we will see you next week. [applause] [inaudible conversations] ..

the desired to be the best was very pronounced. next, tv and radio talk-show host tavis smiley and princeton professor cornell west talk about poverty in the united states. the book is quote code of the rich and the rest of us." facebook last month at hunter college in new york city. this is about one hour and 20 minutes. [applause] >> thank you. first of all to dr. green, thank you for the invitation to be here tonight.

dr. west and i are in the midst of what is about a three week tour across the country for this new text "the rich and the rest of us a poverty manifesto." and we were asked to consider making one of our stops here to support this great work. we immediately accepted in part because we believed in the work that marinas during and dr. west has appeared at the conference before and i was just at the writers' conference this year matter of fact just a couple weeks ago so i'm back in new york city. a couple weeks later. but we've been delighted on this tour to have about half, just over half of the stops have been to support fund raising efforts, those kind of causes and entities we believe in supporting sorted is defeating america and all of the

insecurity that exists in this country or the national writers conference we have found ourselves traveling on this tour to libraries, to nonprofits, to corporations, colleges and universities and churches all across the country we've been talking about this issue of poverty, so we are delighted to be here tonight to support this work. we happen to be african-american writers, writers who are african-american so we again are delighted to be in new york city tonight and to offer our support thank you again for being here. thank you for showing tonight for this conversation. i want to talk for a few minutes about the book and set the stage for a greater talk for america's leading public intellectual. the person on a regard as the

new boys in our time dr. west. i learned 25 years ago we became friends, and he is the big brother that i've never had. i'm the oldest of ten kids, the eldest of ten and so honestly have never had an older brother of peace i didn't have one until 25 years ago that reconnect it, and he is the younger brother of kristen west, and so he never had a younger brother. so, 25 years ago i became the younger brother he never had. he can the older brother that i never had and we have been running for 25 years together. and so, -- [applause] delighted to be sharing -- divided tonight to be sharing the stage with dr. west coming and we look forward to your questions and answers and the q&a with you i should say in gistel debt. but i have been fortunate for 25 years as his younger brother and his friend and his radio host on

public radio international now almost 2-years-old. we have tried to do significant work being true to our vocation and calling and purpose to try to do significant work across the country the last 25 years individually and collectively and are around the world. but for all the work we've done we've never written a book. i was stunned the other day on somebody's program somebody counted the books i've written, counted the books and the total was almost 40 between the two of us refer to almost 40 books and edited others but we've never done a book to get worse this represents the first book that we've collaborated on and the subject matter would be the issue of poverty the rich and

the rest of us a party manifesto and a filibuster as they say in washington to put to microphones in front of me anything is liable to happen. but i've been fascinated now that we have a week or so under our belt for orders could be a three-year tour across the country but now we've been out almost a week there are some reflections i can share. one of the things i've been struck by some things i didn't respect may i was naive i've been struck by the conversation that has kicked up about the title of the book. we have no issues whatsoever and it didn't spend any time whatsoever thinking that the title of the rich and the rest of us would be controversial i

thought it was a great tidal because it was an act of a depiction of what's happened in america they are the rich and the rest of us and a party manifesto clearly not the issue is the we want to tackle in these 250 some odd pages there would be such a consternation shall we say in such controversy about the title but i don't know any other way to describe what's happened in america right now than to say there are neither rich and there are the rest of us. what we argue in this book we argue in the text that poverty threatens our very democracy. now i did believe that we might

be just a little bit over the top in a book that suggests that poverty threaten our very democracy. we believe that to the bone. we believe that at the core of who we are that hour very democracy is threatened by the issue of poverty. we further argument the text only is our democracy threatened, it is in part threatened because poverty is not a matter of national security. that is how serious the issue is as we sit here in new york city tonight. one out of two americans -- people always ask us they will say using one out of two. the census bureau said. it's not like we made these numbers up. we had a wonderful researcher who helped us navigate through all the issues that we had about the case in the text but what

our government tells us one out of two of us is living in or near poverty that's a crisis. i'm a math major that means 150 million people in this country are in or near poverty are the persistent poor. you take the new poor and we are doing this text of the near-poor poor horse a paycheck away from falling into that poverty of this. you put those groups of americans together and you talk about 150 million people who are wrestling with the issue of poverty either trying to get out or trying to make sure they do not follow in it is simply this.

there is a highway into poverty for too many americans. the highway and but not even a side walkout when it comes to poverty in this country so easy these days for folks to fall into poverty. once you get stuck in the poverty of this it becomes very difficult almost impossible for so many americans to pull themselves out of it. one of the things i've also found interesting and fascinating is off to a plot so many people in these conversations want to talk about the plight of poor and the middle class. they want to talk about the middle class and what happened, they want to talk about whether or not the middle class is disappearing, how did this happen to the middle class. all kind of interviews and conversations on to talk to us when we get into discussing the book about the middle class and we are happy to do that because as i said earlier we believe and are due in the book the data

that the middle class, the former middle class we once again find ourselves in a place in america where those that have been persistently poor, those that have been poor are still stuck right where they are and nobody is committed to having a conversation about those persons who have been starkly over a sustained period of time stock in this poverty of this suite try to talk about in the book in chapter 1 wheatley of departure of poverty. we thought it was important before we got into the subject matter to really remind people how we arrived at this place what has the majority been in this country that's allowed us to arrive at a place where we've never seen it quite as bad as it is right now and what you discover when you read the text as we discovered in researching it is that we of the ebb and flow in this country when it

talks to our courage and conviction and commitment to address the issue of poverty. the reality is that the last time we had a sustained conversation in this country about poverty was during the johnson administration. you know this well, the war on poverty. that means that there's been a whole lot of democratic presidents. maybe that's a stretch, all told, but it does mean that there's been democrats in the white house and some republicans in the white house and neither of those administrations have taken the issue of poverty as seriously as they ought to come and so we argue in this text that it seems to us that there has been and still is a bipartisan consensus in washington that the poor just don't matter about the consensus that poverty is just not an important issue so how do we ever get traction on the issue, how we make it a priority of the two major parties and the heads

of those parties don't make the minorities and the reader that four years ago when we exercise our right to vote in a presidential election barack obama was elected president and dr. west and i celebrated that. 65 different events to help dhaka, get elected president and for those persons who never seem to quite understand why he wants to hold the president that he fought for to get elected accountable to progressive policies just remember for what to the california is to help him get elected to hold somebody in the first place, but in that last election of 2008, three

presidential debates between mr. obama and mr. mccain the word poor or poverty doesn't come off one time in those debates. obama doesn't raise it, mccain never utters it. the moderator's never asked about it. so three presidential debates taking place at the very moment that our economy is tanking and there's no conversation about the poor or poverty in this country. fast forward four years later and half of the citizenry is an or near poverty. we cannot abide another campaign for the white house where the issue of the poor in this country is not addressed. we can't go from here to november letting mr. obama and letting the presumptive nominee mr. mitt romney get away from having another contest with a contestation of poor people's

humanities is the order of the day so we put this book out now and apologetically to do our part to remind the nation that we cannot render poor people and visible. we cannot treat them as an afterthought. we cannot at best and presidential election season treat them as some sort of a political calculation. it's telling the truth of allows suffering to speak. nobody tells the truth about the suffering of everyday people. it gets rendered invisible. it never gets addressed by the body politic. so how do you do that? you go to 11 states and 18 cities on the poverty tour bus as we did last summer trying to get an understanding, firsthand

understanding on what it has done or did to the american public and we realize two things in no particular order, number one, we realize that the condition of poverty in this country is so by year that a slight uptick in our economy is not going to address the crisis. some believe when the job numbers come out on employment was down half a percentage point and start a break dancing in washington to make bad jokes all he wants about obama as the food stamp president when they take this broadcast two days ago on wednesday the agricultural committee of the united states house of representatives how can

apply for food stamps. so just another example of the wrong headed notion that austerity is the answer at a moment like this tightening the belt on poor people further criminalizing them come further treating them as invisible isn't going to solve our problem. poverty is so deep and by year that a slide of to the economy is not going to address what we saw we now know for sure poverty is not color coded in this country. we seem to color could poverty in our situation so we think when we think poverty we talk about poverty with ink black, we think brown, that's what we mean by color coded it is all races,

all colors, all creeds falling faster and poverty now than ever before. specifically women and children. we talk in this book about bill clinton, who i like and respect and she's a friend. i think she's still a friend. i said this a few times over the past couple weeks, maybe not the reality is nobody else in our society in part because the welfare reform bill 15 years ago peter edelman has a book of right now called so richard commesso poor we are not the only ones in caring for put people in this country we are not the only ones talking about before he ever got in the race talking about this particular issue and he famously predicted 15 years ago that this was going we were going to be reaping some

dire consequences if bill clinton passed this law. he famously resigned his high post in the clinton administration in protest over this issue. fast-forward 15 years and i have news for you peter was right and that's why we see women and children falling faster than anybody. what does this say about a nation that allows women and children oftentimes the weekend vulnerable to fall into the abyss faster than any other group of americans so we saw that so dhaka year it isn't going to solve the crisis. it's no wonder color coded. we saw people are trying to hold on to their dignity. we believe if there is dignity in labor and in the war you have

half of your population struggling to hold on to find a job you have a dignity deficiency and if it is a dignity deficiency, you have problems. i was watching an episode of 60 minutes a few weeks back and they have a panel about a dozen people who had once been in the middle class making mixed figures and the 401k in the savings account that we think coming along with having access to and having realized that middle class american dream all of them have lost their jobs. again mostly americans. i was fascinated to watch this story on 60 minutes a great piece and i remember vividly a particular woman having the last word in that conversation and

she said, and i'm paraphrasing, that chaim beyond the embarrassment of having lost my job a few years ago. i'm beyond the interests and having lost my 401k and my savings account to date on and beyond the embarrassment of having lost my house how long i've been unemployed all i'm trying to do right now is colin to my dignity. it took me back the genesis for this text to akron ohio where we sat in a room full like this a room full of military veterans who had put their lives on the line, some of them injured to protect and preserve our freedoms. sure they are back on now and

they've been unemployed for a year or two or three. guangya in the room who told a story that had me in tears she and his wife were having such a difficult time trying to make eight that after 25 or 27 or so years of marriage they had to split not because there was any trouble in paradise, there's no trouble in their love relationship but they couldn't come they didn't think they didn't come to a conclusion in their own relationship they didn't make it together that they had to split to try to make it and she's living animals all male shelter his living across town in an all female shelter they had to split poverty that

they were enduring. we saw these kind of stories all across the country on an indian reservation and dr. west and i ask the native american brothers and sisters about the but the recession had done the replied what recession? we've forgotten about them. they don't even feel the impact of no recession. these are the depression conditions that we live with day in and day out, a year in and year out, and decade in and a decade out to get so americans again of all races and creeds are suffering in a way that many of us have never suffered. and the time to do something about that is right the book lay out in a very simple format the first chapter is a portrait of poverty how did we arrive at this place.

second chapter is called the poverty of opportunity that we talked about why there is such a deficit, why there's such a party of opportunity in this country right now including these greedy corporations who are making more money at home and sending more jobs abroad that is one of the reasons there are many others, white is a poverty of opportunity in this nation right now but beyond the poverty of opportunity here is how we want to challenge americans to reexamine their assumptions about poverty to expand the inventory of ideas that it was about poverty to look through poverty to look at poverty through a different prism. we want to challenge for us to do that what it is we get an authentic answer and understanding about what poverty is so it's not a poverty of opportunity that the next chapter is of affirmation. what about a party of compassion

a popular imagination in this country and we read through these countries the meritor is that we saw and spoke to, we spent time with people not just talking to them but on the tour we stay with poor people to really stay with a family that in kids, two dogs and three cats, stayed with them in columbus mississippi. we stood on the sidewalk one might stay all night sleeping with our friends we just talked to one of the edible days ago we try to stay in touch with people the best we can and we spent the night sleeping with some homeless folks in the nation's capal not too far from the capitol. we spent the night on the streets so we did get a sense of what we were doing. we are part of a program sponsored by feeding america so we didn't want to just go and take your camera us this became a dhaka entry on pbs we want to

understand what these people were in during senator is a poverty of affirmation we know there's a poverty imagination and we also know near the end of the text that there are some law is, boulder out right demonic why is told of reading about poverty and poor people in this country. we want to debunk those and finally in this manifesto we lay out our plan and agenda because that is what matters. it doesn't take long in these interviews after a couple questions what is your plan, what is your solution? we've got one. at the end of the book there are 12 ideas we could have to be wrestled with sooner than right

now and quicker at once if we want to be serious about reducing an erratic and in poverty in this country it can happen. this is not a steal problem this is a will problem. do we have the will to make poverty other countries have reduced poverty significantly because they came together with a national plan to make the reduction of poverty in their societies a priority we believe that poverty threatens our democracy and it is a matter of national security and to tell you more about why we believe that i want to introduce my public radio cohost, co-author of this book, america's leading public intellectual of our time my friend who has the heart generate lilos please welcome cornell west. [applause]

>> let me first say i am blessed to be here and any time i have a chance to spend time with my brother tavis i have a smile on my face. as he said before, 25 years ago i met this brother and we decided that we were going to be willing to die for the legacy and diane - who had a love for people and especially who are brothers and sisters and all of us make a contract and has seen

a mirror to leave to spirit dimension to it we are granted but whatever that has blessed us with to keep alive this tradition. we believe in the same cultural barriers but we refuse to move forward staying in contact with the best of those that have molded us so unique in the american culture working for the mayor of los angeles dividend a dynamite john bet and they've lost their jobs on bet. our dear brother bob johnson who had a mass demonstration with myself and to other friends. the black leaders that might be for, but the black elite function in such a way that after some phone calls were made and possible money it was just

myself we will march any way. because i'm a christian country to love everybody. but i was disappointed. we went in deep prayer with my brother clinton to bounce back and remain true to your calling, not your career. don't become preoccupied with your job. have a sense of what your life past is. don't be obsessed with your profession. retired your vacation and be true to a people who are then enslaved, hated and despised and lift every voice.

do not ever become an eco. be true to yourself. and he was down and out and he was broken in the ten commandments financially at that time and bounce back national public radio public tv tavis smylie foundation 13 years now she and i meet every summer with a young black youth or leaders i should say now it's thousands of them. we have to hunt them down. then of course the grand exhibition the books and so forth and so on and i do get upset oftentimes when i hear people say about a brother tavis slyly that somehow he doesn't have his focus on serving others

because he's so successful and because he owns everything that he does like prince he believes in controlling his master's and i would just say to the world on notice brother he finds joy in serving others and if he's highly successful but he comes from a tradition that echoes 1045 and says he or she is greatest among you he doesn't confuse success with greatness. greatness has to do with service. what is the quality of your love for others. what kind of sacrifice will you make, what price will you pay? martin luther king jr. died with 72% of americans disapproving and 65% of black people disapproving of martin why? because he loves poor people and he was critical of the american

occupation of vietnam. that's the tradition that we are talking about. we see it with a smile on our face. doctor, professor, her magnificent work i want the world to know i support your work and your struggle. [applause] the mother of two magnificent sons distinguished professors columbia law school and one of the great prophetic hip-hop artists of a revivalist to be in the studio with give the family a hand. professor smith. what the world to know in the sense of her black literature the only institution fundamentally committed to preserving the talent and the genius of the towering figures like gwendolyn brooks and tony morris and richard and ralf

ellison and young brothers like kevin young. we just a black sister that won the pulitzer prize just the other day. tracy smith, give her a hand. we love you, sister tracie. she happens also to my colleague at princeton but i'm not saying this just because she is a fellow princeton ne. i'm saying this because she's an artist. the last line of the template of 1821 poets are the unacknowledged legislators of the world not just talking about versify years, talking about all human beings who have the courage to muster their imagination to conceive of a world different than the one that we live in with more love and more justice and equality, more democracy and do what you can. use a bit of reality. if you're dancing it might just be your body.

maybe it's raw material as an architect. whatever it is coming use your imagination to attempt to make this world better by conceiving of some alternative and transform the present world in light of a better world. that is the best tradition and general that puts at the center the dignity of those everyday people and james cleveland calls ordinary people it's a deeply space way of being in the world with affinities on the nellis side of town to rauf emmerson, ralph waldo emerson, our jewish sister who build on that tradition here in new york city concerned about the dignity of everyday people last but not

least this is just my introduction. i'm moving on. [laughter] [applause] last but not least i want to congratulate my dear brother also has a publishing company and we have the legendary -- your social we want to acknowledge. i don't know where she is. and brother raymond ross. why do i spend so much time? because i believe always beginning on a note of gratitude to be a black man in america 58-years-old i am happy and partly still in my right mind.

when i grew up brilliant black brothers and sisters much more talented than me. you look at my first great picture and i am the only black male living in that picture and i'm just 58-years-old. it is a professor west, you're so talented you didn't know the brothers and sisters we grew up with. if i'm just one-third of the person here. triet uzi on the corner that's

what happened unpleasant thoughts we may end up in jail again. that's all right i have my senator closing on. i dress in black every day. why? because very much like the poverty tour it is a love to her. but the eyes lee brothers call a caravan of love. they are being treated unjustly. they are being treated unfairly. and if you don't do something

they are going to cry out in the tradition that we are trying to keep a life very difficult these days when a poor people are caramelized and demonized on the side but also including our white brothers and sisters and appellation of poverty you would never know poor people even accessed if you look at the corporate media. do it never know poor people exist if you kept track of the dialogue between the politicians with the middle class. the working-class folks with a identity to get paid to months their poor. that is who we are talking about. [applause] it means you have to cut radically against the greens to even talk about the rich and the rest of us. one month before our occupied

brothers and sisters and i want to affirm the occupied movement talking about corporate greed and wealth inequality we should have been talking about 30 years ago. should have been talking about that a long time ago. of 1% of the population owned 42% of the west. 2101% of the population got 93% of the income growth that means 99% of the rest of the population dealing with 7% of the income growth. what does that do, put us against each other. 22% of our children in poverty in the richest nation in history of the world that is a moral disgrace. let us never forget your indigenous brothers and sisters to your precious like each and every one of us no matter what civilization or sexual orientation 40% of our children living in poverty, 38% of our

precious latino brothers and sisters living in poverty and 39%, 100% of the future and obsession with middle class. poor people don't vote. poor children don't vote, poor people vote but not at the same rate. we refuse to put up with that kind of truncated cents devotee. we are told it is a question of not having e.f. money. we gave $500 billion in the plan in the last 25 years to the industrial complex. we find the money when we build jails and prisons in the criminal-justice system but when it comes to education we can't find a penny and we have to cut it when it comes to jobs with a living wage weekend find a penny or we have yelled source.

when it comes to decent housing and dilapidated school systems. when it comes to drones the special powerful the instrumentalities that can tell folks thousands of miles away supposedly telling terrorists were killed how many civilians so far in the last few years crux nobody's kidding track but it's about 850 minimum. we brag about killing osama bin laden pure it is a terrorist, yes he is. we can debate whether he would go back and forth. but when you kill his daughter, that's wrong. no justification for collective punishment.

whatsoever. president and executive power can detain u.s. citizens with no due process, no judicial process whatsoever indefinitely to the interests are tied to terrorists groups or associated groups and i say to myself i went to south africa and they booted me out as a complement. i knew the underground police was tight. nelson mandela was on the terrorist list for 25 years of u.s. government. nobody is going to stand in the way of me being in solidarity with nelson mandela in the struggle against apartheid in south africa and under that same act she would be dragging me off the stage right now. because i'm a terrorist and i

say yes i militant. the militant for kindness. like a brother martin used to say i want to be an extremist for love. that's how we are, brother tavis. it's true. [applause] i was blessed to write a song with a genius his last album of the hero in his basement in cincinnati ohio called when love is a threat, and anybody that looks poor people in america is a threat to the status quo with your question, jewish, hindu like gandhi, secular, atheistic,

agnostic faugh poor people and poor children you're going to cut against the grain, and for your whole life not to be well adjusted to injustice. you're going to be maladjusted to injustice. you're going to be in the playwright that he was and play the misfits. brother tavis mildly and i decided in our text but we are misfits. we refuse to fit into the widespread indifference to the suffering of poor people. we refuse to view them as any way of but invisible we put them right at the center of the discourse but why is it so difficult one to associate with black people black face on

welfare and anytime you put a black face on any issue in america, you can rest assured that unless value is placed on that issue because the history of america and of this legacy of white supremacy is what, lack of life has lost value. you sound like you are anti-american. i've been here for 13 generations. i am antiinjustice in america, not anti-american. that's why the text is rooted in the best of america's prophetic and progressive traditions but our progressive traditions now up until the occupied movement had been so weak and feeble in the last 30 years where it has taken place this attack on poor

and working people and trade unions on poor children power from abroad look at our political system dominated by big money the republican party for the most part deeply conservative version of the oligarch rules of the all st. in the corporation's with the democratic party, neil liberal version of the oligarchy rules so much better than the republicans. it doesn't take too much when it comes to the treatment of working poor than the republicans. better than rod stewart when it comes to the song book. but give me sarah vaughn, frank sinatra and dean tawes bea come

somebody who can really sing why we set the bar solo the democratic party would move year in and year out because we are better than the republicans you are not saying too much we are not just talking about political expediency in judgment. we understand that we are three critical of any of the candidates including a more member of the brother mitt romney, right-wing as he can be. mean-spirited towards the poor for the weak and vulnerable barack obama so much better, certainly better no doubt that's all we need to know that's the beginning of the conversation not the conclusion. why is it that both parties are

extensions of the oligarchs and democrats at the top big money big bank and the corporation. if we organize and mobilize its crushed or infiltrated by the fbi. let's just be honest. in abramoff just sounding brassy that's what this text is about to tell the story of truth that he was talking about to allow severin to speak and that an apologetic loved as martin used to say just this is what looks like in poverty we have been so muted in raising our voices individually and collectively in the occupied movement in the

treatment of poor and working people to be little to speak their truth to try to live their truth and listen and learn from others and then conclude poverty is the spiritual issue of our time. it's not simply a matter of politics and economics and there's no way that american democracy and all of the flaw would be will to survive, let alone thrive, if we don't just wrestle with poverty but we call for the elimination, the eradication of poverty. ' abolitionist. look at the history of the united states. after we so chronically mistreated our indigenous brothers and sisters, stole their land, violated the women and the man and the children that became the land base for the american space experience. then we enslaved the africans.

that became the leader base for the american space. but the first is with what, to overthrow the monarchy because we began as a colony. and i am an antiand realist across the board which means i am and solidarity with the antiimperialism even as the slaveholders like george washington critical of the slave state, the slaveholder states that the imperialism the of over to the marquis de they did but it became what? slavery's we have a second american revolution to read the civil war. 620,000 to do what? fighting over 4 million inslee of africans like slavery, of the midst of the space experiment to madrid black soldiers joined the union army maybe we would not

have sometimes i speak with of those in the south. maybe we should really treated to worry about smiley and west out there running to keep the ghazni grows under strict control but we broke the back of slavery. here comes the american terrorism by another name lunch break for a plaque that slavery until the 1960's crop on the basis of the list slavery, and here we are now 50 years after breaking the back of that american apartheid, the second american revolution. and what we need is a third revolution in america. he's a revolution from a revolutionary christian to beat

deep democrat, peaceful resolution. we need a fundamental transformation of our economy and transfer of power from the oligarchic plutocratic control of resources to the space accountability to the ordinary citizens. oligarchy it's not the demonizing of oligarchs. it's not a demonizing of plutocrats. it is now the fundamental issue and it's tied to poverty and it's tied to the vast social conformity in america in which what? the everything is up for sale and everybody is up for sale and as long as you can be bought, you will never be willing to stick your back up until the truth about the circumstances under which we lived, and poor people will find themselves continually tied into the buying and selling of drugs. the buying and selling of drugs to deal with the survival with

no possibility of the kind of effective organizing and mobilizing necessary for the effort peaceful american revolution that allows for the democracy to flower and flourish and calls the oligarchy and plutocracy into question. that's where we are. poverty is the new slavery and oligarchs are the new kings. and if we have the democratic energy from below, maybe we have a chance. working with the insiders, those that work within the system. we can go on the and on to. maxine waters. but then we need outside. we need folks that are willing to put their hearts and minds and bodies on the line in the streets and the jail organizing

and mobilizing keating love and justice not hatred and revenge at the center. martin luther king jr. died calling himself a what? a revolutionary christian. we shouldn't even think of celebrating his legacy that we don't come to terms with that love supreme enacted in the movement of fraiman hammer and others montfort to keep the tradition alive to each and every american of every color recognizes in a crisis with in catastrophic conditions for. with the hatred or revenge and chaos. [applause]

thank you so much for raising our consciousness and for putting this on the agenda. it's time to hear from you. i have questions from the audience and we have a number of questions, so i think it might be best if i just ask the question and whoever wants to respond can respond. the first question is what are your thoughts on student debt and poverty, and is debt forgiveness the answer to? >> when we know that student that has exceeded the credit card debt its researchers trillion dollars which nobody shows again what kind of value we put on the lives of our young people forced to go to school and college as increasing making it difficult for the very talented poor and working-class students to gain access to education. yet at the same time, when they

apply for the loan, they have to pay high interest rates. none investment bankers get nearly 0% interest rates wouldn't it be nice for the students with any interest rate at all. again, you can see the hypocrisy in terms of how the will to do is treated as opposed to the working people. more and more students are coming to this conclusion in terms of the massive kind of organizing that is taking place. and i think that my only relief for this event that i would say the same thing of relatively when it comes to the mortgage, given the kind of predatory lending of the powerful ordinary people that led to catastrophe. that kind of perspective ought to be part of the discussion and keep in mind nothing that i say is definitive. it's a voice in the democratic conversation connected to public

interest and common good and goes through arguments so forth and so on that's the kind of a voice that i would raise in talking about our students. >> just to follow up, we talk about the middle class the raising of the middle class. what happens to end poverty and recreate the middle class again? >> the last chapter in the book starts with telling a story about a conversation the president barack obama had with the late steve jobs and he was talking about the program he wanted to roll love and he did in fact little to calm his idea for in sourcing american jobs. he talked about that in this year's state of the union address but prior to that speech and prior to mr. steve jobs has

dingley, president of the conversation with steve jobs as we recount in the book and he was asking steve jobs about all of these american jobs that had been shipped abroad and try to get him to talk about how the jobs could be in sourced and he wanted to pick his brain about this, so she wanted to say without blinking or batting an eye those jobs are never coming back. >> this is one of america's most celebrated ceos, corporate those jobs are not coming back. dr. west and i wrestled with for days at this point trying to come up with a single reason many american corporate ceo would be incentivized to actually hire back hit the workers were laid off and i'm

sad to report but at least you know you're going to find in the book as you open up that we couldn't come up with a single reason. the only reason why any major american corporate multinational ceo is interest in hiring the folks they already laid off is the demand for your product is so high the u.s. to put more people on the line. you have to put more people in the pipeline to get the product made. ..

who we gave all of our money to. we bailed them out and you know this, they are now sitting on a trillion dollars that they will not reinvest back in the economy so we gave him all this money without any strings attached and now we are begging them, and folks in washington are trying to come up with ways to incentivize them to put that money back into the economy. we gave you the money and now you are sitting on it. it. it out to be put back into the economy so that is why we don't have jobs, because they won't pour that money back into the economy. we don't have jobs so those jobs abroad and are going to come back on. the president has said not by their so it's a long answer to a simple question dr. green but the short answer is that i don't know.

dr. west you suggested earlier and i concur we don't have an immokalee on the tree. what we call forced to bring together all these experts and craft a plan, a national plan, calling for a white house conference on eradication of poverty, bring all these expert mice together and fashion a national plan to reduce poverty over 10, 15 or 25 years. very quickly these ideas and plans are this. the catholic charities has one, jim wallace of sojourners has one. this is a well problem. we have the ideas. we have the ways & means to put together a national plan to make poverty a priority and reduce it and other countries have done it. we can do but i'd know how you bring the middle class back if we can't find a way to make jobs, jobs, jobs with a living wage a priority and i don't know how you incentivize the greed the american corporations shipping jobs abroad.

that i don't know. >> can i just add though because tavis is the right. and of the reasons has to do with the fact that 40 years ago can i'm% of corporate profits in america were made by banks. today 42% of corporate profits are made by banks. what's the difference? this is between mitt romney and his father. his father was the head of american motors and they produced products for the consumers. mitt romney made his money with banks. he produced products and you introduce deals and made money by cutting workers so you don't produce things that can be bought at all. it is casino like. you are generating big, big, big money, billions of dollars at the top with no productive value for the society as a whole. so you end up with lives of the rich and famous and look serious and the cultural sub-- celebrity

and people that want status of wealth and power and we see it of course throughout our culture. we see it in the hood, the ghettos. we see it in the middle class, we see it in our corporate television. we see it in critiques and we see it in our news shows. the aim is to and stimulate, bottom line, keep the frenzy. thank god tavis smiley amy goodman and the others, we don't want stimulation, we want information, lots elimination. we want analysis of what is going on. the only way to bring the jobs back is massive job creation programs. that's the only way you do it, rebuilding infrastructure, rebuilding the bridges, rebuilding housing across the border and providing jobs and it's not just public sector. he can be a combination that regard that is one of the reasons why it's so difficult to talk about jobs with a living

wage and that is one of the reasons why it's so difficult or our leaders to really tell us the truth. the truth is -- steve jobs row four he died god bless us all. >> we believe destroying the middle class is really not an accident. the rich want to eliminate the poor and ignore policies and poverty, trying to understand this. they want to eliminate said they are using this in order to perpetuate the idea that there should be no middle class. that is not really an accident. it's a very conscious decision. can you comment on that? >> i just think it's greed run amok and i don't want to deal with the consequences. we live in a society that is so obsessed with instant gratification, instant stimulation, instant success.

that is why i was making the joke, do you know what i mean? you can be a highly successful singer and he cannot sing. [laughter] >> that is true. that is true. that is true. >> because it's not about quality. it's about appearance. it's about spectacle and appearance and spectacle tyndale laid with angie stone and anthony hamilton and glenn jones, great singers, less success than -- who have made big money. some of them want grants. i won't follow through on that. [laughter] >> i want to add very quick, in the book we talk about this a little bit. i don't prescribe to the notion that the rich want to do away with the poor. i don't ride that because there is a whole lot of money being made on poverty.

rich people are rich in part because of poor people. there is a lot of money made on poor people. in the back of the book leads debunk these 10 myths about the poor and one of them is that the rich pay more. last night we appeared on my friend stephen colbert's program and colbert has become famous over the last two years for the word he uses, truth in this -- truth ines. we quote colbert, it is truth when you say the rich pay more wealth and essentially the more wealthy make the more you pay taxes but they find a way to not pay taxes, loopholes. something is wrong when you and i and i'm on public television public radio and i don't know what you do for living but something is wrong when a couple of years ago general electric paid fewer taxes then you did. ge headquartered in this state, paid zero taxes two years ago.

not a sense. not 1 penny of taxes for the entire fiscal year. they know how to manipulate and by the loopholes and work the process, where they pay nothing. >> the ceo happens to be the head of the commission on jobs. not to demonize jeffrey immelt but that is true. >> the stuff will drive you crazy. >> president obama's election. the rich make a lot of money off of the poor. it is not altogether true that the rich pay more, and one of the reasons and we talk about this in the text as well, we have a number of national conversations that i moderated for c-span and -- c-span is here today as a matter of fact. [applause] i have been fortunate to moderated number of conversations rod cas live over

c-span and for that matter we repeatedly broadcast on pbs over the last couple of years. in new york here at ny q. a conversation about women and children in poverty in america. earlier this year in washington, george washington university, nbc a conversation that included michael moore and an area where poverty is run amok. michael moore who we give some space in the book to share particular belief, explains in very simple and straightforward detail how and why, the how the crisis came to be. he is a documentarian and he has studied this and then work on it and the simple answer is, what is the one thing dr. green, that the middle-class has that we can rape and pillage? their homes. the one thing they all have, the one thing they all have equity in is their homes. he goes into a deep treatment and i will let you read it in

the book about how in part, in part we got into this housing crisis by going after people who were in the middle class and trying to get into the middle-class. we know homeownership is the surest and safest most secure way in america to start to create wealth and that was the one thing they knew that they had not figured out a way to rape and pillage. they figure that out and the rest as they say is history. there are some great stuff in the book about the middle-class. >> follow the steps because first you have to have two sponsors working -- spouses working and you need a credit card because you don't have the money so all of a sudden now you are in debt and then you run out of debt and the only thing left is your wealth, your house. than your house is gone, so what is left? now they are going into other parts of the world. >> that is what i mean by greed running amok. >> is a human thing. i have got greed inside of me but i'm just working on it. when that greed runs amok like death that than the system

itself begins in an ugly way in the most important thing for me is what happened to the children. >> just to follow up on that, you talked about how poverty cuts across racial division, and the question is, what is the role of continuing racial division in maintaining silence of our class in political discourse? poor blacks, poor whites and poor hispanics have much more common with each other but racial separation keeps them from recognizing and acting on their shared interest. how do we cross the divide and generate the power of the poor? >> divide? i thought we were post-racial america. [laughter] >> this is a doctoral student asking this question, the reality. >> i want the doctor degree to respond to it. >> the truth-tellers come in all

forms. he didn't go to college for two colleges went to him. he is a truth teller. a lot of folks go to college -- if you don't understand the difference between education and cheap schooling, they just want to get schooled and don't want to really be educated and challenge. i think that question about how is it that we can come together as human beings acknowledging the legacy of white supremacy and anti-semitism, anti-arab and anti-muslim, hey check, and so forth that divide and conquer strategy, those powerful persons often reinforce the possibility is coalescing and uniting become very very difficult. we saw this here new york with the occupy movement. those are just young sisters and brothers on the other side of town. they talk about corporate greed,

does that affect you? very much so but i not used to spending time with them. you can contact with the truth they are talking about. if we don't come to terms with that then we have another divide and conquer. let's connect police brutality and let's connect stop and frisk and connect the -- becoming more and more vanilla market driven. let's tell the truth about that and let's do it in such a way that it is broad enough moral vision to allow us to calm together. that is in part what martin was trying to do in the poor people's campaign and that is why he was viewed as the most dangerous person in america. we have got to build on that. >> one of the questions, this is the last question, is the whole concept of poverty is a matter of national security. can you elaborate on that?

how is poverty a matter of national security? [laughter] i saved save that one for last. >> usually we talk about national security that we are talking about foreign policy and wars and external threats. but, we know that when people write the histories of civilizations and the history of social regimes in the history of empires, it's usually as a result of internal rot that imparts collapse. it's not external threats. and when you look at the internal rot in america, all you have got to do is look at the prison industrial complex. all you have to do is look at the schools in the poor children and the privatizing efforts and the attacks on teachers. those -- no serious commitment to it. it. all you have to look in his the

workplaces and how many people are not dissatisfied with their jobs that but feel as if they have some physical -- on their job. wises so many citizens find some instant gratification in self-medication? and addiction, pervasive across class? those are all signs of decay and decline. so when you talk about national security and national -- national security it is internal and that doesn't mean we shouldn't have foreign-policy but that is precisely what we are trying to deal with. >> to add to that briefly, when i say it's a matter of national security i don't mean to suggest in addition to what dr. was just offered. my read of history suggest that there is no empire in the history of the world that at some point did not alter or

fail. every empire has its day. every empire has its moment. i don't know what it is about us in america and i will be accused of being anti-american for even suggesting this. i don't know if that is our narcissism, our arrogance or hubris or a patriotism, our nationalism, whatever reasons we as americans want to consider that we could he on the edge, that we could be on the precipice, that we could be on the verge of imploding from that internal rot, and we take this on, we take this head-on in the book, this whole notion of america's exceptionalism, and there are so many of us who still believe that we are the biggest, we are the baddest, we are the oldest and we are all that and then some because we are the united states of america. and today it -- the data just

does not bear that out. one of two avenue americans is either in or out of poverty. don't talk to me that american exceptionalism. is reading an interesting article today about president obama urging to be more confident on the campaign trail, to be more -- to express more enthusiasm about her future. you have to be more reaganesque and they were pushing him to change the narrative a bit. dr. wes said earlier and i agree when you love people you tell them the truth. the american people are not being told now the truth. i cannot abide another campaign where we get lied to or we don't want to deal with what is happening in the country. and the doctor is right. for all the talk about -- this country is not going to go under due to an outside force. our military budget is still --

we can protect ourselves. that doesn't mean we are not going to get hit again but we have the military might and the wherewithal to protect ourselves. that is not what is going to take us down. what is going to take us down is right here on the inside and the fact that we do not take the issue party seriously in the fact that we don't see it as a national security issue, the fact that we don't see it as the moral and spiritual issue of our time, it's not just a political issue and it's not just an economic issue and it's not just a social or corporal issue. this is the moral and spiritual issue of our time. to the extent we make like the ostrich and put our head in the sand and ignore what all the signs are telling us, we are going down. because every empire eventually goes down. we can put on a happy face in act like we are all that all we want to but this is the reality we are dealing with and we are not the first ones and we are

not the only ones trying to ring the alarm. trying to sound the bell. there are whole lot of folks who have been long-distance runners on this issue but in this residential election season and i said earlier tonight, we cannot go to -- we cannot endure another campaign for the white house with this issue just getting ignored. and all the data just you know, we act like it doesn't fit. and so that is why for me it's a national, matter of national security. that is why for me it is the moral and spiritual issue of our time and again dr. westin die on the poverty tour, we spoke at the poverty tour last summer and we knew that it could not stop at the tour. we knew it could not stop there. we knew it could not stop there and it became talking about women and children in poverty and we knew it could not stop there. we are committed and have been committed collectively to

raising our voices on this bigger issue but there is no time like the present to get serious about this. poverty robs the spirit. poverty robs the spirit of the vision and where there is no hope for the future, there is no power in the presence. there is no power in the presence. when you have half of your -- trying desperately to hold on, 1/2 of your populace is trying desperately to hold onto their humanity, you see where this ends up. there is a reason why each of them exploded and the reason why the human exploded and we don't want to come to terms or wrestle with again howell on the edge we are. now is the time for that. we have to make poverty a priority in this country. dr. green it was wonderful for you to have us here tonight and

we celebrate your legacy. >> thank you are thank you very much. [applause] >> you more booktv coming up on c-span2. in a moment, grover norquist of americans for tax reform talks about jobs and economy under president obama. the book is debacle.

next grover norquist of americans for tax reform and political commentator john lott discuss their book, "debacle" obama's war on jobs and growth in and what we can do now for a future. this event was hosted by americans for tax reform and an american spectator. >> good afternoon everybody. welcome to our newsmaker lunch for today. it's an ongoing series sponsored by "the american spectator" magazine and americans for tax reform. i am jim antle from "the american spectator" and we are here to discuss a new book i

grover norquist, public enemy number one of taxation in america and the economist john lott. over the next few months we will be hearing a lot of positive statistics on the president about how he is turning the economy around and he deserves a second term on the basis of progress toward reversing unemployment and making all kinds of the economic situation better, moving us away from the great recession. the book we are discussing today however, paints a much different picture of the president's economic policies and i think it sums up very well the book title, "debacle" and i i don't think a lot of their portrayal of what the president's record is going to be on jobs, economic growth, the extent of revelation and spending and deficit spending perpetuated by this administration will be very different from what i think you will be hearing on the campaign trail from the incoming president. to sort of kick it off we will have grover start with his

thoughts about what they're trying to do when they wrote this book and their vision for the economy under obama. >> the book has three parts to it. the first is people are more familiar with, the failure freddie mae and fanning -- fannie mae and freddie mac and how that led to the financial crisis, and then part one, and then the question of how the obama and the stray shin and the latter part of the push of administration reacted to that with bailouts and the stimulus spending, for different stimulus packages, not just the big when we generally think of and why that actually made the recession worse and the recovery weaker and creating fewer jobs, increasing gdp less than other countries which didn't see stimulus spending and and a our recovery is weaker than previous recoveries because you can

compare what we are going through now with the reagan recovery, with the ford recovery, recovery back to the great depression or you can compare it with other countries that are going through what we have been going through in the last several years. in both cases, the obama recovery is weaker, less strong and in some cases weaker than what has happened in the past. huai? unlike reagan who got a deeper recession in terms of destruction of jobs, 10.8% unemployment at 10.1 and reagan had to wrestle double-digit inflation at the same time, what obama did was not reduce marginal tax rates and spending from where it was going and deregulate. he did the opposite and particularly on the stimulus package you have to ask yourself, now what was the theory? the theory was if the government would take a dollar from somebody you aren't it coming

either in taxes physically take it or in fact you borrow it and you hand that to somebody who is politically connected, that there are now more dollars in the economy. that there are more jobs in the economy. the idea being that if reid and pelosi and obama went to one side of the lake in each had a bucket and tipped it into the lake and they took their three buckets of water around to the other side of the lake and in front of the "msnbc" camera sports a three buckets back into the lake, they will have stimulated the lake to great depths. this is the theory they were our parting on. not only is there the same effect, the same amount of water in the lake, minus whatever chicago takes home with them, but at the same time what incentives does this give to the person who worked on saturday, whose dollar you took for this experiment? do they keep working? do they hide their resources,

and what incentive does a get to the person who because they were politically connected or did what the government wanted instead of working, they got the dollar because. it give that incentive to the people who receive the cash and disincentives to work saving investment, to the people who are earning for dollars in the first place. it shouldn't surprise us that this didn't help the recovery, didn't create jobs, didn't create more money in the economy simply by moving it from one person's bank account to somebody else's, and it does seem to have surprised the obama administration which continually predicted that now the economy will turn around because we spent all this money and every time it didn't have to have a new explanation as to why it didn't work. usually blamed on somebody many years ago. so the third part of the book is okay, so now that we are have a

weak recovery and job creation is weak compared to the reagan recovery and gdp grew -- growth is very weak now what do we do? that is where we have a 12.12 step plan towards recovery and the short of it is, make a list of all the things that obama, reid and pelosi did it and stop doing them and do the opposite. but it's a little bit, when somebody says okay reduce tax rates, spend less, regulate less, don't inflate the currency, it's not particularly helpful as political advice. it's a little like when somebody says how to get from pakistan to china and you say just go over the himalayas. okay, how do we cut taxes and reduce spending and deregulate and bear in the last chapter the book we go through what it's going to take as we have a decade ahead of us where the republicans have the majority of the house and should keep it because of redistricting. they have 25 net seats in the

house. if you look at the senate seat there are 47 republicans and you are going to need four to get the majority but you need to net 16 to get 60 which obama taught us what you are really going to need if you are going to make dramatic change in congress in the next election cycle in 2012. there are 23 democrats in the senate, 10 republicans and two years later, 20 democratic seats and 13 republicans so the next three years, the two election cycles 43 democratic seats, 23 republican seats up. the republican seats you worry about two of the men of the democratic seats they have to worry about 20 of them. the republican seats in that 13 of those to get to 60 in the next two election cycles. than the question of the presidency is there but if you elect a republican president to go with the republican house and senate and 12 or 14, then you have the opportunity to begin to

turn around some of these decisions and i think the paul ryan of wisconsin's roadmap is aptly named. it is the path to a future that works for america. ..

>> what are the steps of electing the president, and keeping them on a path and getting the economy moving. >> thanks so much, sir. thank you for having us here. motivation for the book was just there are lots of people who have said obama promised certain things in terms of the economy. cannot have your -- [inaudible] >> all right. >> you get a good one. >> anyway, thank you so much. obviously, a lot of republicans

are saying that obama promised a% unemployment if we pass the stimulus. it went up win up to 10%. we just can't go and tell people, look, it didn't work out. you have to explain to people why the stimulus made things work. this strong economic argument as to why there is the case. the stimulus and the other jobs program that grover was talking about, not only are you moving a chilly and dollars from where you and i or companies would have spend spent it, to where the government wants it's been, not only are you moving resources from one company to another or one industry to another, but you are moving around the jobs that are associated with that money. the problem is that jobs don't instantly moved from one company or one industry to another. it takes time. you don't just pack up and throw the kids in the back of the card on a friday and start work in another state in a completely different job on a monday.

it takes months or even years, more refining, for people to move from one job to another, even if they can find jobs. you move jobs in the oil industry in colorado, or louisiana, and you have started jobs in solar energy in california. assuming they are even qualified to go and do that. a lot of the jobs are people who are already employed. that chaos that you are creating, that's yearning that you create by moving jobs around, it temporarily increases unemployment. more than that, you have all these regulations. we have never had so many regulations or regulatory bills passed in such a short. of time. whether it be housing or credit markets and financial market regulations, or health care regulations or epa regulations. that, too, creates winners and losers. moving around resources and jobs and the economy.

that creates unemployment temporarily. there are two ways that you can reduce unemployment. one of the good ways is to get people jobs. the other way that you end up reducing unemployment is people giving up looking for work. if you just look at the period of time from when the recovery started until now, we have had about 2 million new jobs increased unction being created. at the same time coming of about 7 million people stopped looking for work. the number of people in the labor force has decreased. that is unthinkable. during a recession that you have people give up and stop looking for work. not during recovery that you see something like that. i don't know people can see the diagrams. is this working at? anyway, we have diagrams here someplace.

are we going to have the screen up or not? could i have my posters back? is that possible? all right. you know, i will go on to one thing while we are waiting. you look at county jobs. what they will do for county jobs, they will see is the money going to someplace, and if you haven't and if there are any jobs fair, even for people being hired in that industry, we are going to count those as stimulus jobs. the problem is that you also have money being taken from someplace else.

you can see here that these are the all the recovery since 1970. the dotted line is the average that we have. the ones that have grown the most are the ones that have had the biggest loss in jobs previously. so you have the recession, the carter recession of 1980. the recovery afterwards under reagan. the ones for 1970 and 1975. the two low ones are from 1991 and 2001. those are relatively small recessions that you had. this black line at the bottom is the obama recovery. you can see how much worse this is in terms of job recovery than any of the others. i would argue that one of the reasons we have job losses here, the bottom line is 100% -- the reason why it actually has fallen during the recovery for a period of time, is because of the fact that we have had all this churning, this damage

caused by the stimulus itself that has gone and created unemployment while it is moving resources around in the economy. now, the book gives lots of comparisons to other economies. looking at canada here, as an example, one place it didn't go and follow the type of stimulus policy that obama advocated here -- and you can see, in 2008 and the beginning of 2009, the unemployment rate parallels canada is amazingly close. our gdp dropped and also parallels closely. as soon as the stimulus passed, the dotted line you have here. our economy keeps getting worse. canada's levels off and starts to improve. if you look at germany and other countries that also did not follow the stimulus, they are, too, we had the same types of differences. as soon as we have the stimulus,

ours got much worse compared to other countries. now, where did the stimulus money go? there are lots of things you can look at here. you can look at poverty, bankruptcy, foreclosures, measures that show places that have the worst problems. if you believed obama and the democrats, they were trying to go and held out the ones who are hurting the most as a result of the recession. in fact, when you look at where the money went, it it was incredibly perverse. it was the area that was busstop got the money. the ones that were hurting the most got the least. i will show you a couple of diagrams here. if you look at the stimulus dollars and poverty rates, the ones without the that got the most stimulus dollars had the lowest poverty rates. you can see the general relationship with the line there. if you look at bankruptcy. again, a similar type of relationship. the ones that have gotten the most money have the lowest

poverty -- bankruptcy rates, rather than the highest. in unemployment, there is no relationship. states with higher unemployment are no more stimulus. if you were a big union state, you would get more money. but it is not related to things that how badly off the streets were. or thing that explains a lot where the stimulus money went. what that was was, was the makeup of the congressional delegation. the states that had the biggest percentage of that congressional delegation were democrat. we got the most money. basically, the difference between having a congressional delegation that is all republican versus all democrats comes to about $460 per person in terms of stimulus dollars that were there. now, the book also goes through and tries to deal with obvious

explanations for why the stimulus did not work. on one hand, obama claims we will get more jobs every month, a summer of recovery, and it doesn't happen. then there are some excuses that are thrown out. i will give you some examples. one thing that treasury secretary timothy geithner mentioned, that is, countries have suffered bad financials are going to have slower recovery and job growth. well, it's pretty easy to go and check that claim. you can go and look at the countries that claim to have the financial crises, and those that didn't come out and you just see. do we see increases in unemployment than the one on trent ones that had the other? if anything, the reverse is true. if you look at the diagram that we have here, the countries that are in the bold black, are the ones that were -- the ones that

were apparently facing a financial crisis or were not facing it -- and the gray one is the ones that work. if you see a bigger increase in unemployment in the countries that were not facing a financial crisis. you can show the same type of thing with regard to gdp. we go through a whole range of different types of explanations here. okay. you know, -- the important thing here is that if you're going to convince people, if you're going to help them understand why these policies failed and hopefully not try it again -- not to tell them that it failed in certain things were promised and didn't come through -- what is often happen is people come back and say well, this is a special case and we blame it on this or that not working out. fine. you have to go and answer those

questions. i am very proud of this book in terms of how we go through and knocked down each of these claims made by them. you also have to provide a basic theory as to why this failed, and i think we do that also. i greatly appreciate your time. thank you. >> [inaudible question] >> a maker phone that is all. we had a republican approach to regulatory regime. we still had a great recession. that is an argument. >> much of the fannie mae and

freddie mac challenges could have been pulled back. it wasn't all legislative. unfortunately, the bush administration did not have limited government spending on their to-do list. they should realize that you're not supposed to raise taxes and there were some tax reductions in 1981. there were the cheney tax cuts designed by the vice president in 2003. cutting the capital gains tax and dividend tax. every time president bush ran into a problem, he threw the government out of it. you saw that in louisiana, you saw that with oxley and enron, each time there was a challenge from you saw that with the financial crisis when they won the first $700 billion in spending in t.a.r.p. and $350 billion for the next administration to throw at it later, too, there was a real challenge. the bush administration sort of

said don't raise taxes, but they didn't do part two, and that is where the tea party movement came in with a two by four and instructed the modern republican party has so far so good, don't raise taxes. the other part was the regulatory burden, which bush did not pull back. frankly, he was distracted by the mayor of baghdad for a number of years, and he did not focus on maintaining the limits on government spending. that said, everything who are dead, fdr did worse. i don't want to suggest that bush was as bad as spending as obama, but he was moving in the wrong direction. >> john, in your talk, you lay out a lot of the funds did not go to the state that were most affected by the economic crisis. is the problem with this stimulus funds were misallocated, or that the entire idea of stimulus spending is misguided?

>> you go and take money from certain places. you go and take it somewhere else. that is not increasing the net jobs. maybe one can make an argument some time that government might know better than individuals where they can get a higher return. i am skeptical about that normally. you're not going to be increasing total number of jobs. what you are doing, is increasing unemployment temporarily. that is the reason why you see this drop. the stimulus is over. now, the stimulus is over and you are starting to see some recovery. well, that should've happened before. the stimulus delayed by creating all this churning, it delayed recovery that was there. you have to -- actually you have three problems. one is the stimulus actually created unemployment. secondly, it moved a lot of our wealth to places where we get smaller returns.

there is a reason why people were not investing on their own in ethanol or in these alternative energy forms. the return from those investments with less than people could have gotten some place else. we are making ourselves poorer for the future. the third thing is, this has been a giant wealth transfer. when you look at the stimulus basically requiring unions to go and get it, or supporting public union jobs that are there. you know, maybe we can make an argument that you should have more teachers or teachers who get even better pay than they are getting previously, but that was not the argument that was being made for why we should have this. it is public employees and unions across the board. if you're going to go and build a road, why does it need to be dealt with union workers? why not just tried to figure out the least costly way we can go and build a road for the taxpayers?

it is not just them. we had other things beyond the stimulus, bailouts for general motors and chrysler, which doesn't even include a lot of attacks of these and other things we have given them. this is probably the largest wealth transfer that we have ever seen in our nations history. it is primarily been heavily democratic areas. and rabbit punch and relatively wealthy areas. the whole point of the stimulus was to help. >> let's open it up to questions. when you ask a question, identify yourself and who you're >> any questions? >> the question i was going to raise. it will clarify things if you tell us more about the transfer of wealth to the auto industry.

that was the case where it seems to follow your criteria for what they did. at the same time, as i say, to clarify my understanding of that, michigan was pretty hard up. it is true that they were high up as states go before the crisis, but they were hard up in years of decline in auto. at least in the popular perception, the auto industry is, perhaps, in strong recovery mode. >> right. thank you very much. i'm not saying that all the sermon this money went to well-to-do places. but much more on a per capita basis went there then two states that were poorer. look at the graphs. you can look at all these different measures, whether it be poverty or per capita income

or bankruptcy or foreclosure is or unemployment -- and it is not where you think it would go. if that is who you wanted to help. with regard to general motors and chrysler, one of the myths that has been put out here is that if we didn't go in bail them out, all of these jobs would've been lost. you know, anybody who deals with bankruptcy, they know that judges don't shut down operations that are viable. that is not the point. a may sell up certain things, but there is no reason. the exact opposite happens. they try to protect those operations during bankruptcy so they can keep going. now, not only do we give general motors $50 billion, indirect stimulus funds, but the obama administration gave them another $45 billion in terms of tax breaks. they basically rewrote the tax rules they are, and the next

$45 billion of profits that they may, general motors, they are going to be able to write off. that is unheard of. those two alone, not including the other money that they got from the stimulus, they got plans, they got developing batteries, money for that come all sorts of things that are there -- if you take a look at general motors price today come in the value is something around $30 billion. it doesn't even come close to the first 50 billion. let alone the other 45 billion that is mayor. in fact, it is interesting. right for the government had the stock offer for general motors in this new general motors -- about a week before it may -- that is when they announce these two tax breaks. i can only imagine how low it would've been if you didn't

throw another $45 billion and, presumably it would have been around zero. so, you know, with the main impact of that was to preserve existing union contracts. what normally would have been in bankruptcy would have been preserve vital operations. renegotiate, things like labor contracts that were there. they protected them. they not only protected the unions from it having to renegotiate contracts, but also they give them a massive wealth transfer because money was taken from the bondholders and essentially given to the unions in terms of stock ownership. that has other repercussions. that makes investing the united states riskier than it would have been otherwise. >> do we have another question? >> can we have the microphone?

>> sometimes i think when we discuss these things, it is if we think they don't know what they're doing. but they just can't quite understand. i come from the position of thinking that they know exactly what they are doing. it sounds like perse buswell chaos. i would like for you to address that. >> it is certainly purposeful. look, the stimulus package was written in the basement of the house and senate. it was basically one collection of iraq's stapled together. this is a time when people are promising not to do earmarks. it was all done in secret after the president announced that his legislation, obama announced it, remember that promise? it is not how they did obamacare or stimulus. it is not how they organized the

new regulations on banking. the dodd-frank legislation. dodd-frank, the two gentlemen who have as much to do with bankruptcy as anyone else, they were put in charge of fixing it, and they wrote a bill which regulated everything except fannie mae and freddie mac. it is almost a comedy, but it is a dark comedy. this is an administration that has imported economics and ethics from chicago. they view the proper role of government is taking money from people who don't vote for you and handing it to the democratic precinct workers. the fact that people have lost their jobs, they don't care. this is a administration, the president who talks about wanting to cut the marginal tax rates on businesses from 35%

highest tax rate in the world today, down, some are, what he also wants are the same time is raise the taxes that small businessmen pay because they pay the personal income tax, from 35240. it is very nearly apolitical series of decisions to tax people who don't vote for them. why the war on oil and natural gas? until recently when we had a fraction, oil and natural gas were found in states that don't ever vote for democrats for president and tend not to elect democratic congressman. senators have the war on texas and louisiana and oklahoma. it is all political. the fact that it is not working economically does not bother the white house. in their view, at least until 2010 and the election, it was working politically.

politically, they don't care that cost people jobs economically. >> i think there is one other point to add there. you go and have government policies create more of a problem. the call is that we need even more government to try to solve the problems that are created. you look at the great depression, you have a lot of government programs, a lot of economists will argue that it made the great depression much worse. it calls for more government intervention. that may have been part of what is going on. i think the main thing is -- i am willing to give people the benefit of the doubt. i am sure that a lot of the money was specifically done to create wealth transfers. they probably thought they were doing the right thing. but the problem is is this

keynesian theory that i thought was dead 20 or 30 years ago among economists. it is attractive to think that if only the government spends money that will create jobs, will we see those jobs that are created? but you don't see it. what you don't see is that the money we borrowed, and the people we borrowed it from, they are not spending it there. we have taxes. moving money around, we see the directing that the government does. we don't see what is lost. when they count up the jobs that are there or other things, it is understandable why people would forget these types of things, but that is her job. to try to remind them and say look, you have to look at the entire picture, you can't look at where the money is being spent. you have to look the other impact that it has. >> next question? >> i am with "the american spectator." john, with your point about visibility. i am wondering in your

recommendations, if you could try to address the visibility issue. the new deal was popular and people look back on a calmly because they say you could visibly see that something is being done. in times of crisis, people feel motivated to try to get something done. they want to see the government is doing something. a lot of things like removing regulations is invisible. it is not something that the public can visibly see. any of your recommendations, do they address that? if not, how would you handle that? >> you are right. that is kind of a problem. you go when you have people dig ditches and have them fill up again. you see the guys that are out there. it may not -- they may not be doing something worthwhile, but you see the jobs they are. you don't see the jobs that are lost. that is one problem with selling these things. there are things that you can do, hopefully, there are somethings you can do that you can see the effects relatively quickly.

at least you can slow the problems. i will give you one simple idea. as of april 1, the united states will have by far the highest corporate income tax rates in the world. the problem that you have is that we have a world capital market of literally hundreds of trillions of dollars where people are trying to go and get the highest return that they can do it. you are an investor. you try to make decisions. do i invest in canada or the united states? if you invest in canada, you get to keep 15 cents more of every dollar that you make and if you invest in the united states. that gap will get bigger over the next year or so. you know, if you can go from having the highest tax rate in the world to having something below the average, hopefully a bottle of the average, all of those hundreds of trillions of dollars are going to flow towards you. a lot of them are. that is not only going to

increase investment, but it will make workers more productive. when reagan changed the tax rates, at that time, we were relatively competitive after those changes. we saw huge investments in the united states. it was associated with very quick increases in employment and increases in wages. people have been patient and waiting a few years now for some type of benefit here. i think if you were to go and make that type of change, just that one change, you would see huge investments and a relatively fast turnaround. >> one of the challenges that you have is the government does one law, it affects everyone in the country, and it was tough to tell if that is what is making things better or worse. but we have 50 states. there, it is a little easier to compare what works and what

doesn't work. that gives you some of the transparency that you were asking about. what i have here is a chart of those states. the red states have a republican governor and a republican legislator legislature in the house and senate. when they get together, they can pass anything. there are 11 blue states. the democrats have the governorship and both houses, and they can and are turning themselves into greece. california, illinois. then there are five yellow states where the republicans have both houses of the legisla3 then there are five yellow states where the republicans have both houses of the legislature, but not the governor, and three green states where the governor but not the legislator. what is happening now that is going to become even more true over the next decade, because these colors on the map are not likely to change very much over the next 10 years, redistricting , republican states are redistricting themselves and

the blue states are redistricting themselves to be democrat state legislators for the next 10 years. the next 10 years from the republican states will be spending a little less time attacking the less, having less regulation and doing better on reform. you also see blue states trying to reform taxes, not reforming pension systems, having more regulations and giving the labor unions more of what they want. so we really are seeing a sorting out, not a north-south split or a coast versus the center of the country, but look at the red states and blue states -- people are going to be continuing the process of moving to lower tax states and states with no income tax or low income tax. another decade of that, with this exacerbated -- instead of having gridlock in washington dc, we have a gridlock senate and house that passed

legislation now in one direction. in the 50 states, you're going to see quite a number of the states not having gridlock, but the opposite. all the republicans get together and cut taxes in texas. while the republicans get together and end teacher tenure or give more parental choice. louisiana, florida, idaho. all the democrats get together and continue everything they have been doing to make illinois the place that illinois is today. the country is going to be moving in a tremendously different direction state-by-state. i think that will help give some of the clarity and transparency about what works and what doesn't. we are to see that now. we see that in the failure of our american cities run by democrats versus areas where the democrats don't have that kind of control. go 20 miles outside of the democratic mayor's control, and you have schools that work better and roads that are paid better. it will be clear as it goes state-by-state. >> another question?

>> i just got the book, i haven't had a chance to read it. but i wanted to ask you about three things. one, the market that got changed him and nobody talks about the impact that had in helping the economy be brought down, in one day, on publicly held companies. second, the fact that this administration has people in it but have never even held a private sector job, let alone created a job. what impact do you see there. third, that europe now is finally recognizing that they predicted their debacle in what we can learn from that. >> okay. well, i mean europe, they are

further down the road in terms of problems. but we can see some parts of the continent, which i've learned, germany for example, has seen its unemployment rate decline very quickly. after the recession hit. they did not go and follow our policy of going greatly expanding government spending, you know, it and huge deficits that were there. they were fairly innovative and trying to reduce some of the regulations that they had. other parts have gone down the road. you look at greece or other countries. they have continued to borrow. hopefully, it is a warning to us. we have this huge increase in debt that we have had. at the end of the bush administration, publicly held debt in the united states for the federal government was 5.8 chilean. now it is about $11 trillion.

it has doubled in three years. that is bad. when you think about the fact that we may be talking about $100,000 per family of four, in terms of increased debt, but looking at countries like greece or portugal, you can see how quickly these things change. each 1% increase in interest rates in about $150 billion more that you have to pay in terms of interest for the federal debt. just a few% increase their. a little bit over 2%. we are talking about $500 billion a year. what is $1.3 trillion debt this next year, could be near $2 trillion. when you start having those types of deficits, and that increasing debt, if your credit rating falls more, you know, interest rates go up, and you quickly find yourself in a situation where what was difficult to pay becomes almost impossible.

then your credit rating falls more. interest rates go further up. you quickly find yourself in a real crisis. even a small country, like greece has found. others, including the united states, bail them out of it. well, you know, to answer your first question, what would cause the problems here -- there are lots of regular tory issues. i think the clear one was what happened in mortgage markets. where we go through this and we talk about how people like larry summers and geiger -- timothy gr and the role that they play in this. they were forced because of threatened legal action by the federal government, people don't put down deposits on homes. that can work on 10 work as long

as possible. as soon as they go down, and they start going underwater, and they walk away, then you have the whole thing spiraling out of control. >> you brought up the question of the private sector experience. i am not a big believer in bringing businessmen into this businessmen tell everyone what to do in their business, and they actually do it. they can fire people who don't do the job. if you get to be governor or senator or president, that is just not when the world works. it is a completely different skill set. scott walker, the governor of wisconsin, who is saving wisconsin and turning them from a deep blue state to a red state, changing it so that the units are not allowed to loop all the teachers, they got rid of tenure is so that that teachers can go way.

they are not giving the teachers unions millions of dollars to some of these mandated insurance companies that the teachers unions set up. scott walker, if he had been a banker or a business guide, had he become governor, i'm not sure that he had the skill set that he did have because he had been a local elected official and knew how crippling those labor union contracts the government sector contracts were. we need to be set aside. the reforms that they did there was that unions were allowed to -- they were not allowed to impose work rules or negotiate on pensions. they can negotiate to raise their pay up to inflation, but not beyond that. they got rid of teacher tenure, which no matter how better to just come in to get to keep their job and keep getting paid more and more. all of those reforms were ones that scott walker could do and knew would work and understood it because it actually worked in the government.

i think the question is, not so much that the obama type people don't have private sector experience, many of them are academics. they don't like the free market and they don't like the business community. it irritates them because their parents told them when they were young but he worked really hard and you study hard in school, you will be rich, which is not true. these people got a grades and they are not rich. they see the people who dropped out of college, and videotape the heck out of them. life is unfair because mommy promised if i did well on my sats, i would be rich. they think the world is supposed to be stratified at how well you did on some sort of exam rather than what you did that was productive that other willing people are wanting to pay for. i'm much more value skills and managing government, connected to somebody who understands the concept of individual liberty and favors it. then somebody who may be able to

manage the private sector while, or who comes out of technically the private sector, university, at least not necessarily the state. but someone who is hostile to the concept of individual liberty and property rights. yes, they don't have private sector experience. that is not their problem. the problem is they don't like the people in the private sector. they don't value what they do. we're talking earlier about the transfer of wealth from people who earned it to the people who got checks from the government and the stimulus package. you see that also in the energy field. what is this administration about? taxing energy that works. oil, natural gas, and using it to subsidize energy that does not work. ie doesn't produce energy at reasonable cost in place of the many needs it. windmills and solyndra and algae and all this stuff. the reason they call it

alternative energy is because it is not energy. they don't refer to nuclear power is alternative energy or gas or hydro or anything that actually produces energy. those are not alternative energies. alternative energies are things that aren't energy until you add large quantities of money to them, and then they can't pay for themselves. just as with the stimulus, where you took money from where it was earned and what was valuable, and where 300 million people decided it ought to be, then you have one bureaucrat who took it from them and put it where he thought it ought to be, substituting one guy's judgment for 300 million people and their judgment, and you move it from an economic news to a non-economic use. their energy policy is that way too. >> the center for urban education. my question is regarding urban

inflation. you touched on it briefly. considering that goes hand-in-hand with outrageous spending and the increase in the debt over time, i was wondering, we also touched on disability. you can't get as much visibility as you would like with an unelected officials such as ben bernanke. he is being painted the world over as the savor of the global economy. how do you approach that? i know that i dipped into several debacles myself, several debates with friends of mine who are more of dickensian persuasion who think it's a great thing, i find myself on the defensive, simply because the messaging is there that is promoting him as a keynesian poster child. >> interestingly, you do have real support for ron paul's suggestion that we are the federal reserve. how about auditing it, and the fact that anyone objects to that

really makes you wonder. he didn't think there was a problem, then they say would you mind if we look? and they say don't look. why not? why not audit it? that is an important conversation piece, and yeah, we have to worry, when somebody puts a lot of money coming you will end up with inflation, and it is a huge concern. >> a lot has come through in terms of where the feds have put trains of dollars to bail out banks worldwide. that is just in the united states. we have been subsidizing a lot of the world. it should be something that was debated rather than was not being debated. you know, as far as government spending -- i don't think causes inflation. we can talk about waste and we can talk about things that would've given us a higher return there, and we can talk about how it lowers our wealth, but basically, what causes inflation is if you have an increase in the money supply.

you know, it is like if i had twice as many apples tomorrow is ahead today, the value of each apple will be less. if i don't have twice as much money out there tomorrow as i have today, the value of each dollar is going to take more dollars to go and buy something than it did previously. borrowing, per se, doesn't cause inflation. government spending doesn't do that. there are lots of problems with those. those i would not say inflation is related to it. >> i should've clarified. regarding the fact that he is being held as this keynesian regarding that his approach is entirely keynesian. >> he basically controls the money supply. dickensian stuff about running these large deficits, i mean, a couple of times, he has expressed concern about the

large deficit that we have had. i don't think he would probably call himself a tense in. i would not agree with everything he has done, but you know, what the federal reserve does has not been related to the type of keynesian policies that obama has been doing. >> are there other questions? >> i am from tohall. even over how the government you have any positive or negative feelings on some of that broad-based tax cuts, temporary, obviously, that were included in the stimulus. and whether they were a positive or negative were not very useful at all. >> obama talks about the tax cuts and the stimulus.

the problem is they were done the wrong way. if there was one thing that reagan tried to get across to people. the important thing is the marginal tax rate. how much do you have to pay the government for each additional dollar that you earn? if government takes more and each additional dollar, you're not going to have the same incentives to work hard and expand as you would have otherwise. the problem is, the types of tax cuts that we had were credits or deductions that got phased out along with other ones. they got phased out as you may more money. what happened was the obama tax cuts lowered the average tax rate that people paid, but raised the marginal rate. not only would you have to pay the official marginal tax rate of 25 cents on earning another dollar, or that you lost -- since you lost these credits that you had there, the effective rate could be 40% or so. you know, the important thing it is the marginal tax rate.

obama raised his tax programs that they raised the marginal tax rate for people. >> in the tax credit that is refundable, it is spending. if they are writing a check, it is not a tax cut. it is stunning. a lot of what he called -- tried to call tax cuts that were actually writing checks to people who did not have a tax liability. >> how can a candidate asked the question to voters on the street, are you better off today than you were before, and gives some simple understandable example of how these policies have been at the bottom, whether they are better or not? >> well, the discussion we are having now on health care. people told one thing when obama

ran for office. look, obama was a very good candidate in 2008. he wasn't very good president. about a year ago, he quit being a president and decided to be a candidate again. he is now spending this year being a candidate for president. which means everything that he is doing is political as opposed to actually policy. that's what the democrats and the senate don't actually write a budget. the president likes to talk about things he likes to do. anything that the president or democrats in congress tell you, we want to do this or that -- for two years, they had the house come in the senate and the presidency. they could've done that. when they tell you what they want to do something now, it's not true. they wanted to do it, they would've done it already. everything they have it on his own list of things. they have a collection of things they want to do, but they're not

talking about because they want to get past the next election. you can only imagine, not just on defense issues, but taxes and spending, what are the kinds of things that they want to do that they don't feel comfortable telling us between now and the last time we ever get to vote on obama? on health care, he said would reduce the cost of health care when they ran past obamacare. it is now clear that it is increasing health-insurance costs, and the total cost of the government is now twice what they thought was going to be. you are pointing to what they said they are going to do, what they did, and people know, from questions of how do you approve how obama is handling health care and the economy and so on -- people know that they are worse off than they could be. i would hope that the people wanting to replace obama and harry reid and democrats in the house, would focus on how we can improve things in the future. yes, you have to step back and say the other two made it worse. here's how we make it better. the american people do want to

be optimistic and forward-looking. we need to talk about what we're going to do to fix things, not do what they did. which is to spend their presidency whining that every problem they have every face was caused by somebody for years or 10 years ago. they have to point out the mistakes that were made and immediately switch to how we fix things. >> the number of -- the economic numbers you can point at to show how things have gotten worse over time -- one does not even know where to start, almost. you look at the increase in poverty during the recovery. whether you look at the number of people in the labor force during the recovery. as i said, we have had seven more million people not in the labor force, just during this recovery. not even looking at the reception beforehand. whether you look at what happens to wages -- i mean, the jobs that we have in wages. these are things they would normally see during a recession.

not during a recovery this year. you look at the number of new hires. the bureau of labor statistics has been collecting these numbers since about 2000. if you look at 2000 and one the recession started, officially in december 2007, 5.3 million people were being hired on average each month. during the reception, that felt to 4.1 million per month. during the recovery, it has gone down even more. about 3.9 million. you know, you don't expect the rate at which jobs are being hired -- people living hired for jobs, to fall even more during a recovery, then what was occurring during a recession. you know, i think it doesn't take a lot to convince people that look, we have had this drop in unemployment. but you can see that the big drop that we have had is primarily from people giving up

and not looking for jobs. you are only classified as unemployed as long as you're actively looking for work. we can break it down, as we do in the book, and show how much of the job to the extent we have had a job, and we have never had a recession. thirty-three months into a recession, you are still talking about over 80% unemployment. thirty-three months into recovery that you were still talking about over 80% unemployment. how much of this drop that we have had is people giving up looking for work. >> we have time for one more question. >> does anyone have a question? the map right here. >> hello, grover. i have a personal question for you. i saw you on jon stewart. i was wondering if you are doing a book tour. it was that one of your more difficult interviews, and did he give you a fair shake?

>> stewart was fun. i did the show once four years ago. what you do is they do it live and tape. six minutes ago on television that night. you foment and 86:00 o'clock and goes on at 11:00 o'clock. after they do the six minutes into the interview, they do what they call the extended interview. that goes online. we did 20 minutes. stewart is kind of a liberal. he is a serious person. he is cynical and he will call out obama when he thinks obama is being nonsensical. he will do the same thing to conservatives. he is not a left and center -- and i have great fun. half an hour, back and forth, it's minutes which is on tv, and the other 20 something minutes is online.

it was great fun. very serious, but he kept asking questions. he had lots of a good staff with great numbers. you could not get them anything around him are passed on. he was very well-informed. it was fun to do. he is the a comedian, you have some points to make. let him do any of the jokes. don't try to step on his territory. >> one last thing. when bill clinton ran against george bush in 1992, the recession had technically been over before it bill clinton declared his candidacy. bill clinton was still successfully able to run against the worst economy in 50 years. do you think obama, by citing some of these more positive statistics, because we are technically in a recovery, runs a similar risk of appearing out of touch with the way perceive the economy? >> obama has behind him the three networks cheerleading, which is what he had for him in

1992. now, there are more cable shows and talk radio opportunities. there is a second media, as well as the status meant. i don't think he can quite good about the nature of it. the other part is, too many americans know somebody out of work. they know that their own wages are not going up. they know the problems that are created. i don't think you can imagine an economy that isn't there. but between now and the election, you won't leave the believe that the world's problems will be solved. >> the media -- they have been doing their best to paint the recent few months as being incredibly rosy, we have had over 200,000 jobs. those are seasonally adjusted jobs. the real question is about whether the rules that we use right now are useful in the current recovery.

this is such an unusual recovery. for example, we have 200,000 jobs that were created in january. that was only a little bit more than 160,000 you need to keep growth with increase in working age population. the reason why we actually lost 2.7 million jobs in january, it is only because of the seasonal adjustment that you get that increase. the only reason why you get an increase is because it was so bad a few years ago. you know, when they say that 2.7 million -- they compare to what has been in the past for january. they say this is a relatively smaller drop than what we had four years ago. everything else, you had the same baseline that you had five years ago -- we would actually have a job loss. i think the reporters need to go and explain how this is such an unusual recovery. i don't think they are doing now. hopefully, the people -- you look at polls, people themselves

know whether they have jobs. they know whether their friends have jobs or have given up looking for work. i think ultimately, that will make a huge difference. >> i want to thank john lott for being with us today. please get this book. it is important. [applause] [applause] >> spend the weekend in wichita, kansas, with book tv in american history tv. saturday at noon eastern, literary life with book tv. american presidents and black entrepreneurs, from business and black-and-white. and dennis money on the beechcraft in the barnstormer and the lady. also, browse the bookstore. kansas aviation museum. a kansas civil rights movement in 1958. they sent him for service at the

drugstore. once a month, c-span's content explores literary life across america. .. washington journal airs every day starting at 8:00 a.m. eastern. next, james talks about

inequalities in the global economy. his book "inequality and instability." a study of the world economy just before the great crisis. he spoke at m.i.t. international studies. it's an hour and fifteen minutes. greets. thank you for coming to this quorum hosted by m.i.t. center for international studies. my name is david i'm an associate prefer here. before i introduce the speakers i want to talk about the foryum of the event. we're going to talk about with the professor speaking about his book. we'll have discussions and comments by rachael, and then we will open up the floor to q and a. again during that time we ask that you come forward and use the microphones that are available on the floor. so first of all, we're happy to have professor james here with

us today. he's the junior chairman in government business relations and professor of government at the university of texas at austin. he is a senior score lar of the economics institute and chair of the board of economists for peace and economy. he writes a column for mother jones and occasional commentary in many other publications. the new book which he's talks about today is inequality and instability a study of the world economy just before the crisis. the other books include, "the predatory state" "balancing acts" and creating on equal the crisis in american pay. he's coed tit a number of books. we're please bed to have him today. we're going to ask him to speak for twenty minute the and move

to discussion and question and answer. thanks. [inaudible] professor, soon to be professor -- soon to be my colleague at the university of texas. a good pleasure to be here. on the day when election results in france and greece call attention to a changing popular mood, at least in some parts of the world after four years of unresolved economic crisis. i'm pleased to be here. at m.i.t. to talk about a bock -- book that studies some of the issues that are real vabt to the

onset of the events with which we have been facing in recent years. it's a pleasure to be back at cam ridge which is my hometown. the study of economic inequality, has been a coming thing in economics only for the last decade and a half or so. it was a back water for many years following the end of world war ii for the first half of the post war period and only began to catch interest of the economics profession in the 1980s when it became clear that things were changing, that they were developments of interest in respect inequality especially in the united states was getting worse.

over the years since and particularly in the 1990's, there developed a dominant narrative on the subject, in which the classic economic motions of supply tended to predominate. that is to say, developed in the literature in the explanation of inequality based upon technology and the demand of for skill, education, supply of the skill. immigration and trade and the supply of unskilled labor contended forces operating in the labor market, but operating in ways that economists understand to be substantially microeconomic driven in character.

this suggested that the environment in which the forces were cooperating was substantially self-contained labor market which is might be looped to each other but only by the kinds of channels i just described by the i did i did fiewshes of technology, by the migration of workers by trades in good with difference ever differing composition in the labor that puts them together. if you went to the journal of economic litedture, in fact if you go there today and ask how you would be able to classify an article on mark macroeconomics and you would find that's no classification. it's not oriented to thinking about the problem of inequality in those terms. this is something i have been engaged in trying to change for quite a long time. i did a book called, "created

unequal; crisis of american pay" in 1998 which reviewed the literature particularly focus on the united states and came to the conclusion that the narrative framework was noted a dwoit describe what was actually happening and that one needed to have a much clearer picture of how inequality movement of inequality fit into the ongoing evolution of economic conditions. this book, inequality and instability" extends that work to the world at large. and does so in the first instance as the earlier work also intended to do by building on a very substantial project of the collection of information of

data. of measurement of inequality and the movement of inequality around the world. i begin the book with a quotation from a cambridge, massachusetts law firm about the proper role of information gathering at the root of this kind of -- inquiring. i was not first obviously to realize that in order to understand something about the movement of inequality in the world of economy, you are had to good information on it. very capable people had done a great deal of interesting and important 0 work in this area particularly in the 1990's when at the world bank and later at the wider [inaudible] the world institute for development research scholars

had assembled the mas of measurements survey measurement was inequality had been done in the world up to that point. the problem with the work was not in the collection of the data but in the fact that the origin nam source data simply wasn't rich enough to give a reliability picture of what it going on. that was for two reasons. one is that surveys are expensive, and they were in many plays quite rare so that long periods might pass years upon years in which a survey adequately high quality was not taken in many countries around the world. and secondly, where surveys did exist, the object being surveyed by was often quite head are genius. sometimes to say the surveys were income, extendture, where you were looking at the income concept and the concepts were not consistent from place to place. not the fault of anybody working in the area but a problem for scholars attempting to work with

the resulting data collections. and one of the consequences of that, was that the literature built upon this work was quite indefinite knit what seemed to show. in particular, one of the great original insights of development economic research, that of simon relating inequality to income level as the development process progressed, [inaudible] and i actually have a wonderful shorten exchange of response with paul sandalson. he wrote that he was write until he wasn't right anymore. it was paul's view it was a per perfectly reasonable view based on the evidence as he had seen

it. there was a great deal of literature which i think was inspired in part by the -- let's say war shack test quality of the block quality of the information, relating inequality to economic growth. it was a low-degree of inequality conducive to a more rapid rate of growth or was a higher degree. the better wellspring of stronger economic performance. this kind of thing became a staple of the economic research. what we did was to find sources of information which had not been tapped to provide measurements of inequality. and those sources of information turned out to be extensive and easily drawn on as a body of

let's say source data from which measures of inequality can be calculated. i won't go into the technical details here, they're ready available and i can explain them if anyone needs me to. i will talk briefly about what we found at the world level and then a little bit at the national level. at the world level, it turns out that this work by work strongly validates simon's core insights which is that the driving force behind economic inequality is intersect yule transitions in the process of economic development and change. in particular, changing patterns of industrial development, chaining pot earns of the roll of finance.

here is a style disaition of that argument which holds as he did, but if you are in the initial fazes of economic development moving from agricultural to -- income you have the differential between the country side and the factory and the farnl. the dirchltdial tends to moderate and decline in the process of centralluation as it deeps -- the and the economy because you have ongoing processes of growth of democratic and the union decision and social democracy in the process of urban decision. that story seems to be substantially true. we found for the richest countries in which the united states is a prominent example, countries which are supplying advanced technology local goods, financial services to the world

economy, a period of strong economic growth raises the income level at the top. and so you have a relationship in which as income continues to grow rapidly inequality actually gets more extreme in countries like the united states. and to put in a nutshell, in a stylized fashion, the argument i make in the opening part of the book, in the 1980s and 1990's one had broad ltd. following phenomena. at the low end of the scale in china, income was growing rapidly and equality was growing rapidly. at the high end of the scale we had high growth income in the late 1990's as a result of the credit and equity driven boom in finance in equality. but for many of the world because of the debt crisis

because the stress of high resource costs and well commodity prices for those who were exporters, things went backwards. if the model is correct, you would expect inequal toy rise there as well. that's what the evidence shows. show you have -- so you have a -- too simple but still an explanation for rising inequality under the conditions in the entire world. the second point that the curb is not necessarily stable, it does in fact shift at the shift and is a -- has a common pattern in the world economy. and we extract that pattern from the data set from the information we have in a very simple way. that is, if you look, this is from something called a two many of way fix effect model panel data set using the time effects as a time series to show the common pattern of the movement

of ino'quality in the world economy over the period from the early '60s to early '00. what you can see there is initially a fairly stable period comes to an end 1971. a short period of declining inequality between 1971 and 9170 which the coensyndsed with commodity boom and the debt. driven expay in some bards of the -- that peeks in 2000. this is the period that george refers to as the super bubble. i would also call it a super crisis. for much of the poorer population of the world. it's interesting that this measure of inequality almost exactly with an entirely separate set of measures which are so-called son accept one inequality measured between countries on weighted basis and the same pattern that you find

if you take the profit share in the oecd countries. they have all the same turn point and the same pattern of increase from 1980 to 2000. this suggests that the movement of inequality is not something which is id owe sin karattic, depend upon the policy of individual countries except in some cases where countries truly did isolate themselveses from the world. but rather part of a common global process which was, i suggest, driven by mainly by changes in the financial regime. that is to say from 1960s to 1971, you're under brett woods you're in a credit broom and then in a massive credit bust which rolls around the world latin america then to central europe, soviet union and final asia in the 1990, and that is a

massive period of rising inequality which again, peeks so for a as we can tell in 1990. i have data on whats over the period from 2000 to nearly the present in the united states what we find is that there is a kind of saw-toothed pattern in the u.s. after that. i'm come to that momentarily. the ability to measure inequality a lot of different countries in a fairly they are row going way, inequality comes pay of wage structures, depending upon what your data source may be. [inaudible] enables me at my mostly student associates did a great deal of this work, to do a study of a number of important economic relationships, and to call into

question in some certain ways some others a aspects of the economic orthodox. one of which, as i think everybody knows particularly, europeans has been the claim that the united states hold an advantage in employment over europe because we have more flexible labor markets and the claim that europe suffers from chronically high unemployment because of the commitment to e egalitarian wage structures. that is a prop ticks that depends entirely upon the frame within which you making the the comparison. it turns out, however, that the data do not support it at all. we looked at inequality with relation to unemployment inside europe we friend is a stable comatic relationship which countries have in fact lower unemployment rates, better

employment performancen that the countries with more unequality wage structures. it's very good, i think even in convention until economics why someone might expect that to be true. people who are in unequality situations tend to leave the bad jobs to look at the good. they are unemployed in the meantime. it's true the insight behind the sand knave began models which -- wage structures tend it attract better industries and their productivity and income levels rise over time. it's [inaudible] not true as has been often claimed that the wage structure in the united states is radically more unequal than it is in europe. the reason that finding comes into question, is that those measurements have always overlooked for europe to differences that exist between countrieses which are very large. if you treat europe as a single

unified content, you find that the inequalities that exist between poland and germany or between let's say norway and spain are very, very substantial. when you calculate those into the mix they're larger than those who exist in the united states. so again, the ability to look at the problem with fresh eyes, and with fresh information sets of various kinds gives us the capacity to say ethics are very interesting things about the world. coming back to the united states, i know my colleagues are political ?irses, wanted to say very briefly some things about the relationship between inequality and political outcomes. the conscious that we're moving into a territory which has a [inaudible] which a great deal has been written there seems to be us to be interesting to look at in particular inequality in

american states and whether there was any somatic relationship with political owblgs. and we found the following things, which i think are certainly worthy of reflection. one is it does appear to be sismatic which american states which have higher degrees of inequality have lower voter trends. not a surprising finding. you might expect, but in that situation, the rich would be more anxious to suppress the votes of the poor. and as you live in the american south, as i do it's not out of line with the historical experience. we also find that more interesting perhaps more subtle and maybe debatable proposition that we're able to at least maybe cast some light on a very interesting paradox in the political science literature namely the finding that rich people tend to republicans and

the gillman paradox. at one of the things that we are able to do is to ask whether we could explain the relationship that he has associate. and it does turn out if you measure inequality in a spatial sense, looking at where people live, not just the differences of income how they are located across state, states where the rich and the poor more spatially separated tend to have less of a relationship between income and voting path earns than others. that's an interesting phenomena where the inequality measurements appear to cast some light on the interesting phenomenon in social science. here is, by the way, i'm summing up a little indication of how to understand income inequality measured in tax data in the united states.

the inequality measure in this case, which tracks very closely all the standard measures is taken by measuring inequality across counties, the other line is the log of the nasdaq stock market rielsing to a peek and the acorrupt fall in 2000. you see the inequality measure and the stock market measure follow each other precisely. not only do they peek statement they rise and fall by the same proportion. for very obvious reason, inequality in the united states measured by tax data is strongly reflective of the incomes of those at the highest part of the income spectrum and those incomes tend to be heavily dominated by stocks. out of the proceeds of ipo in this period. i'm sorry you're looking at in the actually two measures of exactly the same fee nom non.

can verify this. i can't show it on this computer, up fortunately. if you take out the just a handful of counties grow i take out new york county and new york state, the measure of inequality rises considerably less. if you take out five counties, new york, new york, plus three in northern california, washington and seattle. about half of the increase in inquality in the 1990s goes away. you're looking at something which in the united states represents incomes that were extraordinarily spatially concentrated for the obvious reason that the companies that were achieverring the highest income gains for the executives were either the banks doing the financing or the silicon valley tech terms that were receiving

the money. and the one update the same analysis. skip over that. to the late 2000s this is a map that has been produced that shows the movement of inequality across with the contribution of individual counties to inequality in the united states. you can see the once again, the financial center in the late 2000 exthe record i theirly important. there are hot spots and important centers and high porns of florida, california, and other cases which are clearly reflective of the housing boom and of the loan lending against housing, which was, of course, the source of the debacle that lead to the melt down in 2007,

2008. what i would say by way of conclusion, is that the work that i've done in this book, i think, tells us that inequality and economic instability are essentially two sides of the same phenomena. when you see one, you're seeing a representation of the other. and that this is perhaps the single most important reason that i at least as economist can bring to a policy discussion of the issue to suggest it's something we should be much more concerned about and we have been. we're living in a period in which we find that the instant of the consequences of tolerating that sort of instability for very large parts of the population here and around the world are very, vor serious indeed and likely to

lead to political, economic, and social upheaval if we don't deal with them adequately going forward. thanks very much. [applause] thank you we're go to discuss to comments by rachael soon to be doctor she's finishing the ph.d. she's a specialist in the international political economy in all of the facets a special expertise in the relationship between governments and multinational corporations in particular in eastern europe and other emerging markets. so i'm going to pass it over to rachael for comments. we'll invite your questions. let me say copies of the book will be straibl for purchase

outside after the forum. >> thank you so much and thank you for the very interesting presentation. and the book just had some in it. it's very rich and grappling with different questions, i would highly recommend it. i thought maybe i'd start by phrasing you and saying thank you for the data collection efforts that you put together. not only collecting the data but applying the relatively straightforward metric to find entirely new sources of inequality measures. that are useful in all kinds of research agendas. what's particularly important about using geographics variables to calculate inequality allows to identify the important role that geography in place can have in identifying what we even mean by the consent of inequality in addition to understanding what

inequal tight might mean. all of the data allows for very good retellings of economic history in the book, you find a summary of cuba's economic argentina and brazil with very interesting ways to relate the not only economic growth but the relative movement of different groups of society measures of relative -- and with this d.a. data, again, it's a new way to approach what might a topic that you think you already had some thoughts about. so the thing that kind of main application in the book is to use these data to trace inequality since the 1980s in country around the world. there's a consistent and strong correlation between measures of economic inequality and measures of financial decision, and by

financial asian, mean the relative growth of the financial sector, relative growth of sectors that you state that the capital sectors that are directly benefited by the financial sector like high-tech and the stock market measures. and so with this evidence, with this correlation in hand, the book takes on three huge topics as one. the the financial idea of financial and the idea of equality and instability. the way i took it, at least, the argument is that financial is making up the largest share of inequality and it is through this in the they inquestion -- inequality is leading to crisis. financial is pointing to inequality which is pointing to crisis. although, in the text times you factor kind of melt into each other. so make this argument that the