you don't have time to think of that to that you are being beaten by people not of your color. i cannot die out here. >> thank you very much for coming tonight. i am the editor of the manhattan institute's city journal.

it is a great pleasure to and -- introduce luigi zingales lourdes of the most charming contributing editors who is here to speak of his book "a capitalism for the people" recapturing the lost genius of american prosperity" when he first arrived in the country he enthusiastically embraced the american dream that hard work brings success. not look or who you know, which was the case in italy and other countries. this e those was essential to american capitalism making the poor rich by a global standards. but as he warns in his new book with the post financial

crisis era of political insiders profiting from connections to a federal leviathan a renewed faith of government planners and struggling middle-class prosperity is that a profound risk. disturbing signs that is a burlusconi crony capitalism system prevented us from full economic recovery. how we got into this mess luigi addresses in the book. preceding up ph.d. and no a

professor of entreprenuership and finance. ranging from financial regulation and his earlier book was called saving capitalism from capital list. in 2003 he received the prize for best young financial economist and a member of the american academy of arts and science. he also served on the committee and a long list of other appointments.

and then if i had to pick out one book to a popular audience this might be it. >> this is a must read. >> and they urge the romney campaign to read it. in the meantime let's welcome luigi zingales. [applause] >> and a thank-you to the "journal" easy academics to

write and a popular book but to but let me explain why i wrote the book. but to live by it with the political affiliation it is much more important to it was a big deliberation with

the free market system with has wide political support. if you go our round is supported by the vast majority. not true asia or latin america. they have experienced superior form of capital list. his attention between the free-market and democracy. with the free market believer with proper incentives. budget to the system is the

engine of growth. to get a decent enough and share. and they think it is fair. with the market competition you have to believe to believe in the system. >> all of this that makes america a great from the one prevailing the only compared

did the vantage is that i have seen them before. it makes the system after world war ii in america and also superior do with the institutions. few are in the firm to invest the vast majority was run by dictators. europe was not as secure place to do business. business in america and american workers with some

extra of benefits. and every citizen would get an extra benefit to out of those. to copy what a very good did. and now it is competing with seven rest of the world. and the competition taking place with the distribution of talent that creates

tension with people feeling left behind. with of lack of sense of fairness prevailing before. i remember the first time there was a tornado watch. everybody had to stay at home and take the windows. and do the opposite you are fine.

but why? that they were acting in interest of the people. we have lost that trust. and it's a secretary was acting in the best interest or not. and whether this was true or not to be cut is perception was just as important. with the driving policy in their interest rules are not

safe for everybody from the tea party and historical a was a very dangerous combination the quality, a perfect combination and storm that might destroy the free market system. with institutions are in that situation they try to protect themselves it creates a and at which it is

very difficult. i say let's to know that natural since not destroying the market to but to fit equal level playing field. >> that aim of the book is how can we do it? to say let's do massive distribution. in europe they have statistics income equality

is matt -- much better that is the reason why the statistics are better. you are not a fan of soccer but football. all the best place goes to spain. soccer players have a 20% marginal tax rate. surprise surprise they are the best in the world. so we need to have more competition with subsidies

that if you look at the statistics why most americans feel they fall behind the wages don't grow fast enough to cover the cost of health care and medication. and most don't see directly the cost it is taken away. we don't bear the full cost. and sell if we want to contain costs college cost

even if you account for the fact the cost as still gone up quite a bit. but most people don't pay attention. in college they say it is price list. that is not true. but it makes up for the difference. the lender does not pay the cost of the mistake.

it prevented innovation and. and start when firms cannot survive. we need more innovation. with the focus is to rethink economic policy. we need to regulate or subsidized the industry or sector because it is important. of political economy there are few people who benefit all lot. but how can we invert the

dynamic? glass-steagall was 23 pages those that mandate 67 studies. it is difficult for anybody who unless they are paid lobbyist. might claim is rewind regulation we know from the economist's point* of view if you want to subsidize with the ownership imagine

how easy it is to say i want to make the american dream more likely? not very good. because you've been if it. is any of the taxes. on the other hand, making it possible. so let me make an example. lobbying is excessive. it is the most profitable

activity in this country. also illegal. and it is legislation besides defrauding investors did not have to pay taxes in the united states. so he that senator but now we know jack abramoff and said i need the 18 to do a special job. paying out 150,000 per month

and they started to create a fake grass roots organization the other is to the campaign fund. and you could defeat the loss of $4 million. there is no activity in the world the other solution is to tax it. but taxation does the trick. ring being close to home we need to look at the social norms pro-business school

should think seriously. that would frame under the could set of laws to know that dream is good. it is passed the normal level with the consensus of the free market system. they may have a different agenda and thrive of the free success.

how do do that? but to celebrate alumni. and with of ph.d. from m.i.t. the claim to fame is with the techniques to gambling. to maximize revenues. let the catalyst to doubts that with the enemy of catalyst stronger.

it should not be something as an example. at the same time we should teach cannot deeply religious so i have no qualification but i do have an knowledge to talk about general norms how to make the market work and what don't. it is incumbent to push for those. said destruction of capital list with regulation and those social norms can only be conformed with a

consensus. but it is lobbied with the social norm but approved by the majority of people. that the norm would be applied. a free market system is crucial to preserve it. and fight the generation reaching this country. we should act before it is too late. thank you. [applause] >> time for questions. wait for the maker phone to

arrive. please keep the questions pointed. no statements. >> you mentioned in the jt's of the knoll lobbying tax. is there a specific policy proposal? but it is just communication it would be easy to skirt oversight how policy would deal with the problem. >> that is a very good question.

the book is and 80 and not a detailed policy to change the conversation. i don't know how to be implemented but there is a vast range of activities. some hour freedom of speech. even the right team this book. at this point* lobbying at congress is registered. you could discuss where to employ is -- impose the tax. it is destroying value. we have to find a way to address it. it is simpler with attacks

deregulation. trying to regulate is impossible. and then, congress this this addicted to lobbying to pass a tax. i do believe pressure can achieve a lot. my favorite example there was a proposal of insider-trading and it then became a lot. they felt the need to do it.

with that pressure to change the system. >> you discuss the fax, from lobbying but the most costly policies have wide public support like medicare, the employer deductions for health insurance, mortgage tax deduction and cost trillions of dollars per year. to rethink democracy and public opinion will help? it seems the opposite. >> we need to try to channel

the debate i do believe the only defense a bowline of the mortgage tax deduction is have none. . . that is why i say we should eliminate all this. if you really think the goal is

so volatile, due with that task and see if that task is -- because i agree with you. the most dangerous lobbying ideas are the nice ideas. and i mentioned it because being against ownership is like being against beats. so if you can cover up your naked interest with a grand idea like that, you become irresistible and that is why i would try to avoid by saying if you want to do economic policy, you have to convince me that a tax is good. >> professor, you just told us that lobbying is the highest margin business that there is. they are only going to pass along that task, those lobbyists

are going to pass along their tax whether it's advocacy groups, anti-smoking groups, israel advocates. lobbying takes on many many different shapes. why is it that policy which is almost never worked -- i'd be interested in the example where tax has inhibited or undermined a fundamental policy that you believe we should be deterring, should be opposed to? where is that tax policy that has produced that, where the vendor can pass it along to the buyer? >> first of all translated completely to the buyer depends on sort of the market system but

more importantly, we know that taxing any entity -- when you taxing, people want less of that is a pretty good example of a tax working in the wrong direction but working, so what i'm saying is i want a tax benefit so taxing pollution for example is a much more effective way to solve problems than regulating pollution. why do we see a lot of -- with taxes? i was told that recently lumbered has passed a regulation of soda pop in new york. now, if you really think that soda pops are bad because of externalities let's put a tax on it. it's much simpler and now let's discuss it. there reason people might disagree but it's easy for people to understand, so think

about, the same is true for large financial institutions. one way to sort of solve the problem is to increase their capital requirement which is basically imposing a tax on them and if you do that, that will save you 2000 pages of legislation and i don't know many people working trying to pass that legislation. so i think the good taxes are what economics called -- are very effective alternative. that is why we will see it. people prefer anything to do. with retire hands and say the only way bree reduce debt we will see how much intervention we are going to get.

>> professor, it would seem that to advance your ideas, it would behoove you to advance one or more advocates to persuade others of the benefits of not subjugating the rest of us to crony capitalism. where would this advocate or applicants come from? do they come from academia? with a come from other parts of society or with a credibly come from the business community? steve jobs is dead. he had a lot of credibility with the average citizen. i'm not sure he would actually abdicate this idea however good it may be. what would you say the applicant should come from? >> i think that is an excellent question and first of all, the reason why i wrote this book is

really to make people understand that defending free markets does not mean all the time defending business interest, and i think all too often, especially we free marketeers feel free in whatever they do without understanding this has a gigantic cost in terms of public opinion. so if people understand my logic, i think that there are two ways in which crony capitalism will be exposed. one comment have a chapter on this called -- by increasing the level of accountability with a large infusion of data. in today's world, it's more difficult to destroy data then too collected to kos they automatically sort of collective. however, there is a lot of

resistance in sharing them because once you share them, they% evidence that is too hard to pass up. and i was discussing with some manager of an italian bank who did an internal study and they found that not only women in the bank were severely underpaid with respect to the men with the same job, but they were much more protect this. so they were paid less but they would produce more. and of course, they don't want this study to be released because it will undermine the men who are in power at that bank. i have a colleague who, teaming up with some people at the federal reserve, wrote a fascinating paper showing that the state regulator -- state regulators are terrible and bank

state regulators are basically two buyers and the federal reserve has no edges because it's competing with state regulators but you know they they're all the same people -- code tried to not have this study released and block any further use of data and for no reason. i can understand that the so-called devil reserve or state regulators rating of bank might not he released immediately. but because of the financial stability concern but there is no justification for not adding adding -- leading them release it with the delay. it was three or four years ago. who cares? we can go back and look at them and find out whether the ratings were well done or not, whether they were useful or not. i do believe in data-driven

policy and i think that the reason, both in the media world and the academic world, to uncover these facts because if i want to write a more exciting paper, i want to sort of show some promise so i'm going to dig out the data in order to show those problems. so the best way to get this information out is a combination of competition in the media and academic market and data development. >> down here in the corner. cb luigi why is it despite the crony capitalism that you talk about, the design in the fashion industry managed to succeed despite this and become world leaders in spite of this and i wonder if there is any lessons in that about overcoming if you

will the constrictions of the state? >> if you allow me a joke. the joke is because the human capital is so great that they overcome all their diversity's. but more seriously, there is a lot of creativity in italy and industries that don't require a large infrastructure, you can still operate and be okay. so the fashion industry is basically an interstate based on a few individuals with a lot of talent. it is not a large organization that requires efficiencies and that is where italy has a comparable advantage. we are fantastic at producing niche products like ferrari but not as good at producing cars like the fiat. so i think in a system that is not transparent and not -- is

much more difficult in a large organization. a system that lacks trust is much more difficult than a large organization. that is where italy is deficient and that is where it is following behind in a -- that has become more competitive. >> howard hughes, manhattan institute. critique has emerged from the left of american capitalism encapsulated by the work of the economist emanuel sigh as which has it that inequality has increased, that the increase in inequality has diminished mobility and this reveals a fundamental flaw in a system that you are extolling. i wonder if you think one, few believe those trend lines as identified accurately, if the date is correct and two,

whether, if that trend is verifiable, whether that is because we have already strayed from a productive free market system undermined by cronyism or whatever, or whether it's a function of competition that you discussed earlier and as a result, and in either case, how do we sell this inequality increased to the american people such that they don't go in a direction that would concern you? >> i think that is an excellent question. i think the income inequality is by and large increasing income equality is clearly a matter of concern for everybody. not just the left. i think everybody should be concerned about this and that --

i discussed extensively in the book what can be done to alleviate the effects of this income inequality. the causes are many. somme as i said as the global competition. the the second is more what i think and effect a too much -- at the top of the organization and i have a proposal on that margin but also i think what is important is to recognize that in order to have a truly competitive system, we must make an effort and equalizing the stopping points. my perception but also all the signs that i see is americans don't resent necessarily inequality, resent the unfairness and they don't have a

fair shot. so the decree social mobility is important and we need to understand better and to fight. how can you fight in a market way this increase in inequality? for example, by improving the level of schooling, not only a voucher-based system but a voucher-based system based on starting points. so today we have a lot of programs like affirmative action and maybe historically it might be justified but today, if you are from an african-american middle class you don't need any help and if you are a white in a poor area, you do need help. sifi white help is not race-based, it's need a so i

think it can be easily solved by saying we know what what is the disadvantage? it's very easy to calculate the advantage to come from a certain neighborhood in terms of your performance in school. so why don't we try to give higher value vouchers to people that come from those areas so that they can get to better schools and have a shot at competing before the better colleges. if you are good at the high school level you can get the best colleges and succeed very well in life but for many people they don't arrive at the level of competing the at bat states. we need to bring them up. my model even if i don't play golf, i think that golf is a very free market game and one of

the things that golf does is create a handicap to equalize the starting point. they don't -- because that of course would destroy the incentives but they are in fact trying to equalize the starting point so that is the direction we should go into. >> down here in front. >> your concept on the tax of secrets really works. that was a big success in the united states. >> he right here in the second row. be isn't taxation really another form of regulation? when you tax cigarettes you tell people not to smoke which is fine but it is another form of

regulation. >> absolutely, but my goal is not the -- of regulation so how do you get that? my view is the idea of taxation is simple and has very little what we call in economics ways, when you have a regulation people go in a lot of ways trying to get around regulation and most of the regulation is far away from the eyes of the voters so they have no say on that. inevitably it's going to be captured. we decide whether we want a regulation or not but in a referendum on taxing cigarettes, the majority will prevail and we

decide how much we can tax cigarettes. in my view that is the proper way to do regulation. i agree with you, it is a form of regulation but it's the least wasteful and by the way the fact that it is not trivial because we can reduce the tax on income so if we could raise all of these taxes on income i think we would all be better off. >> we have time for a few more questions. >> luigi to what extent are the problem of income equality's -- [inaudible] >> i think that moving forward, i see that as a potential. first of all i have to say i'm

not qualified enough to talk about genetics because it's not my cup of tea but from what little i understand i think moving forward this is going to be much more of an issue because of the way the market works today versus 20 or 30 years ago. at the moment i don't think that this is the biggest problem. i see more if you want, huge return on -- especially in areas like the software industry where the marginal cost of the product is the row. you tend to have basically, a disproportionate return. there could be five facebook's created next to each other but facebook collected the biggest mass at the beginning and now

has a disproportionate return which is completely disproportionate to everything that they make. there is no easy fix for this aspect. you have to realize that there is this component. part of a good free market system is a system also where the people who make a tremendous amount of wealth, they give it back -- because i think they have to recognize that sure, it is scale but it is not just scale. >> nicole. >> luigi the obama constriction is encouraging europe to pressure spain to use scare sovereign resources to recapitalize expense and thereby protect by the creditors to private institutions that they should take.

is this a good idea of? is it good for capitalism for spain to bail out its banks and for europe to bailout spain and does this send the opposite signal that dodd-frank is supposed to send that bailouts the bailouts are still the preferred way of dealing with the financial crisis? >> it is clearly -- a traitor friend of mine was concerned at some int when he was trading with a french bank that they were overly exposed to -- joined the france trader told him, don't worry, the garden is behind us. people might discuss a there is no discussion after the crisis. people do perceive that is a problem. now in terms of europe, i do want to have -- pay part of the

cost and part of the blame. increase, the greeks cheated and they have their responsibility but the lenders who did not check the greeks have the responsibility too. the system has been a system where we use public resources basically to ensure the creditors so between 2010 and 2012, most have credit up to now it's very difficult for greece to get out because there is not enough money that they can -- with. so coming to spain, they don't want the spanish banks to collapse because i will have a dramatic negative effect on europe but that doesn't mean you have to protect the creditors and the shareholders.

and it has been my favorite way of intervening sense sort of -- in 2008 today, i think that is the way to go. >> time for one last question. >> hello? one of the -- in our market system is short termism and a lack of long-term horizon on the part of investors and the rise of finance capital and productive capital. would you agree with that and if so in the spirit of earmarks would you support a tax on short-term speculative sq xpi think that i am concerned about that. i don't have enough evidence

that is the case but i don't have enough strong evidence that it's not the case so i am concerned. most of the time it's funny because -- [inaudible] so the public trading companies might -- now do i advocate may be a differential capital gain taste on the length of holding? yes, i think of that makes a lot of sense especially -- i think there is definitely too much turnover in stock especially before pension funds. we don't need to have sort of them turning over there portfolio every six months when we are supposed to go for the long-term. there is some value of course in trading. whether it's all value, i doubt.

>> thank you very very much, luigi zingales. the book is called "a capitalism for the people" and it's just out from basic looks. i want to thank you all for coming tonight. >> we are here at bookexpo america, the book industry publishing annual trade show in new york city. another university presses represented that is the university of chicago press. carrie adams is the publicity manager for that press and we want to talk to her about some

of the books that are coming out in the fall of 2012. ms. adams if we could start with beatrix hoffman's book. what is that? >> beatrix hoffman is the author of health care for some and the only right we have to health care in the u.s. is the right to be seen in emergency room which is a relatively new law passed in 1986. as a result of that being the only actual right we have rest of our health care system comes to them to a series of rationing. this is what he attracts discusses how there were results in the sort of spends the bulk of -- voelke random system we have today. she talks about how it is experience a human level everyone from soldiers lives to victims of national disasters like katrina. >> does she look for policy solutions to this rationing? >> is more of a history. i wouldn't call it polemical but i think anything that is going to give a history of health care is going to steer a little bit

left a released talk about ways we can make it a little less illogical and a system that makes more sense to more people. >> does the university of chicago press philip point of view when you choose books? >> we try not to. our university press, all of our books are fêted both by readers and a board of university professors so the board itself is often divided on different policy decisions but we are looking for strong scholarship with anything. >> another book is coming out this fall is michael landis dauber's. >> yes that is a great revisionist history of the welfare system in the u.s.. is called a sympathetic state and we often think that welfare has its origins in the new deal and progressive era politics of that time but actually is dauber shows well for goes back earlier to 7090 which was a law that allowed for federal aid to victims of natural disaster. it was actually this law they were drawing on when they drew up the welfare system during the

great depression and author says this reframes the idea of the great depression. retraces out this history to show out this conflict continues to play out in our discussions about welfare today as we kind of debate whether we want to help those in need while we have this kind of skeptical suspicion that perhaps they are responsible for their own plight. see how many books a year does the university of chicago press put out? >> we have over 250 titles in this new catalog but then we also distribute 455 other publishers. i think there are 700 titles altogether and 8325 page catalog. >> lacked as a distributor for who? >> we have many presses in the u.k. like the british library, the buzzing library for reaction books but our reach extends even further. we have a publisher of calcutta india. >> finally, michael gordon's new

book. who is michael gordon? >> michael gordon is writing about pseudo-science in america, looking at a the bella koski affair. bella koski is forgotten today but in 1950 published a fantastic bestseller that created quite a frenzy called world and can coalition. from the catastrophic floods, the results are, that came precariously precariously close to earth and settle into orbit as venus. he was immediately at bestseller but it was also vehemently attacked by scientist who said it was absolute bunk gordon is looking out by science practice of the he-man way to it. they felt the need to come out and talk about this. the reception of his book and kind of talked about how this reflects on our current debate in science of how we determined what is legitimate scientific inquiry that is often discussing