are more popular than the bill itself. but there's also a reason rooted in reality why many americans worry about obamacare. its cost. remember, most americans have health care. what they worry about is the cost of insuring 20 million to 30 million more people. and unless the mead yearic cost is slowed an expansion of coverage might remain unpopular no matter how it is explained. how is that going to happen? republican alternatives to obamacare such as they are, do have a strategy to control costs. get consumers to pay more for their health care. the basic idea is intuitively appealing. markets produce efficiencies, they presumably would do the same thing in health care. but the situation on the ground suggests that markets work imperfectly in this realm. a new study conducted by the pharmaceutical company novartis

and mckenzie and company shows a stunning difference among countries with regard to health care efficiency. for example, smoking rates are higher in france than in the united states. so the french population has higher rates of lung disease. yet, the french system is able to treat the disease far more effectively than happens in the united states. its levels of severity and fatality are three times lower than in this country. and yet, france spends eight times less on treatments per person than the u.s. system, eight times less. consider britain, which handles diabetes far more effectively than the u.s. while spending less than half of what we spend per person. the british system is five times more effective in managing diabetes than the united states is. to understand this issue better i spoke with daniel vasella, chairman and former chief

executive of novartis and physician by training. he's also frankly pro-market and pro-american, both of which occasionally have made him a target for criticism in europe. vasella emphasized that there's no single model that works best, but he explained that france and britain have been better at tackling diabetes and lung disease because they take a systemwide approach that gives all health care providers an incentive to focus on early detection and cost-effective treatments that make wellness the goal. so i asked him, is the lesson that only the government can produce systemwide improvements? vasella's brief answer was, yes, this is a case where you need government action. you see, economists have often written about the asymmetry of information. areas where consumers are not expert enough to be able to determine what product is best. evidence increasingly shows that this is true for health. after all, consumers freely make

the choice to smoke, eat junk food, and forego preventive care, all of which are highly likely to make them sick, force up their health care costs, and lower their quality of life. having us spend more of the money ourselves is not likely to solve the cost crisis in health care. let's get started. let's get right to our global panel. in london, ann applebaum, a foreign policy columnist for the "washington post." in paris, dominique mazi, founder of the french institute of international affairs. in singapore, the dean of the school of public policy at the national university over there. and also in london, mark malik brown was deputy sect genersecr general of the united nations and member of gordon brown's cabinet.

welcome to you all. let's start with the crisis. mark, you've dealt with these issues often and your former boss, kofi annan, is trying to broker some kind of settle investment syria. is he likely -- settlement in syria is he likely to be successful? >> you have to give diplomacy a chance though it may not finish the finish line. in the balkans, diplomacy went on too long and we didn't attorney a military solution soon enough. do think kofi annan has made progress. the russian and american positions in private are closer than they often appear in public. and still if there is a united international community, the regional neighbors plus russia and the united states and europe all rowing in the same direction on this, this is the best way to get the transition to a legitimate government that the country has.

>> dominique, in france there is less enthusiasm under hollande's government for an intervention in syria compared with nicolas sarkozy in libya. he led the charge in libya. >> yes, definitely. we have no money. there is no enthusiasm whatsoever for what would look like a much more difficult military adventure. and the shooting down of a turkish plane last week was a kind of warning by the syrian government -- don't try to deal with me what you did with libya. it won't work. >> anne applebaum, you just got back from libya. what is the perspective there about western interventions? >> well, the libyans would love to see western intervention because they feel in a way that this is part of their

revolution, too. i don't know that they're so focused on it at the moment because they're worried about their own elections which are strangely both very, very chaotic and very optimistic. it's a very strange moment in libya. it could still go either way. there's an enormous kind of gathering together of civil society, people wanting to make this work. at the same time, this is a country which hasn't had elections or political parties for 50 years. so it makes a kind of interesting template which maybe -- we can see how other countries follow or watch it. >> what does this look like to you on the other end of the world? do you think that -- how do t theations regard talk in the west about getting involved in syria? >> i think number one, let me emphasize that assad has to go because he's lost his legitimacy, and it's only a matter of time before he goes. at the same time, there isn't

any enthusiasm in asia for any kind of military intervention again in syria because if you look at what the west did in iraq, you look at even in libya, at the end of the day, can you show that any such military intervention will lead to better results? and there's no -- no one in the west to finish the job. if it starts, you'll have an incomplete problem again. >> mark, do you think that the russians are the key here, and can they be brought around? >> well, they're one of the keys. i think in a sense they've been a useful device for everybody. for the russians presenting themselves as the key has meant that diplomats have had to make their way to moscow and put moscow at the center of things again. and clearly they do have influence over assad. what's not clear is if they told him to go whether that would indeed be the decisive thing or whether the support of iran, the continued degree of support he has inside the country would let

him still hang on. but i think it's convenient for everybody to present russia as either having a veto on change or -- or at the very least being the key to it. i think frankly the russians will come into line on this. i don't think they like this public demand that assad's departure be spelled out so explicitly. but i think they as long-time syria watchers recognize he's finished, it's just a matter of when and how he goes. >> and when you look at the situation with iran, dominique moisi, are the europeans comfortable with what are now crippling sanctions on the iranians? is this a strategy that the europeans will stick to? because it seems as though iran is going to suffer some very, very serious economic consequences, not just the regime, but the whole country. >> yes. but there seems to be seen from

europe that the tougher the sanctions are, the less likely a military intervention will be. i think there is that logic which is shared, i believe, by the french and the americans. and i think there is now with hollande in power a line in paris which is probably more in tune with the line in washington, as if yesterday sarkozy was even tougher than the americans were. >> do you think this line is shared in china? beijing got a waiver on the issue of importing iranian oil. making the case that they had cut down their imports, but they still need iranian oil. do you think they're comfortable with where things are heading? >> let me say something quite

provocative here because -- it's important to get out of the western perception of this problem. the era when the west can go around changing governments is ending. western power has peaked. and from now on you'll go down. the only question is how are you going to change iranian behav r behavior. and i actually believe frankly that the only way to change iranian behavior is to engage the iranian regime. of course, this is unthinkable still in the west. but you asked about china. frankly, from china's point of view, the more the west isolates iran, the more iran becomes a gift to china. now that america said, okay, you can go ahead and buy oil, china is off the hook. and that's happening because it is impossible for america to impose the same sanctions on

chinese banks they can import in any other banks of the world. that's why they're getting away with. it you're presenting china with a geopolitical gift, and china will not accept it. >> we're going to take a short break. when we come back, the point about the decline of the west. we will talk about greece, the euro, and ask as we always do on international shows in america enough about the world, what does the world think of us? [ male announcer ] citi turns 200 this year. in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. so why should our anniversary matter to you? because for 200 years,

we've been helping ideas move from ambition to achievement. and the next great idea could be yours. ♪ and so too is the summer event. now get an incredible offer on the powerful, efficient c250 sport sedan with an agility control sport-tuned suspension. but hurry before this opportunity...disappears. ♪ the mercedes-benz summer event ends july 31st. ♪ ends july 31st. energy is being produced to power our lives.

while energy development comes with some risk, north america's natural gas producers are committed to safely and responsibly providing generations of cleaner-burning energy for our country, drilling thousands of feet below fresh water sources within self-contained well systems. and, using state-of-the-art monitoring technologies, rigorous practices help ensure our operations are safe and clean for our communities and the environment. we're america's natural gas. hey america, even though slisa rinna is wearing the new depend silhouette briefs for charity to prove how great the fit is even under a fantastic dress. the best protection now looks, fits and feels just like underwear. we invite you to get a free sample and try one on too. did you know honey nut cheerios is america's favorite cereal? oh, you're good! hey, did you know that honey nut cheerios is... oh you too! ooh, hey america's favorite cereal is... honey nut cheerios ok then off to iceland!

and we are back with anne app applebaum in london, mark malloch-brown in london. anne, you have written about the greek crisis that there really is no solution to it. no matter how you structure the deal, now matter what the rescue operation, greece is simply bankrupt bankrupt. is that right? >> yeah. i pointed out that greece's problem is to do with math. and the greek government is bankrupt, and the money has to come from somewhere.

and so therefore -- and right now it look like the money needs to come from germany. so therefore, greece needs to reach an agreement with germany. and that's created -- we've already seen, it's created all kinds of odd side effect in greek politics, the emergence of a far right, far left. all kinds of dissatisfaction. and i don't think -- there was a kind of sigh of relief recently when the greeks elected a kind of mainstream government in their recent round of elections. but i don't think the trouble with greek politics is over yet. >> mark malloch-brown, will this be solved? will the germans essentially agree to bail the greeks out understanding, as anne says, this is a very large bill that will never be repaid? >> well, look, i think the whole of this crisis is, you know, it's always one minute to midnight. and the germans come in and do something that buys a bit more time. unless there's a much more decisive intervention that goes much wider than europe, the money must be on anne's, i

think, belief that ultimately greece is going to fall out of the euro. it finds itself trapped. and from its point of view, overvalued currency, it's trapped in an austerity economic program. the combination is, it can't grow, it can't export. it faces an economy which is at best taking over. it's an unsustainable longer term situation. >> dominique moisi, what is going to happen in europe? francois hollande wants to change that austerity regime, but will he be able to? at the end of the day european countries, as anne apple baum says, they need to get the fiscal house in order. it's tough to say we don't care about that, we're going to spend our way out of this problem. >> well, i would say something as provocative as kishore. i think it would be premature to

bury europe right now. i think a lot of big investors are edging their bets between emerging countries and the west. they are in a way saying the virus is in europe, but the antibodies are probably stronger in the western world than they are in the emerging countries. so just wait. europe and the west may be slowly starting to do that, especially if they don't -- are falling under the guillotine in the next coming week or coming month. >> kishore mahbubani, when you look at this issue, and i'm going broaden it to the united states, do you think, you know, this is july 4th weekend. do you think that the rest of the world looks at the obama administration as having

restored some of the credibility of the united states? do you think that they look upon what -- you know, what america is doing now as showing a certain degree of leadership, whether it's in economic policy, whether it's in geopolitics? >> i find it quite frightening that so few american are aware that in terms, as jeff sachs said in a letter to the "financial times," the united states economy is going to become number two in the world in 3 1/2 years from now. now the rest of the world is preparing for a new world order slowly, carefully. and americans are not aware that this is happening. and here, unfortunately, the thing that's reverting -- that's keeping the rest of the world quite reverted is the fact that washington is so divided, so polarized at a time when they should be coming together. so everyone's waiting for the elections to be over. then we know, we hope something will come out of washington,

d.c. >> mark malloch-brown, you spent time to both sides of the atlantic. how does the united states look to you this july 4th weekend? >> not too bad. not too bad. i think it gets written off very prematurely. i think the extraordinary change in the energy scenario which will make it energy self-sufficient through the discovery of shale, tremendous changes in manufacturing in terms of the contribution of labor costs against intellectual property and transport costs mean that a certain amount of manufacturing is going home to america. and a fiscal deficit which is so dramatic that the politicians will have to sober up after the election in one way another, address it. so i think those long-time american virtues of reflexibility and difference don't discount them yet. i think america has another chapter in it. >> dominique moisi, frenchman from the country, legendary for

anti-americanism. you have the last word. >> well, i'm like mark. i think by the end of the day america, to me, looks better than china because its fundamentals are probably righter. >> thank you all. fantastic global panel. up next, what in the world? i'll give you one reason why america has a big advantage over china. right back. ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 let's talk about market volatility. ttd#: 1-800-345-2550 in times like these, it can be tough to know which ttd#: 1-800-345-2550 way the wind is blowing. ttd#: 1-800-345-2550 at charles schwab, we're ready with objective insights about ttd#: 1-800-345-2550 the present market and economic conditions. ttd#: 1-800-345-2550 and can help turn those insights into ttd#: 1-800-345-2550 a plan of action that's right for you. ttd#: 1-800-345-2550 so don't let the current situation take you off course. ttd#: 1-800-345-2550 talk to chuck. ttd#: 1-800-345-2550

there it is ! there it is ! where ? where ? it's getting away ! where is it ? it's gone. we'll find it. any day can be an adventure. that's why we got a subaru. love wherever the road takes you. wow, there it is.

throughout our entire lives. ♪ one a day women's 50+ is a complete multi-vitamin designed for women's health concerns as we age. ♪ it has more of seven antioxidants to support cell health. that's one a day women's 50+ healthy advantage.

now for our "what in the world" segment. i was pained recently to read the tragic story of a chinese woman who was seven months pregnant but already had one child. local officials forced her to abort. the story could have ended there, another loss, another sad story. but her relatives posted graphic images of her fetus on the internet. the pictures went viral, forcing government officials to apologize. the story led to a government-affiliated think tank calling for change. writing in the "china economic times," it suggested beijing should switch to a two-child policy. even a few years ago, it would have taken a very brave chinese thinker to pose that question in public. now there is public discussion about china's one-child policy. could it actually change? when the one-child rule was first introduced in 1979,

china's leaders were reacting to an unprecedented population boom. from 540 million to 960 million people in just under 30 years. and this was happening while china was one of the poorest countries in the world with little prospect of economic growth. with certain exceptions, the policy was meant to restrict married urban couples to having only one child. officials sometimes resorted to extreme measures to implement the rules, but do they make sense anymore? leaving aside the immoral practice of forced abortions, china is facing a demographic disaster. china is going to get old before it gets rich. right now only 8.9% of chinese are over the age of 65. compare that to the american ratio of about 13%. but come 2050, china's percentage of elderly people will overtake that was america's, rising to 26%, which

is more than japan's right now. look at the median age over time in china. it's gone from 22 in 1980, rising steadily upward to 35 now, roughly the figure for a rich country like america, not a developing society like china. but continue the projection until 2050, and the numbers get even more troubling for beijing. while the u.s. will have a median age of 40, china's will be closer to 50. so half of all chinese will be over the age of 50. the implications are immense. china's work force will shrink, it will no longer be the world's factory. all those older people will need to be supported by their families or by the state. and china will likely need to import workers instead of exporting them, and china's not exactly an immigrant-friendly society. societies with fewer young become less dynamic, less risk taking, and less adventurous.

there's one more thing -- china's one-child policy has been especially brutal on women. p by one account, there are 123 male children for every 100 females under the age of 4. imagine what happens when they grow up. too many men, not enough potential spouses. and remember, countries with male youth have historically seen civil wars and revolutions. chinese officials claim the one-child policy has prevented the births of 400 million children. they point to it as one of the reasons why the state has been able to lift millions out of poverty. that may be so, but the policy is now a burden, not a benefit. the rules have been relaxed in some ways, but no formal reversal is policy until beige's next set of leaders assume power next year. even then it will take much courage. this is actually a fascinating, real-life example of the problems with centralized

authoritarian regimes even when they're as well run as china's is. when they make good decisions on economic policy, for example, they are rapidly implemented and well executed. but the same is true when they make a bad decision or a decision that no longer makes much sense. that seems to be the case with the one-child policy. we will be back. up next, the man who is laying claim to mexico's presidency. we'll talk about the drug war, immigration, the economy, and more. right back. ♪ this is our pool. ♪ our fireworks. ♪ and our slip and slide. you have your idea of summer fun, and we have ours. now during the summer event get an exceptionally engineered mercedes-benz for an exceptional price. but hurry, this offer ends july 31st. for an exceptional price. by what's getting done. measure commitment the twenty billion dollars bp committed

has helped fund economic and environmental recovery. long-term, bp's made a five hundred million dollar commitment to support scientists studying the environment. and the gulf is open for business - the beaches are beautiful, the seafood is delicious. last year, many areas even reported record tourism seasons. the progress continues... but that doesn't mean our job is done. we're still committed to seeing this through. starts with arthritis pain and a choice. take tylenol or take aleve, the #1 recommended pain reliever by orthopedic doctors. just two aleve can keep pain away all day. back to the news. just two aleve can keep pain away all day. this is new york state. we built the first railway and the first trade route to the west. we built the tallest skyscrapers, the greatest empires. we pushed the country forward. then, some said, we lost our edge.

we couldn't match the pace of the new business world. well today, there's a new new york state. one that's working to attract businesses and create jobs. build energy highways and high-tech centers. nurture start-ups and small businesses. reduce tax burdens and provide the lowest middle class tax rate in 58 years. once again, new york state is a place where innovation meets determination and where businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com. i think we should see other people. in fact, i'm already seeing your best friend, justin. ♪ i would've appreciated a proactive update on the status of our relationship. who do you think i am, tim? quicken loans? at quicken loans, we provide you with proactive updates

on the status of your home loan. and our innovative online tools ensure that you're always in the loop. one more way quicken loans is engineered to amaze. ensure that you're always in the loop. hethey don't need one,gh wes, clay and demarcus tried on the new depend real fit briefs for charity to prove how great the fit is even while playing pro football. the best protection now looks, fits and feels just like underwear. get a free sample and try one on for yourself. we asked total strangers to watch it for us. thank you so much, i appreciate it, i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money ? if your bank takes more money than a stranger, you need an ally. ally bank. no nonsense. just people sense.

i'm candy crowley in washington. "fareed zakaria gps" will be back in 90 seconds. first a check of the top stories. it's another day of extreme heat for much of the u.s. at least 30 deaths are being blamed on triple-digit temperatures. to make matters worse, some 300,000 people are without air conditioning because of power outages. weather forecasters are expecting cooler temperatures over the next couple of days. secretary of state hillary clinton says syrian president bashar al assad's days are numbered. at a press conference in tokyo, clinton cited the growing strength of syria's opposition forces. she's in the midst of a 13-day trip that stops in france, afghanistan, egypt, and several asian countries. floods have killed at least 150 people in southern russia. heavy rains that began friday flooded homes while most people were asleep. survivors were rescued after climbing into trees and on rooftops. some 12,000 residents have been

displaced. those are your top stories. "reliable sources" is at the top of the hour. now back to "fareed zakaria gps." my next guest is the man who has by all accounts won the presidency of mexico. enrique pena nieto will take on a number of issues vital to mexicans, to americans, and to the world. what are his plans? well, mr. pena nieto joins me from mexico city. welcome, sir. >> translator: fareed, thank you very much for this great opportunity. greetings to all your audience. >> we are now in the sixth year of a drug war that president caldron announced in which 54,000 people have died. naturally, you campaigned on policy changes. but what i'm struck by, mr. president-elect, is the similarities. you say no treaties, no truces, no negotiations with the drug cartels. you promise to continue to fight

th them. we hired the former police chief of colombia, a country which went for a very tough strategy. so can we expect to see a continued bloody confrontation with the drug cartels? >> translator: look, fareed, what we seek now in our new strategy is to adjust what's been done up until now. it's not a radical change. it's to broaden the coverage and, above all, the emphasis i aspire to of reducing the violence in our country. >> but there can only be a reduction in violence, mr. president-elect, if the cartels also agree to a reduction in violence. if they keep fighting, you will simply be unilaterally disarming. >> translator: i'm persuaded that if we achieve the specialization in the work carried out by the various branches of the federal police and the inspector general's

offi office, waging war on immunity will allow us to combat crime. >> let me ask you about the last president of mexico who came from your party. ernesto zadilla. he with the former president of brazil, mr. cardoza, and other signed a report a few months ago in which they said the war on drugs that take on militarizing this, using violence, trying to interdict supplies, cartels, has clearly failed, and there's much evidence for this. the price of cocaine is 75% lower than it was 30 years ago. there are so many signs that this punitive approach, whether you use the police or use the army, has failed. shouldn't we be trying something that tackles more of the problem of the demand for drugs rather than the supply of drugs?

>> translator: yes, i do believe that we should open up a new debate regarding how to wage war on drug trafficking. personally, i'm not in favor of legalizing drugs. i'm not persuaded by that as an argument. however, let's open up a new debate, a review in which the u.s. plays a fundamental role in conducting this review. >> mr. president-elect, how do you react to the news that you read about in the united states with american -- certain states like arizona trying to put in place more and more punitive laws that allow the police to check whether or not people are from mexico or whether they are

u.s. citizens? the general atmosphere -- the rhetoric that you hear coming out of some parts of the republican party. as president of mexico, what is your message to americans about thi this? >> clearly it seems to me that these are discriminatory laws that don't recognize the contribution and the value of millions of immigrants, particularly from my country who make enormous contributions to the united states' economic development. it's clear to me that mexico must facilitate conditions for greater economic development through structural reforms, energy reforms, treasury reform, labor reform, in order to generate jobs and greater opportunities in my country so

that immigration is a decision and not a necessity for mexicans. >> you've spoken about your priorities, mr. president-elect, and the key one has been economic growth. you have among the lowest tax states of any oecd country. in other words, very few mexicans pay taxes, mexicans as individuals or as corporations. will you be able to change that? >> translatranslator: that's an one of the great structural reforms that i have committed to and which i propose to carry out is a treasury reform. which would allow fair taxation, simplified tax code, and to broaden the tax base which would strengthen the country's public

finances. >> mr. pena-ney y pena-nieto, p have you on -- >> translator: i will look forward, fareed, to our next meeting and appreciate the great opportunity to have this interview and to reach your audience. >> thank you, sir. up next, an issue that is in its very nature divisive. who creates jobs in america? the 1% or the 99%? we will have a debate. to prove how great the fit is even while playing pro football. the best protection now looks, fits and feels just like underwear. get a free sample and try one on for yourself. one is for a clean, wedomestic energy future that puts us in control. our abundant natural gas is already saving us money,

producing cleaner electricity, putting us to work here in america and supporting wind and solar. though all energy development comes with some risk, we're committed to safely and responsibly producing natural gas. it's not a dream. america's natural gas... putting us in control of our energy future, now. everyone has goals. take the steps to reach yours with us. with real advice for real goals. a u.s bank wealth management advisor can help you every step of the way. from big steps, to little steps. since 1863 we've helped guide our clients. so they can take the steps to help grow, preserve, and pass along there wealth. so there footsteps can help the next generation find there own path. all of us serving you. usbank we charge everything else... maybe it's time to recharge the human battery.

only the beautyrest recharge sleep system combines the comfort of aircool memory foam layered on top of beautyrest pocketed coils to promote proper sleeping posture all night long. the revolutionary recharge sleep system from beautyrest... it's you, fully charged. get a free set of sheets when you buy a select beautyrest mattress. hurry, offer ends soon. i tell mike what i can spend. i do my best to make that work. we're driving safely. and sue saved money on brakes. now that's personal pricing.

with the unemployment rate as high as it still is, a crucial question that must be answered is -- who creates jobs? is it the 1% or middle-class consumers? that's at the heart of the debate we're going to have today. i'm joined by two business leaders on. my right is ed carnard, former bane capital partner and unabashed member of the so-called 1%. and he says it is he and his colleagues who are largely responsible for job creation. nick hanour is an entrepreneur and venture capitalist, also a member of the 1%. he says that when business people take credit for creating jobs, it's like squirrels taking credit for evolution. so let's start, ed's got a book out. we've had him on the show before. you get the first word. why is it like squirrels taking credit for evolution? >> look, if investment was the key, then -- then there would be apple stores in somalia, and there would be a bane cin capit

office in bangladesh. the goose that lays the golden egg is not people like ed and myself. we are a dime a dozen. the greatest economic achievement of the 20th century has been the creation of the american middle class. it is demand, it is customers that drive all economic activity. look, the world is awash in capital. american skoerpgds acorporation sitting on $2 trillion of cash. ed's firm alone has raised $35 billion in private equity. i'm in the venture capital business. you can fund any cockamamie idea. the world is awash in -- >> tell people in africa and india that the world is awash in capital. it's ridiculous. >> it's awash in capital. what we lack today are consumers. the only reason any company invests, oenthe only reason any company hires someone is because they believe they're going to have a customer for that. look, anyone who's ever run a

business knows that a capitalist hires more people only as a course of last resort. when there are no options available other than meeting increasing demand from customers. >> at some point presumably this logic does apply, which is that if the middle class, if the larger -- if the majority, if 80%, 90%, have lower and lower incomes, the fact that they don't have much purchasing power will affect demand, tell not? >> i think there's two problems with the argument. first of all, we know why there's no apple store in thailand, okay. there isn't a lot of capital per worker. there isn't a lot of training per worker. and there isn't a lot of innovation there compared to the u.s. that has driven incomes way up in the u.s. relative. and that's why we can afford apple computers and things like that. so if you don't have the investment in place, first of all, you don't get the consumption after the fact. now, you can run the math, and the assumption in the math is if you lower the incentives for risk taking, if you lower the investment that goes into risk taking, if you lower the capital, the equity that underwrites the risk taking, you

will get the kind of growth in the middle class that the u.s. has been able to achieve. well, we can look at real world experiments out there. and we don't find one where that's true. we have three great world sparchlts -- the u.s., europe, and japan. our median incomes are 25% higher than europe's. our median incomes have grown compared to europe and japan. we can spread the income over a lot of employees which we have because we've grown much faster and greater than they have grown theirs. or we can restrict the supply of labor, for example, and drive the wages up to a certain extent. but either way what matters is how much income you've created. and we are creating way more income at the median than europe and japan are creating. and that is because innovation is driving our economy so we can say, hey, we'll take away the incentives. we'll take away the equity. we'll take away the investment, but we'll get the growth anyway. god bless america with entrepreneurial spirit. >> ed and i are in violent agreement that in -- that innovation is an extraordinarily

important thing. where we diverge is this idea that we have to lower tax rates to these unbelievably low levels in order to have it. so this is my world. and the idea that you have to have a 15% capital gains tax rate in order for people to start companies, first of all, reduces people like me and other entrepreneurs to sociopathic money grubbers who only do what we do for a dollar. and that is categorically untrue. we start companies because we want to change the world, solve a problem, be king of the hill, be our own boss. by this logic, bill gates and steve jobs made a terrible mistake by starting their companies because tax rates were 2.5 or three times higher than they are now. >> let me ask what you would change. even if your argument is true, wouldn't it be fair to say the united states does provide enormous incentives for rich

people to invest, taxes are historically speaking at least, you know, much lower than they were in the 1970s when microsoft and apple were funded, marginal tax rates were 75%, capital gains rates i think were in the 40s. so do you think that tax rates need to be further reduceded? >> i would be very, very careful about reducing the incentives for risk takers and would be working very hard to lower the spending. and i think there's agreement on the left and the right that we have to -- i mean, we have to substantially reduce the spending over the long run. if we want to preserve the growth rates and the benefits that we have been able to provide for the middle class relative to europe and japan, if we want to continue that success. >> you want to invest -- i mean, the spending you're talking about is basically investment in the middle class. >> absolutely. but i want to address this risk thing for a moment. i find it absurd. i mean, if you think about the iconic so-called risk takers in our economy, bezos, zuckerberg,

gates, the google guys, imagine their lives, right? so the google guys -- god bless them, they've done a great thing. but they grew up in families where their parents are professors in mathematics and computer science. so far, no risk. they go to stanford university to get ph.d.'s in computer science. other than being born in the british royal family, no institution on earth more insulates you from risk than a ph.d. in computer science from stanford. at the best time in human history in the pest place in human history, they go off to live the dream and start an internet company in silicon valley in the mid '90s. so far, no risk. the money that goes into google comes from venture capitalists. you think maybe they took a risk, but not really because venture capitalists, like private equity people, make money whether the deal works or not. the only people who took a risk in this entire chain are the working people whose pension funds the venture capital -- venture capital company invested in google. because if google goes bankrupt,

those people will actually lose their money. this idea that we owe the so-called risk-takers special tax treatment is utterly absurd. it's just not true and not fair. >> you're making a moral argument as opposed to an economic argument. all you care about is how do you get the risk taking that benefits the middle dlaes lowest possible cost? >> i agree. >> thomas edison said success is 1% inspiration, 99% perspiration business is a team sport. it's not about two guys in stanford. it's been attracting talent to make the company successful. getting people to walk away from microsoft and google and companies they're walking away from. it doesn't matter whether it's moral or not. it's what's the economic cost to get guys to walk away to create the next google, the next facebook. it's not the after the fact payoff, billions of dollars, it's before the fact when they have a one in a million chance. and they recognize that unless they get a little more equity, they have very little chance of producing as much income and wealth as they would of in they

stayed at their job at google and facebook as opposed to walking away and taking the risk. we have been able to do it, and europe and japan have been singularly unsuccessful in accomplishing this. their most talented people go to the beach. our top 20%, the only people in the high wage economies. as you get more money, you work less. we only pay high wage economies where people are working more hours, not less. that is beneficial to the middle class and the working poor throughout the world. the u.s. innovation is what is driving the growth rate. >> thank you, gentlemen. wonderful debate. maybe we will have round two in the future. more when we come back. this is. ♪ this is our pool. ♪ our fireworks. ♪ and our slip and slide. you have your idea of summer fun, and we have ours. now during the summer event get an exceptionally engineered mercedes-benz for an exceptional price.

but hurry, this offer ends july 31st. for an exceptional price. hey america, even though slisa rinna is wearing the new depend silhouette briefs for charity to prove how great the fit is even under a fantastic dress. the best protection now looks, fits and feels just like underwear. we invite you to get a free sample and try one on too. did you know honey nut cheerios is america's favorite cereal? oh, you're good! hey, did you know that honey nut cheerios is... oh you too! ooh, hey america's favorite cereal is... honey nut cheerios ok then off to iceland!

the calcium they take because they don't take it with food. switch to citracal maximum plus d. it's the only calcium supplement that can be taken with or without food. that's why my doctor recommends citracal maximum. it's all about absorption.

china and europe's central bank both cut their main interest rates this week on the same day. europe's rate is now .75%, and the u.s. fed rate is even lower, .2 %. so my question for the week is -- what is china's benchmark interest rate? is it, a, .75%? b, 3%? c, 6%? d, 9%? stay tuned, and we'll tell you the correct answer. go to cnn.com/fareed for more of the gps challenge and lots of insight and analysis. and follow us on twitter and facebook. also remember, if you miss a show, go to itunes. you can get the audio podcast for free, or you can buy the video version. go directly there, type itunes.com/fareed into your

browser. instead of one book this week, we're going to give you five of our recent choices. think of it as summer reading. just don't think of it as homework. these are all fun reads. the economist tim harford's book "adapt" offers a new approach to solving problems in your personal life, your career, your business. franklin and winston, "an intimate portrait of an epic friendship" by john meacham. one of my favorites. in the campaign season, one of the best presidential campaign books ever written was, "the making of the president: 1960." by theodore white. a work of fiction about iran's nuclear program and very good fiction at that, check out david i dna tius' "the increment. " and my favorite, k"the post american world." if you like the show, i think you'll like the book. they say it takes two to tango. ♪

but two tank tangoing? oh, and here tanks doing a pirouette. and there, a jete. all parts part of a tank ballet directed by the bolshoi ballet. military hardware and ballet, two of russia's surviving strengths. this exposition held recently outside moscow wasn't about art. ♪ >> it was about commerce. russia was showing off its military technology, looking to impress potential buyers. one has to assume president assad had to decline the invitation. but that's okay because russia's best customers are not in the middle east but rather to the southeast, india, vietnam, china. asia is rising and arming up with defense budgets soaring across the region.

and moscow is benefiting. though not as much as washington which is, of course, the world's biggest arms seller. the correct answer to our "gps" challenge question was c. china's central bank lowered its main interest rate to 6% this week. unlike in the united states, emerging economies like brazil, india, and china have kept interest rates high. that gives them a secret weapon in their arsenal. they can lower rates if growth continues to slow. thanks to all of you for being part of my program this week. i will see you next week. stay tuned for "reliable sources." it wasn't exactly stunning news, but it was news he had never before publicly acknowledged. when anderson cooper said, yes, i'm gay, he didn't do it in front of the cameras where he makes a living but in an e-mail. "i've always been open and honest about this part of my life with my friends, my family, my colleagues. in a perfect world, i don't think it's anyone else's

business. but i do think there is value in standing up and being counted." so is it any of our collective business? and why did the cnn anchor finally feel compelled to come forward? rupert murdoch chides mitt romney on twitter, and his "wall street journal" follows up by slamming the candidate. is the media mogul leading a right-wing revolt against romney? the "politico" reporter who lost his job after making racially charged comments on more than. we'll talk to joe williams about what happened. plus, we all thought we knew the story of barack obama's early years. but thanks to four years of relentless reporting, david mariness has cost it in a whole new light. >> what obsessed me were two things to start with -- the world that made him. sort of the randomness of his existence, and the ability to write about the whole world through that story. and then how he remade himself. >> a conversation about his book on the president. i'm hurd kurt-- i'm howard kurt and this is "reliable sources."