looking at the plates separate from the rest of the text, but in any case, it would have been bizarre for someone to take the blood spattered plates then and biped them up. i don't know what was going on, but the book, itself, is quite valuable for us because it does have so much information about the people who were living there, the way they lived, the fonna and flora, and so it's an important book, a book that we would be delighted to have in any case, but the story of john paul miraz using it in the bath and holding it when charlotte stabbed him to death adds a little extra to the book. ..

he is the godfather, i may say. we are longtime friends. his wife, kim, who is an excellent editor and also great, you know, i cohort grandmother. thrilled to be a part of this extended family. he is also a harlem resident, which is in sync with hue-man bookstore & cafe wonderful collaboration. we are here tonight to listen to jeff talk about his new acclaimed book, "age of greed," the triumph of finance and the

decline of america 1972 the present. it is another instance of look at our economy following his previous economic analysis best sellers, the end of affluence, taking america why economies grow, and the case for big government. a regular contributor to the new york review of books and a former economic scholar, the editor of challenge magazine, a senior fellow at the roosevelt institute, and the shorts center at the new school, also an adjunct professor of the humanities at that cobber union. here is what some reviews have said. in a long list of rave reviews about "age of greed", the new york review of books says this is a fascinating and deeply disturbing tale of hypocrisy, corruption, and insatiable greed a reminder of just how we got into the mess we're in. david greenberg of the

"washington post" said "age of greed" abounds with powerful man , ugly fights, and from the scandals, tourists and turns, and true to the book's title, lots of shameless cupidity. that is a heck of iran of for a book about the usually less than scintillating economics. but once again, jeff madrick has exposed the key players, and deeds, and the reckoning exacted during these fast and loose and dangerous times that we are living in. jeff madrick. the floor is yours. >> thank you. carroll has been a very close friend. [applause] when i was struggling to be good on camera i would look in in the of how good she was naturally. here we are today wondering, of course, how we got here. i want to thank all of you at hue-man books for inviting me to talk. kim and i now live in this

community. we are delighted to be here. we had to protect our house from the ravaging hudson river the other day, the hurricane. in fact, we did not have to come as it turned out. well, the rain was pretty bad. in any case let me get on with the subject because it does change. i was calling to come to talk about how we got here. and i am going to talk about how we got here. then it started to occur to me that we don't even know where we are. four years ago, four years ago ben bernanke, the chairman of the federal reserve and a bright and i believe well meaning is often misdirected man said, if those sub prime mortgages collapse those mortgages made to people who have low incomes and poor credit and were often conned into taking mortgages they could not afford, even if we had a high default rate of those mortgages we would not have the financial crisis. this was the chairman of the federal reserve, august 2007.

two months later read in the face he realized we were about to enter the worst financial crisis since the great depression. how did he not know that? what he also didn't know, no republicans and democrats new, very few economists new across the political spectrum was we would not get out of this problem, even four years later. we would not have solved the central problems of the economy. what happened was it financial crash and a recession, we now call it. the worst recession since the great depression. recession means high unemployment, low wage growth were actually falling wages, no growth and opportunity, lots of bankruptcies, and in this case many, many people who thought they own their homes and no wonder do.

we felt we knew. we felt we knew how to get out of a recession in. bernanke knew he had to take many emergency actions to pump up the financial system again. president obama in one of his more courageous efforts passed an economic stimulus bill of eight or $900 billion, which helped. it turned out it wasn't nearly enough, but it helped. obama economist, almost all economists expected us to do far better. what has happened since then? president obama took office and inherited one of the worst economic situations of the last century engineers. he did provide a stimulus, did not do enough in the end. but we thought that unemployment at least would be going down some by this point. it reached 10%, now at 9%.

actual unemployment, if we include all those looking for full-time workers can't get it or are discouraged, actual unemployment is more like 15 or 16%. outrageous. wages on average of gone down. what has gone up? corporate profit. corporate profits have gone up enormously. bankers' bonuses have gone up enormously, and the economic problems have not been solved. so what happened? added we did here? i think we have not been able to come up with the proper solution partly because the problem is so difficult. we have not faced the situation where so many people, including business are indebted. it is very hard to get an economy afloat again in that kind of circumstance, and we should recognize that. but number two, we have had an attitude about how to manage it

economy that simply has not been good enough. the wrong people, all i should put it differently, though on attitudes have been determining the source of solutions that we have had. the essence of this book, "age of greed," is that this crisis did not start in the 2000's. it did not even starred in the 1990's under bill clinton who did contribute to financial deregulation. it really started back in the 1970's. i want to make three or four major points. one is, it started in the 70's. number two is, individual did this. there are people to blame. their institutions to blend. there are the way institutions are run the combined. when this crisis occurred a bunch of men stood or sat.

there were only man. the people who ran these major financial institutions. and they included the great warren buffett who is occasionally on the right side of issues, and they all said this was a systemic problem. it really wasn't anyone's fault individually. these things simply occurred every three, four, five, six years. you can't blame anybody. i spoke to them. i've known some of them as journalists and economic analysts for many, many years. they said the same thing to me of the record as they sat on the record. you can't blame us. her new? did you know? did you know all about this? of course i pointed out to them that i was not the president of the new york federal reserve or the chairman of the federal reserve in washington or the president of the united states. i was not even the head of a major bank. those are the people he should have known and could have looked into some of these structures

and said there's something wrong here. the truth is, i knew something was wrong, as did others, but i don't think anybody knew the extent. let's go back for a moment to the 1970's and see what happened. the third factor, i want to emphasize this. number one, is started in the 1970's. individuals did do this to us and could have changed the flow of history. number three, there was a major attitudinal shift toward government in the 1970's. indeed, against government. i know many of you were not fully adults in the 1970's, but some of the war. it turned americans from of favorable attitude to what government could do to high skepticism about government. how did this happen? and it happened in only a few short years really. well, there are many contributors, and i don't want to oversimplify.

the vietnam war of the 1960's may people skeptical. indeed, washington lied to us about the vietnam war. watergate, nixon -- the next and catastrophe may people skeptical of government's. but i think the main catalyst in the mid-1970s was a catastrophic economy in which unemployment and inflation soared and people got scared. unemployment and inflation are not supposed to sort together. there reached double-digit levels every week prices of food and necessary goods and gasoline would go up. yet people were losing jobs at the same time. the old economics, which are likely have been called the new economics, did not seem to be working. every time inflation with a lot some politicians and some economists would say government

did it. government spending, budget deficits. we have to stop that. the federal reserve is creating too much money. eventually it worked. eventually americans turned against government. americans panicked to my democratic advisers panicked, and a bunch of people rushed in to take their place led by the famous economist build friedman. let me give you an idea how quickly this changed. in 1973, these are the windows of change or the balkans as i occasionally call them. ronald reagan, remember, was governor of california, his second term. he started his career when he was 55, his first public office. a second term in california, he wanted to lead in more conservative legacy. he thought, let me pass an amendment to the california state constitution to cut state income taxes significantly and

permanently. he campaigned all over the state. he was pretty popular, and he thought he would win. he lost pretty badly. californians said, no, we don't want to cut our state income taxes. we are voting against this because we believe in the things demint does. in fact, california had a great education system from primary school for university. they had a great highway system. they believe in government. then came that catastrophe was talking about, confusion and panic. five years later we get the famous proposition 13 to cut property taxes significantly. property taxes that pay for education by constitutional amendment. in those five years america changed. californians overwhelmingly voted to cut their property taxes.

and a tax revolt spread across the nation. skepticism of government spread across the nation. many people distrusted all kinds of institutions. business, educational, religious government was what they distrusted most in these years. and this tax revolt spread not only across states, many states adopted similar constitutional amendments, but the federal government and ultimately ronald reagan was able to keep a campaign promise and cut income taxes by 30 percent, especially for upper income people. that was the source of change, the attitudinal change. it's very personal because those are the years in which i got out of school, became an economic journalist covering these issues. i got to know some of these people like alan greenspan and bob rubin. they were active on wall street. not yet that : "great man it

were about to become . i did not believe that this change would be permanent. i believed it was a little swimming of the pendulum against government that would since when back. i grew up in the 60's. i marched, protested. i believe did the civil-rights movement. i had a sixth grade teacher who taught us a lot about brown versus board of education, which was before was in sixth grade. he gathers to interviewed jackie robinson, of all people. so they came into town. you can imagine how excited i was. not so much because he was a civil rights leader, and i think some people in retrospect were a little skeptical about him in that regard, but because he was such a darn good baseball player who would be excited? at look at his hands, chest, back. that is the real thing.

it -- i was pretty well sensitized, and i believe america achieved something, a permanent lasting change. here it was reversing. very hard for me as an observer to take in the idea that this would be a permanent attitudinal change. in fact, it has been, at least until this time. americans are by and large skeptical of government's. everywhere you look people talk about how we have to restrain government, keeping limited, it taxes down. they don't trust social programs. they just don't trust social programs. time and again they believe, if you ask, that it is government spending that caused our economic problems that has not been the case. in fact, it has been very much the opposite. the denigration of government,

the weakening of government, the undermining of faith in government has led to financial crisis after financial crisis and poor economic management. let me just go through those financial crises very quickly for you. we had a financial crisis in the early 1980's because a guy named walter wrist and who are right about wanted to land -- remember opec? opec, the arab oil countries raised oil prices three and four times and then raised oral prices again at the end of the decade. one of the issues that created this big inflation, one of the factors that created this big inflation. also led to a new problem. what will we do with all that -- all those battle -- dollars and the arab oil countries? walter stood up and said i know what to do, and ended up the south american countries and

help them develop. as with all due in the meantime as the head of first national city bank, later citicorp. i'll pocket to dollars of every hundred violent and make a little money on the spread is low. the bank did great in those years, but almost every one of those loans turned bad by the early 1980's. there were all based on very rapid inflation of the commodities these countries could export and that inflation stopped. crisis, another crisis. the stock-market crash in 1987. another crisis. savings and loan association, the press. they made all the mortgages back when. they got into trouble. the dumbest single piece of legislation passed in washington, at least on the domestic side. deregulated and allowed to put that money that they took from

you and me, federally insured deposits and to almost anything they wanted. guess what they put it into? coffers arts. huge skyscrapers. other kinds of resorts. and just pawns. and pretty soon those investments turned sour. they all had to be bailed out in the late 1980's. then there were the junk bonds by the famed mike milken, very bright guy who had a good idea. it was a good idea in the beginning, but sometimes you have to give a little to get some credibility. i have a chapter on michael milken's that might be worth taking a look at. eventually he started issuing jen bonds, high-interest debt for all kinds of bad companies. some people -- mike milken got caught up in the crisis. it made money off of takeovers, traded on inside information, one of the most aggressive to

use on mall street. one thing -- and you know, i hesitate to admit it, but it did know him personally. and even work with them. you will go any farther than that, but not on wall street investments. he would it make, like many of these people were created these fantasies about the good that there were doing in america, he would've meant that what he did was against the law. he was calling to iraq. pled guilty. a lot of commentators, smart people said that's what brought him down as novel brought him down. he was going down anyway because he is making bad loans. where was washington? no where to be found. paul volcker was a little bit worried. financing of these takeovers. these huge takeovers. an absurd crisis. who benefited? wall street. they had a little piece of the action every time the takeover

price of up. they got a bigger piece. they made fortunes, leveraged buyouts. some of them. people turned into billionaires' this to the takeover of existing companies of which they claim they deserve because what did they do? expenses which made them lean and mean, regenerated america. well, we see where we are today. "the sarcastic and angry, but i think it's just. i think i got away with too much chairman of the federal reserve. probably went too far. disturbed by these loans. the publisher probably regulate them, but he got no hearing from are rated. the book talks a lot about this kind of thing. let me jump to the 1990's. i'm going to lot. i want to make the point very clear. there was crisis after crisis

before 2007 and 2008. to crises in the 1990's. one was undertaken by banks. they started using these newfangled securities called derivatives. you could buy a stock or bond and trade against the stock market or interest-rate or currencies like the british pound of the japanese yen of the u.s. dollar for very little down you could use all kinds of sophisticated hedging techniques they told people, we can show you how to borrow a lot of money had a very low interest-rate without affecting your balance sheet and with low risk. and what happened in 1994? seventy alan greenspan jacked up interest rates. by then chairman of the federal reserve. and those supposedly riskless debt which was based on derivatives turned bad.

procter and gamble. you think they were smart financial officers. you would think so. it didn't know what they were doing. they got caught by wall street. in particular a bank called bankers trust. they lost two to $300 million. orange county california lost $1 billion in the comptroller went to jail for a little while. a big crisis. wall street was really in trouble. it was well advertised, but there was a far bigger crisis in the later years. we had a far east asian financial crisis, russian financial crisis in 98. that famous hedge fund in new york, long term capital management went under. the authorities thought they could bring all of wall street down. then we had the high technology fantasies driven by if not read, i don't know what else, with these people who underwrote

these high technology stocks may $45 on every hundred dollars of stock is sold. one fantasy after another. the absurd levels as speculation , and the market crashed and crashed badly in 2000 to a 2001. finally mortgages, crazy mortgages. why? because wall street had learned how to raise money from pension funds around the world and institutional investors of all kind, big investors, mutual funds. probably colonel khadafy himself invested in some of these investments. almost surely he did. they can raise some much money that mortgage originators, those famous people like angeles was a low, could go out. they have some much money that they have to make. they felt they had to make crazy loans. of course they didn't. when you have all that money your pocket you do it.

they made loans that were deceptive that people could not afford and which depended on the house press going up the year after year. you could refinance in order to peddle love. a lot of them were adjustable-rate loans with alone would look like it was going to be low for one or two years, but if interest rates went up, doc. indeed, interest rates to start to go up. half -- how did these crises happen? the big guys on wall street when they got before the congressional committee said they just happen. no one was to blame. wire you picking on us? in de they happen for two major reasons. one is washington, federal regulators were weekend, did not do their jobs, and were overcome by an ideology that arose in the 1970's. markets could decide things better than government. in some cases that's true.

i'd rather have markets determine what kind of cars are sold, although i'd like to have environmental standards for cars. i have markets make a lot of decisions, but i don't want to make all decisions. in particular finance cannot be run without regulation. the problem. welcome. and it was run with no regulation. people were put into government that did not believe in government under ronald reagan, under george h. w. bush, under george w. bush, and sadly enough under bill clinton to some degree. indeed, deregulation and finance went farther faster under bill clinton and sponsored by some democrats, not least of them the senior senator from new york to shut go nameless for a moment. then under many republicans. we did not regulate derivatives.

we don't have to worry. we did not try to stop or at least diminished the craziness in the takeover market and the enormous amount of debt that was taken on by private investors. did not try to do any of that. we did not try to control what might be an undue risks taken by major commercial banks that were guaranteed by the federal government. who is taking that risk? un die, the taxpayers. regulators had an obligation to do something about that. they didn't. they believe the markets and competition would work all that out. they said -- thanks for coming. and they said that markets would work out. alan greenspan said time and again, you don't need my regulation. markets are self regulating. this was the philosophy taken to the extreme by known treatment and, in fact, put in practice to the extreme by alan greenspan in those years greenspan said after

2007-8, he made this mako. he said somehow or other this model i was falling for four years stopped working in 2007-8. this model that led me to believe we did not really have to regulate these markets very much failed. everybody said, my gosh. greenspan is admitting the truth. but greenspan did not go far enough. the model did not work. i just described one crisis after another. crises damage the nation. they damage the nation permanently. and over this time -- and one of the things i find most fascinating and most difficult to understand is that it is very clear our economy performed poorly since the 1970's by basic

conventional economic criteria. why do we keep hearing differently? why doesn't the media come to terms with this more clearly? some do. let's not pay with a broad brush year, but many did not. why do we read from economists who have some political points of view that the economy did very well jack what happened to? wages hardly went up, and for male workers wages are actually lower when you account for inflation today than they were in 1969. how can you declare that an economic success? we never had a time in american history where we did not rise. significantly over 30 to 40 years. that is an amazing fact of life. other prices rose. the price of mike lowry ovens went down, we are told what this

all the time, the price of refrigerators. did you see that a recent campaign by one of the right-wing think tanks that talked about how many refrigerators poor people had? as if that is a measure of prosperity in america. it did not talk about whether the health care. it did not talk about whether they could get a decent education. they talked about microwave ovens and refrigerators. remarkable, but that's how the discourses changed. the bdm and some parts of the media have come to accept that. wages went down. the cost of health care, education, and to some degree housing, that time of low mortgage rates went up. what it took to be middle-class went up rapidly in price in this time not only that, income became highly unequal. part and parcel of this. across the board cannot be cool. every demographic.

men, women, minorities of all kind, majorities, what used to be majorities. inequality across the board since the late 1970's. how can that be? and let's get technical for a minute. something called productivity. you all heard about that. output per hour of work. the heart of our growing economy. the more we can make more income we can learn per hour of work, the more we compare ourselves. the higher wages will be over time. productivity is not too well until late 1990's, partly because of lead. may be mostly is of the coming of the web. i think for other reasons. productivity did continue to grow, but why? because the corporations cut

back the labor and use of labor so vigorously, so aggressively. george bush in 2001 said, let's cut taxes. alan greenspan, and it was that of his business, chairman of the center bank, but he said it anyway, yes, i agree we should get taxes. people whose supporters of the wood and drawers w. bush and self, and says it to the state, if we cut taxes we will have economic growth and create jobs. that is true in the very short run, but what happens under bush , we had the slowest rate of economic growth of the recovery and an expansion of any similar time cents. i don't mean including the catastrophes of two dozen 7-8. i mean from 2001-two dozen

seven, before the great crash and the recession began. slowest rate of economic growth, let's reduce government plus a very. what was even worse was to brief. there was almost no job growth at all under george bush in those years. the reason unemployment did not go up is because people dropped of the workforce. so here we sit today with an economy that was weak to begin with. i think the american job machine had already broken, and then we have these financial crises created by man. a talk about men mostly. there were some women there. i guarantee you. created by men, could have been stopped by men, and when it occurred, completely surprised

these financial experts. and they did not quite know how to deal with it. and here we sit today in perhaps the most dangerous economic circumstance of the lives of many of us. housetops cent and open it up to some questions. we have of a democratic leader and the republican leader who agree with one thing. we have to cut government spending, adopt austerity economics, and balance the budget. this is simply not true. this is self-destructive. it is being practiced in europe, it is being practiced here, and if it is maintained in the near run we could very well have another recession. odds are probably 50 / 50. i will sit there are definite, but 50 / 50 we could slide into another recession, and so could your pet a time when unemployment is at 9% enormously high.

it would make the reelection of president obama very difficult in november, and i don't want to take judging by the field of republican candidates what america would be like under them . how did we develop? you might even be saying, hey, what is he talking about? we have a big budget deficit. we have a budget deficit because we have the recession. that cut tax revenues because income fell so much. because we have the bush tax cuts early in the 2000's, 2001 and 2003. because we are fighting very expensive wars. and because we have a medicare part b that was not really funded and has done more to make health care companies rich than almost anything else i can think of. that is why we have a budget deficit today. how do we get out of it? first of all, we have to write

the economy. just last week the congressional budget office, which is nonpartisan, neither democrat nor republican, said things are even worse than we believed. why? were going to have a bigger budget deficit than we believed. why? because the economy is growing much more slowly than we believed. we have to get the economy back on track. that is the first order of business. once we get the economy back on track we can begin to address the budget problems. well, what we need now is serious government action, both to spend money and to create jobs. that government activity can involve outright spending, and it can involve building roads and bridges and investing in infrastructure. it can involve creating jobs like franklin delano roosevelt did in the 1930's. the government creates jobs and

hires people directly to do things. it can involve tax credits to business to hire people. it must also be accompanied by as serious mortgage rescue program. too many people are under water. that is holding the economy back because these people can't pay their mortgages. you say, how do we do this? i asked the same question. how do we do this in washington? only talks about balancing the budget. on the talks about cutting government spending. we can't, and that's why i'm so scared. i am out right scared. we are paralyzed from doing the right thing. once we do the right thing we can begin to address the budget, the long-term budget problem. i wanted to say one are two more things. the long-term budget problem is a health care problem. it is not a social security problem. it is a health care problem. it is not specifically a

medicare problem. it is a health care system problem because with one to drive medicare and medicaid costs of, rapidly rising health care costs. in the next two years medicare and social security will not be a problem for our budget. the deficit is going to be created by those things i've just talked about. we can correct that ten year budget balance by reversing the bush tax cuts of 2001 and three. on the rich, but also on the middle class. plus doing a couple of other things, but not much. the big issue is way down the road. that is when medicare and medicaid become very expensive. keep this in mind, and this really aggravates me. you talk about these people in washington talk about medicare, medicaid, and social security. social security is said to rise from 5% to what?

what do you think? to 6% of gross domestic product. one percentage point. you think we can't afford that? make that system totally solvent without cutting benefits. of course we can. one way we can afford it, there is a cap on social security. above 107,000 versus nobody pays. we could get rid of that cap or raises significantly and make a couple of other minor changes. no problem. medicare and medicaid go from 5% to 10 percent of gdp over time. every time you hear people talk about cutting entitlements, make a face. they're just wrong. or tell them their wrong. even better. it's medicare and medicaid we have to worry about. and they are being driven by health care systems which are enormously in the fishing.

and as you can probably tell, i like to go on. we can't just muddle through. i think in america because we have done so well as a nation and solve our problems, not without pain and not without damage and not always efficiently, but solve the problems. we think we're going to solve them again. for me the most dangerous assumption is that, there were just going to muddle through, will be okay, we'll figure that out, that even with all that nonsense going on in washington we will come up with the resolutions we won't necessarily ball through. we may be on the edge of a serious decline in america, and i know that makes me sound -- maybe it makes me sound suspect in people's minds to be such a pessimist, such an alarmist. i would rather leave you with an alarmist message that an optimistic message. until we begin to understand the

extent of this crisis and the potential dangers out there, four years and we have not gotten, really gotten anywhere. four years of trying to solve this crisis and we have not gone anywhere. we better begin to think aggressively about what we have to do, and we better begin to tell our friends and neighbors but government has to solve this problem, not the business is bad, not the business is not central to our prosperity, that we need strong government, faith in government, and really good people working in government. let me leave it there and off the road open to questions. [applause] [applause] >> i'd like to know, sir, first of all, are you an economist? secondly, what is the thesis of your book?

>> well, it depends on how you define economist. i have a master's degree in economics. i think probably i qualify. the pieces of the book is as i have been describing. number one, this problem started in the 1970's. it's a function of attitudes that developed against government. but it's about individual people. each chapter focuses on an individual, and i believe i tell the history and biographical terms. they are not character sketches, but an attempt to tell this history. and most of this history is about how people turned self interest, which can make a free market system work, and agreed. self-interest into extreme self interest, and thereby turn and economy into one where powerful people stop dividing by the rules.

start making the economy work only for themselves. washington should have been stopping them, and they didn't. washington was part of the problem. yes, sir. [inaudible question] >> we will come around with the microphone. can you wait one second. we will do a question here and come back. >> high. it seems like the problem with washington is that everyone keeps employing their own cronies. when you continue to employ your friends a lot of times you lose sight of what the true reason is that you need to be, you know, their to take care of business. what i am not understanding is we know that this it has been going on for so long. why did they continue to employ the same people who continued to the rear of the system? why is it, you know -- >> well, we often ask ourselves the same question.

an issue that bothered me a lot. but i think maybe what you were alluding to was that what happens is people go into government and get a job in the very companies they are supposed to be regulating. is that what you meant? yap. i think that's a big problem. i think obama has claimed he would address that problem, yet it's a very difficult problem to deal with. lots of people have already gone back into the private sector to work for companies they had been regulating. that's a huge conflict of interest. [inaudible question] well, below careful about that. tim geithner never worked for goldman. he could have. he thinks in a way that suggests he may have. he may well go back to the private sector. i think that's a really serious

problem, not only in finance, but certainly in defense. it has been true in defense since:00 close laughs sift it's true in all kinds of areas, health care it started in finance. obviously it's true and drug administration and so forth. probably true end product safety -- consumer safety, and maybe even environmental protection agency. it's a big problem i don't know how to solve it except there are serious rules about how people can take jobs for two years after they leave public service. one of the things we should keep in mind is the public service has been denigrated in my view since ronald reagan. but maybe even before. i think during roosevelt's time people were proud to work for government. i think that continued on

through. people saw it as a career that could last. now they see it as a stepping stone to a multimillion-dollar job. that's a pretty serious problem. yes, sir. >> your opinion and the theory behind the tea party and does this country need a war? i hope it doesn't because in the past is scenes like war brings it up a little bit. >> we already have to wars, right? so i don't think we need another . i mean, what you're referring to is the world war ii got us out of the great depression. you know, the wars subsequent to that, korean, vietnam, the current wars, really great costs to the american economy because we -- you build the bomb and it goes off and there's nothing left. you know, you build a school or wrote and it lasts. educates people and makes

transportation of goods more efficient. so in the end, no, i don't think we need a war. but i think a said what i think we need. we need to restore faith in government, and it's hard for me to see where that's going to come from, especially given, it seems to me that the media has no independent voice. it follows the washington dialogue. if the democrats and republicans essentially agree on the subject there is no alternative. that has been happening much too much and much too often for 20 1/3 years. [inaudible question] what was the question about? well, i think that tea party, the question is what is my opinion of the tea party. i think the tea party is an outgrowth of a bad economy.

i think people should recognize that. lots of those tea party years are far from well-off people. a think there are frustrated, scared about losing their jobs, scared of losing their health care when they lose their jobs. they have been directed in such a way or think in such a way for many of the reasons i describe the book that they blame it on government. they think the answer to making them secure is to cut down the size of government to cut taxes radically, to cut social programs radically. i must say, i think in some cases there is some -- there are some racial overtones there because there is the idea that social programs are designed to help people of color. so there are lots of complex issues here, but i think a lot of it, and it's not often talked about enough, stems from a bad economy and health and in come and security, which lots of a share and they manifest in this

way. can we come back to you in the second? i think there will be time. >> may be the gentleman over there. coming out on the winning side of the war help the economy. the question i have has to do with what you're saying about government solving these problems. i have to apologize to my have not read your book get. but for decades now the economy has just been in steady decline all this time and without any obvious way out of this. is there actually a way that the government can't do this, or do we need some kind of work to change the whole system, social system that does not serve the interest of the people? >> i did think -- i did talk about this a little bit and i do think there are ways out of it. one of the judge used to be that it's not winning the war that

makes you rich, it's losing the war. consider germany and all the aid to europe. after world war two. some idea that having a war will help us develop all kinds of new technologies and recharge innovation. i think it would be a long way to look at it. the fact is we have had a war economy for quite a long time now. it's not help finance. but yet there are things that government can do, but it will take a vigorous leader to do the it will require spending, job programs, serious energy investment, serious investment in infrastructure and modern infrastructures, and i think in some sense revitalized social programs to get kids -- to give more equal education around the country. asoka yakima think there are ways to get back on track.

and i think ultimately it will require more support for research and development because indeed historically the defense department did do a lot of spending. private contractors and r&d. that was not exactly will related. so i think their is a lot the government can do. we need leaders now believe the government. i sometimes think -- i joke about this, but i'm not sure it's a joke. i joke about president obama's age. he's in his late '40's. he never grew up or at least he never was old enough to have seen government in a positive light, seen government accomplish the things. government has accomplished very few big things since the 1980's, and large part because of the ideology i talked about and the idea of federal deficits.

the only thing we do is give income tax credits. we don't spend money on social programs. >> i guess my question is about the lobbyists that represent. is there any difference between corporations and government? >> well, i think partly the woman who asked about the revolving door between government and corporations was hinting at the same thing, but increasingly less. i don't think there's any question about it. beginning in the 1970's business started to recognize it was not lobbying hard enough and started to organize much more. right-wing think tanks in particular were developed, financed by wealthy patrons to produce new ideas and to provide

policy makers with similar points of view with new ideas for legislation and how to write it. but one other thing happened. campaigns became very expensive because of television. lobbying paid off. putting more money into lobbying paid off. there is basically an arms race in a presidential contest. it's an arms race to buy as much tv time as you can everywhere, and increasingly web presence in that kind of thing. a think some door knocking. but it is an arms -- who can raise the most money. there is a whole political science that has gravitated very interestingly. i used to think it was about what people believe. no political scientists talk increasingly about whoever raises the most money wins. it tends to get simplistic, but

that's what has gone on. yes. at think it's a big problem. if we had one reform in america, financing of campaigns might be it. everyone should think a little bit about it. lots of ways in which democracy is failing. one of them, maybe the biggest is this. there are others. you know, sometimes the democrats support the filibuster rule when they are the minority. sometimes the republicans. but it is certainly cobbling s in recent years. the way the senate works, wyoming, a state with a handful of people, has as many senators as new yorker california or texas. and the senate has a heck of a lot of power. how is that? the gerrymandering of the way people are elected to congress has contributed to dysfunctional

democracy. attempts to force people to create do credentials that have the effect of keeping people increasingly from voting locally, aggressive attempts at this. it's outrageous. undermining democracy. i would love to hear the president talk a little bit more about the future of democracy. people always say -- and you can see i sense a little dissatisfaction that i have with the president, but people always say he faced such huge obstacles. so much political opposition. how can he possibly do with this? but the president has the famous bully pulpit. he can make a speech when he wants to to the nation. he can do it over and over again it is better to be president,

believe it or not, then on and fox news. i'm not even joking. you can get on the air and you can educate people. at least you can present your point of view. you can tell them government spending matters at this point. you can tell them some people are threatening democracy in america. you can say it over and over again and firmly and stick to your guns and not back off. i think we're missing that. >> a couple comments made about war, if you would. but in my understanding, there kate to, even more has been a moot point in terms of generating income when you see halliburton and the money that was sent over to iraq, the billions of dollars that was basically still want.

what is your comment on that in terms of how the powers that be, if you will, have reduced the military work force, if you will, and have stolen the money, such as halliburton, and become registered in dubai. >> i think there is considerable corruption. i'm not by any means an expert in this area. but i think the defense business has always suffered from a fair amount of corruption. i think that level has risen. we will see a graphic the restoration of that when we begin to see the financial shenanigans of khaddafi and the private corporations that were involved and tolerated what he did. there will be another illustration. will it stop it? we have blackwater. as you say, the halliburton issues. we had a vice-president who work for one of these companies who nobody criticizes very harshly

for the. we get these defense secretary's to get positions higher up because they have great rolodex is. those rolodex is are not only for government officials and america. those rolodex is include government officials overseas. ethical standards were not always pristine and transparent the way they are in the u.s. so i think you raise an important issue. >> high. i've always wondered. i hear your for solutions to these issues. when i looked at what happened, what has happened over the past couple years in congress, the senate and the fighting and the gerrymandering, like he spoke about, is there a solution? even if you're the president of the united states and have the bully pulpit, how do you get your, you know, -- for example,

job creation. to come out with a policy shortly. have you get that through congress and the senate without the specified or watering down? >> i agree. that is partly why i'm not optimistic. at think it's very hard to do, and let me tell you what he could've done. maybe it's too late, but i never think anything is too late. he could have talked about government spending programs back in late 2010. he didn't. he talked about cutting government. he and his people interpreted the loss of the november 2010 loss as a sign that an american people wanted to cut back on government spending. if you look uneasily at the opinion surveys back then, that's what they said. what did they say that tonight because nobody was telling them any different. nobody was telling them there was an alternative. they decided to my belief, the white house, and i think people have written about this, let's