hospital in the city is one of the few places holding out with gadhafi loyalists. harsh words from syria's foreign minister to countries that appear unsympathetic to his government, saying syria will take strong measures against any country that recognizes an opposition council that's been formed in turkey. and those are today's top stories. thanks for watching "state of the union." i'm candy crowley in washington. up next for our viewers in the u.s., "fareed zakaria gps." this is "gps," the "global public square." welcome to viewers in the united states and around the world, i'm fareed zakaria. we have a really important show today. we're going to take an in-depth look at the u.s. economy from four crucial angles. first up, the big picture. and it's scary. from martin wolf of "the financial times." then a snapshot of the economy from starbucks chairman and ceo howard shultz. next up, the u.s. economy's breaking point.

where are we weak incentive that's what the author of "money ball" and "the blind side, "michael lewis, will give his insights on. finally, solutions, what will fix the problems that ail us? i'll talk to tom freedman of "the new york times" about his book. also, want to see the hottest new thing on the globe? take a trip to mumbai or shanghai. i'll explain. and of course a few thought on steve jobs. first, here's my take. barack obama busy apparently committed blasphemy. in an interview in florida last week, he dared to say that america had gotten soft. the denunciations came in fast and furious. >> the american people are pl plenty tough. what we've got is a soft public. it's not that we've become soft. it's that he's on our shoulders, and he's too heavy. >> if you watch the clip, here's what the president actually said. >> the way i think about it is, you know, this is a great, great

country that had gotten a little soft, and we didn't have the same competitive edge that we needed over the last couple of decades. we need to get back on track. >> isn't this self-evidently true? and isn't this what conservatives have been saying for decade? the evidence on the topic is pretty clear. the united states is slipping by most measures of global competitiveness. in category after category, actual venture capital funding, research and development, america has dropped well behind countries like japan, south korea, and sweden. the information, technology, and innovation foundation measures 39 countries on their efforts to improve competitive not over the last decade. america comes in next to last. perhaps the most crucial measure of our ability to compete in a global economy is our educational level, especially in science, math, and engineering. a generation ago, america had

the highest percent of college graduates in the world. today we are ninth and falling. in 2004, only 6% of u.s. degrees were awarded in engineering, and is half the average for rich country. in japan, it's 20%. in germany, it's 16%. the great scholar daniel bell once summed up the essence of the protestant ethic in the west -- delayed gratification. the ability to save and invest today for a better tomorrow. that's been at the heart of every society's leap from foster plenty. and america was a country marked by this ethic. let me give you three example. in the 1950s, household debt in america was just 34% of our disposable income. today, it is 115% of disposable income. we're all maxed out on credit cards. over the same period, investment in infrastructure and r&d

spending are both down by a full percent of gdp. today the federal government spends $4 on every adult over 65 compared with $1 for every child under 18. every level of government now spends less money investing for the future and more fueling consumption for the present. conservatives used to believe in confronting hard truths, not succumbing to comforting fairy tales. some still do. in a bracing essay in the right wing "national review," co-founder of paypal and politically active libertarian describes quite well how america has, well, gone soft. he notes that the economy hasn't been performing well for decade, that median wage have been stagnating. he argues that the country's redskin ovation culture has begun to decay, corroded by a widespread search for easy progress and quick fixes. in our hearts and minds, he writes, we know that desperate

optimism will not save us. that's what the feel-good mantras you hear so often these days sound like. desperate optimism. for more on this, read my column in this week's "time" magazine or at time.com, and let's get started. we begin with the macro view from one of the world's great economic observers, martin wolf, chief economics commentator for "the financial times." martin, does it appear to you that there is any danger that the united states could fall into a double-dip recession? >> well, the answer i like to give is you can't really get into a double dip because it never really got out of the first recession. properly understood, this is true for the u.s. and really all the other major developed countries except for canada, their output in the most recent

quarter is still at or below where it was before the crisis started in 2008. they've never made a proper recovery. now, the question is -- could they start bouncing back down further, even further below the starting point over the next year or two? yes, that's perfectly possible in which case the slump-like condition, which is what i think of it now, could continue for many more years. >> and what gets us out of it? is it -- i mean, fundamentally? the average american keeps raising his savings rate. american savings rate is back up to -- up to about 5% now from 0 or negative 1. and is the feeling -- do you feel that probably what you're going to see is american consumers being extra cautious and, if you will, overshooting on the upside, say, i'm not going to spend again until i get my savings rate up to 6%, 7%, 8%? >> obviously policymakers have to stop making mistakes. they have to stop doing thing

that shakes people's confidence, shake people's confidence, and make them feel things aren't going to be managed in at least a moderately public way on both sides of the atlantic, including the united states. that's very, very important. second, i believe that we have to accept that there is going to be this very long-term process of healing as housing markets stabilize, investment in housing stock falling, this affects both sides of the atlantic. unemployment really stabilizes. and while the household's finances are cured. we have to accept that. and while that is happening, there has to be a compliment to very strong policy support, however unpopular and risky it is. that mean very aggressive monetary policy. very aggressive fiscal policy. >> so let's just -- back to what you said, martin, you think the government should be doing more to create jobs, building

infrastructure, providing tax credits to corporations for investment, and you think the federal reserve should be doing more of the kinds of thing it's been doing. iffer for example, the latest bout of further trying to loafer interest rates. but you realize, this is all unpopular in the united states right now. >> i agree. this is an incredibly controversial set of issues. i have personally absolutely no doubt that's what government should be doing. i think we in the west are making the mistake that the japanese made in about '97, tightening too soon. the mistake that roosevelt famously made in 1937 in the u.s. we are tightening before the private sector has healed, before the private sector is willing to spend. and i know this is an incredibly controversial view, but it seems to me simple common sense. you've got an extremely

deflationary recessionary backdrop. i don't know whether the opponent of -- opponents of stimulus are wanting the economy to contract. i wouldn't suggest that. but it seem an inevitable consequence of that. i think the ideas that your president put forward for his recent jobs package made lots of send to me. i just think it's too small. >> what do you think the lessons from britain are? because britain looked at its situation and decided that it had to create confidence in the markets. it had to -- engage in tightening, fiscal tightening. it cut its budget deficit. and it has had the effect of creating confidence in the bond markets. britain certainly has the highest credit rating of any european country. what has been the effect on the economy? >> i accept that we needed some such plan. but it was far too ambitious and far too inflexible, and the effect on the economy is quite clear. the economy stopped growing completely. it's utterly stagnant. but there's -- it seems to me

quite nunambiguous. the british experience, against exactly the same backdrop, very cautious private sector, very weak housing market, very -- very high savings in the private sector. the government has to be willing to spend. and as the government is cutting its deficits, the economy has basically become completely stagnant. and that's exactly what i predicted. and that's where we are. and i do hope the u.s. doesn't follow this example because for the world, the u.s. matters so much more. britain makes a mistake, everybody can live with it. if the united states goes back into a serious recession, which is something i really worry about, the effect on the whole world and the confidence in the u.s. economy and the western economies will be really very badly damaged. this is not some trivial sort of small local thing. this is a global -- of global significance if the u.s. does this. >> martin wolf, always a pleasure to have your insights.

i wish you were more optimistic. maybe that will happen next time. >> i wish i were, too. >> and we will be back. if this of a company, if this was a business, the business would be bankrupt. [ multiple snds ng melodic tune ] ♪ [ malennounc ] at northrop grumman, makthworld a feplace. th's value performance. northr gruan.

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with maximum-strength medicine and no embarrassing odor. break the grip of pain with aspercreme. so just what would a snapshot of the u.s. economy taken this week look like? my next guest has a fascinating perspective on that. he has more than 11,000 data points, that is how many cafes starbucks has in this country. my next deficit is the coffee chain's ceo and chairman, howard shultz. so thank you for being on. >> my pleasure. thank you. >> when you look around and you're getting data from everywhere, do you agree with ben bernanke who said this week that he thinks that the second quarter is going to be better than -- second half of the year is going to be better than the first half? that things are picking up? >> i'm not sure i agree with mr. bernanke. but i would say the question is

somewhat bifurcated on. one hand you've got 9% unemployment and significant pressure on consumer confidence. on the other side, starbucks is having its best year. and i think there is spending based on luxury products, affordable luxury, and there's two consumers. my concern in term of mr. bernanke's comments is just the crisis of confidence that exists as a result of this functionality in washington that is creating a cloud over the country and as a result of that, my confidence in the second half of the year is not as strong as what he would suggest. >> when you talk about the crisis of confidence, do you think that consumers are not spending money because they are shell-shocked from all the debt they have, because their houses and mortgages may be under water, or do you really think it's beyond that, and it's about this political climate in washington? >> i don't think there is a silver bullet to define why

customers are not spending or there is a level of no confidence in the country. having said that, i think if you would track the crisis of confidence after the debt ceiling debacle, i think you'd see that there is a straight line in terms of what is happening in america. americans reading the paper, listening to the news every single day, and all you hear is things getting worse and worse. and that has a psychological effect on consumer confidence. that's what consumer confidence is. then you have companies across the board that are sitting with $2 trillion, $3 trillion of cash on the balance sheet and not spending as a result of the fact that they have no confidence in the direction of the country. so this is -- the connective tissue of all this is a swirl and the swirl is pessimistic. >> the way you describe it, it feels as though it's a little apox on both your houses.

there are two approaches. the president is out with a jobs plan which is basically unemployment insurance extensions, tax breaks, cuts in the payroll tax, an infrastructure bill too modest for my taste, but still, it's something. on the republican side, people saying what you need more than anything else is to cut the -- cut government spending, cut the deficit. which of them would you prefer to see? >> well, i -- i don't think it's one versus the other. i think what you described is the problem. it's not one versus the other. it is we need cooperation, and we need co-authorship. we need a combination of both. let me take a different tact if i can. in the mid 1940s, something was created. it was significant, it was innovative, it was bold, and it was courageous. it was the marshall plan. now, let's take a step back. can you imagine the situation today where the marshall plan would have any opportunity whatsoever in this existing

political climate to succeed? and the answer unequivocally is no. i would suggest that our problems domestically are as great as the problems were when the marshall plan and president truman convinced america and a republican congress this was the right thing to do. we need a domestic agenda. and we need a forcing function that addresses the significant problems and, as tom friedman said in his book, we need truth-telling one and for us. tell us the truth. we don't have a $14 trillion deficit. it's $47 trillion. and it's things like that. unemployment in america is not 9.1% when you're african-american or hispanic. there's no access to credit for small businesses. >> you were a big supporter of president obama. you were a supporter of obama care. >> yes. >> is this -- does this suggest a kind of deep disappointment with the president? >> i'm not here to in any way

criticize the president or any members of congress or any party. i'm a registered democrat, but i'm an american. i'm deeply concerned. i'm profoundly disappointed with the direction the country is going. and the president is my president. i want him to succeed. >> what do you want him to do? suppose you had him -- assuming you've had these opportunities. what would you tell him to do? >> i think we need political courage and -- political courage and will right now. we need big, bold ideas. we're not going to solve these problems incrementally by putting band-aids on things. if this of a company, if this was a business, the business would be bankrupt. and you would have to do drastic things to override the system. we need transformation. and that transformation comes from leadership. we need decisiveness. i want to say something -- i know i'll be criticized for this. i don't think this is that hard. i don't. what's hard is when you get people in the room who have

ideology and re-election and polling and the elephant in the room is not the problem, it's self-interest. if this was a business and you had like-minded people who left their ego at the door to try and solve the problem, we would solve these problems. >> but you want to defund politicians, right? you have -- >> i do want to -- yes. >> you made this appeal that you want people to withhold campaign contributions. >> correct. >> what do you hope to achieve? >> i want to suspend contributions because i don't believe that writing a check based on a $4 billion election cycle in 2008 and an estimated $5.5 billion in 2012 is what we should be doing. instead, i want to send a powerful signal to washington that i and other like-minded ceos now, 150 of us, are dissatisfied with the status quo, and we are begging you to understand that we need solutions to significant problems. and i also think businesses and

corporations -- and this is where i feel differently than some of my brethren -- we have a deep responsibility, as well. and we have to do our part. we have to invest in the economy, and we have to create a sense of optimism that we still believe in america. america's best days are ahead of us, and we believe that investing in america despite the landscape and all the information is still the right thing to do. >> howard shultz, pleasure to have you on. >> thank you very much. >> we'll be right back. [ dog ] i am a rockstar. my coat? solid gold. my insides? pure platinum. [ female announcer ] a healthy outside starts inside. new iams simple & natural has chicken as its number one ingredient and zero fillers. it works inside for health you can see on the outside. [ dog ] i can't be a rockstar on the outside if i'm not one on the inside. [ female announcer ] new iams naturals. you'll like what's in them and love what's not. [ dog ] i am an iams dog.

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now for our "what in the world" segment. going to the movies is a great american pastime. whether it's "kung fu panda" or "harry potter" -- >> harry! >> there's always some extra cache in catching the films as soon as they're released. ♪ >> so if you're a "mission impossible" fan, you know that the latest installment of tom cruise's action series is opening soon. but if you want to be there for the first day, first show, don't go to los angeles to watch the world premiere in hollywood.

try new delhi or mumbai. you see, those protocol releases across india five days before it hits u.s. since mass. and it's not an isolated case. steven spielberg's film adaptation of the comic series "tinted" -- >> it may sound crazy -- >> opens in asia and the middle east more than a month before it hits american cinemas. now we are all used to a world in which events, ideas, and products start in the west and move east. is this the beginning of the great reversal? well, maybe. partly this is happening so companies can avoid piracy in asian countries. earlier when movies would arrive in chinese or indian cinemas two months late, many fans there would have resorted to pirated dvds. but there's also a major economic trend here that big companies are picking up on. overall u.s. consumer spending declined by 2% in 2010. the sector that declined the

most was entertainment by 7%. it makes sense when times are tough, you can't cut back that much on essentials like food and housing, so you spend less on things like movies and music. meanwhile, indians, for example, are moving in exactly the opposite direction. consumer spending is up in general, but on entertainment, it is up 14% in 2010. emerging economies including china and india account for half of global output, but only 1/3 of global consumption. this is changing, and it's not just the movie companies that have figured this out. when dell launched its new ultrathin laptop last week, it made china its first stop. the xps 14-z is being marketed as the world's thinnest laptop, but you won't be able to buy it in the u.s. yet. you have to wait. you see, china is now the world's biggest p.c. market, so it gets prioritized. look at the auto industry. the 2013 chevy malibu is going to launch in korea and china

before it hits dealers here in the usa. and g.m. has done that for years with a seary of new buicks. so there is a big shift at work here, a picture of the two-speed world. consumers in developing markets are growing in important in the eyes of the biggest global companies. here in america, consumer demand is stagnant. could things change? yes. but only if we get growth going again in the west and, particularly, in america. u.s. companies are currently holding more than $2 trillion in cash reserves. i saw a chart this week that illustrated in the starkest possible way why this needs to change. take a look. plots corporate spending along with employment numbers. the correlation is unmistakable and tight. as corporate investment goes up, employment goes up. so the question everyone in washington should be asking is -- how do we get corporations to invest more and sooner? looking at permanent change in tax and regulatory policy, let's

agree on five measures and pass them right away. this doesn't need to be mission impossible for america. and we don't even need tom cruise to fix our problems. we'll be right back. that's the problem, they want public services, and they don't want to pay for them. they want to cheat the future for the present. and that's -- that is not a financial problem, that's a cultural/moral problem. she has kind of funny looking toes. she's always touching my hair. and she does this dancing finger thing. [ male announcer ] with advanced technology from ge, now doctors can diagnose diseases like breast cancer on a cellular level. so that women, like kristy's mom, can get personalized treatment that's as unique as she is. [ kristy ] she's definitely not like other moms. yeah, my mom is pretty weird. ♪ yeah, my mom is pretty weird. ♪ ♪ ♪ when the things that you need ♪ ♪ come at just the right speed, that's logistics. ♪ ♪ medicine that can't wait legal briefs there by eight, ♪

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time for a check of today's top stories. the leaders of europe's two biggest economies are meeting today about europe's financial crisis. the meeting between german chancellor angela merkel and french president sarkozy comes amid fears that greece will default on at least some of its debts. that would put more pressure on the euro, the currency used by 17 european countries. fighters loyal to libya's new government say they're nearly in control of moammar gadhafi's hometown of sirte. a hospital in the city is one of the few places still holding out with gadhafi loyalists. and harsh words from syria's foreign minister to countries that appear unsympathetic to his government. he says syria will take strong measures against any country that recognizes an opposition council that's being formed in

turkey. new york mayor michael bloomberg says the occupy wall street protesters could destroy the jobs of working people. the occupy protests are now taking place in more than a dozen cities. those are your top stories, now back to "fareed zakaria gps." michael lewis is a storyteller extraordinaire. unfortunately for many of the characters, the stories here tells are non-ification new york stock exchange his book "boomerang," he's on a tour of the world's financial disasters. among his stops, iceland, ireland, and dprois. now he's setting his sights closer to home, in fact at home. lewis says his home state of california and others like it face the nightmare snare joe -- scenario.

welcome michael lewis. >> thanks for having me back. >> when you talk about ireland and greece, you write that the cause of the problems was the same. essentially too much cheap credit. too much easy money. but the consequences were different. why? >> well, this is absolutely right. the cause was the temptation of free money. that -- the banks ceased to do credit analysis. they became an element of the risk. one that happened, people could borrow money who shouldn't be able to borrow money. the temptation gets created. the societies responded to the temptation in very different ways. and i think the answer is they're very different places. >> let's talk about the cultural consequences of this easy credit. when you look at america, what did we do with the easy money that reflects our national character? >> you know, it's -- they're --

there are two obvious sort of events that are tied to the credit bubble. one is the way wall street went crazy. the way wall street basically systematically set about disguising what it was supposed to be revealing. disguising risk rather than revealing risk. and the way the financial sector basically abused the rest of society in a lot of ways. but the other thing that was -- that was a by product of the easy money was the way public employee unions abused the governments they work for. in what my state of california is the perfect example. public safety workers could cut deals with cities across california, they're going to bankrupt the cities. they're deals that can never be fulfilled. if you look at the behavior, the patterns of behavior in american life, the patterns of behavior

reflect this very -- really almost sensational ability to ignore long-term considerations and long-term interests for the sake of the short term. i think that short termism is the thing that is most revealed by what we've gone through. that we have not -- we've forgotten about the long term. >> you are absolutely right. when reading your kind of california, it's the politicians willing to make these promises to state employees, but the cost of which are pushed off because the pension and health care stuff which won't show up on the books for two decades. >> the future is undervalued. in all the calculations, the future is undervalued. and i think there's this notion alive in the land that we're just being misled. that -- that the problem is politicians. >> yeah. >> i think we get the democracy we deserve. and in california it's hard to argue otherwise. we have essentially direct democracy. all big fiscal decisions are made by the people.

and the idea that somehow in that system people aren't getting what they want -- they are getting what they want, that's the problem. they want public services and don't want to pay for them. they want to cheat the future for the present. and that's a -- that is not just -- that's not a financial problem. that's a cultural/moral problem. >> when you look at it, what you're describing in europe and the united states really, is the problem for democracy to impose any short-term pain for long-term gain. >> right. >> the kind of classic principle of the gym, the fitness club. no pain, no gain. so how do you make it happen? i mean, is there a path out for democracies? >> i hate to say this, but what i think happens is the only way -- the only way pain gets -- that solutions that are slightly painful get imposed are in time of great crisis. so i think the -- a crisis is necessary in order for change to occur. >> didn't we just have one? >> well, we had one. what did we do?

we took morphine. and we essentially injected -- >> more easy money. >> we did what we could to avoid the pain. and so i think that's what happens. we just get to a bigger crisis. and that's what this story is about. it is -- it's -- it is a companion volume to the big short saying that we are still in the same financial cries i because we didn't actually deal with it. what we did was essentially we nationalized problems across the world. and now the question is are governments credible. the question before was, are the banks credible. now banks are backed by the governments, are the governments credible. at some point you get to the end game. it's going to take years to play out, i bet. >> do you think the end game will take place at the local level in america? >> in america i do. and i'll tell you why. because the way the end game plays out financially, you can see it in europe. that what happens is a country gets itself into actual trouble.

and the markets get scared and the market raise the interest rates they charge the country which exacerbates the fiscal trouble. then you get the vicious spiral, and that's what greece is in now. if they had to borrow money in the open markets, they'd be paying 70%. they can't afford that. here the market are telling us what's going to happen. the u.s. treasury gets downgraded by standard and poor's and you would think the treasury bonds would fall. that people would demand a greater rate of interest from the u.s. treasury to lend it money. instead, people panic, and they buy u.s. treasury because they are still relatively the most riskless thing. and it -- a fight to safety goes to treasuries. that tells you that at the federal level we're going to be able to finance ourselves probably for a while no matter how badly we behave. that it's going to take a while before we enter a vicious cycle. i mean, decade. but at the local level, all it takes is a single wall street analyst to go on "60 minutes." meredith whitney did this. for a few minutes to suggest there might be defaults. there is a stampede out of

municipal bonds, and the rate of interest charged to municipalities goes through the roof. so the way the european sort of vicious cycle reprises itself in america is at the level of local finance. i think that's right. >> on that cheery note, michael lewis, thank you very much. boomerang and of course "money ball" in theater everywhere. we will be back. don't tell me we're going to get out of here with just hocus-pocus -- give me the truth. [ female announcer ] introducing crest complete whitening plus deep clean.

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tom friedman, pulitzer prize-winning columnist for the new york times spends a lot of time thinking about america's problems and solutions to those problems. he joins me now. thanks for joining me, tom. >> great to be here, fareed. >> tom, you have a new book, "that used to be us." and it came from something obama said, so many people feel that way when you read about the biggest bridge, the tallest building. you know, i began my book with a similar idea that you -- all the stuff used to be american. and now we take it for granted that we're not going to build the biggest bridge. again, we can't even repair the washington subway elevators. tell that story about the washington subway. >> well, i had come back from a

conference in china at this amazing conference center with multiple escalators in every corner, huge ones. i came back to bethesda, maryland, where i live, and called michael. my co-author, michael mandelbaum, and i was telling his wife about the center. she said, have you been to our subway stop lately because both escalator have been under repair for six months. basically -- >> which is as long as it had taken roughly to build the entire conference center in china. >> actually yeah. almost the exact same amount of time china took to build a conference center was taking us to repair two escalator with 21 stairs each. and our book is not about china, fareed. as you know, it's really about america. and we firmly believe china can succeed and we can succeed. by the way, china can fail and we can succeed. what china doesn't really matter, it's not what we do or what we don't do. the title, that used to be us. does it have a happy ending, we

tell people it does, we're just not sure if it's fiction or nonfiction. we're not falling behind china or brazil. we've gotten into the situation because we've gotten away from our formula for success. the thing that got us here, this great public/private partnership that was built on five pillars, education, educating people to use whatever the technology was from the supercomputer to the cot ingin in its day, infrastructure, have the world's best infrastructure. third, having the most open immigration policy to attract the most energetic and innovative immigrant. fourth, having the best rules to incentivize capital formation and investment. and last, government-funded research to push out the boundaries of science so our entrepreneur can pick off the best flowers. >> why did you go from a situation in the 1950s where the state of california had the best public education system in the world, k through the ph.d. programs through the university of berkeley, the best highways, best public park, best quality of life.

i remember growing up in india, california was utopia. it was the future. >> now it is again for america and in a different kind of way. >> you look at it and california spends four times as much on prisons as it does on the education budget. >> we gave way for the greatest generation which believed in save and invest to baby-boomer generation. my generation, yours, that believed in borrow and spend. and did not is what my friend doug simon calls the sustainable values. do thing in ways that sustain, but instead had situational values. do whatever the situation allows. just do it, the nike commercial, that's us, fareed. i give you $1 million mortgage even though you only have $10,000 in income and it's a sub prime mortgage, and all i ask is can you fog up a knife? i just do it because the situation says i can. we got into a values decline. secondly, we misinterpreted the end of the cold war. we thought it was a victory. it was a great victory, of

course. we thought it was a victory that meant we could put our feet up. in fact, what it did was unleash two billion people just like us with the same aspirations to connect, collaborate, and compete. okay? and then thirdly, tragically after 9/11, we had to spend a decade chasing the losers from globalization called al qaeda and the taliban, rather than the winners called india, china, and brazil. and you put it all together and the net result is if you look at that great formula for success that got us here, education, infrastructure, immigration, rules and government-funded research, the arrow is pointing down today on all five. that's why the only way out of our problem -- we keep debating this economic crisis, we need jobs, but it's not a three-year-old crisis. it started 20 years ago. that's why i've been writing. we can have a choice, a hard decade or bad century. we can roll up our sleeves and get back to the formula for success which is going to take hard work and cutting because we made promises we can't keep.

it's going to take taxing because we need more revenue because it's going to take investing in that formula for success. either weigh do that over the next decade in which case i think we'll be fine. or i think we're going to limp into the 21st century. >> how do you make the politics of that work? because i mean, western politics and american politics the last 30 or 40 years has really been about politicians promising voter more stuff. >> right. >> more benefits, more health care, more -- you know, better pensions. if you look at the way this which local politician get elected, they promise state employees fatter and fatter pensions and health care, which busts the budget but not that year -- in the out years when they're out of office. the mechanism by which politics works in this country is about promising people stuff. everything you're talking about is taking stuff away, reducing benefits, raising taxes. because all of this is getting the situation back under control. >> right. >> can -- can -- >> can we do that in a democratic success? i don't know.

i hope we test it, though, fareed. i think that if we don't, you see, the market or mother nature's going to do it for us basically. you know, when we do it, when we make the reforms ourselves, that's like going to a dentist. you have novocaine, you take out a rotten tooth. when the market does it, it's like having i caveman do your dental work with stone tools. the market will adjust, but there will be blooda the floor and a few other teeth will come out. if we don't do it, the market will do it for us. we argue in the book that basically, look, i think it's unfortunate the president is going down this track of attacking millionaires and whatnot. millionaires should pay taxes like everybody else. and i don't think that's the way, fareed. i think the only way to do it is with a program, okay, for basically cutting, taxing and investing, that has the following components -- first of all, people have to believe it's at the scale of the problem. don't tell me we're going to get out of here with this hocus-pocus. give me the truth.

people want to know the scale of the problem. two, they have to believe it is politically androgenous. takes the best republican ideas and democratic ideas. three, they have to believe it's fair. everybody's going to pay. the millionaires are going to pay, but everyone's going to pay something. we all got in this together. just because you make $250,000 or $249,000 or $50,000 or $20,000, everybody should pay something. everyone contributed to world war ii, everyone's got to dig out of this hole. lastly, fareed, in my view, it needs to be aspirational. it's about making us great. keeping us great. and to me the aspirational message for the president is it's obvious. we think what cape canaveral was to america in the 1960s, america should be to the world today. what was cape canaveral? a place we launched our moon shots. it's a different world now. we're not going to get to the next plateau by launching one moon shot anymore. we're going to get there by becoming the platform where everyone in the world wants to come and launch their moon shot. that's our vision for america,

that we identify ourselves as the place where everyone comes to start something, create something, collaborate with something, heal something. that's how you get people to come here to start thing. and if people start things, enough things here, then the butcher, the baker, and the candlestick maker will all have work, too. but if we don't do that, if we sit around saying i'm going to take it out of your hide or you've got more than me, i'll take it out of his hide, it's not aspirational, it's not at the scale of the problem. it won't work, and we'll limp into the 21st century. >> tom friedman, always a pleasure. >> thank you, fareed. >> and we will be back. at bayer, we're re-inventing aspirin for pain relief.

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the big news this week, of course, steve jobs' death. and i will offer my two cents in a moment. but first, a question about him for our "gps" challenge question. what was steve jobs' first job after dropping out of college? a, video game designer. b, pizza maker. c, typesetter. d, apple picker. stay tuned and we'll tell you the correct answer. go to cnn.com/gps for ten more questions.

and check out our web site, find interviews, essays by some of our favorite experts. you can follow us on twitter and facebook. this week's book is actually a magazine. pick up "time" magazine this week which has a superb cover essay by walter isaac son. having written prize-winning biographies of henry kissinger and albert einstein, he just finished a biography with jobs with jobs' cooperation. this week in "time," you get a special reflective essay from isaacson. and now for the last look. many of you have probably seen this extraordinary speech that steve jobs game at stanford university's 2005 commencement. >> so you have to trust that the dots will somehow connect in your future. you have to trust in something, your gut, destiny, life, karma, whatever, because believing that the dots will keg doconnect dow road will give you the confidence to follow your heart even when it veers off the

well-worth path and that will make all the difference. >> for me, it's the best commencement speech i've ever read or watched. it strikes me as simple and profound. the reason is because we live in a culture that so event rates success. people write books, everyone tries to learn about it. but the essence of steve jobs' address was that he learned from failure. the talk is about three failures -- dropping out of college, getting fired, and being diagnosed with cancer. and how he was able to give his life meaning, purpose, and richness as a consequence. >> sometimes life's going to hit you in the head with a brick. don't lose faith. i'm convinced that the only thing that kept me going was that i loved what i did. you've got to find what you love. >> everyone tries to copy and learn from success. it takes a very special person to learn from failure. if you haven't watched the address, go to our web site. the correct answer to