barack obama, in the white house. this is a number one best seller on the bestseller list for several weeks. >> thank you. >> is there a nonfiction author or book you'd like to see featured on booktv? >> send us an e-mail at booktv@c-span.org. ..

>> article went viral, one of the advantages of modern technology, and my publisher persuaded me to expand a 4-page article, and it got bigger and bigger. the actual -- what i wrote was bigger than that, and he disciplined me. the causes of this inequality,

the consequences, and i'll argue it is actually very bad for our economy, but also very bad for our democracy, and i'll talk a little bit about the way it manifests itself in almost every aspect of public decisions from budgets to macroeconomic policy, and then finally, i'll have a few words to say about what can be done about it because i'm going to argue it's not inevitable, but a consequence of the policies we've adopted and try to say what could be done. picking up on the remark that was made that one of the presidential candidates suggested that you shouldn't talk about these things in public. he also said that it's all about the politics, and i'm going to try to argue it's not about the politics of envy. it's really a debate about the

justification and consequences of the level of inequality that's reached in america today. one aspect is that most americans don't realize is that america today has more inequality than any of the other advanced industrial countries, and that says something because we like to think of inequality having to do with market forces, but market forces are there over all the world. what we do with our policy, way we do in government affects how the microforces operate, and the way that's happened in the united states resulted in our having more inequality than any other society. that should be a cause of reflection. not only have we attained this high level of up equality, and it's been growing rapidly. it used to be said, you know,

watching inequality grow was like watching grass grow. it's very hard to see it happen, but, n., what's been -- in fact, what's been happening in the united states is rapid. since 1980, the share of the national income that goes to the top 1 #% has doubled from 10% to 20%. the upper 1% gets one out of five dollars. that's in terms of income, but in terms of wealth, inequality is greater. the top 1 #% -- 1% gets about 40% of all of the wealth. the -- however you slice it, inequality is growing. at the very, very top, the top .1%, their share of gdp tripled since 1980. what's happened recently, say in

2010, in the recovery from the great recession, not a full recovery. not a real recovery, but what happened in that year, the top 11 #% got 93% of the growth of the economy. even more disturbing in some ways is what has been happening to opportunity. ryan, the head of the budget committee said, oh, we're not interested in up equality outcomes. what we're interested in is opportunity, but unfortunately, that's not any better. united states has -- is a country with the least equality of opportunity of any of the advanced industrial countries. what's that mean? that means the life chances of somebody born at the bottom are

less, much less than those born in the middle or the top, and there's a higher correlation, a higher dependence of a child -- of a child prospect of the education and income of his parents than in any other advanced industrial country. that should be disturbing because we think of ourselves as a land of opportunity, and we all know examples of people who made it from the bottom to the top, from the middle to the top, and we all know examples of imgrants from poor backgrounds who made it to the top, but when economists talk about opportunity, we don't mean these examples of -- these exceptions. what we mean is what happens on average? what are the life chances? in that dimension, america's performing more poorly than any of the other advanced industrial

countries. what is particularly of concern is what this bodes for the future of up equality in the united states because if there is less equality of opportunity, it's more likely, then, in the future we'll have even more inequality in a way and in a vicious circle that i'll come back to later. as i said, this level of inequality is not inevitable. other countries have less inequality, we have less inequality in our past. even the increase in up equality is not inevitable. united states say a decade or two ago, had even then the highest level of inequality, but our inequality has been increasing rapidly while others have managed to tame the increase of inequality and a few countries have actually reversedded and brought down the degree of inequality. one example of that, of such a

country, is brazil. one interpretation is they looked over the precipice. they saw where they were going, the devise in their societies, a kind of political, social, economic turmoil, and they said we can't go there. they developed a cohesion of even the 1% seeing it's not in their interest for the con tippuation of their society to -- continuation of their seat to continue to go in the direction they were going. a president on the right, not by far right and by american standards probably on the left. [laughter] he said it was important for everybody to get an education. he pushed that. you know about president lou saying no child should go hungry, no child should go without vaccinations and succeeded in actually doing a

lot for poverty in that country, and so much so, you see the decline in poverty in a relatively short period of time. now, those who defend this kind of inequality, and there are, as you know, many, although increasingly few, those who defend this level of inequality say, oh, it's the politics of envy. everybody really benefits, and that's an idea called trickle-down economics. you through enough money at the top, and somehow it trickles down and eventually everybody benefits. i wish it were true because if so, gimp the level of inequality we'd have, everybody would be in good shape. if you look at the data, right now, most americans, and let me repeat, most americans are worse

off than they were a decade and a half ago. in other words, incomes adjusted for inflation at the median, half above and below are lower than they were in 1997. that's really striking. the american economy has not been working for most americans. it's been working well for those in the upper 1% or 10%, but not for the majority of americans. another statistic i find even more troubling is when you look, when you parse it out more finely, what you see is the extent to which some groups in our society have been doing particularly poorly. one group are males. that has a large fraction of the population, obviously, and male workers, a full-time male worker in the united states, his income

adjusted for inflation, immediate yap, people in the -- median, people in the middle, is lower than in 1968, almost a half century ago. if you want to understand the frustration and alienation, it has to do with people finally beginning to figure out the american dream is not true. the idea that you shouldn't complain because while the bottom may be getting -- the middle may be getting a smaller share, the pie is getting bigger, and therefore, the size of the slice of getting is bigger. that's just wrong. in fact, if you look historically in the period, in the decades immediately after world war ii, our economy grew much faster than it did in the

period after 1980, and the period after world war ii was a period in which we grew together. the people -- every group grew, but the people at the bottom grew more rapidly, and the people contrasted to the period after 1980 where the bottom and the middle have not done well, but the people at the top have. they have done very well. this relationship between inequality and growth is not an accident. i'll try to come to that later. i believe that this inequality actually is harming our economy. it's also the case that our views of inequality would be different if those at the very top receive their income because of the greatest contribution that they made.

the idea that those at the top receive income on justification have been part of the theory for a long time, and those studying economics, margin of productivity, pay is related to contribution. well, that idea was totally underminded many my judgment by what happened in the great recession. remember that those bankers who brought the world's economy to the brink of ruin, their own firm to the brink of ruin so their contribution either to the firm or to our society was unambiguously negative walked off with very large bonuses. how could you say that their pay was a result of their marginal productivity? i sometimes joke that sometimes, you know, you make a sign area, and so they thought it was negatively correlated rather

than positively correlated, but that's not what i theory's really supposed to say. in fact, some firms were so embarrassed by this lack of congruent between performings and pay that they decided to change the name from performings pay to retention bonus. [laughter] of course it raises the same question. why do you want to retain somebody who brought you to the brink of ruin? that, i think, is one of the reasons that there's sitdiscontent. if you look at the people who made the most important contributions to our societies, you know, the people who did the mathematics behind the computer, the people who discoveredded the transistor, the laser, go down all of the major innovations, dna, that transformed our society. none of them, none of them are in the top wealthiest people in

the country or in the world. the people who wind up there have done something different. i'll come to that in a minute. i want to say before coming to that, there's many dimensions to america's inequality. it's not that there's too much money at the top, but it's also been a hallowing out of the middle class. their income is slower, but it's the fraction of population where the range of the middle is smaller an the country is becoming more polarized, and as a consequence, there's a significantly larger fraction of the population in poverty today. one example of that brought home when i was in india not long ago, and on the front page, they had a big article how about how one out of seven americans was

on food stamps and one out of seven americans, on food stamps, face food unsecurity meaning they go to bed once a month hungry not because they are on a diet, but because they can't afford food. of course, the context, you know, the indians found this amazing. america is supposed to be a rich country, and, yet here even in america there's so many people that can't afford food and remain hungry. well, the recession made all of these problems worse. it's taken away, you know, a particularly in the area of wealth, there's a devastating effect because americans in the bottom and middle put most of the wealth in their homes. when the house prices went down by 30% and in some places by 50%, they lost everything.

that leads to the kinds of statistics such that the six members of the walton family have a wealth that's equal to the bottom 30% of america. it's a testimony to how rich the rich is and a testimony to how poor the bottom is. when you look at inequality, it manifests itself in every other dimension like in health, life expectancy. if you're poor, your chance, your life expectancy is lower, especially in america because we have no commitment to providing health care to everyone. let me now spend a few minutes, and i'm running out of time, explaning sources of inequality, and each part of the inequality, the increase in the top, the hallowing out in the middle, the

increase in poverty has their own explanations, and i'm going to spend most time, a limited time, talking about the top. one of the arguments in the book is that a lot of income at the top is related to seeking, and those who are not economist, i'll explain ranks. ranks are the income you get not from working, not from effort, but from your ownership. say it originated from land owners. they got rents. now economists generalized that. the basic idea is a simple one. the question is are you making the pie bigger that's creating wealth, or are you trying to get a bigger share of a begin pie? in a fight to get the pie, you may make the pie smaller.

we are used to talking about the problem of rent seeking in oil countries, in russia. we describe these countryies as -- countries as rank seeking economies. america has become a rank seeking economy. an example of ranks that diminish the size of the pie are like monopoly. monopoly, you get profits by restraining output, not by producing more, but con stricting output. people at the top include monopolists. it's not my gum, but what american courts judged as monopoly. you can figure out what i'm talking about. the -- another kind of rank seeking example of rank seeking occurs in as a result of our deficiencies in corporate governance.

the ceos of many of the corporations have been very successful in getting for themselves a larger share of the corporate pie. this has increased enormously in the last 30 years. much worse in the united states than in any other country. you cannot relate their pay to any higher level of productivity of american corporations. if you lock at their pay, it's unrelated to -- as the example i gave in the financial sector illustrated. so, you know, if you had somebody that worked for you, you would say you have the right to determine what their pay is. that's almost obvious. the managers of the companies are supposed to work for the shareholders, but the managers fought tooth and nail to stop a

simple provision that says shareholders should have say in pay. other countries like australia have such legislation. the ceos in america says it's the end of capitalism because they would be held accountable. [laughter] that's an example of rank seeking, getting a larger share of the pie. market forces, obviously, play a role in affecting the level of up e -- inequality that we have. market forces don't exist in vacuums, and the lays and legislation that we pass shape market forces. take our bankruptcy law. our bankruptcy law in the united states gives first priority to derivatives, those risky securities that brought down iag and required a bailout of $150

billion. we say those are the most important things in our society. moremore important than paying s or anything else, derivatives. of course, the consequence of that is that resources move into derivatives and making our economy more up stable. at the other extreme, in the bankruptcy law, we say that student debt cannot be discharged even in bankruptcy even if the school does not deliver on education they promised. they say satisfaction guaranteed and your money back. is this, owned by wall street, tried to exploit the least educated students and said you won't get your money back no matter what we give you, and your student loan is around your

neck the rest of the life. another example that should be deeply disturbing is the way the financial sector moved in predatory lending and abusive credit card practice, a whole set of things of that kind which effectively move money from the bottom to the top so that explains the money at the top and little money at the bottom. the legal framework gave them the scope to do that. that's another explanation for inequality in the united states. the final set of explanation has to do with government that the

top uses that to get more money out of government. chairman of the advisers, one of the tasks i was given to identify corporate welfare and do something about it. it's not easy to identify corporate welfare because a lot is buried in the tax code, not easy to find, but it was there, and it was very, very large. unfortunately while we could identify it, after a lot of work, we cowmpt do anything about it, and, in fact, in subsequent years, it grew enormously. the largest agent of corporate welfare, of course, was the bailout of the banks in the trillions of dollars. in addition, there's examples of hidden subsidies. for example is when the government pays more the market

prices for what it buys. an example was in medicare part d, the drug benefit of medicare, very important program, but there was one sentence, and it shows how one sentence makes a difference. one sentence that said the government, the largest purchaser of drugs could not bargain with the drug companies, and the estimated cost of the one sentence is a half a trillion dollars over ten years. again, that's just a gift to the top. another is to sell public assets at below market prices. minerals, when we sell minerals, we ask them to pay only a nominal amount, not anything related to the fair market value so, again, it's a give away leading to market inequality. well, these and things described

contribute to making the u.s., the country, the most unequal in transfer distribution of income. what's remarkable of the united states is we do less to direct the inequality of market income saying we do less through progressive taxation and transfers to make our society more equal even given the high level of inequality that we have. things, again, have gotten worse. most of you probably know about the most egregious example of that, and that is that the average tax rate of the top 11% is around 15%. less, much less than those who earn a much lower income, and we all know at least one person who

falls exactly in that category, not paying his fair share of taxes. the reason is, of course, we have special provisions, and there's much lower income than people who work for a living, but think about what is that doing? what that says is if you make money by speculating, trying to bring down the greek economy, cause turmoil in the world, you will be taxed at 15%. if you work hard and try to make an innovation and you are # successful. you're taxed at 35%. you can say what -- how does this reflect either values or a system of economic efficiency. what it does reflect, of course, is politics. before coming to that, i want to

spend a few minutes trying to explain why america's inequality is so bad for our economy and our growth. it's bad for our politics. there's a lot of adverse effects, but in the narrow sense, you know, not looking at this from a moral point of viewr, but just looking at it from an economic point of view, it's bad. the first reason is that this kind of inequality is associated with more instability. it's not, in a weaker economy, and it's not an incident that the last time inequality reached a level that is comparable to what we have today was in 1929, right before the great depression. the reason for this, let me try to explain it very, very quickly, the people at the top say a significant fraction of the income, 15%-20%, the people at the bottom can't.

they save the money. when you redistribute money from the bottom to the top, you reduce demand. now, the response to the fed ignored what was going on and said, oh, i know how to keep demand going. let's create a bubble. of course, they didn't say that way, but they got rid of regulations, flood of liquidity creating the bull. ..

technology, education. but when you have a very divided society, it's very difficult to get support for that kind of public investor. part of the reason is that the 1% people at the top worried about to strong of a government because they worried the government might use its powers to redistribute, and they don't want that. so they don't need the public part. they don't need the public education. and so for them, government is a threat. and yet, in the long run, they

are wrong. because and unless you make these investments, the overall economy is not going to do that well. and they won't do well. so, there's one really important idea that comes out of this analysis, and that is, you look at the old textbooks, they always talk about trade-offs. yes, inequality is a bad thing, they say, but to get less inequality will pay a price. the price we'll pay is lower growth, lower gdp. that's the story. so yes, there are trade-offs. if you want more inequality have to pay a price. what this analysis says that we get more equality, and more growth and more efficient economy. does not a trade a. in fact, inequality is really hurting our economy. that's the reason for the title.

well, i described effects on our economy. i want to say a little bit about other aspects of our society because i do think that the level of inequality that we have achieved is reaching our democracy. there's a puzzle here, those of you who study political science know that the standard theory says that any democracy the outcomes should reflect the median voter, the person, half want more public spin, half want less. if you look at the outcome of american democracy, doesn't reflect immediate it's much closer to reflecting the views of those of the talk. that's a puzzle. and i try to analyze why that is. two hypotheses. one of them is that there's been a process of disenfranchisement. we saw that in florida.

disempowerment, and most important disillusionment. because if you have a policy of politics that leads to outcomes that are the same no matter what happens, that is to say, do we drive the legislation, no matter what party, it may make some difference but they say well it doesn't make a lot of difference. and you get a disillusionment with democratic politics it and you saw that so clearly in the last election, 2010, where only 20% of young people bothered to show up. and what you're saying is politics isn't going to solve the problem. and that i think is extraordinarily difficult, extraordinarily bad for our democracy. the of the partial reason for what's been going on has to do with advances in modern psychology, behavioral

economics, marketing. firms have learned how to sell products. for instance, they were able to sell the idea that cigarettes, there was no credible evidence that cigarettes caused cancer even though the cigarette companies had any files the evidence that said they did cause cancer, but instead is over and over again. they had a good advertising campaign, and an awful lot of people believed it. the point here is, if you can sell bad, dangerous products, you can also sell bad ideas. and those, 1%, have the tools, today, modern tools, they have the resources, they have the incentives to do exactly that. and you see that over and over again. perceptions of the degree of inequality in the united states have been shaped by those who don't want americans to realize how unequal we are.

equality of opportunity, you know, people say well, we don't care about equality of outcome. we care about opportunity, as if that's what we have that we don't. so there's been a concerted effort to convince americans that there isn't a problem, when there clearly is. well, let me, what i try to do in a series of chapters in the book is to show how these debates about inequality, these concerns, the growing inequality affect every aspect of our society, of our politics. so just let me give two examples. we're used to thinking of our country as determined by a rule of law, justice for all. what do you mean by rule of law and justice for all? a rule of law is supposed to protect those at the bottom. just to give you one example,

think about what happened in the foreclosure crisis. we threw people out of their homes, under the so-called rule of law who owed nothing. and, of course, what is the banks response? and their response is, well, most of the people who were thrown out of their homes did owe something. but a system of justice assess most of the people get capital punishment, were probably guilty, is something that we should feel uncomfortable with. but that is the mindset of the bank. we are really undermined the rule of law. if you look at other aspects of our system of justice, what we've evolved here is not adjusted for all, but justice for those who can afford it. there's another example in washington, you're going to the battle of the budget. you might actually think that the battle of the budget was about the deficit. but it's not. it's about this issue of inequality. if it were about the deficit, the first place you begin is to

remember 10 years ago we had a surplus. with a surplus that was so large that alan greenspan said that unless we do something about it, we're going to pay back our total national debt and he would not be able to conduct monetary policy. [laughter] when you think about it for a moment, you realize how bad that argument was. as soon, in fact that the surpluses had continued and say in 2015 we had almost pay back the national debt, i believe that he could have gone, or his successor could have gone, to congress and said, we face a national emergency, you have to spend more. and you have to be deficit. i cannot believe that congress and this administration couldn't figure out a way to spend more and getting the deficit up. and yet he made, with a straight face, that argument, and congress passed a tax cut for the millionaires on the basis of

that argument. well, you go to the other things that happen between 2001 and today, and you realize of course that we converted this surplus into a very big deficit, and the obvious way to get rid of the deficit is to reverse the four things, there were only four things that really let the change of our fiscal position, between 2001 and 2011. that would go least a very long way to correcting the deficit problem, but that kind of discussion is not on the agenda at all. what am i talking about? any deficit reduction package that comes from bowles-simpson, they talk about capping the tax rate. at the top. so really what is in here is it agenda to reduce the degree to some extent, i do want to make it to strong, but there's an element of reducing the degree distribution, progressivity in our economy, in our society. well, the final chapter presents

an agenda for reform, and you can see that it pretty well follows from the analysis of the sources of inequality of all the kinds, the top, the medal and the bottom. i won't go through it because i want to open it up for questions, but there is a difficult question. while it's easy to write down the economic reform agenda, i had 21 points but my editor said you can't list 21 points in a book that anybody will buy, so it's there but you have to figure it out as 21 points, but we know with economics, we know what to do. the question is where the politics allow. and this is where to get the economic reforms will have to political reforms. and the political agenda i think is very well understood although

there are some aspects that i think, that a try to call attention to that haven't gotten -- campaign finance reform, stopping the revolving door, the role of lobbyists, and so forth. the problem -- the difficulty is we are in a vicious circle. the more economic inequality leads to more political inequality that leads to rules that make for more economic inequality. the question is how do you cut into that vicious circle? well, i don't have any magic solution to that, i wished it. so that leads me to the final question, is there hope? [laughter] now, i'm of two minds about this. but i want to end on a little bit of an upbeat because i was also told that people don't buy books if they're going to get depressed.

[laughter] and my book is a 3 trillion dollar war, it became a phrase, $3 trillion war but nobody want to buy because it was too depressing. it turned out to under estimate the cost of the war. we can go into that later, but, so let me end on an optimistic note with a realization that there's some skepticism among optimism. [laughter] our country has been at high levels of inequality in other times. in the gilded age, in the years, in the roaring '20s, and each of those times we step back. we step back from the brink. in the gilded age, after the gilded age we have the progressive era where we pass antitrust laws to deal with the knob lick, a whole set of legislation to make our society work better and more together. the new deal, we know about the

whole set of legislation in the '30s that made our economy work better, and our society come together. so hopefully, what i hope is that, that americans will realize where we are, what the consequences are, what the prize that we are paying for inequality, and with the price people will pay for inequality, if we allow it to continue, that they will step back from the brink into something about what is clearly one of our most pressing problems. thank you. [applause] >> that was actually spectacular. >> that's a good way to start. let me just stop there. [laughter] >> i'm going to stand for a long

time. i have two quick questions. one of them is, is a leveraged buyout -- particularly when the money that comes out of the company in the real economy goes into the financial economy and stays there and is traded back and forth? and should we ban them? and the second thing is, it's the what's the matter with kansas drop him. use it, why do working-class and lower middle class people, the people are being squeezed the most by this economy, why do they vote republican? you suggested they had something do with advertising and understand, and that's true. could it also have to do with the fact that there is no leadership on our side? that we don't have an fdr, that we can't even say the word liberal. >> okay, let me first, the question that leveraged buyouts, you know, companies need to be restructured at times, and the

activity of restructuring companies that are not working well is important. but a lot of the leveraged buyout, it's not about restructuring. it's about taking money out of the company, shortsighted act to be that then leads the company -- leads the company incapable, in worse shape. as all of you may know, a lot of the countries get restructured, money gets taken out, go bankrupt a couple years later. so there's not the fundamental kind of restructuring that is an important part of the task. i don't think leadership provides all the explanation, because after all if you look at the republican party idol see any leadership there either. so that by itself isnot a convincing argument. the are some other theories about the ability to exploit social issues that do play a rule, but to me the explanation that i focus on in the poker

probably the the two most persuasive once. >> i'm a retired professor in mathematics, and i just realized listening to your talk, my biggest failure in life is that i was never important enough to be a capitalist cronies. on a more serious note, you talk about instability. i was reminded of aristotle's politics were somewhere he says when the few have too much and the many have too little, troubles arise and states soon come to a new. so 2500 years ago, aristotle recognized the extremes of the terrible consequences, the extremes in inequality that you mentioned. that you emphasized -- you didn't emphasize a political

instability that will result from this economy. >> no. let me say, i try, i only had half an hour. i couldn't talk. but political instability is one of the real risk. democracy is a pale come you see what is going on as a result of an outperformance of the economies in europe. the rise of extreme groups, neofascists, and that's the kind of political instability that can arise. i should also say about social instability, or social problems, in those countries in which these kinds of high level of inequality have persisted you find it very, 1% living in gated communities separated from everybody else. they are in a kind of prison, but the real point is that different ommunities live

totally apart different life. and it's not, it really undermines the notion of a community. >> the motto another world is possible, and that's also the motto for a coalition that was formed out of seattle during the wto protests called our world is not for sale, and that coalition has worked very hard to try and turn around the trade agreements that really are harmful to the kind of issues that you are talking about here. and it's very, very difficult. you know, the negotiations go underground and you can't even get the documents now. so my question is, what would you do to begin to really mobilize people? is like with a supersaturated solution right now, but what would you do to to begin to

mobilize people, to begin to really make a change? >> so on the particular issue that you discuss, the trade agreements, i think one of the point is exactly the point you made, that many of these trade agreements are negotiated in secrecy. right now many of us want to know what's going on a partnership agreement with asia that we are talking about. no one really knows. and the result of this is at the end, when presented with a doctor, they say we've already negotiated, you can't change it now. so i think one of the real demands ought to be more transparency. and that at least, we may disagree about, people may disagree but the contents are. i believe with greater transparency people will say this is not acceptable, this doesn't reflect our values. >> i do want to just make the point that the corporations do know what's in those --

>> they know but the rest of us don't. that's the concern. >> i was lucky enough to hear you on the radio. so i've had two days to think about this. you said the stockholders, stockholders have more control over ceo salaries until about 1980. or correct me and then -- >> what basically happened was, we didn't change our corporate governing laws, but they used to be a kind of social consensus, a kind of self-discipline that the ceo said it is wrong for us to take a salary that is 1000 times that of our average worker. you know, in japan the norm was 10. you know, in new york, you know,

maybe 30. and the united states just went out of bounds. so you might call it a social contract disappeared in the united states, and then because we have no corporate governance laws, like australia has, there was nothing to be strain. and, finally, -- there was nothing to drain. finally, be in a traffic control strikes weakens unions which had served as a partial constraint, and then we got in the situation where the company would say we have to pay you know wages because we don't have the revenue, and the reason we don't have the revenue is because we are paying myself this this, you know, $400 million salary. and they said that again with a straight face. >> do you have any ideas? i'll bet a few people here are stockholders of companies. >> there is a movement for shareholder activism.

what's really striking in europe, it's actually working. people are voting down the exorbitant pay of a lot of ceos. and the interesting thing is, what they call the exorbitant is miniscule compared to american exorbitant city will pay. >> think these are. >> hi. it's a pleasure to finally meet the face behind all the violence on academic papers i did in college. we talked a lot about the grand strategy but i like to bring a little more personal. myself and my friends, about one year, two years out of college find ourselves in an interesting limbo land where we're to extremes to get in the internships are not experienced enough to get any jobs, and we've noticed that there's a seeming in equality within the internships world itself, whereas those of wealthy parents and can afford to take an unpaid

internship at a very prestigious institution can afford to go somewhere, and those that can't end up waitressing or something, not that there's anything wrong with that, but they don't have the opportunities. so i which is what a despicable but on internships. >> you right. i actually talk about that in the book. because it is one of the mechanisms by which inequality gets perpetuated. the question is, why is it the united states becomes the country with the least equality of opportunity, the highest correlation between parental income and the child's income? and that's one of the mechanisms, by which we perpetuate inequality. and, obviously, it's also, can be a form of exploitation as well. there's some interesting books that come out on that spirit i will buy your book. >> thanks. >> thank you, sir, for coming. i'm in the same situation he is. i'm a recent college graduate as

well. i just wanted to hear your thoughts on the occupy movement. i was down there the other night, and it was a rather sad sight, only a few tenths there, the park pretty much trashed, the restaurants around their are talking to the newspaper saying how glad they were that occupy was going. they could have normal business again. nicd tea party and i see the republicans pretty much going to tea party and the tea party prematurity take over the republicans. and i don't see that with the occupying the democrats. so where would you say occupy went wrong in that regard? >> first, for those young people who don't have a job, i don't know if this is going to make you feel better but if you were in spain, there is -- [laughter] there's a 50%, more than 50% unemployment rate, and there's no prospects prospects of things getting better. so you might say relatively you're better off, but that should not be a good answer.

i think the reason -- this is a difficult year for movements like occupy wall street, because it's a political season, and what the tea party did is link itself with a political party, with the republican party, and try to take over the republican party. and i think there hasn't been that kind of link between the protesters, the occupy wall street, and an attempt to have their voice heard more strongly within the democratic party. so at least that's one possible explanation. let me just say one more thing about the occupy wall street movement. in spain it was called -- i spent last year, i went to tunisia, i went to cairo.

i talked to all these protesters. i talked to them in the park. they had a common theme in all these, and that is that markets were not working the way they're supposed. they are supposed to be able to get a job. their demand is supposed to equal supply. that's the basic law of economics and the part of demand equal supply is in the labor market them labor market isn't obeying the supply. moreover, you look at our economy. we have underutilized resources and huge unmet needs. so again, something is wrong. they also articulated a few that politics -- by the art -- something isn't about what's going on.

politics doesn't work. there's an inequity and there's and inefficiency. the difficulty is they didn't have an agenda. they articulated what was wrong. they didn't have an agenda. the tea party movement has a simplistic solution which will make things worse, and worse even for their own self-interest. and i think eventually they will figure that out but it may be a very painful process, not only for them but for our whole country. >> hi. i'm a college student and i am an intern by the way. my question is, how do we of the with these talented people away from the financial or and into the world of innovation and policy? if you're proposing to abolish rent seeking, i kind of feel that is devaluing ideas of discovery, so how do you convince a culture? >> now know.

it's just the opposite. discover is really creating value by creating something that makes the size of the pie bigger. that's the major distinction. one way of redirecting resources is more progressive taxation but when you have rent, the good thing is if you tax rent, and discourages wind sinking. so if a lot of the income of the top is read, you make it less attractive to go into rent seeking activity. it's not an accident i think that the lowering of the tax rate at the top has led to more inequality in the before tax income. because it provided more sense for people to engage in rent seeking. so actually, there's an interaction between our tax structure and hour before tax income distribution of income.

>> testing, testing. spent we have time for a few more questions. >> okay. well, i didn't get to read your things when i was an economics major, you're not written your first book yet. i have one question but it's a little bit involved. and it's not about any called it a chore the right person to ask the question. if economics is a science, why is our economic theories with answer to the same questions, or to the different areas have different economic goals and if so, why and what are they? or have the theories of adam smith, hayek and milton friedman been represented to us by politicians with an agenda? ..

information is imperfect. some people more than other people don't know. what we showed was that the reason that the inviz hand was unavailable was that it wasn't there. that is to say it was not the case that the pursuit of self-interest leads to well-being of everybody the banker pursue their self-interest and i don't think any of us would say that's to the well-being of all of us. so that theory has been totally

discredited as a theiry. but if you listen to milton freedman and his disciplessings you would not believe there was this research that is taught in all graduate schools, accepted break they have a political agenda. they want to ignore these results. now, of course, what they try to see is, this is a little piccadillo, and one of the thing i showed in my research is even a little bit of imperfect information changed the result in a dramatic way there was a discontinuity. they don't want to pay attention to that. so my answer is, the rope why you have -- there's a political agenda summon of these theories -- on in of these theories. there are some cases where

there's ambiguous empirical evidence. the world is complicated and we have to interpret the world -- let me give you an example of very briefly of where there aught ought to be unanimity but there's controversy. there's a big debate about the role of austerity. now, there has not been a single large economy that has ever recovered through austerity. not a single one. now, those on the other side look -- have identified a few instances where governments cut back and economy grew. those were all small economies. and if you look at what happened, it was very simple. they were lucky.

they were lucky because their trading partners were going into a boom. and so as their government spending went down, the gap was filled -- more than filled by exports. so, there are some circumstances -- and you could even manage it to increase your export if you're a small economy, especially with flexible exchange rates. but we're not a small economy and our trading partners are really not no good shape. so there is no way that we can hope to grow through as state. no way europe can hope to glow austerity there has been experiment after experiment, you might say, call it an experiment. the first one, recent history, was herbert hoover, and he tried austerity, converted the stock market crash into the great depression. i don't know why anybody wants to try that again but there are some republicans who want to do

that. but then, if we didn't have enough evidence, the imf did more experiments, on some involuntary patients. and it had austerity in indonesia. korea, thailand, agent, -- argentina, and each instance it was a disaster. not one of them worked. downagreedsgrades into depressi. so that's an instance where people can say you haven't looked at data that are successes but when you look at the data more carefully, you realize, there are none. [inaudible] >> i hope he listens. >> good evening. thank you for your terrific presentation. i look forward to reading your book at as an irish national i can directly relate to what happens when the majority of the population shifts from

productivity to rent, seeking, which is exactly what ireland is now trying to recover from. i have two questions. the first one, would you care to comment on the loss of manufacturing base in the united states? the rise of china, india, and other economies as to what the impact is on the price of inequality. and secondly, would you like to close this evening by letting us know whose policies, obama's or romney's, are going to be better for curing the price of inequality. [applause] >> okay. the first question is not easy to fully answer. the role of globalization in this whole process. let me say that 30 years ago, we could have kept manufacturing more in the united states.

but we decided to let it go. we decided not to have any industrial policy, as it's called no strategy, and once you let it go, you start losing your -- what we call dynamic comparative advantage. you become less competitive. they learn, we don't learn. germany maintained their industrial capacity but they have good education, oriented around it. they have a set of financial institutions, the have the middle instead of entrepreneurs so they have managed to maintain it, but we've lost it and, it will be very difficult to recover. for those who -- let me also say, even if we were able to do a little bit in recovery -- we have to realize that manufacturing is a little like

agriculture 100 years ago. we are the victim of our ensuccess, increases in productivity in agriculture meant we went from a world in which more than 60% of people were farmers to a world where 2% of the population grows more food than even an obese population can consume. manufacturing has been in the same light. we've been increasing productivity. we're getting -- the result, manufacturing jobs in china are going down dramatically. so, we're getting a smaller share of a declining employment, and that's why we have to restructure our economy. now, your second question is really an easy one. the fact is that one of the candidates simply doesn't understand inequality and doesn't want to talk about it. he says should only talk about it in hidden rooms. the politics of envy. the other one has finally come out and realized there is an important part -- this is a key

problem for america -- and reflecting that, i mentioned before that romney is only paying 15% taxes. warren buffett is also paying 15% taxes but what warren buffett said, it's wrong, and he has come out with a lot of other billionaires and said, it is wrong for him to pay a lower tax than his secretary. i have not heard that statement from romney. he evidently thinks at it right, and that's very disturbing to me. disturbing both about the likely policies that they would pursue, and about a sense of moral compass, about what the right directions for our society. [applause]

>> you're watching book tv on c-span2 and we're on location in new york city at the annual book publishing industry's convention held at the javits center, and we want to introduce you to a new author whose book is coming out in september, and his name is kevin powell and he has written a novel called "the yellow bird." give us a bit of your background. >> i grew up in virginia. i joined the army. >> what year? >> 1997. before my senior year in high school. i ended up going to iraq in 2004 and 2005. got back. i've always been a huge reader, and i've always been a writer, too. and when i got back from

overseas i realized i had a story to tell about the wars. i started writing a book a year or two after i got back. >> how long were you in the army and the armed forces? >> eight years total. >> host: did you feel fulfilled being in the armed forces? >> guest: it was a lot that i liked about it. a lot of really good people. i appreciated the discipline, and i learned a lot about myself. and it was a privilege to serve in the armed forces. >> host: you were in iraq in 2003 and 2004? >> guest: 2004-2005. >> host: when you got back and left the army, left the armed forces, what was your life like? >> host: well, i think one of the things that is difficult in coming back is kind of the lack of order and direction. life is is a difficult as it can be in the military, especially overseas, it's incredibly

simple. you know what is expected of you, your job is right there in front of you and you have to do it. when you get home, there's so much free time. just bombarded with options and possibilities and stimuli, especially coming back from the desert. color, everything is overwhelming. the re-adjustment period is challenging. >> host: what tide you find most challenging? >> guest: i think the not knowing what was supposed to do next. that was tough. i knew i was going to get out of the military after i got back from my tour. some i sort of didn't know what the next step was going to be for me. so figuring that out was tough. >> host: you started writing a novel. >> guest: yes. >> host: how did you submit it? how did you get it to somebody to publish it? this is published by little brown? >> guest: right. i started working on it while i

was an undergraduate at virginia commonwealth university. i had taken somesome creative writing classes. actually was mainly writing poetry at that time. i ended up at graduate school at the university of texas, and showed it to professors and they were encouraging. a good friend of mine, also a graduate of the center, loved it, and offered to send it to his agent on my behalf. and that how i got it in. >> host: is this based on your experience in iraq? >> guest: well, i think it's a work of the imagination, that when you're half in without the experiences that i had. the circumstances that occur in the book is not what happened to me wheel i was overseas but i think the sort of emotional core of the book is something i wanted to get out there and communicate to people who maybe felt like they didn't understand that experience. one of the most frequent

question is got asked, and a lot of veterans are asked, what was is like over there? and it's hard to know how to answer that question. that's really what i was trying to do when started to write the book. how do i contend with that question, what is it like? >> host: you talk about the emotional core what emotion do you bring out in the book? >> guest: i think confusion. you have a sort of job to do and you understand your job. you may not understand all the reasons behind it. the way it affects you thousand line, the way it fakes people around you and the way it affects your family at home. my mother, the hardship she endured. i didn't understand that until i had time to mature and get a little older and have conversations with her about what that year was like for her. so that's a story i wanted to tell, too. not just what it's like when you're overseas about the effect it can have on the families back

home, too. >> host: where did the title "the yellow bird company company come from? >> guest: it's a marching cadence. yellow bird with a yellow bill, burst upon my windowville. which anybody who has been in the army has heard that one a million times. >> why did. >> host: why did you decide to make this a novel rather than a fact-based book? >> guest: i think a lot of people have really capably talked about what -- the big picture view of what happened in iraq and afghanistan and what's going on over there, but i just felt like this was an opportunity to tell an individual's story. give a picture into one person's consciousness, their emotional life during that tour, what that was like coming home. i felt like there was an opportunity for a story to be told on a kind of smaller scale.

>> host: kevin powers-was pdsd an issue for you? >> guest: i don't know. i was never diagnosed with anything like that. i i was tough coming back. i'll say that. it was a bigger challenge then i thought it would be. it takes -- i expected that things would be different, but you do have sort of noises will alarm you and things like that, and that's certainly something i experienced. but i don't know -- i do know that people have had it much worse than i did. both my experience overseas and coming back. people out there who really struggle with that, and maybe if the book can raise some aware unless about what people are going through when they come home, that would be something i would be grateful for. >> host: you're still a student at the university of texas? >> guest: i just graduated in may. >> host: congratulations. >> guest: thank you very much. my msa in poetry.

>> host: as a first-time author, what's been your experience getting published and the whole hoopla? >> guest: it's really -- it's exciting. it's not something i can say i expected. i certainly hoped for it. bogota great agent, and little brown has been fantastic to work with. so i feel look i have a support system in place. it's a privilege that people might read something i have written. >> host: your next book? are you planning on doing another book? a book of poetry. >> guest: i have a book of poetry that is more or less finished and then this fall i'll start on my second novel. it's in its very early stages now. >> host: based also on your military experience? >> guest: no it's not. no. >> host: well, we have been talking with kevin power about his new novel "the yellow birds"

based upon his experience in iraq and this comes out in september of 201. >> you're watching an interview from book tv's recent trip to new york city for book expo america. >> there's a new exhibit at the library of congress and it's called "books that shaped america." book tv is taking a tour of that exhibit, and joining us is roberta schaeffer. why is it called book that shaped america. >> we called it that as opposed to other words we considered, like changed america. we think that books slowly have an impact on american society, and shaped seemed to be the better word to imply that kind of connotation. >> host: when you think of the word holiday shaped" and what you said, what book comes to

mind some. >> guest: that's the fabulous part of this exhibit. no one book is shaping america. so many books have had such profound influence on american culture and society, and indeed the very essence of what america is, it would be impossible and improper to pick one book from the 88 that are here. >> host: 88 book. the exhibit starts out with common sense? >> guest: it does, although the earliest book is actually ben franklin's book on electricity. that's a 1751. so, we have two books about common sense in the shelf. one is fox's book on raising your child in a common sense way, and of course, thomas payne's book that sparked the american revolution. >> host: are these all first additions or very rare? they're not all first editions

or very rare, all we have a number of books in our collection that would be first editions editions and very rare if not one of a kind but we selected books for a view virginia rite of reasons. some have indescriptions by other famous people or the authors themselves. two books in the collection i adore, are books that are part of the armed service. book outreach to people serving in the military. so we have two examples of books that soldiers were sent. i believe now they are sent books to read at the war front on ipods and other things but at least in the olden days. >> host: what are the two books? >> guest: i believe one of them is taliban, and i'm trying to think now what the other one is. but -- my goodness. >> host: while you think of that, in this exhibit, a lot of novels. >> guest: yes. and novels are a critical part of american culture. not only dime novels that people

read-the-common people read, but some very highbrow and complex novels. some novels that appeal to people of all ages. some children's books that appeal to people of all ages. the wizard of oz. charlotte's web. hardly limited to the children's audience. >> and gone with the wind is here as well. how did those books shape america? >> well, many of them identified who we were becoming or the as -- aspiration west had as a nation others told about experiences we had uniquely as americans, like the diaries of lewis and clark. and many others really defined our dialect. huckleberry finn. talk huck talked to in dialect so it shaped how we speak today. >> host: you also have social, cultural books and i wanted to ask you about that.

you mention editor -- doctors spock. there's a come of cookbooks and the big book, alcoholics anonymous. >> guest: we thought it was important to look at nonfiction and books that were self-help or broke barriers. so we looked across the board spectrum of books that shaped america. we didn't want to limit ourselves to a particular genre or kind of book or even a certain kind of author or writing style. we looked for many books that were innovative. that showed americas a an innovative country, country that looks for solutions, that shared her experiences broadly. that used books and stories to inspire going into the frontier, and that could be intel electric fewing. >> host: were you no charge of

the winnowing process? >> guest: an interesting question. a very large committee, with no chair person, which i think is rally interesting with had a number of discussions as poem broughrth titles, and private or not it was not all that difficult to select these books. this is not a definitive list. there is no article, the book, that shaped america in the title of this exhibition so we really didn't it we wanted to choose books that would get america talking about books and that was not as difficult to find consensus on as maybe choosing the 50 books or the 100 books. and so we didn't need a chair person. >> host: some of the books in here have created social movement. i'm thinking, upton sinclair, rachel carson. >> guest: one of the interesting thing about the becomes here is

they not only created social movements summit led to legislation. so, we see the jungle in here and we know that it really created the forerunner legislation to the food and drug administration being created. so not only social movement but actually social change. >> host: why 88? >> guest: 88 is really just where we decided to stop. we were worried about using a number that is commonly associated with a definitive list. so we avoided 10, 25, and 100. beyond that it was up for grabs and when we got to 88 we said, we think that's a good number. it won't give anybody the impression that we've -- we mean this is the 88. >> host: poetry, religious books, are they in here? >> guest: we have quite a few exemplars of poetry, running the span of at least two centuries. we have walt whitman, allen

beginsburg, and we tried to show that poetry has been part of american history and americans have been committed to both writing and reading poetry, and i think that continues today. >> host: what about religious books. >> guest: well, we do have a holographic bible. a lot of books wouldn't necessarily be associated with a religion, have a moralistic or a kind of a do-good tone to them. and we really felt that is more representative of america than would be a particular religious book. so, we tried to look at the values of america, her spiritual sort of persona, rather than looking at particular religious books. >> host: how did you get your start here at the library of congress? >> guest: my goodness. i started here over 30 years ago the first special assistant the

law librarian. fairly fresh out of law school. i absolutely fell in love with the library of congress, and 30 plus years ago, as today, you cannot keep me away. i run to work every morning. and i think that working here and being here surrounded by books, manuscripts, musical scores, movies, the whole gamut of what is knowledge in america, is such a thrill and such a privilege, that you really are going to have trouble getting me to retire. >> host: is this exhibit open to the public and how long is it open. >> guest: it's entirely open to public, open through the end of september. but let's say you can't come to washington. we have a virtual version of our exhibit on our web site, and part of this exhibit, part of this conversation, is an open web site where we're asking people from all over the world

to comment on the book wes've selected, but also to tell us why you think something we selected shouldn't be on our list, and even more important, why something you think should be on the list, should be added to the list, and we want to hear from you. so far we have heard from over 5,000 people. and we encourage everybody to go to our web site, www.l www.loc.gog/bookfest and you'll find a list of the books and the opportunity to complete a very brief form telling us what you think about the books. >> host: the last book was published in 2006. >> guest: be kind of decided to put a cutoff on it. we tught if we're going to be looking at books that shaped america, we have to give them an opportunity -- give books an opportunity to prove their worth in shaping america. so, this is an organic endeavor

by the library of congress. we intend to keep looking at books that keep shaping america. and we thought, about a decade, that's a good place to stop. so since we're in 2012 now. let's stop at 2002. >> host: later books, band played an and -- >> guest: randy's book had a huge influence on age research and really sort of raising our consciousness about that terrible disease, and caesar chavez, a leading voice of farmworkers and a reading voice of america. >> host: these books, were they best sellers. >> guest: many of them were best sellers and actually many of them continue be and have not gone out of print. so even though that wasn't a specific cite tieron, so many have been translated and carry

american ideals across the world. >> host: i wanted to ask you about emily dickenson's book of poetry. >> guest: of course she is a must-have american poet but the particular books we have in the show is an art book it's done by a cooperative in cuba, and they have reproduced the book of poetry, and they have also made a facsimile of her house and a little tree, and it is made out of recycled material, and emily dickenson is a phenomenal poet but we didn't know about her or discover her until the mid-1950s, when we finally were able to see her poems or read her poems and love her poems unedited and in a way she meant them. >> host: who was doing the editing. >> guest: there's professional editors. they like to take their pen and make you cop form so for emily of all people, that was an awful constriction. >> host: rer