT WAY.
IF YOU'RE GOING TO HAVE A MOVEMENT, YOU HAVE TO HAVE CLEAR
GOALS AND LEADERSHIP, AND THEN THE QUESTION IS, WILL THE
PEOPLE -- WHERE WERE THE PEOPLE ON THE LEFT OR THE CENTER WHO
COULD HAVE PROVIDED THE FUNDING FOR "OCCUPY" TO BE A REAL
POLITICAL MOVEMENT, THE COUNTERBALANCE OF THE SUPER
PATRIOTS, THE KOCH BROTHERS, THE NUMBER OF FOUNDATIONS AND
FUNDERS ON THE RIGHT THAT FUNDED THE TEA PARTY.
THERE WERE EXPERIENCED POLITICAL ORGANIZERS THAT GRABBED ONTO THE
MOVEMENT AND TOOK PART OF IT OVER.
THAT DIDN'T HAPPEN ON THE CENTER AND LEFT.
SO IT'S PARTLY THE KIDS THAT ARE INVOLVED IN IT, AND IT'S PARTLY
THE RESPONSE OF OTHER PEOPLE IN SYMPATHY WITH IT.
IT DID VERY WELL IN THE POLLS, BUT IT DIDN'T BECOME A MOVEMENT.
IT'S POSSIBLE THAT A MOVEMENT WILL EMERGE.
I THINK A MOVEMENT WILL EMERGE.
>> PLEASE ADDRESS THE DECLINE OF UNIONS AND HOW MUCH EFFECT THIS
HAS HAD ON ECONOMIC EQUALITY.
CAN YOU UNIONS EVER REGAIN THE ECONOMIC IMPACT ON WAGES THEY
ONCE HAD?
>> WELL, THE DECLINE OF UNIONS IS EASY TO GIVE THE STATISTICS
ON.
UNION MEMBERSHIP IN THE PRIVATE SECTOR BACK IN THE HEYDAY WAS
39% AND TODAY IT'S 8% OR 9%.
THERE'S A TREMENDOUS LOSS.
PART OF WHAT HAPPENED IS COMPANIES HAVE MOVED.
TEXTILE PLANTS, AUTOMOBILE PLANTS, SHOE PLANTS HAVE MOVED
FROM UNIONIZED OR UNION-FRIENDLY STATES LIKES MASSACHUSETTS AND
MICHIGAN AND ILLINOIS AND OHIO AND SO FORTH INTO RIGHT-TO-WORK
STATES WHICH YOU DON'T HAVE TO JOIN UNIONS LIKE ALABAMA,
MISSISSIPPI AND SOUTH CAROLINA.
THEN THE JOBS HAVE MOVED TO MEXICO AND CHINA.
PART IS THE SHRINKING OF THE INDUSTRIES WHERE THE UNION WAS
STRONG, AND PART IS A VERY STRONG AND EFFECTIVE ANTI-UNION
CAMPAIGN OF MAJOR EMPLOYERS LIKE WALMART AGAINST UNIONS.
I THINK THERE'S NO QUESTION.
THIS IS A TOUGH SUBJECT THE TO TALK TO AMERICANS ABOUT.
AMERICANS ARE EMBARRASSED ABOUT UNIONS.
MOST OF US TONIGHT THINK OF THE FACT IF IT WEREN'T FOR UNIONS,
WE WOULDN'T HAVE WEEKENDS.
DO YOU UNDERSTAND THAT?
IF IT WEREN'T FOR UNIONS, YOU WOULDN'T HAVE WEEKENDS.
UNIONS CAME UP WITH A FIVE-DAY WEEK AND 40-HOUR WEEK.
THEN THEY CAME UP WITH OVERTIME AND SO FORTH.
THE UNIONS HAVE HAD A PROFOUND EFFECT, BUT THEY HAVE -- THE
MODERN ECONOMY, THE KNOWLEDGE ECONOMY, THE INTERNET ECONOMY,
THE DIGITAL ECONOMY, PEOPLE WHO WORK IN THOSE FIELDS,
PROFESSIONALS, COLLEGE-EDUCATED PEOPLE DON'T TURN TO UNIONS.
I MEAN, IT DOESN'T -- IT FEELS SORT OF ARTIFICIAL.
I SHOULD BE ABLE TO STAND UP FOR MYSELF.
I'M ALWAYS INTERESTED WHEN I FLY AND OCCASIONALLY I SEE A UNITED
AIRLINES PILOT THAT MAKES A COUPLE HUNDRED THOUSAND DOLLARS
A YEAR.
HE WAS A MEMBER OF THE AIRLINE PILOTS ASSOCIATION, WHICH IS A
TRADE UNION.
THERE ARE SOME PEOPLE THAT MAKE A PRETTY DARN GOOD SALARY WHO
GOT THAT IN PART THROUGH UNIONS.
I DON'T THINK THERE'S ANY QUESTION THAT THE DECLINE OF THE
UNIONS HAS A GOOD DEAL TO DO WITH THE DECLINE OF THE
BARGAINING POWER OF AVERAGE PEOPLE IN A MULTI-NATIONAL
DOMINATED ECONOMY.
CAN THEY COME BACK?
I'M NOT SURE WHETHER OR NOT WE'RE GOING TO SEE UNION
MOVEMENT IN THE SAME FORM THAT WE'VE SEEN IT IN THE PAST.
IT MAY WELL BE THAT IT'S A PROGRESSIVE MOVEMENT WITH PEOPLE
CONCERNED ABOUT CHILD CARE AND THE ENVIRONMENT AND HEALTH AND
WAGES AND THE MINIMUM WAGE IN GENERAL A CLUSTER OF ISSUES MAY
DECIDE THEY WANT TO GET TOGETHER TO FIGHT FOR THE
ISSUES.
I DON'T KNOW IF THEY CAN COME BACK.
IT'S VERY DIFFICULT.
>> WOULD YOU DRAW ANY COMPARISONS BETWEEN TODAY'S
ECONOMY AND GOVERNMENT AND THAT OF THE GILDED AGE OF THE 1800s?
>> YEAH.
I MEAN, THE QUESTIONER HAS GOT IT.
THIS IS THE THIRD GREAT WAVE OF AMERICA'S ENORMOUS WEALTH.
THE GILDED AGE.
IT'S INTERESTING TO GO BACK AND LOOK.
THE GILDED AGE IN THE LATE 19th CENTURY SAW ENORMOUS
CONCENTRATION OF WEALTH.
WE REMEMBER THAT.
WE REMEMBER SLOGANS LIKE BARRONS, BUT WE DON'T REMEMBER
THAT THERE WAS A PERIOD CALLED THE LONG DEPRESSION IN THAT ERA,
OKAY?
WHILE WE HAD ENORMOUS INEQUALITY OF WEALTH, WE HAD A LONG
DEPRESSION.
YOU LOOK FORWARD TO THE NEXT PERIOD WHERE WE HAD WEALTH IN
THE 1920s, AND WE WOUND OUT WITH BLACK FRIDAY AND THE DEPRESSION.
TAKE A LOOK AT AMERICA TODAY.
WE HAVE HIGH INEQUALITY OF WEALTH AND WE HAVE THE GREAT
RECESSION.
WHO KNOWS WHETHER OR NOT WE HAVE ANOTHER FINANCIAL COLLAPSE.
I DON'T BELIEVE THE DODD-FRANK BILL DEALT EFFECTIVELY WITH THE
PROBLEM OF BANKS TOO BIG TO FAIL.
I'M NOT SURE WE'RE OUT OF THE WOODS ON THAT ONE YET.
WHAT YOU SEE IS HIGH CONCENTRATIONS OF WEALTH BEING
ACCOMPANIED BY LONG PERIODS OF UNEMPLOYMENT
UNEMPLOYMENT, DEPRESSION, RECESSION, FINANCIAL COLLAPSE.
NOT A GOOD COMBINATION.
I MEAN, THE HISTORICAL RECORD IS OUT THERE.
WE ACTUALLY HAVE TO TAKE A FEW MOMENTS TO ACTUALLY GO BACK AND
LOOK AT IT AND SAY, OKAY.
NOW WHAT DO WE DO?
>> BEFORE I PICK UP MY PITCHFORK AND TORCH, CAN YOU EXPLAIN WHY
YOUR CONCLUSIONS ARE SUCH A HARD SELL TO MOST PEOPLE?
>> I GUESS I'M NOT VERY GOOD AT IT.
[ LAUGHTER ] I'M TRYING REAL HARD.
I REALLY APPRECIATE THE QUESTION.
I DON'T KNOW WHETHER THIS IS THE MOMENT WHERE WE SHOULD STOP.
>> WE HAVE ONE MORE QUESTION AFTER THIS.
>> I WANT TO END WITH THIS QUESTION, BECAUSE I WANT TO COME
BACK TO THAT.
CAN YOU DO THAT?
>> OKAY.
BEFORE I ASK THE NEXT QUESTION, LET ME REMIND YOU THAT ON
FEBRUARY 25th WE'LL HAVE THE NEXT THOMPSON FORUM, WHICH WILL
BE THE CHUCK AND LINDA WILSON DIALOGUE.
THE TOPIC FOR THAT DIALOGUE IS THE AMERICAN MILITARY: WAR AND
PEACE, SPENDING AND POLITICS.
IT WILL FEATURE PROFESSOR ANDREW BASOVICH OF WASHINGTON
UNIVERSITY AND DEREK SHALEY IN THE DEPARTMENT OF DEFENSE.
AFTER WE ADJOURN DOWN IN THE LOBBY YOU WILL HAVE THE
OPPORTUNITY TO PURCHASE HEDRICK SMITH'S BOOK, AND HE'LL BE THERE
TO SIGN HIS BOOK FOR YOU.
>> VERY GENEROUS THOUGHT.
>> NOW, LET ME TURN A COMMENT INTO A QUESTION, AND THEN YOU
CAN COME BACK TO THE OTHER QUESTION.
>> OKAY.
>> THE COMMENT IS, PLEASE RUN FOR PRESIDENT IN 2016.
>> YOU THINK I'M NUTS?
[ APPLAUSE ] I GOT MORE SENSE THAN THAT.
YOU WANT TO READ THAT AGAIN?
THE PITCHFORK QUESTION.
>> WHY IS IT SUCH A HARD SELL TO MOST PEOPLE --
>> LET ME TAKE THE QUESTION HEAD-ON SERIOUSLY AND THEN SAY A
COUPLE OF THINGS I WANT TO SAY AT THE END HERE.
I THINK THAT THE HARD SELL REFLECTS THE FACT THAT PEOPLE
HAVE A VERY HARD TIME PUTTING THE PICTURE TOGETHER.
I TRIED VERY HARD TONIGHT, AND I'VE TRIED VERY HARD IN THE BOOK
AND VERY HARD FOR MYSELF AS WELL AS FOR YOU.
I'M TRYING TO UNDERSTAND WHAT THE HECK HAS HAPPENED OVER THE
LAST 30 OR 40 YEARS IN OUR COUNTRY.
I THINK THAT AS JOURNALISTS, MY COLLEAGUES AND I HAVE FAILED
YOU.
I DON'T THINK WE HAVE DONE THAT.
WE HAVE A SHORT-TERM JOURNALISM FASCINATED WITH THE DAY.
WE'RE INTERESTED IN ENTERTAINING US, EXCEPT WE'RE WILLING TO BORE
YOU END LITERALLY BY REPEATING EVERY SINGLE DAY, EVERY SINGLE
NEWS CYCLE WHAT BOEHNER AND WHAT THE WHITE HOUSE SPOKESMAN SAYS,
EVEN THOUGH THEY DON'T SAY ANYTHING BUT WHAT THEY SAID IN
THE PREVIOUS HOUR.
I DON'T THINK THERE'S ENOUGH WORK BEING DONE BY PEOPLE TO TRY
TO EXPLAIN TO PEOPLE OUR STORY AND PUT THINGS IN CONTEXT.
I THINK THE REASON WHY IT'S HARD -- THAT'S -- YOU KNOW, THAT
IS RIGHTLY OUR FAULT.
IT'S PARTLY YOUR FAULT BECAUSE YOU BUY MEDIA YOU SHOULDN'T BE
BUYING.
THERE ARE PLACES IN THE MEDIA THAT ARE TRYING HARD TO DO THIS,
AND THEY'RE NOT DOING IT AS WELL AS THEY SHOULD.
THEY'RE TRYING HARD, BUT THE RATINGS AND THE ODD ANSWERS ARE
STILL GOING AND THE BLOGSPHERE IS FULL OF UTTER NONSENSE.
IT GOES ON AND ON.
PART IS AN INTERCHANGE OF THE DIALOGUE PUBLICLY WE HAVE IS NOT
VERY GOOD.
I THINK PEOPLE HAVE A VERY HARD TIME UNDERSTANDING WHAT'S IN THE
SELF-INTEREST.
I THINK THE IDEA THAT IF YOU LOWER TAXES YOU'LL HAVE MORE
GROWTH IS A VERY SEDUCTIVE IDEA AND ONE OF A BUNCH OF SEDUCTIVE
IDEAS.
IT DOESN'T HAPPEN TO BE RIGHT, BUT IT TAKES A LOT OF THOUGHT
AND CARE, IT TAKES A REALLY DESPERATE EFFORT TO BE AS HONEST
AS YOU CAN ABOUT IT.
THAT DOESN'T MEAN YOU'RE GOING TO BE PERFECT IN YOUR ANSWER TO
GET AT THAT.
I THINK THE STORY IS HARD TO TELL.
WHAT ENCOURAGES ME AND I'VE BEEN GOING AROUND SINCE THIS BOOK
CAME OUT FOR THE LAST YEAR DOING MUCH MORE THAN I EXPECTED TO DO
AND WHAT ENCOURAGES ME IS TWO THINGS.
THE AUDIENCES LIKE YOU COME OUT, AND YOU'RE HERE AND STAYING HERE
THROUGH THE QUESTION PERIOD BECAUSE YOU CARE DESPERATELY AND
YOU WANT TO KNOW.
YOU'VE GOT A HUNCH I MIGHT HAVE A FEW THINGS TO TELL YOU THAT
WILL BE USEFUL.
I THINK THE FACT THAT YOU CARE AND YOU WANT TO BE HERE AND WANT
TO PARTICIPATE IN THIS IS VERY IMPORTANT.
I JUST LEFT COLORADO, AND THE AUDIENCE THERE WAS 500 OR 600
AND I TALKED TO SEVERAL HUNDRED STUDENTS.
I'M GOING ON TO SEATTLE AND WASHINGTON STATE NEXT WEEK, AND
I WAS UP IN NEW HAMPSHIRE TWO WEEKS AGO.
I'M NOT RUNNING FOR OFFICE.
I NEED TO JUST SAY WHAT I THINK YOU PROBABLY SENSE.
I CARE INTENSELY, AND I THINK WE'RE IN TERRIBLE TROUBLE.
I THINK WE HAVE TO DO SOMETHING ABOUT IT.
WE CANNOT ANY LONGER GO ON SAYING, THEY'VE GOT TO FIX IT.
THEY'RE DOING IT WRONG.
AS LONG AS OUR POLITICAL DISCOURSE TODAY IS ABOUT THE
THIRD PERSON AND NOT ABOUT THE FIRST PERSON, NOTHING'S GOING TO
CHANGE.
YOU ACTUALLY HAVE TO DO WHAT I SAID EARLIER.
THEY HAVE TO FIGURE OUT WHAT WE CAN DO IN OUR AREA, IN OUR
ARENA, AND WE HAVE TO GET MOBILIZED.
WE HAVE TO DO WHAT THE CIVIL RIGHTS MOVEMENT DID AND THE
WOMEN'S MOVEMENT AND THE ENVIRONMENTAL MOVEMENT AND THOSE
MOVEMENTS.
THERE'S AN EXAMPLE.
A FRIEND OF MINE IS ERNIE CORTEZ, HE'S A LATINO ORGANIZER
IN TEXAS AND NEW MEXICO AND ARIZONA AND SOUTHERN CALIFORNIA.
HE SAID THIS TO ME, AND IT REALLY JUST KNOCKED MY SOCKS
OFF.
HE'S A VERY BRIGHT GUY.
HE SAID, YOU KNOW THAT OLD SAYING OF POWER CORRUPTS --
ABSOLUTE POWER CORRUPTS ABSOLUTELY.
HE SAID POWERLESSNESS ALSO CORRUPTS.
IT CORRUPTS DEMOCRACY AT THE CORE.
IF WE BELIEVE WE DON'T HAVE POWER, IF WE BELIEVE WE'RE
POWERLESS AND THE LOBBYISTS HAVE GOT A HOLD OF WASHINGTON AND THE
GRIP CAN'T BE BROKEN AND THE MONEY'S GOT HOLD OF OUR POLITICS
AND THE GRIP CAN'T BE BROKEN, AND THE MULTI-NATIONALS ARE NOT
SHARING THE WEALTH AND THAT WON'T CHANGE, IT WON'T CHANGE.
WE HAVE TO ORGANIZE OURSELVES AND ORGANIZE MONEY AND POWER AND
ORGANIZE PEOPLE POWER.
WE HAVE TO DO IT.
WE HAVE TO BELIEVE WE CAN DO IT.
THEN WE'LL DO IT.
THANK YOU.
[ APPLAUSE ]