ortae umced acallohad ertle hee , p continue in the work that i am now engaged for evatiofor the dntrde gso e ale tbd r. a tnk l eeet ofa work. lincoln continues to grow. we're very happy, very proud of our past, and e've got a acy ttufou wao llthet liy, c vts lto for more information on the recent visit to jefferson city, missouri and many other cities sigooprgal cot. tlian born economist luigi zingales warns that the u.s. economy is becoming mirror of italy's economy under the leer ofio a tt nder an hour. [iib >>an t ry f cmtgh aibrnarsi' e oro manhattan institute city journal.

it's a great pleasure to introduce luigi ziales one of the valued and let meadd mt mi nutgeor o ronp abthbrdnbt pilism for the people" recapturing the lost genius of american prosperity. now in luigi zingales first arrived in the coutr tostdy ecomick 8 emacheri am iwbngysce r work. not luck not who you know which was too often the ase in the native taly as it is i ma otr mti coie wenmanty cali whhergnhaben exrdy ne prri may being even our poor rich by global standar. if he extremely imporn bo r nonia isrofmaivtay bats i k f political insids pfiting from their connection to the ever expanding of a renewed fah in government plr. gg mecls. thn ge r elves there are disturbing signs that the u.s. economy is transforming into a berlusconi ste syem. a lot at l e rulcmireer

ananaar e cotetu we got into the mess and how the reinvigorated we can escape. he re i to d l a ni herve ph.d. from m.i.t. in 1992. he's now the robert c. mcorp. maroor f trneip fce heri o bch pics ranging from financial regulations to the economic effects of culte. earliercoauthored book was called "saving cpc caliroaal" hew ean cali 2003, luigi received the prize for best young european financial economist. he's currently the vice est he meran nasiahle innddecol ta e oh american academy of american arts and sciences. he serves on the committee on capital marnghts regulation and a long list of other appointments. noptlifohpele is e gerg te us eoisl heclyao the blog if i had to pick out one book to explain what is going on right

now, to a arudenceof nono tmiw . rscd sus adtpid a action for discovering what makes american. urging the mmpaito ad alat ld oe y t ge f ve aly. inemee wee man himself, luigi zingales. [applae] k u bste and the journal who not oy sort helped me in the process but motivate also writing this book. otrsrn emwhh oofo th td t t o mpi a more poplar book. the incentives are not there. it rising to do. let me eplai wy i ris okndhithti valeimrt iay, s country that invent to the term -- and baca mme important who you know than what

yoknow. come together kin was a -- first of all a ig liberation but mad or r ucis unsndht ndnst ipib h a system a free market system, which as some wide political support. because one ofhcri e e ratte supported by a vast majority of the american people. it's not true in europe, asia with, or latin aerica. and myuntagfi usey e ie. what drives the support for a free market system. eqocobee tre cessary egg to provide the proper incentives. why people should support adding a w needto the -- the answer isse nale whe tag t. er two is because sort of indecent share so that even the poor a reachedby standards.

ane rd i au ththth i ef. d otito cis circle that what do you think is fair depends on your view and yourview issort of ecoetn faiy vits a yoed l t te s arnnagainst you to believe in the system. lltsataam granthk caliifnt onpai hef ewd weaening. and i think that my only advantage is i can see things more clearly because i have e them befe. anatrtent m s te ort sk eta world war xii in america, we or you fending on the point of view had had easy. why? beusemeica end w w iia ga p tyththo w. and if you were an american and you wanted to invest, it s not really a se place to inest. e mity twld war ito e unta eytagvcotry after country. and western europe was not a secure place to do business.

business in america would invest mcaattic amanke e tt anmiea getting extra beefs because of the -- benefits because the factor. the constitutions of america the were unique to amerand ve ti wasengs exbet te. w,riey example the rest of the world as pretty much copy what america did. and as a result, this the institution isot o uque noe ic ke a cointh t e rlndako diul rtwhe observe in income inequality is the competition that is taking place wodwide and why theop of he odibn l --nnits bestn thwar. it's not true throughthe distribution. that really creates sort of a tensioand feeing of people being left hi t wsa asen maory tecfe feshi think was prevailing in the united states before there was about a sense at you can --dh --

there was inaudible] everybody had to stay athome and tape the windows. my rct s,rs al usht if you do the opposite of what the government says you are always fibro. i shc t ow hsiaasowi thveloy. y? bee e disfused trust that the was acting in the intere of the people. i think we've lost the rus i ve oy th nalbaousgppl whr gh secretary was acting in the interest of the country or in the interest of goldn sachs. 50% ofthe pepl o onsahehot as ngnhnstfgo in he wru is irrelevant because in politics perception is as important and at's more importanth ality. an n pl elh rt o the cotry is not run in t interest that the rule

are not same for everybody. they teo uhyst. anl u w' i mvtrol omheaatat the occupy wall street. an expression these sort of feelings. dhisriy,siso a gs inn ahrin ssnas ea sense of unfairness. it is really -- they're trying to protect themselves by distributing favorite [inaudible] here andhere. anis ea st mr anoptndres reamorent fhe st 's basically vicious circle which is very difficult to excite. that's the rson why i wrote the book andtrdsomeg bi srt ry. y t ryohneh tus of revolt against the system. they're unfair. in the direction not of he destroying the market but resting tar reorfellelplg fith ll ad sr of a more effective form of

capitalist. and aim of the book is h can weo t? u w tetcaeon eneiseslic ua s st massive distribution. it doesn't work. d, you know, in europe, they have statistics aboutime uauctt he edtesehe jueomoed [iib or ud es ey dn ithe statistics. that's why the reason statistics are better. we don't want that here as well. and,ou know, yu' pba noocreo offalbse om a cceavesn that in sweden, theoccer teams are terrible. why? because all the best players go to spain. anspai mght bbkr t re h ia ccast tax. they're the best soccer players in the world. surprise. it'sot a solution. what is the solution? i ti taheashr ma ng thfti wt e mpio lt or its that todayren't protected. include in the sect which -- [inaudible]

youook ath tis, so st aean ely'alinehas thadt ft enough to cover the cost of health care and the co of education. and those are two ctors that eyegutend hey uiz analaros n'eirlyoo alarbeust embedded in our sort of paycheck, it's taken away for the paycheck bfore you even see the pain check. wewedtr eu su cncopo wob the full cost. it is a distorted decision that should be changed if we want to contain cost which is the primary thing we want to do. dthesistrwih ll coe csop trdo. yreout fact in -- [inaudible] dhemve e m siltos people don't pay attention to because when you go to a college, the first thinghey say is, the location is no pre. it'scele. th nrue. bee ce pe an o,uhodorybo eeolsmak enough money to pay it back.

why you should worry abut it the governme is making up for the differen. evertiooddefults e erisnngth co t tomta ants harelypedthe cost of the location much higher and pevented innovation. in most sectors, innovation start at ttot t p dstwny cno id t rland onwayo ope. emo that innovation in a location. the second theme that i am very so ocud n ort ththww om li tyl yeovme teesayier to regulate or to subsidize an industry or sector because i des th industry and ect mpoan anthptiecn thams ch atere w lehoetnh stus who pay. it's a nonfair game. and the subsidize or the particular of regulati tohe trwa n. hoier yic rslheduln ised b simple. 23-pages and the dodd-frank act a on fahmda

d a ereuon siful fny tu kupwittht except if they're paid lobbyist. that is not a way to run a crcoueceh leatisbaldn trng lyi yasoan gution that is simple enough that even a congressman can understand it. [laughter] and the second point is e know ncisotfie thisbic sme u sbizmng atou tax the substitute. so if you want to subsidize a -- because you think it's a valule too nhi xns. in nsmow syiso orea y ntto tax rentersto make the american dream more likely. novery good. why? causheocaymiis atyoa nra rend u bne d use. e buyers would be -- into the action of any of the taxes. which on the one hand is god we're going to have inen. ttawom itose. e tio pl ee,heme nvced that a tax is a good thing. let me make an example. why not tax alobby.

know that lobbying is exiv wewhalyihabme st poabctti hint didosa just legal activity either. illegal acvity dealing cocaine i don't think give you thesame naudle whas abec sln tatlma copper tax because tax -- [inaudible] be besides the fraud investors not to pay in the taxein te itta blerwi e ago je is ndratno a taxization. [inaudible] we know thatbecause nw gone ja snehatmtd a iab. ori of $150,000 a month, the a. team started work and worked with themon oneand tikaot gatiagaa rr t. an teoerhdi y t campaign fun of that republican senator. there is -- in less than few mohs actlly ybe yar, eye lh w thpeo$4 ll so tie cosaved -- money for.

there is no activity in the world that has kind of return. llis oolnso ce ane ersoiot . i t n sogo to complicated legal argument. taxization will do the trick. the third pontigo howeornk sonsatng si ict rul necourses should think seriously about that. why we learn from anna smh thatou er fa ud thod oawdeee beut feod v rnt e good. smith aue] ha afft itere da d. si caltve on cc maet sd their interest to teach share their students not only skims but some

social nrms bvi hyodotfio aludil. , y r celebrate alumni, you want to celebrate alumni that made their money in a dent way. e ae lldom weheuss gambling and his claim to fame is the modern markets techniqueto gang aedeohoa ct gmng txze the. it's legal, i ave nothing against it but i don't consider it a good ehavior. the cpitist o ta roy e mafaal ankeeyofcitt ster ss howehootne sodye at. should now be a great alumni nist should not be something that we ring as anele wh ea ll tam ou ahac norm, not a norm. [inaudible] i'm no at deeply religious person. i'noin o tabo mo ms haachetal ou when nr vee market the -- make the market work and what norms don't.

i think it is incumbent upon us to push for thens. thren caitt l iv giod beia r to add social norms that are naturally born for below and only be enrced with conensu t rif pep bee ey h sl rmi tuke c sln g i redod pa social norm doesnot go through any meeting cogress must be approve bid the majority ofhe oplen r eala caon tcenn nwobeaie quo are discovering more of the mention of the free market syst is to crucial to pesee nd t ig heeti thfotunaly st hihiun anth woc before it's too late. thank you. [applause] time for questions. i'll field them. wait for the microphone to arrive. please keep the quetions pointed. no stes. jueon thk vryu

ridoe son st t. siwen c-span. you mentioned a lobbying tax. and i was curious if there was any specific plpse t omnge . hoch outhe ve tacthbb omca wn dialssry sy skirt oversight on that. i was curs you if there was policy and how t deals with the prlem. thas ago qen. myk t eted ti b soitmoobko ea itwrtt to change the conversation. so i will work out all the details if you want how it can be implen wh wlk u by e istra o acti ofe,ooftae noedof e and even me bringing of this book is a form of lobbying or free market. i think that is one leve the is thbb ng w aioi gied iveeay d. an ne nss ee you want to impose the tax. the important principle when you

have a aivity tt t [iib actys egve acty 'strgl wen nd dr nd teimt way to address it is wh a tax rather than with regulations. reeely c tus-inbl yitorlaiwi pole th r r intellectual die dilemma -- how do you a get congress which is adected to bbygtp tan bb. ths yidie bl prre hi a lot of the targeted and simple objectives. and my favorite example is, you know, there was a proposal of detrngymeer re. anatiedfors l ok m t tat pohochy oig and in three days with, that law pasted botthe house and the senate and became law. d ley idh poofgr t ndt d bhss thmyoiso start asking the question to lead to that pressure to change the system. r d . >> giycu ct aomr lobbying on behalf of corporate

institutions and other narrow interesting. the mosts icy e nabou hwie ispol gaax ddon mereeployer tax exclusion for health insurance. ese particular program or policies cost the government trilons of dollars a ye. sreyweaha itatoca l opni eiatfe es opposite. >> i'm not saying it is always that the case that public opinionelmis t. ntchelt dtein thwwa i el t e ly nsiinera deion is to center known. even if you have your favorite tax deducti may be the charitable one i very important. the momentyoupehfld ipole et. thly ln fe entono it. and i think if we make it clear to the american people that's so of e . u avesuppt d. be i wee pt e evodlle exio t h you'll have a ton of amount of lobbying to make the point that x is valuable

and that'sthe ae ouemi ah l n at gld aleih x. and let's see if it pass consensus. i agree with you. the most dangerousing lobbying ideas are theobyisoro it ennhaeseors is being against-- [inaudible] and so if you can cover up your naked te th ra ea kethy bo reib 'st ytoy sa ioantod economic policy you are to convince me that the tax is good. it's a much higher habit to . >> fe, st l atbyheit profit margin business that there is. they are only going pass along at ax,hloes ps oneitt o et whwa ised a antismoking groups lobbying takes on many many mny, many different shap. y is thapoy, h st eror, teedth examples where

tax has inhibited or undermined afundamental pots that you liwhobeetin ld ot e aaxoat has produced that where the vender can pass it allo to the bu ffalitn ou an ne mplythye it depends on the market system. more importantly, we know that taxingany activity would reduce that activity. en you tax icom popl ork . tsrtygepl at wki n t on ctbuwin atayis want to ax other activities. taxing pollution, for exame, is a muchr fivy soremthus poio y e lot of -- [inaudible] in new york, n if yu really k tt olaroread bee th [ud a ap it's shrimp simpler. someeople degree or disagree. it's something that is easy for people to understand.

k t me iro rgfiannsut. wa ve te problem too big to fail is increase their capital requirement which is basically posing a tax on them. and if you do a ati veo24pwa giio n'ow myle ki y the legislation. i think that good taxes or what e econoc te ae ae fe erve soect istso onse lefer anything else but that. if we tie our hands and the only way to intervene is that w see a much gerinteen. ow e. >> professor it would seem that to advance the ea e u ncrmaatto suede others of the benefits not subjecting the rest of uso crony capitalism. whywdthsadat adtemef? ul emer aia ulth cfror parts of society. or would it come from the

businesscommunity? so whom? stjo deaheha a oribyag ze no l advocate the idea as good as it is. what do you say? >> i think it's an excellent questi. first ofatrsow wrthoo a eeunrst defending free markets does not mean all the time defending business interest. i think all too often, pely fe et at teoits aat cti terms of public opinion. but so if people understand my logic, i think that thereare twys ch o ta w bson haaernt increasing the ability with a rge i did fugs of data. in today's world, it's more icto dtroy a an tolei theuatly lld. however, the resistance in sharing them. once you share them th present eviden that isto ha msp d sscngths

manager of an italian bank that did an internal sdy, they found that not only women in the nk e de d thpeo maite saob therum poti they work less but produce more. and of course, they don't want this study to be lahe ca itumi e pothe nk av colleagueho is teeming up with people in the federal reserve rote a fascinatg paper showing that the staterla a rr. annk at rgtoe siy biedth diio banks. and the federal reserve that has no interest, it's competing with federal regulators. ey'rhspletrto nove tsud rled lonyursef data an for no reas. i can understand th the so called ratingsr th sta la rng b ht no eaimia. bee yionh nalccebure is no justification for not having them released with a delay.

so the atishro ara, ar we ade c ad ah diu etthrainwwll done or not. whether they were useful or not. i do believe in data-driven policyaninken reot tedw d cdeco unr ac because if i want to write more exciting paper, i want to sort of show some problems and i'mogodioda r horem be wyote foiota combination of competition in the media and the academic market and data ability. dowherroplea p e ny pis at tk ao l some industries in design fashion managed to succeed in spite of this. managed to com wod leer worifte'aso abha miifu , rectnh at iyaowm a joke, the joke is because the human is to great. ey overcome allth veie in steus [iib an industries they don't

require a large infrastructure you can still operate and . dsothfon u i ca nryde on peoplef talent. it's not a organization that requires standard efficiencies. that's why italy has the advaag were aasin dg nipruce i ar t as od ioin . i think that the -- in a system that i not tare moiictol gati inys tt ks st ucoriula large organization. that's why italy is efficient. that's where it's falling behind in a world that is becoming more mpetive. >>k ho critique has emerged from amican -- which has itt eqtyh re eaialha ni mitda isreveals a fundamental flaw in the system that you're expose. i nder if you ink oe,

elethrebds idfiavben actedeief d. data is correct. and two, whether if that trend is ver febl e' reraroa uc fmetsm unin rosm whatever or whether it's a function of the competitions you discuss earlier ases inheasowoe se ti qtyamri inse er o they don't go in a popular direction that uld concern them. >> i think that's an exllent question. ink athenua bn lgeireng gh an's a haonrn fo everybody not just the left. i think everybody should be ncerned about this. and that is - eteio ok atanonolvito toec om li ure many. some, as i said is the global competitio that the a ri ve le sybo ab seim ith ineffective competition in the

market control market that -- too much of the organization and i ha if ou pros at rgutlo,hihis imantooe i r ve a truly competitive system we must make an effort to if equaling the start point. i think my epon ut mcan rst eqty rehet unfairness and ty don't have a share shot. and the decrees soial mobility is an issue important we ned rs br fh an hafi ar y this increasing equaty? for example by improving the level of -- we ntn hesest t vohesestbd aro td w e t programs like affirmative action. it might be justified. but todayf yu are fomhe upafn-icid cl 'd ye oue a white in a poor area, you do need help. so the kind of help is t ac se nan i itldelysd

sa w w wate advantage begins with the data. it's very easy to calculatewhat is vac to - [inaudible] neighborhood in term yur rfnc oo wonwett e hi v c eople that come from those aeas, so they can get into bett schools and have a shot at copetg fo e ercolge caowrnhym inchify good at the high school level, you can get a citizenship in scholarship the best colleges. fo nyo eyon vethvefmng t a wedtbgtp if i don't ply golf, i think golf is a very free market game. and e ng o i tenpoquye ar p. thenrsutth cate eg. oudestroy the incentive. they try to equal the starting pointo a more competitive game. that is the direction we sould o. >>nh r waor con please. >> i admire your book. in the concept of the tax on

cigaree it is really reduced. ed itas iguccenh ed mit 'oi h tho iger eco righin back. >> the taxization rely a another fo of regulation. when you tax gattyo llple oto o whin aer mf guon aoly. imy goal is not deregulation. it's the minimal regution. and hodoue h plte yv- d i use oaxti v pl as very little economics cost waste -- when you have a regulation, people go aot of y ngoetruln. an e gti ne a fo te eyes of the beholders. they have no saying on that. and it is away from he eef thevrs goi to-[iib etawidwthe waoegtin aefduntax and cigarette, the will of the majority would prevail and we decideow much wa. mithtro wa dgio i et r f guon tss wasteful.

byhe way, the fact that on the side we rise revenues. -- wecanreduc tax. shaethetaxoco ifca se th xei lde tt imraf moreuestions . seoul? >> to what extent do you believe that e robminme ua o ud >> thn tht in frw eehstia rs h quied o k t at. it's not my cup of tea. from what i understand moving farred, this is going to be much moren ue caufhw it kstynt t s o. at the moment i don't think this is the biggt prom. if y wan g tu ci iaarlit er u we marginal cost of the product tends to zero. you tend have bailly, - nale

buerulaefa faok ane e he but because facebook collected the biggest mass at the beginning with and now it prti rnch mplyoti t yt tffth . thtt'sn easy fix for this aspect. again, the best fix is to say youhave to eale hat do thomntt goor eer emsymher ophma mes amount of wealth that give it back. because i think they have to regniztht is ey en 'sj lnt >> the obama administration is to pressure spain to use the reresoce ta iai rotrtecrrst iv tioose th ul eom s eyult. is this a good idea is it good for capitalism for spain to bailout the banks and for urope to bai ano th? dotse eo gn ddan ng ha they are the way to deal with

the financial crisis. >> it's clearlyending a terrible signal. a trader friend f mne as erateptst waadwiafnc bk r od gce dhr trader told him don't worry, the government is behind us. so i think that the fact that peleigiscue eytooa doraced rs. th nesht ispeople to perceive it's a problem. now in term of europe, i think that i do want tdeor paeiofpoc anrtthbe. , gs of cheated and they have the responsibility. but the lenders who di not eceeavhe spbi . d symisba sy er ueb resources basically to ensure the creditors so between 2010 and 2012 most of te pv it l banit fft gr tge user nt eo mn atnrrue with. because the imf would never do that coming to spain, i think you don't want heahao ap

itwhdatnat ef oepe thetaua pct t ers. and protect the others. there is a way to intervene that does not dotht. at bal mari waofierng ng t ofe toon wrong in 2008 to today. i think that is the way to go. unenunfortunately. 'sot pl. ti onltqst hen rt. lo one of the cro teaks market -- increase of tttis d icecaitm odve l. woyorethha if i yur ma would you support a tax on short term speculative transactions >> i thk that i'm concerd abouth n'avnoa id tisse bud e r d nhea. m ni ncerned. i think that most of the time it's funny because it comes from and there is one sector that t sth- ud] thbl d mp mgh ent. do i have advocate a

differential on the eleventh f tt? inkta otf e. esali kt e iny o h turn over in stark especially for pension funds. we don't need to have them turninge teoli anylu zns. itu i t t f ming ti ppuse] fo bv tt t pbinewcli da ar rmna ta ecwiaho du t eprrag. twitter.com/booktv. former u.s. senator and ssi t ea i xrm ercimiri e ka l i iosier book, "if walls could talk." >> the mansion has been here since 7 wit ws bilto reace lothwai suadha ith dl meo

re and first family who moved in was the brown famil e w rn,aun t p of the roof when there was a small iron rail. and the governor looked back and said to the senator he was with. go on toh te i hve to ac saebos. anhisllyses he in ty e man. the young men that he was probably about nine at the time he had a tool t, d h i e ximngh it whteg s t r dgoo table, they were beginning to wobble about. they couldn't figure out why unl they discovered that the lile g hd taen w lgst i tih waeye thas. e' n at in em it was true for my grandchildren as well. they used to tel about the ghost of the mansion. i never had an encounter with thegho. untahewao wawinthtio y. hft n id tuau mgw tornhi ughter is in the attic. the guard looked at him and said, but the governor doesn't have a daughter and he was

scared to deah anddn't rern. d ofcoue,th ro osor aw sesteena great party giver. the guards told stories of hearing the parties again and people were laughing on the aie, a perhaps thoe reghtr. >>t t oe riha yurmb iemsof wofuine fo il especially. th ohwerar sh sin ba idhafo several years. thousand of children come. and we had something we cal the spookspooktacular. inctober drhe halleen. dchenwctus anve fe nme e io d hat ht the mansion. and missouri mansion preservation helped with this. they have been help of the in education programs dhe ldehein abth thaed thns ch e na alshem olri wa ftgsf chen, but mostly we tried to -- we tried to keep the tradition of the mansion and expand the o hoal ri d t. be woncchdw shape our buildings and

afterwards they shape . it's been history unfolding over time we see it hre. itaonnti it k ep. d easeaay men gy avecnen g . that's why i think the mansion