doc holliday and. virgil wanted to be a good lawman. i think the was very pragmatic about the way he enforced the law. preferred giving people chance to back away without embarrassing them or having their pride attacked. he did his best that day to let the cowboys settle down and ride on out of town, and finally felt forced to act. when he did, he called on the people who trusted most, his two brothers, and then of course there doc, who was never going to mission mist an owe indication like this. ...

>> if that had been the case, then something similar would have happened, i think, sometime soon. >> you can watch this and other programs online at booktv.org. >> up next on booktv, ha-joon chang takes a critical look at capitalism. this lasts about an hour, 20 minutes. >> my name is peter maravelis, i'm the events coordinator here at city lights bookstore, and i'd like to welcome you all to city lights, a literary landmark since 1953.

we're very happy to have with us ha-joon chang tonight, he teaches at the faculty of economics at the university of cambridge, and his books include the best-selling "bad samaritans." he is also the recipient of two very prestigious awards, the 2003 myrtle prize and the 2005 prize for advancing the frontiers of economics. but we're happy to celebrate tonight "23 things they don't tell you about capitalism," his new book out on bloomsbury books which is really kind of a forensic study of our ideas about capital. it aims to equip the reader with an understanding of how global capitalism works and doesn't work. professor chang offers us a realistic appraisal and many fresh insights into how to shift from a more plutocratic to humane economic agenda. so please join us in giving him a very warm welcome. [applause]

>> right, thank you, peter, for that very kind introduction. um, yes, i'm delighted to be here. i mean, it's one of those legendary places that one hears about all the time but never visits, so i'm very happy that i have a chance to actually give a talk here. let me change my glasses. i'm getting old. right. so you see the book in front of you. i mean, the book arguably has the weirdest title in the history of economics. [laughter] um, now, other people have asked me why 23 things. actually, a cottage industry has developed around guessing why 23. so one, well, at least in the

initial period one prominent theory was that i'm a big fan of michael jordan. i mean -- [laughter] you all know michael jordan, you know? but, actually, i'm a very big fan of baseball. but i don't watch basketball, so even though i have known who michael jordan is, i didn't realize that his number is 23. others thought that it went to the more esoteric -- [inaudible] apparently in numerology there's this theory which is called the 23 enigma which claims, exactly how i don't know, that all significant events in the human society are somehow connected to number 23. so there was that famous book, the series of nobles which i, of course, haven't read called the

ill lieu natty trilogy, and there was, apparently, this movie with jim carry called "the number 23." now, i don't know how this theory works, and i've never heard of it before people pointed this out to me. and some people had very charitable view of me and thought that i was so loony that i was implicitly referencing to the so-called 23 mathematical problems proposed by the great german mathematician david hillberg in the 20th centre. i've never heard of the guy, so -- [laughter] this theory, while if i said was true would put me in a very favorable light, meant that i had nothing to do with the title. actually, i mean, i can't tell you exactly how the number came

up. but then i worried that you might be all get, might all get disappointed by the story. well, 23 actually is a random number. how it came about was, you know, the working title was 20 things. and one day, i mean, i still remember exactly where it happened. you know, there's a station called taddington station -- paddington station in london, the paddington bear. the 450 from paddington, i mean, it's a famous location. and i was sitting in this french café called paul with my literary agent, this irish guy ivan mulcahy, and we are talking about this and that. and be suddenly we look -- and suddenly we looked at each other and said, 20, that's a bit boring, suspect it? so we start -- isn't it?

so we started playing with the numbers. and i said, look, i could probably write 30 things, 32 things or whatever, but that will make the book too big, so why don't we start at 25, yeah? and then we thought 25 is a bit obvious. [laughter] i told him, i don't like even numbers. [laughter] 21, well, too close to 20, huh? so that left 23, and the title was born. [laughter] now -- yeah, i know, that sounds a bit bizarre, doesn't it? sounds a bit like a sketch in monty python maybe. actually, in a way the story that, you know, i tell you this story because i didn't know a representative of the spirit with which the book was written.

my american publisher, bloomsbury usa, in his catalog described this book as a light-hearted book with a serious purpose. so in that same playful way in which that we came up with the title, book, the book has a lot of kind of jokes and kind of satire and things like that. to the extent that one of the reviewers described the book as joan maynard keynes' written by the argentine yang novelist -- [laughter] actually, the reviewer meant it as a criticism, but i took it as praise because, you know, i love boorhurst, and it's exactly the

kind of description that i wanted to get attached to the book. it is an economics book, but it's unusually interesting, sometimes bizarre. so let me tell you a few things about this book. the book will, basically, tell you that a lot of things that you thought you knew about capitalism are, at best, partial truth and at worst downright myth. now, in the book the chapters are called things, yeah? so thing one, thing two and thing three in the first of dr. seuss. do you remember "cat in the hat" with thing one and thing two? he had only two things, but i have 23 of them. [laughter] so thing one says that there's no such thing as a free market. now, a lot of you might be

puzzled by it. i mean, you might say we may like or dislike the free market, but, i mean, how, how can you say that we are liking or disliking something that doesn't exist, yeah? you know, it may be difficult to kind of scientifically define the free market, but we know it when we see one, yeah? in the same way that it's very difficult to define an elephant, but you know it when you see it. but i put to you that, actually, we cannot tell whether our market is truly free or not in any objective way. let me give you an example. back in 1819 a new law was proposed to regulate child labor in the british parliament.

now, the proposed law was incredibly weak by modern standards, so it said, well, very young children shouldn't work. now, how young is very young? any guess? well, you know, they were not that heartless -- [laughter] below 8, yeah, children cannot work, but from 9 they can, yeah? and then they said that between 9 and 16 that they were allowed to work, but their working hours should be restricted. any guess? >> twelve. >> that's right, 12 a day. that is considered being soft o, yeah? [laughter] so you find this regulation very light, especially given that this law is supposed to apply only to cotton factories which are considered exceptionally

harmful for children's health because it creates all of the dust, dust settles in the lungs, a lot of children working in cotton factories that died of lung disease, yeah? anyways, so there was this very light touch regulation, but a lot of people couldn't even take it. a lot of people argued, look, this is such a fundamental effrontery to the principle of freedom of contract which is that the foundation -- which is at the foundation of a free economy. these children want to work, these people want to employ them, what is your problem? few people today even including the most enthusiastic supporters of free market, at least in the rich countries, could argue that we need to bring back child labor in order to truly free our

labor market. but when you think about it, there are few labor market regulations that can have such a huge impact. you know, in many developing countries children under 16, 15 depending on the statistics account for nearly half the population, yeah? so they actually say that we ban child labor, you are ultimately ec colluding -- excluding almost half of the potential labor force there the labor market. economists debate whether minimum wage regulation, i mean, 1% more of the labor force unemployed or not. compared to that, yeah, i mean, this child labor thing's so huge. but very few people, at least in the rich countries, think that this is a big regulation. why? because they accept the values

underlying those regulations so totally that they now don't see them. so to put it in another way, the liability freedom -- the beauty of a freedom market is in the eyes of the beholder. there's no scientific way to define a free market. all markets have regulations, many regulations. we, depending on what we believe in, see the same market and one person says, yes, this is the free market. another person says, no, it has too many regulations. there are people who believe that banking industry in, say, the united states or the united kingdom is too unregulated,? there are a lot of other people who say they're too regulated,

the so-called free banking school that i believe the government should have no say in how much that capital banks should have, yeah? i mean, if they've mismanaged their money and go bankrupt, t their problem. -- it's their problem. you see the same labor market if you are in favor of child labor regulation. yes, i mean, you say that the u.s. labor market is quite free market especially compared to the markets in europe, but if you believe that the child labor regulations are illegitimate, then you say it is a very heavily regulated market because you're excluding probably one-third of the labor force by decree. you think that the stock market is a free market, but can you

really -- [inaudible] with the wag of shares of your company in new york stock exchange and sell them on the doorsteps? no. you have to get listed, yeah? and can you just get listed if you want it? the no. you have to submit a lot of information, your detailed accounts for three, five, whatever years depending on the particular stock exchange we are talking about, yeah? when you get that listed, that doesn't mean that anyone can buy and sell it. no, you have to do it through certified traders and so on. so you call the stock market a free market only because you don't see these regulations, yeah? because you implicitly accept the values that these regulations end -- embody. free market economies like to portray all regulations as politically motivated interferences in the free workings of a natural system, but when there is no way to

scientifically define a free market, free market politicians are as political as any other politician. i mean, it is very important back to line because, you know, people who want regulation tend to be on the defensive. they say, well, the market doesn't work very well, we have to do something. no, it's not like that actually. all markets have regulations. it's really natural, but which regulations you see as legitimate. so thing one ends by saying that breaking away from the original market objectivity is the first step towards understanding capitalism, huh? is -- and then thing two gets even weirder and says companies should not be run in the interest of their owners.

now, how can i say that, you know? i mean, we have been told by many experts that, you know, the properties get properly taken care of only when they are clear owners, yeah? and since shareholders own companies, companies should be run in the interests of the shareholders, yeah? this is the well known proposition of shareholder value max myization famously propagated by mr. jack welch, the former ceo of general electric. now, the argument that companies should be run in the shareholders' interest may have made, actually, more sense in the old days when companies were basically owned by a small number of people if not a single individual.

but today in the system where all these companies have limited liabilities and have dispersed ownership, ie owned by hundreds of thousands if not millions of people, in this system despite being the legal owners most shareholders are actually the least committed to the long-term future of the company because they are free to leave, yeah? in cons -- contrast, other stakeholders in the company like the employees, the suppliers, the local community, they cannot leave the company -- i mean, not in the literal sense because, i mean, people like suppliers do not literally belong to the company. but they cannot leave the company in the metaphorical

sense that easily, huh? you have been supplying, i don't know, toyota, suddenly you want to switch to, i don't know, nissan or ford. it's not that easy, yeah? whereas if you're a shareholder, yeah, you can sell it with a click of your mouse, yeah? now, thises has made the shareholders -- well, not all shareholders, but short-term floating shareholders very impatient, yeah? they want result now, yeah? when? they want results yesterday before they could afford it. companies have to cater for their interests because a lot of them now that you have a lot of these floating shareholders. and in the last three decades with increasing financial deregulation, these floating shareholders have become even more powerful than, basically, hired managers like mr. jack

welch have decided to run the company in the interests of these short-term shareholders. so what do you do when you run the company in their interest? first of all, you maximize short-term profit, yeah? by squeezing if workers, squeezing the suppliers, not investing because, you know, if you don't invest, the result shows only five, ten years later today it makes you look good because you have a lot of cash, yeah? so you, first of all, maximize short-term profit even if it means that the whole thing -- [inaudible] because you're not investing in be shares, you're not investing in research, you're not investing in training. and once you have made those profits, you give an ever increasing share of the profit to these shareholders through increased dividend and share buybacks. so in the united states until

the 1990s dividends used to account for about 3545% of -- of --35-45% of corporate profit. now it's over 60%. so, basically, until the '70s the shareholders claimed through dividends about one-third of corporate profit. now they take away nearly two-thirds. as for share buyback, i mean, this is related even more -- [inaudible] in the 1980s, yes, there was buybacks, but this accounted for nearly 5% corporate profit. essentially it's kind of a short-term activity. i mean, do you buy back your own shares as you prop up the share prices, yeah? you occasionally do it, sometimes, i mean, have to use

these kinds of things. but the trouble is that in the recent period these share buybacks have become the proverbial tail that wags the dog. in 2007 90% of american corporate profit was used for share buyback. in 2008 the ratio was 208%. now we are entering boorhur srx t territory. this is real. you are spending two and a half times of your profit to buy back these shares which are, essentially, unproductive activities, yeah? and the result, well, we've seen it. the decline of giant american corporations. you know, general motors once used to produce millions of cars when japan, all the japanese

countries together produce is -- 100,000 cars. today the company has been, basically, hollowed out because they did everything to make money except making good car, yeah? i mean, truly. i mean, i have a lot of discussion in the book, but let's not get into that. so the decline of many american corporations that have to be seen in this perspective, and now even the proponents of this idea admit this. i mean, mr. jack welch at the famous guru of shareholder maximization recently came out and admitted that this idea of shareholder value maximization was, and i'm quoting him, the dumbest idea in the world, yeah? it's, obviously, too late to say that.

you have destroyed the economy, and now you say it was the dumbest idea in the world, yeah? thing three says something quite strange. it say most people in rich countries are paid more than they should. now, what do i mean by that? now, especially in the last three decades of free market capitalism we have been told that people are paid what they are worth. so we should not complain about income inequality. so if mr. blankfein and goldman sachs gets paid, yeah, $50 million a year, well, that's what happens only because he's worth that. if you are paid $10,000 as a cleaner, it must be that you're only worth that, yeah?

now, the natural tendency then is to, for people to project this into the bigger world and think that people in poor countries are poor because they are not very productive, yeah? i mean, it sounds quite obvious, but is it really true? to show that this is not quite the case, i talk about two bus drivers in the book. one guy's called rahm, and he drives his bus in new delhi, and another guy's called sven who does it in stockholm, yeah? sven gets paid about 50 times what rahm does, but is it because sven drives 50 times better? now, to begin it, i'm not sure

whether you could measure driving skills in that kind of way, and is it really only that one guy drives 50 times better than another. i mean, maybe it's true if you are comparing me with michael schumacher -- [laughter] but i don't think it's possible to say that there's such differences in driving skills between two regular bus drivers. now, actually, it's more than that because when you think about it, if anything rahm should be the more skilled driver because he has to, you know, do acrobatics every second of his driving. he has to dodge a cow, dodge the rickshaw, dodge the bicycles stacked three meters high, dodge the children, yeah? whereas sven can do his job as he know more or less how to drive straight, yeah? i mean, swedish drivers that

keep traffic moving very well, there are no cows on the street as far as i have seen. so, actually, how is it that this guy who is a much more skilled driver gets paid only one-fifth of what the other guy's being paid, yeah? well, the main reason, of course, is protectionism. in other words, immigration control. you know, the truth of the matter is if you totally free immigration, 80, 90% of the work force in rich countries can and probably will be displaced. and i'm not just talking about bus drivers and cleaners. i'm talking about bankers, engineers, medical doctors, economists. you know, i should know because i replaced a british guy. [laughter]

now, i'm not advocating a full legalization of immigration. i think that would do more harm than good. but, you know, if a free market economy is to be consistent, they should advocate it because they advocate full legalization of capital market, yeah? they advocate full legalization of trade in goods and services, then why not free market in labor, yeah? once again this shows that market are fundamentally political construct. and if they really want to advocate the full free market, you know, i mean, these people should advocate full legalization of immigration, bring back child labor, bring back slavery. they don't do that because, you know, some of these things are, they politically do not want to. but economically speaking,

that's inconsistent. anyway, so that nicely feeds back into my earlier point. now, the flip side of this story is that poor countries are poor not because of their poor people, but because of their rich people. if you go to poor countries, the rich people of these countries that keep telling you if you will listen that, i mean, because of this uneducated, lazy people that their country's poor. i mean, if our people work hard like the japanese and kept time like the germans and were as inventive as the americans, we'll be a rich country. but look at all these good for nothings, yeah? not wanting to work hard, but, actually, these people do not

realize they are fools, yeah? because as i said earlier, the poor people in poor countries actually can hold their own against quite well against their counterparts in the rich countries. actually, many of them would be more productive than their counterparts in the rich countries. so it's actually a fourth of the rich people in poor countries who fail to pull the rest of the country together which is what makes these country poor. now, that leaves the rich in the rich countries, doesn't mean they can now pat themselves on the back and tell them they only are worth the money they get. i don't think so. what those people don't often realize is that their high

productivity critically depends on the fact that they were born into or at least migrated to societies with advanced psychologies with organized firms, good institutions and high quality physical infrastructure. and most of these are things that have been accumulated collectively and over time and not something that those individuals have created themselves, yeah? and the smarter ones know, yeah? i mean, warren buffett back in 1995 said in be an interview that, well, i think most of my wealth was made by -- [inaudible] it's not my own doing because you drop in the middle of bang bangladesh or senegal, i'd be a poor farmer. because i just cannot create all the infrastructure that i needed to make my money, yeah? so the smart ones know, and

that's why, you know, that he has studies this -- studied this movement of keeping -- [inaudible] so you can debate whether that is necessarily the best use of his money, but still, i mean, he knows that individual productivity is fundamentally collected. it's not just your own doing, yeah? the same person with same skills, same brains can become be very differently productive according to the society that he or she belongs. anyway, i can go on like this, but i haven't got the time to go through all 23 of them. but let me just give you really

one or two more. i mean, i could talk about thing four which says the washington has changed the world more than the internet has. this has raised quite a lot of eyebrows. but this one will take a bit of time, so i can get back to it if you're interested. i could also talk about thing 23 where i say good economic policy does not require good economies. well, there you go. [laughter] i naught my union card. i also say financial markets need to become less, not more efficient. in thing 16 i say we are not smart enough to leave things to the market, yeah? so there are lots of counterintuitive statements

that, i mean, sometimes put, you know, deliberately prosock ty way to -- provocative way to make my readers think. so it goes on in that kind of vain. let me give you one, maybe two more. yes, thing 13 says making rich people richer does not make the rest of us richer. you know, this is what we have been told by free market economists all the time, especially in this country for the last three decades, yeah? you know, you have to give more money to the rich people so that they invest and they create wealth. so initially, it might look unfair because they are taking a bigger slice of the pie. but they invest to make the pie bigger. so in the end every slice become

bigger. of course, in proper terms you are now getting a smaller to portion of the pie, but since the pie is bigger, the absolute demand that you get is actually bigger. this is sometimes known as trickle down economic, yeah? [laughter] well, i mean, trickle down is not a completely stupid idea because what it say is you cannot judge things simply by looking at the forest or the effect. so, yes, i meant initially these people might take more money, but if they invest the money, create jobs and is on then, yeah, the effect might be more positive than what you think in the beginning. so it's not a completely stupid idea. i mean, the only problem is that it's supported by evidence. [laughter] economists agree that not letting minor thing like

evidence get in the way of good arguments. [laughter] there we go, yeah? is anyway, but, you know, interesting that this logic is identical to what stalin used when he collectized agriculture. what he argued at the time was actually an equation of a classical argument by 19th century free market economies like david ricardo who argued, look, there are three groups in the society. there are the workers, there are the capitalists, and there are the landlords. landlords are the ones who accumulate capital and create economic growth. workers, basically, if you give

them more in terms of wages, they consume it, yeah? so they don't invest. landlords despite having all of the money, they actually do not have the drive. that's the money on conspicuous consumption, yeah? so we have to concentrate resources in the investor, ie, the capitalists. now, stalin's argument for agricultural collectivization was -- actually, in his logic identical. he argued that at that moment all the -- that could be invested in the soviet economy was in agriculture sector. industrial sector's tiny and, therefore, you had to mobilize the surplus in the agricultural sector. unfortunately, the land boards and farmers are known as the --

[inaudible] were not investing. so you had to actually get this resource against them by collectizing agriculture and extracting resources by deliberately keeping the agriculture prices down and transferring that resource into the investor, ie the central planning authority. actually, t very striking, this similarity. i mean, calling trickle down economics the free market version of stalinism, huh? is. [laughter] now, of course, stalin's collectivization led to huge human cause. not only was there persecution of the labor camps and so on you'll know, but there was also huge famine in 1930 and '303 --

'33. there was a huge disruption in the agricultural is sector in large part because they shipped out so much grain out of the cupside that they didn't -- countryside that they didn't have enough to feed the animals like horse. so when you don't have traction power, how do you till the land, yeah? so it was a total failure in that respect. but at least it achieved its central aim, irk e raising -- ie raising investment and raising economic growth because since collectivization to to soviet industry developed very quickly, so much so that we saw this, a once very poor nation industrializing enough to repel the nazis. unfortunately, we cannot say the

same about free market stalinism, ie trickle down nick r economics. the rich have failed to deliver higher investment and higher growth, i mean, especially in this country. the top 1% took about 10% of national income in 1979. by 2006 through a series of, yeah, tax cuts and business deregulation and so on the share had gone up to 23%, yeah? i mean, it might be even higher today, but, i mean, i -- there isn't a reliable latest figure. so the very rich are getting something like two and a half times more than before in proper terms, but since the late '70s the risk is a proportion of

national income and economic growth have all fallen compared to the previous period of the '60s, '70s and '80s, yeah? so, i mean, the rich, especially the american rich have become very lazy, very inefficient. you have to pay them two and a half times more to deliver what was, what is an inferior good, yeah? less investment, less growth, yeah? they try today justify all this by saying, oh, yeah, we are -- thanks to all these policies -- richer that than ever. yes, by definition if you're growing, if you keep growing, you'll be richer than ever. but the point is are we, sorry, could we have been even richer, yeah? because that growth rate has slowed down, yeah?

>> wide spread description that economics is too complicated for noneconomists, huh? and i say in the book that 95% of economics is common sense, of course, made deliberately complicated. [laughter]

this is known as entry barrier. [laughter] i mean, to be fair, it's not just economists who do that. lawyers invent all these jargons. i mean, i have this document which ostensibly say that i own my apartment, but does it really mean that? i don't know because i haven't been trained in the language, yeah? so it's the same for all professions, but economists have done that probably a bit more than others, so you try to read economics kind of writing, and it's very difficult to make sense of it. but, believe me, 95% of it is common sense. okay, there is that remaining 5% which isn't, but even for those essential reasoning if not all the technical details can be explained in plain terms. so through this book i want to

educate my readers with fundamental economic reasoning and some basic but often misunderstood facts about capitalism so they can better exercise what i in the book called active economic citizenship and demand right courses of action from our policymakers and business leaders. you know, when we think about it, we demand some things without knowing the technical detail, yeah? how many of you actually know anything about epidemiology, but you still demand that restaurants and food factories have to have hygiene standard, yeah? i mean, it's the same. if you know some basic principles, you don't have to become a trained economist. if you know some basic principles and basic facts, you can make a very robust argument for, say, more heavily

regulating complex financial instruments, yeah? you can make good argument for the, sorry, you can make a good argument for letting government kind of develop certain industries, yeah? because there are some industries which naturally, yeah, difficult to develop through pure market mechanisms. so, i mean, these are just a couple of examples, but basically, you can make quite robust judgments about economic policy with relatively basic knowledge of some theory and some facts. and i wanted this book to be an encouragement for people to actually, yeah, learn those things and more actively exercise their economic citizenship.

right, so, well, there we go. i think i should stop there and ask you to give me questions and comments. thank you for listening. thank you. [applause] >> thank you. um, i have a question about population. roger pembrose, the great mathematical physicist in england and the fellow who died recently who was an australian biologist said that in 100 years we will be extinct because of overpopulation and overuse of resources. now, i can understand through technology that we might be able to feed all of the world, but we cannot create enough jobs. in other words, how many baa race thats, shoe salesmen and

doctors can you have in the world? so i'm wondering if economists -- and i think governments must be thinking about the final solution, to use the nazi term -- in other words, it's very brutal, and it transcends gender, ethnicity, age and everything. in other words, there's a famous american film called "soilant green" where they were making food from dead bodies. i think we're approaching that. and so what do you think as an economist about the idea that there are too many people in the world and what do we do? thank you. >> thank you. well, that's a very serious question. well, first of all, i do not think it right to say that technology makes it impossible to create jobs. i mean, once again, this is something that people routinely believe because they think that jobs have to be created only through profit-seeking firms.

but, i mean, there are lots of jobs that we can create by providing better social services and then by putting in regulation that require more kind of labor input. you know, how do american service, retail service companies make money, yeah? by, basically, not hiring people and making things very inconvenient for the consumers. you know, in japan, korea, yes, i mean, by american standard you have all employment in the sector. but this is actually with good for the consumer because you go to the shoe store, someone will be with you within one minute, yeah? here you have to take a ticket, yeah, wait for 20 minutes, yeah? and they don't even bother. so, actually, you could argue that these industries have to

hire more people through regulation and that we create jobs, yeah? you can create many government service jobs, yeah? i mean, you can, you know, a lot of government services are very labor intensive. so libraries, home care, lots of things, yeah? so this notion that we somehow have run out of ways to create jobs is, actually, a result of this relentless corporate campaign to make us believe that, yeah, the job makes money for the corporation. it is worthless. no, we should say to the companies, look, i mean, are you really making money by raising social productivity? because as we see, you actually dumping all this cost to the consumer, yeah?

no, i mean, you've been doing this for ages, and can you don't even realize it. in in the supermarket, you are doing all the work. [laughter] i mean, when supermarkets first came, a lot of people found it quite offensive, yeah? my god, you know, it's like you order a salad in a restaurant, and they say, oh, go in the kitchen and pick your leaves, yeah? but we have become so used to this idea that we think nothing of actually doing all the, yeah, work for them, yeah? so, actually, we need to think about this in a totally different way. now, having said that, yes, i mean, this resource constraint is a problem. i have great trust in human ingenuity to come up with solutions to a lot of our problems. but the thing about technology is that this development is

uncertain. it's, essentially, unpredictable. for all i know, someone might come up with a solution to all the world's energy problem in two years' time, or it could take 500 year, and we might all die before that. so that's my problem with technological solution. but, yes, unlike some other environmentalists that i would not dismiss the power of the technology that easy. easily. let's leave it at that. >> hi. could you, um, talk about whether, um, the observation that capitalism needs growth in order to survive, whether that's one of the maybe thing 24 or not? >> well, i -- yeah, let me start in a more round about way.

my view on capitalism is my, winston churchill's view on democracy. so i think it's the worst economic system except for all the others. so i don't see any kind of realist terms, but the important points is there is capitalism, and there is captain limp. even the united states didn't used to be like this. only in the last 30 years, yeah? i mean, think about the new deal, yeah? this was a different country, yeah? i mean, i'll close the wall, you have different forms of capitalism. american capitalism very different from the japanese one which is very different from the swedish one which is different from the french one. so there isn't just one way of running capitalism. now, because of this global warming issue i think that the

rich countries have to seriously think about not pursuing growth as an objective per se. i mean, you might achieve growth in order to pass to other things, but somehow we have become obsessed with economic growth, and this is not healthy, this is unsustainable. but on the other hand, in a lot of poor countries i don't see how you can guarantee decent standard of living for everyone without having a period of significant economic growth. so i think need to be a bit more kind of nuanced in whether we want more close or not. i mean, it depends on who you are talking about, yeah, whether capitalism is unsustainable without relentless pursuit of profit because all ore -- other countries have modified capitalism, and they live quite

happily. i mean, take the case of denmark. i mean, the government takes up more than 50% of our national income as tax. a lot of american status is like the soviet union. but when you look at all the indicators of quality of living, people's objective assessment of happiness and soon it is right at the top of the world, yeah? whereas you might have other good things in this country, but people are not as happy as the danes. we need to ask ourselves fundamental questions. >> [inaudible] oh, you need this. >> yeah. [laughter] >> hello. >> hi. >> um, i told you first thing about the free market, you and i can agree free is a good

thing -- [inaudible] [laughter] am i a free human? i'm not free in the way that a tiger is free. >> uh-huh, uh-huh. >> so, um, i'm assuming by free market you mean to say deep markets that are liquid, right? is that an accurate description of what a free market is as you mean? and if so, if you were to look at the data and the whatever, past 50 years say -- >> uh-huh. >> -- those economies who switched to more deeper markets, nonshallow markets that are liquid, liquid in the sense that bid/ask difference is small so you can sell things or buy things easily, did they become successmatically better or happier in what -- systematically better or happier? is there a systematic trend for those economies that adopted deeper and liquider, more liquid markets?

did they get better off like, i don't know, turkey, brazil, argentina, asian countries? >> right. um, yes. i mean, even defining what is a liquid market and so on is quite problematic because a lot of people thought the american or the british financial market was very liquid, very deep, you know, until 2008. and suddenly it seizes up so that there are a lot of things that we actually do not understand about workings of the market. but, i mean, let me put it this way. you know, the fact that some dose of something is beneficial doesn't mean that more and more of it is better. so, yes, i'm definitely of the view that, yeah, i mean, the central planning system that was not working, injecting those

market forces in those economies was a good thing. but this doesn't mean that the most deregulated market is the best, yeah? you know, look at the case of ireland -- iceland that had, basically, abolished all of the basic financial regulations that even are relatively free financial market has. for a while it looked great. -- buying every other chain store in britain and having a party. but it completely went off the rail, and the country's, now, in deep trouble.

probably we need to see things more in a balanced way. let me give you an example. some thought is absolutely necessary for human survival, yeah? some more may not be a completely good thing because it creates a health risk, but it makes our eating more pleasurable. after a point it becomes a point where too much is canceling out whatever pleasure you are getting from more tasty food, so markets are like that. some of it is absolutely necessary, but too much of it can be very harmful. >> um, of the 23 things that you propose, define the economic environment of today, what's one

thing that you think, um, children of today should be educated about now seeing as they will soon inherit the economic climate that we're creating? >> right. [laughter] wow. well, ideally, all of them. but i think -- yeah, in terms of practical he is sons, i would say thing 16 which says we are not smart enough to leave things to the market. ..

naked kind of a more humane and equitable system here. >> sorry. >> what changes would you recommend said the american system that would make it a more humane and equitable system? >> i think the most important thing is an american context, to realize that this country is not the country of american dream anymore. you know, this country has operated on the belief that if you work hard and invested in is getting your children the next generation will do better.

and for a long time this was actually true. in europe there are too many legacies, and it was difficult for people who were born in the lower class is to move up. but today this is the reverse, except for one or two european countries like britain and italy , all the other european countries have much higher social mobility because of the welfare state. so this country really is going in the other direction. we have too much government debts. we have to cut social services. reduce the welfare state. but actually, one of the things, people opportunity may not be fair. the free-market economists.

i mean, if you try to equalize the outcome then you punish people who work hard. so we should not have. now, to an extent that is true, but a deeper sense in which it is not true because unless you guarantee some minimal living standard and stability for everyone this equality is in death kind of approach actually disadvantages the people from deprived backgrounds to the children from the prior to backgrounds. so it's like saying, well, you know, we have this hundred meter race in which everyone starts from the same starting line. without mentioning the some of these kids have only one leg.

this problem with the american approach to equality. in other countries have that going beyond that. conte countries in europe had gone beyond that. they have created a guarantee some kind of minimal for all children so that they can be genuinely fair. but here you are kind of deceiving yourselves. you keep saying to yes, everyone starts to the san starting line. some kids have ollie one leg. some others are blind. this kid but with the disabilities whence. welcome is this fair. they all started with the same starting line. i think that is the biggest problem in this country.

>> which kutcher would you say is the closest to being completely free market, and if you want to take him been on the other end, which is the country that is bothersome? >> well, probably the free-market is hong kong. the catch is that are functioning. did you know. really. if you have too much free-market people begin to buy and sell. then you don't have a functioning society. i am excluding some of the -- yes? another zero. >> sort? [inaudible] >> you know, a lot of developing countries are in that kind of situation. actually too much free market can be bad.

but on the functioning once hong kong is the closest that comes to mind. hong kong is a tricky proposition because it never was an independent country. always part of a bigger system before 1984 -- sorry, 1994 that part of britain after words part of china. so it is really excluded countries like ireland, the closest. but then a lot of trouble. lack of regulation in the financial market. of course the other extreme is our own. it is a country that has the

full understandable reasons that i wanted to live on their own. but sadly it was an allusion they kept talking about self-reliance. did they use only technologies that were invented by koreans over the last dozen years? no. clearly it has been running with 1930's japanese in 1915 serviette. they deliver themselves. that way of life. so once again not to walk anywhere. >> given that religion owns most of the property in the world, how would it change the equation if we taxed religious property in america?

>> while. [laughter] >> that is an interesting question. well, honestly i do not know exactly how the religious bodies exercise their proper rewrites. other property owners. maybe they do. maybe they don't. i have no patients to judge that. yes. religious bodies i'm serious. in britain. the biggest landowners. secondly, the church of england. depending upon how you exercise your property rights, landau whenever other assets that you on, the way economies worked defer. i do not have any basis to say

whether they are related from other property owners. if somehow they are different. in normal. >> apart from that. but that is only part of the equation. the way they exercise. if they own shares and certain companies are they less kind of willing to sell at the slightest disturbance? and don't know. >> high. my question is basically back in the 80's in latin america there was a lot of debt and a lot of catches had to take out loans from the imf and world bank. and then we come to the 90's and the 2000's and have.

is there any way that you think that the trading agreements could be made so that way they are more fair and competitive to the people in developing countries? >> yes. well, you know, my basic view is that free trade is good if it is done among countries at similar levels of development. it is not good for the poorer countries if it is done between countries with different levels of development. in the short one there is benefit. central american countries will be able to sell more of what they already sell, but the problem is that once you sign free-trade agreement with the united states it means that you're not trying to develop a new industry. [inaudible] >> exactly. [laughter] >> that is how people should

feel. [laughter] so the short-term long-term trade. in the short run it is better to sign this agreement. yes. you lose some industries that you have been projecting. you're probably it will to some more of what you already have. over ten, 20 years. he just cannot develop anything very much new. look at mexico. when they signed nafta in 1994 everyone thought mexico's future was sordid. they joined. everyone was happy. i mean, it seemed to work for five or six years. a lot of american japanese. companies went there to build factories, create jobs, basically targeting the american market.

in the last ten years mexico growth rate per capita has been basically zero. losing a lot of shows to china, guatemala. they have in the meantime lost their own capability to create new activities, new jobs. that is what happens. so unfortunately there are a lot of countries that are so desperate that they want to sign these agreements for the next five or two years. in a way they are signing away their future. >> professor, i think that the work that you do is very special, especially as an economist from cambridge university. i feel like oftentimes academics, when they get to this level they don't care about trying to engage with ordinary

people, so i really applaud you for that. but i would love to know what happened for you that makes you want to, as you say, you know, try to engage sesame in more practical economics, more educated populace in beijing. it and then the other question i had was -- i would get the bookr perspective on, like, the level of 11. and guess that's a broad question, but i'm just kind of grappling with this kind of rhetoric that has been emerging about the need of investing in women. it feels as if it has such a capitalist agenda behind it. women could be more productive workers in the workforce.

you know, the j.p. morgan analyst pete multinational corporations have these, you know, efforts to bring women into business schools. i don't know. they seem to be very suspect about it. so if you could adjust as things. and the last thing is wisconsin to what you think about what is happening in wisconsin. >> well, no. i am grateful that you appreciate my effort to communicate with the general public. it is a bit worrying. some of my colleagues did worried. so, yes. i do not want to suggest even for a second that what i am doing here such as we don't

need. there are some technical things that only the current trading that can do well. that is not what i'm trying to do. to tell you that actually duquesne understand what they are trying to do. you can make judgments. anyway, the way, you know, it is actually quite strange. it really comes to kind of car safety, nuclear power fission. i don't know. the least policy. a lot of people have very strong opinion. oh, yeah. bell. it should not be like that. i mean, white t let just the economists do it so easily?

why do you get angry with the foreign policy makers and the fda and everyone, but you've just think, you know, well, life is okay. greenspan was okay. i've done things up. women. i don't know. hamid, complex issue that i cannot deal with. bicycle i am concerned, a lack of expertise, but might thinking is in thinking full. the washing machine as is what in the internet has. basically the argument is that the house represented by the wash machine has reduced the requirement for household works on much that now we have a completely different labor market dynamic and family

dynamic that comes from a lot of women working, having independent means. just changing the internal bargaining power in the family and many things. but i can i go into this. let me put it very simply. you know, the book is been jazzed into four languages and will come out and ten more. one of the countries and has already jazz's it is the netherlands. that was invited to judge cable-tv to debate it ditch professor. actually, you really liked the book. there was nothing to debate. to have a great issue. it behalf there is no time left.

so i said i cannot really get into details, but have to break as in the river to wash your clothes. so i said, well, i rest my case. and he was a smart guy. two seconds. yes. you're right. [laughter] one problem is that people who seem crazy, but the chance for the power of the internet, usually mentalist meant working in the media or academia who have never had to do housework. that is why they think the internet is so cool. whereas the real changes, things like -- of course, not saying. my conclusion is fair. wasser machine has been around for a hundred years. in around for only 20. maybe 100 years later internet

will have changed a lot more, but so far it doesn't. this concept, you know, i don't know. but this is what i find very depressing. it is not just of this country, but in britain in many other european countries as well. basically this recession has been created by the finance industry. but now you as an attack on the buses states, ordinary people who have nothing to do with this crisis. so much so that morgan came, the governor of the bank of england who by any stretch of the education is not a leftist speech and recently said actually i'm quite surprised by the lack of anger in the

population at the finance industry because they are totally to blame part creating this crisis. the people european hit by welfare cuts had no role in creating that crisis. people -- not quite say it that way, but the people on underwriting. to think about this. somehow the financial industry and the writing media have created this makes that deal is budget deficit created by excessive social spending when the deficit is mainly caused by the fall in tax revenue as a result of the recession plus a bit of government public money toward financial institutions.

but very clever. comes around and says, look. we can all have nice things. we have to cut them out. so you need to really wake up to this problem because today it is wisconsin and tomorrow massachusetts. it will be the whole country. and once you begin this game is actually going to get out of it by cutting spending further and further. like if greece, ireland. they have been fighting ever spending since for some left and right. scared to the bonds. the situation. if you keep something you're actually making the economy worse. that reduces your revenue. your spending might be falling, revenue is kidding birk consider deficit still remains. please tell repeat that mistake

in this country. the republicans are pushing very hard for that kind of solution. you have all this experience in europe. at least a judge a joyless as from those. the novel. >> three budget want to talk about. i want to start with this one by

charles plug. >> yes. already named one of the big bucks. about the last year. during that time he had esophageal cancer in knew he was dying. basically baghdad to his family. he knew he had one year to finish writing his memoirs, turn it intimate it published so that the finances could be used for is family. as to his publisher was? mark twain. there is an amazing literary back story behind this wonderful work of history. >> sellers the ending, did he manage to get it published? >> he did try three days after turning in the manuscript to passed away. the nick of time. >> the grants memoir is kind of a model for current presidency's price is probably the best presidential memoir ever written, but also one of the best military histories ever written because support as well.

>> another presidential buck. >> the wonderful stanley weintraub. this book looks at pearl harbor. the days immediately following the bombing. the state of america at that time. the darkest christmas in history and in many ways the most unified american christmas in history. >> line make this a book? >> well, wind drop can't go wrong, and he has a tendency to let get holidays in america in history in america. separatist and a perfect match. >> and one more that we want to talk to you about. this is about frederick law of homestead. >> by justin martin, previously done biographies of ralph nader and alan greenspan. this when he went back and researched. most of us know him as the designer of central park. he was a lot more than that, an abolitionist which i was aware of, and a journalist.

so this chronicle's all of the different places that he designed for, including mclean hospital, mental hospital in the boston area, and he actually ended up in the mclean hospital at the end of his life. so his left temple circled. >> what is da capo. >> an independent publisher. we are based in cambridge. we do everything from history, military history to biographies and memoirs and health books in print as well. >> thank you for your time, lissa warren. >> thank you very much. >> book tv is on twitter. follow as for regular updates on our programming and news on nonfiction books and authors. twitter dot com / book tv. >> what are you reading this summer? book tv wants to know. >> well, i always read in the

summer time and throughout the year. a great time. you can catch up and too big to fail. a very good book. this book tells the financial crisis of the last year. arenella bucks on topics. the financial shock. a number of other titles. but this is the last one. it is a buck that details this series of events that led to the financial collapse. it started from the early roots of the crisis which were born in sub prime lending, loans, no income, no job type loans. how people actually make money

selling those. they were sold on the big -- the idea that they would be a will to refinance. actually a fascinating book. i enjoy reading it. one of the financial services committee. a kind of lift it. actually really fascinating to see this take on it. also in the paulsen, hang possum's book on the financial crisis. this is an area that i really want to become a much better student of and this helped me do that. too big to fail. this is just about done. liberty and love. a lhasa, liberty, and love. she is a good friend of mine. i admire her dairy --

willingness to question tradition and convention. she promotes this idea. if you have means, inquiries, questions. add a time when you find some people who will offer ideas based on tradition and just president, she is one that says there is this other tradition, and grow way and questioning. herbert basically is talking about how the modern islamic world has an average city to incorporate freedom. as the get the area, it split. no doubt that it is actually the prospective. that is exactly what the people

in tunisia and all over the region by saying. you know, they believe that they can have their fate in liberty. they don't have to live under authoritarian government. she is one of really raising some important questions. so i've really, you know, a huge part of my life. i do it all the time. i'm sure i'll be done with this book and probably a few hours and maybe even quicker than that. i will be on to something. and always have a bunch of books in the queue. i have a book of getting rid of. i have not opened it yet, but it has to do with the history of goldman sacks, the investment firm, another line of books i have been reading about from the financial crisis. and it has a list of other books that are sitting up they're getting ready.