>> thank you. happy to introduce bob tonight. bob pollin is one of the leading economists in the united states. economists are the best kind, the ones that think outside of the narrow box of orthodox economics. bob is a professor of economics at the university of massachusetts and co-director. a very important research institute and excellent academic partnership with a purpose. bob's books include a number of books and tours of dissent, best descent of the u.s. economy.

the living wage, the building a fare economy. and then more recently, a measure of fairness, the economics of the living wage and minimum wages. and the most recent book is the topic for tonight, back to full employment. i just want to add that the work of a living wage has been very, very important. he's been probably the leading researcher on this important issue. he's published numerous papers and reports in addition to these books. he struggled to cities across the country to speak about the living wage and has testified before many city councils who were considering living wage

proposals and i think this is an important contribution i just want to acknowledge that. bob's recent work is focused on the green economy. and the achievement of the twin goals of sustainable energy and full employment. he's written a number of papers and reports on this topic and has worked as a consultant on green energy projects for the u.s. to provide enough energy and the international labor organization and is currently attracting green energy projects for the u.n. industrial development organizations. back to full employment i just want to add a little context here and that is the unemployment problem in the u.s. is more serious than it appears from the official government statistics. the main reason why the official

rate of unemployment has declined is the official estimates of the labor force has hardly increased at all since 2008 because the population growth is just stock. what happened is millions of fun and plant workers have given up looking for a job coming and they are not counted in the official government statistics. and if we just as an exercise assume. it's been on a plan that would be three or four percentage points higher than the official 7.9 or 811 or 12%. clearly in double digits and that's serious. and i think the unemployment rate is going to remain double

digits for the foreseeable future unless the government creates major job initiatives and bob is going to tell us tonight how that can be done. join me in welcoming bob. [applause] >> thank you very much. i'm happy to be here. so i guess the plan is i will warm up and talk about what is in this tiny little book to give some overview and then we to have a discussion. s. fred said, he took all of my good lines the magnitude of the unemployment situation today is unprecedented since the 1930's and it is not fully reflected in

the data at least that gets into the headlines. so as fred said, what we aren't measuring when we see 7.9% are not trying to get jobs immediately because they become discouraged and it's also not people that wanted full-time jobs but only got a very part-time jobs. now the labor department does count these people. they're just kind of buried in the statistical stacks and if you take those two groups, the people that wanted full-time but maybe only got two hours a week they got five hours or ten hours and the people as fred said was discouraged the unemployment rate today officially this is not something i've made up his

14.4%. a 7.9 is bad enough but 14.4. 14.4% is 23 million people. just to try to ground that a little bit. if we think about the population of the ten biggest cities in the country starting with new york, l.a., chicago, houston, san diego it's in the book. anyway, take the ten biggest cities and add their entire populations of all ten. imagine all the people in those cities and that is 23 million people. that this house of fear the crisis is and again there is no precedent since we got out of the great depression.

another statistic. we had the great recession that followed the wall street crash and was caused by excessive speculation on wall street. now according to the official arbiters of when the recession ends, it started in the last three months of 2007 and it officially ended by june of 2009. we've been out of a recession for three and a half years officially. one thing i recently calculated is let's look at this recession relative to all the other recessions that have taken place since the great depression. in all of the other recessions

there are different experiences with the economy does bounce back. when you say the recession ends it really ends. to conceive that in the statistics and on average the unemployment rate for the of a recession sometime as severe. 6.3% the average three years after the recession ended was 9.2% i'm not talking about the recession itself, i'm talking about after the recession ended with 9.2% as opposed to the previous experiences including 1982 was very severe but then we came out of it.

a 6.3%. now, the difference if the 6.3% unemployment rate today instead of the average of 9.2, officially that is 4.5 million people that would have jobs now that don't triet as we have this very severe problem by any measure anybody knows it and the question of what you do about it so i will mention a few things about what we can do about it but first let me just make a couple of points this is a jury simple point. why do we care so much about unemployment. i think everybody knows the answer but it's worth saying it anyway people need jobs. most people are not independently wealthy and therefore they need jobs even they themselves and a member of

their family supports other people in the family in terms of money and jobs are also basic in terms of people's stability stability of the community, sense of self-worth and being integrated in the community life. if you don't have a job you spend all your time worrying about the fact you don't have a job and it makes it much more difficult for you and other members of the family. as of jobs are intrinsic to the wellbeing so you have material well-being and there are also intrinsic to psychological well-being to purchase a nation in the community to family stability it eats away and

really destroys the basic fabric over a sense of basically 2008 when the great recession started i will get some ideas what to do but i want to mention one other thing which is that the idea about fighting for full employment is hardly original to me i don't want to claim any at all but it was pretty commonplace mainstream orthodox idea for about 30 years coming out of the great recession in the 1930's the idea was basically the capitalist economy is coming out of the 1930's new that they could not survive another great depression would

be destroyed if you couldn't provide something akin to the decent employment opportunities for the people in this society. so, full employment became the centerpiece of economic policy coming out of the 1930's and remains that as the central organizing idea. the government came and went and some of them are more or less committed of course get the idea of providing decent jobs was the whole edifice of mainstream macroeconomic policies was organizer not this idea how can a society that to fall one point and once you are there stay there. there are a lot of debates with your this is viable whether it is desirable and overtime the idea became emerged really what the government should do is

worry about inflation that's the more serious problem and unemployment will take care of itself. this is what some of us call neoliberalism, the idea to bargain for yourself with a potential employer if they don't want to hire you, lower the wage and eventually someone is going to hire you the value that you are worth to them and that's how you achieve full in plant and derived entirely through and that idea has prevailed. that idea overtook the notion that society should build a full employment economy and that the government policy should care about this. so what we had if you want to set a date since the beginning

of the reagan administration in 1981 and the late 1970's you have to read the decline of the idea that the government policy should be focused around achieving full employment and the emergence of the idea that the market knows best if the government tries to do something they are going to mess it up so the government should worry about keeping inflation down and let the market decide everything else so the market decides how the financial operations take place and deregulating financial markets and that is what happened to the speculative bubble and crash that created the great recession. that is the background to what my book goes through on some of that background. and very briefly, again, very short book.

so, i try to compress things a lot. but that is the basic background. now, how do we think about where we are today? well, first again as fred said and i reiterate it is important to realize how severe the problem is. and it's not just that we think about jobs or no jobs. when i say fall in planet, i mean full employment and decent wages, good jobs and that's also crucial to recognize because even before the great recession before 2008 and i have experienced another crisis in the job market which is the average wage for long supervisory worker has actually gone down for 35 years, or at this .40 years. people find it hard to believe, but actually these are official statistics from the u.s. labor

department. the average wage for the non-supervisory workers after controlling for inflation, so we control for inflation was about $20.70 per hour in 1973. today it is about $19.60. now this is over a period that productivity the average amount a worker produces how much does a worker produced? the average, again, official government statistics according to the government statistics the average worker produces about what he or she did. so the average amount produce hot over the course of a day has doubled and what the average worker gets paid as declined about eight or 9% when you hear

about the rise this i think captors a very, very well. the fact the workers have not been getting the benefits of their own productivity for basically two generations. moreover, that extreme i have a graph on that one and i turn right to let. it also contributed to the financial crisis and if the pie is doubling but workers are not getting any more, the money has to go somewhere, it's going to the top people at the top were getting so much more proportionally that created the opportunity for that to gamble

more and so there's always speculation in financial markets it was regulated for about 30 years but the market was the regulated at the same time that concluded accurately as well at least some share of what they got the can gamble with it because even if you lose five or 10% you have so much more than you might have had in the previous historical period with better wages and better share of their overall pothier percent those are the two focal points in terms of getting back to full employment which is jobs, yes, but decent jobs, too and we can talk about some of the politics of how you get there. we have true experts that know more about this than i do so let

me throw out some policy ideas in the longer term. in the short term, we are having the wrong debate. we are not asking the right question. the question is how we get the full employment. i don't know what obama is talking about tonight in his state of the union speech but i bet he's talking about about the fiscal deficit and the fact the government is spending more than it's taking in and the deficit has become the focal point of all of the economic, this whole crisis about the fiscal cliff now and we are talking about these automatic cuts, the so-called sequester social spending and military spending.

so we are not only talking about the fact that what are the tools the government has to promote our return to something like a decent level of employment opportunity and decent wages that isn't even the main discussion so the first thing we need to do is shift the discussion. the fiscal deficit i will say is relatively large starkly but the reason it is largest precisely because we have had the recession when the recession hit that meant people's incomes went down and when their incomes went down that is how much they pay in taxes. to counteract the magnitude of the financial press created by wall street, so that's why we have a big deficit so the point

is even with the deficit we do not have a fiscal crisis today we do not have anything to a fiscal crisis and i will give you a statistic that i hope conveys that and i will explain why we are in this desperate situation but the amount the government actually spends on paying and covering its debt is internist and today it is at a historic low, not a historic high. i know people find that hard to believe that it's true. again, strictly from government statistics. today over the last year the government paid 7.7% of its overall budget on interest payments. under ronald reagan the great conservative icon and his successor the governor was

paying 8.2% of total expenditures on interest payments so we go from 17.2% to seven print seven today. so how was that a crisis? answer it is not a crisis. how is it we have so low interest payments even though we are borrowing a lot and there isn't as simple. if he wanted to buy a treasury bond, five-year treasury bond today, the interest that you would get on the treasury bond is 7%. the treasury bonds are at historic lows so you can borrow and borrow but if the interest rate is less than 1%, you are not accumulating obligations at a significant rate and that is where we are. i'm not saying that the interest rate is always going to be so low. but i've been hearing from the most renowned so called the

deficit hawks like martin feldstein and at stanford the biggest names who have been arguing that we are in a deficit crisis. they've been saying that the interest rate is about to shoot up. they've been saying that for four years. eventually, they may be right. but at the moment, they have been wrong for four years. and meanwhile we still have a jobs crisis. so the government has a lot of opportunity to spend on important things to create jobs. number one, to help the long-term unemployed. is it to extend unemployment benefits. and that's not just a charity program. it's to help people get back on their feet, get decent jobs. but it also keeps spending on the economy more stable. some that actually helps stabilize what would otherwise be a more severe situation. on top of that, state and local

governments need to continue to be supported. state and local governments basically to three things, education, health care, public safety. all extremely viable, and these are areas that have been cut, and it's also true that state and local governments are the biggest single source of jobs in the whole economy collectively. so if you are going to keep cutting the state and local government, of course you are not going to get out of the jobs crisis. we need to support them. we need to invest in traditional infrastructure, and i'm going to focus on this a little bit more. and we need to focus spending on the grain economy, on building up the grain economy. in the short term, it creates a lot of jobs. in the long term, it addresses the climate crisis. so let me talk a little bit more about that. so, in terms -- that is a basic feature of the short term policy. i will mention one other short-term issue, which is the

federal reserve that controls the short term interest rate has been running with a call is zero interest rate policy now for four years. that is the interest rate at which banks borrow is zero. they get free money. they get as much as they want for free. and on top of that, actually if they take the money and all the dubious bank at the fed, they get one-quarter of 1%. it's not a lot. it's one quarter of 1%. but if you could borrow a lot, you know, you are getting that for doing absolutely nothing and that's what they are doing. right now, also something that's frustrating to me that has not been talked about enough, the commercial banks in the country are sitting on $1.5 trillion in cash. 1.5 trillion to give you some sense of that the total u.s. gdp

as 15 trillion. so 10% of u.s. gdp, the equivalent is sitting in the banks. money they got for free doing nothing. so, another policy which i talked about in the book and elsewhere is you must tax the banks to say you can't carry -- we've given you money for free, we've bailed you out and you're getting a quarter of 1% for doing nothing. so let's push them at least to get the money into the hands of small businesses and let small businesses grow. so that's another short-term policy that we could do. even if the republicans wouldn't want to do it -- they should want to do it because a would be good for small businesses that they purport to support -- but even if they didn't, the federal reserve could do this on its own. it has been talked about even among the conservative

economists because it is so egregious that we have a zero interest-rate policy, which by the way is one step and not even against. what i am against is giving it to the banks and then letting the banks do nothing except sit on it. so, that's where i feel we are on the short term. over the long term, i want to mention this point about the grain economy, and i think obama is going to talk about that in the state of the union. and that is good because he neglected it all throughout the campaign. the reason he neglected it -- i'm not privy to his inner thoughts -- but it's obvious the reason is because people have become convinced that okay, we want to support the environment, we want to fight climate change, but it's a job killer. it's going to be bad for jobs. and jobs have to take first priority. obama himself said such. the fact is it is not a job

killer to invest in the guerini economy. it's actually good for jobs and fred was nice enough to mention some of my research on that. that is the main conclusion of my research and it is summarized briefly in the book. let me give you a little sense of that killing it first of all, logically why should it be bad for jobs to invest in building the grain economy? its investing. we are building. that means people have to do things. that means there's jobs. i mean, on the one hand the right always talks about cutting military spending. you can't cut military spending. that would be -- you would lose jobs. if you spend money building at the guerini economy and renewable energy then why wouldn't that be good for jobs? so conceptually it doesn't make sense to think that would be bad for jobs. now, let me give a little bit of

statistics on this, too. i'm sorry, i am an economist so numbers just start flowing out and i can't stop. this is some basic finding from my research. and these also are entirely based on government, u.s. government statistics. if you spend a million dollars on investments in the green economy and by that i mean investing in energy efficiency like efficiency and buildings, efficiency and industry, public transportation, including the electrical grid system so it is able to operate on solar and wind power and so forth, investments in energy efficiency and renewable energy so building up solar power, wind power, geothermal power to some extent, hydroelectric, small scale. you are going to create 17 jobs

for every million dollars you spend. bye contrast, if we spend the same million dollars on maintaining the fossil fuel economy and nuclear power, you create five jobs. 17 jobs versus five jobs for the same amount of money spent. so you get roughly three times more jobs per dollar of expenditure. the guerini economy is good for jobs. so it is a short-term program investing in it and creating jobs immediately. ..

suppose to be half out of social spending and half out of military but as we speak what they're really talking about are ways not to cut the military, in social spending. and two times more jobs. when we talk about the job effected there must be cuts. take them out of the military, take them out of fossil fuels, put them in the green economy, put them into education. that is how we invest in the

long-term future and talk about security and our society. that means we have to control climate change and educate young people and that should be the strategy so the long term strategy of building up a green economy, creating opportunities and education is also the best strategy for creating jobs and moving the economy to full employment. back to full employment, there is a short-term way to get there, pretty straight forward in technical terms and there's a long-term plan for sustaining full employment economy and what we really need to do is get the politics, mobilized to fight for it and not just fight against the republicans but we have to get the democrats and we have to -- what we really need to do is build up at the ground level, at

the grassroots and whoever the politicians are to start to embed in our society this centrality of full employment as a fundamental feature of how we function. stop there and we can have a discussion. [applause] >> sure. [inaudible] >> pulling limit is reached by inflation kicking in. around 4% inflation. what would you consider the full employment? >> very good question. the idea that we can't keep fighting for full employment because once we do we get close, get to uncontrollable inflation. the reasoning behind that is when the unemployment rate goes down a lot, that workers get more bargaining power and when workers get more bargaining

power they are going to bargain up their wage and businesses will pass on extra costs they are bearing to their consumers and that is how you get inflation. there's not a lot of evidence that that works. it is one of these things that works a few years and then doesn't work of you years. in the 1990s we have low unemployment and almost no inflation. in the 1960s we had some trade off. in 1970s we had very high unemployment and very high inflation. in that period, the 70s is when this idea took grip that the government can't worry about unemployment, has to worry about inflation. inflation in the 1970s was the oil prices, will prices tripled in 1973 and again in 1979.

that was the source of inflation. it was not workers having more bargaining power. i think workers should have more bargaining power. 40 years without -- on average, not every single worker, essentials before year's with the average worker not getting a raise. that is historically unprecedented and this is before the crisis in 2008. this is a fundamental transformation of society that workers don't get the benefits of their own improvements in productivity. so what is the number? what do i call full employment? doesn't have to be zero unemployment because there are always going to be people with frictional unemployment. somewhere in the range of 3.5% unemployment, truly 3.5%, not

just the narrow number but true 3.5, somewhere in the range of 3.5%, and everyone else is going to be between jobs, and the reason i say that is what we have seen, there has been, we were below 4% unemployment in 1998 briefly and in the 1916s we went four years at 3.5% and what happens? workers did get raises. in 1997-98, raises, the only time you can see the picture in the book over this 30 year period, workers did get raises, in the labour market. i see that as good. will it cause inflation?

it might cause a little but that is good. that is not a problem. if the inflation rate goes up by 3% or 4%, it was a positive. inflation is caused by speculation in the oil markets which we now have as a severe problem, we have to understand the source of inflation, that is my idea of where practical employment levels should be. >> the clinton years, and they get more money. and they produce more. and the low unemployment and low inflation. in the 90s. >> the raises in the 90s looking at the little picture. the raises in the 90s were very brief.

this low unemployment rate was very brief. you could ask what happened? it was the result of the previous financial bubble, the so-called dot.com bubble where there was investment in the economy, a lot of borrowing and investment and the economy bell -- became turbocharged for a couple years. what i'm trying to get at him is to think of ways that we can get to that level of activity that will create a lot of jobs without relying on the financial speculative public. investment building the green economy can be very important. >> this makes it more efficient to get more money. >> that is exactly. >> in addition to all you have laid out, do we need to shorten

the workweek? >> that is a desirable policy. that is a suggestion and i know in germany. that is part of the, the way the unemployment rate is not as severe as here. and their number of jobs. let's talk up the hours more and people will have less time and make us. i don't see that as a good solution. >> i am wondering if you could talk some specifics about policies around the green economy. what will we be asking the government or private -- >> i think it is both. a big part of my thinking on the

green economy is about efficiency. it is not just about solar power or wind power because for example buildings are the biggest source of energy consumption in society. our buildings operate at very low levels of efficiency and the technology to raise the efficiency is not fancy. retrofitting buildings, things that can be done with on the shelf technology we don't have to think about like solar and a lot of progress which i favor. in terms of investing and building efficiency, all of the technology is bare. the average investment in a retrofit pays for itself in three years because you reduce your energy bill. you don't need the government to

subsidize fat. you just need to organize financing so people don't have to put all the money and the risk and the return comes back. that is one big part of the overall picture. banks could do that. the other thing is we should be retrofitting each and every government public building. that is good for the taxpayer. in effect there is a law in the books passed in 2007 marking the year because george bush was president and he signed the bill. 75% of all public buildings are mandated to be retrofitted by 2015 to achieved 35% efficiency. i don't know enough about the ins and outs of washington to know when you pass a law, you

have to do something. it is not happening. it is the law. that would be very important again and it would be a benefit aside from the environmental benefit a benefit to taxpayers because we would be paying 30% less for energy for all the government buildings and it would set off the market. it would spill into the private market. people would think about it more. in terms of renewables another thing people don't know. government statistics, energy department, the energy department says by 2017 wind power to generate a lot of wind power is going to be at parity with coal and cheaper than nuclear power. this is not me. this is the energy department. solar is more expensive but solar has been coming down

dramatically, if not by 2017, some people think it will be but within a decade solar power will be at parity. the only source of energy at which renewables will not be at cross parity is fracking of natural gas. this technology does pull out natural gas from shale rock very cheaply but it is an environmental disaster. if we are looking at a cheap energy future we could do just fine with investment and efficiency renewable if you put aside the fracking. that is really going to be a struggle in the future. i know the obama administration is saying they are for investing in the green economy but also the phrase we are for all of the

above including especially cheap natural gas through fracking and that we have to oppose that. there is no way -- let me come back on this stuff. let me summarize the results. there is no way you come close to meeting the emission reduction target, greenhouse gas emissions target. and the existing level of consumption for coal, oil and natural gas. no way you come close. if you take the climate scientists at all seriously which i do, basically we have to cut consumption of all three, coal, oil and natural gas, by 50%, roughly 50%, 40% within 20 years. how can we build up this whole big fracking industry. forget about the fact that it is

contaminating water and creating volcanoes, let's just put those aside just on the climate effects, you just can't do it. the green economy is an imperative, an environmental imperatives and also happens to be good for jobs. >> i have to agree with you on energy-saving is. i work for nonprofit and rehab and affordable housing and tremendous gains that can be made by retrofitting buildings and tends to employ people at the semi skill level land people at city center's. you may find it makes subsidy for older housing. >> you have to get it started. it is very frustrating. fred and i are in this

profession, the economist, 7200 years ago adopted dismal science. it is almost like nay saying, nothing good is going to come. the engineering evidence on the benefits of energy efficiency are massive. i have this book coming out, one thing i did with this other book, a lot of it, i read the study by the national academy of sciences called real prospects for energy efficiency. this is not an economist talking. this is the national academy of science coming together to have the best engineering research. and the benefits of efficiency in the national academy of science. on the other hand you have the . and engineering, the engineers don't know how economics will

really work and the main argument from the orthodox economists and there is risk, there is hassle. and let these people in. they could be fever for. there is an article in one of the leading academic journals and economics which say there are no benefits for energy. and my response is if the engineering evidence is there. and to overcome what they are, and to build up the market. and that is the right economic answer so what you are doing in

your community, people accept the idea we should retrofit our building, what will be happening is cars are going to be getting twice as efficient over the next 15 years and more expensive and people will get used to and they will seek, pay $3,000 more, but then you are going to get $1,200 a year in savings that will pay for itself in 2-1/2 years. >> your earlier thing about the difference between productivity gains and the wage level, how are we selling the output, where is it going? if you are not -- if the upper class can't be consuming half of the economic output. does that mean we are condemned to death to clear all this?

>> household debt up until 2008 crisis, basically doubled as a share of household income from 1980s, 50% of household income. by 2008 it is over 100%. people living beyond their means. part of the way they did that is the housing bubble. house prices were going up. that means people were more wealthy on paper. they bar code second mortgages and that enabled them to sustain living standards in excess of their income. another way, people took more than one job so i am talking the average wage for one w oo, and two jobs even if they are low-paying jobs so that was also started to become customary and the other part of it is the

level of consumption. of course the wealthy can, there's only so much they can buy, but consumption by the rich became much more of a focus and the rich became being rich didn't just mean you had a nicer house and a nicer car, you had two houses and a private plane and all of those things actually do add up to some significant level of consumption. >> how much should the government subsidize companies like solar company like solyndra? >> glad you asked me about solyndra. this e-mail exchange with somebody who is of very good journalist, you probably have some of her books. i won't mention her name but she just wrote me about this yesterday and she said i can't believe you bought this stuff.

fred mentioned on was consulting on the energy department and consulting on among other things the project at which solyndra got its subsidy. so here is the story. the program was to give out loan guarantees to big companies that were investing in renewable energy. so there are 24 companies. they didn't get loans from the government. they got a loan guarantees, meaning they got private loans they had to pay back only if they failed to bad back and the government was on the hook. there are 24 companies. three have defaulted, solyndra being the biggest. the total amount of loan guarantees was $16 billion. the three companies out of three companies, the amount the government was on the hook for

out of sixteen billion was six hundred million. it was about 6%. on top of that, when these companies defaulted, solyndra, they do have assets. the government takes all their assets and they can sell them off. they have buildings, machines, land, so basically the government was on the hook for $300 million. let's say a $300 million program that led to $16 billion in new investments in a green economy. this was a successful program. the main thing i was doing with the energy department was they showed me this long list of specific projects under the stimulus and said if we spend this amount of money, how much do we get out of this amount of money and not surprisingly the best way to spend the money was

through these loan guarantees because most of the time the loans don't default. basically the government spends $300 million and got $16 billion worth of new jobs. this is a really quick program. yes, there are going to be failures. that is exactly why you have a loan guarantee, because there is some risk. even with some risk, 90% of the time the program succeeded. >> you said you were a consultant. how do you analyze the financial statements? >> i will say this. i think this was a big program, a new program on this green investment program than has ever been done in u.s. history and i was talking to these people doing it and parts of the

problem was it hadn't been done before so of course there are going to be mistakes and of course it is difficult to scale up. under bush was like a billion. so the stimulus is $90 billion, go from 1 billion to ninety billion, there are going to be naturally some start up the difficulties. for the most part the programs were succeeding including this one so it has got the terrible press. i tell this story in this new book. the trouble is i hope this book is readable. the other one is not. i have got to rewrite it to make it readable. i am dying to put it out. i have got to wait until my publisher wouldn't like it very much if i started giving all the details before the book comes out. solyndra was a success, solyndra

itself failed. the program under which solyndra got its loan guarantee has been a success. >> i wanted to follow-up on that because it seems some of these companies might have been willing to make the investment in the absence -- it seems like the total $16 billion, should that be scaled back? what fraction would have happened without intervention and what more could have been done if more money was on the table for companies to invest? >> that is a very good question. that is one of the criticisms. the banks made the loan, maybe they would have loan without a loan guarantee. you try to judge that but for the most part this is a good way for the government to leverage its financial capacity, a lot

less-expensive than spending. the biggest level of activity in the u.s. economy today or maybe in the world today in terms of renewable energy i have to say is the u.s. military. the u.s. military has committed, i think they are serious, to having by 2025, 25% of all their energy coming from renewable sources and they are doing some fairly innovative things. it is not all government spending. they are also saying private firms, you build up the solar, wind, and we will buy it from you and have a long-term contract and we will buy from you and that is going to become very significant. if we look at where innovation has taken place, technological

innovation in this country since its founding, a lot of it has been tied for better or worse in the military. one example that i would mention that is quite pertinent for the moment is the internet. the internet came entirely out of the u.s. military investment. it was subsidized in a major way for 35 years. when bill gates says the internet came from private, that is false. the technology was developed by the u.s. government, subsidized massively by u.s. taxpayers and handed over to the private sector. something like that obviously doesn't have to happen through the u.s. military but something like that should be happening and so this solyndra case is a smaller example. a very positive program.

once solar power and wind power are at cost parity they won't need big subsidies any more. we will need to build out the market, people have to get used to it. we hear a lot about solar power. do you know how the proportion of energy in this company supplied by solar power, take a guess. how about 1/4 of 1%. it is minuscule. so essentials me if we say we will build out a renewable economy we are almost starting at zero with respect -- all the good ideas and discussions, it is minuscule, miniscule, mr.. wind is a little bigger. the biggest source of renewable energy right now unfortunately is corn ethanol and that is no improvement environmentally

relative to fossil fuels. >> which government agency does these loan guarantees, the department of energy? >> the department of energy did this, all four renewable energy projects. >> i wanted to ask about some of them like denmark and germany are so much further ahead. what were their policies that helped? they were government policies. >> germany is saying they're going 100% nuclear and i think -- what is the number -- they want to be at something like -- don't quote me, something like 25% to 30% renewable. so the -- number one, they are way more efficient, so right now at roughly the same living

standard that we have today they consume half as much energy per person, half. when i say we build up and invest in efficiency all i am saying is in 20 years get to where they are in europe today. that is all i am saying, that would be a big challenge and the other thing they did is they had projects like we're talking about with the military in which the utilities were forced to buy the renewable power and fixed long-term price so investors including a lot of cooperatives, it wasn't just big business, most of it was smaller cooperative community developments to put in wind turbines even in cities and invested in these things and the people who invested knew that wasn't risk because they have a fixed price and new to their market was and that idea started

in california. the government forced -- basically the consumer is subsidizing. the government said this is what you, the utility company, have to do. you have to buy this power. what we were saying is wind power is close to cost parity so there's no subsidy for just building up the market. >> something about why the divergence between productivity and wages. >> fred could talk about that. this is to me a classic picture of what i understand the marksian economics. the basic idea is workers don't

have the bargaining power and the business owners, capitalists get a higher share of overall product and the more they have bargaining power the bigger share they get. so what has happened over the last 35 years that this divergence could occur? this is not something that was expected or widely understood. for example probably the most prominent economist of any strike in the world and certainly the most prominent liberal economist is paul krugman who has his column in the times. krugman wrote an article in 1990s and he said i can think of no example in human history in which when productivity goes up wages don't go up as well. i can't think of a single example and meanwhile it was happening under his nose in the united states. you didn't have to search for

some anthropological obscure studies about something that happened way back then. it was happening in the united states. i don't know if he still believes that. it is of not much importance but basically workers lost bargaining power. why did they lose bargaining power? a big factor is globalization. is no globalization per se but globalization under the new liberal regime which will not support workers' rights to bargain, which will not support workers' rights to form unions, which will not support living wage laws and so what happens is if workers -- maybe you should talk a little bit about this with respect to walmart, but i will give the background. if workers say we want a union, we want a raise, businesses say okay, fine, we are moving to

china. they don't actually have to move to china. all they have to do is say we are thinking about it and that gives workers less bargaining power. one of the reasons i am so big on the green investment is these are investments that take place for the most part in the country and businesses does have the same leverage. the want to talk about the walmart case? >> i believe that the rich get richer like wal-mart. you can ask me anything about walmart and i could give you an answer for it. walmart will tell worker -- right now we are doing this thing where we had strikes on

black friday of this year and walmart is now telling us -- i belong to disorganization which is an organization united for respect and walmart is not thrilled with us at all. walmart is now telling us, telling all the employees, that it no longer exists and if anybody talks about or discusses it they will be fired. >> which is illegal. but we don't even have a full labor relations board. obama tried to fill those seats and the supreme court overturned that so this makes -- these are illegal actions. >> walmart is constantly doing illegal actions. as far as unionizing.

i have been working for walmart for 13 years and when i started working for walmart, i was in one department and that is all i took care of was my department but i was in. now i work on -- i am a catchier now but i have to do work in other departments as well and i get just as much pay now as i got a few years ago. the prices keep going up but my pay is not going up. as far as illegal things, in canada one of walmart's stores, they became unionized. the following day walmart closed the store down.

here in the state's, i think it was in california, the meat department butchers who were cutting the meat, they unionized. there are no longer any need cutters in walmart. it is frozen foods that you get, frozen meat. that is why i say the rich keep getting richer. the six waltons that are the main wall ands, they are the six richest people in this country and yet what drives me crazy is the government doesn't do anything of value. one of the incidents that is going on that is driving me a pull wall is walmart made this big deal about hiring the best.

these men and women, they risk their lives for their country and the walmart is offering them jobs. the jobs they're offering are part-time jobs because walmart doesn't hire full-time employees anymore. they are offering them part-time jobs and their offering them paltry wages. these men and women risked their lives for the country and that is what walmart has to do. >> and they have great publicity. the unions, it was announced a few weeks ago, unionization rate is at the lowest point in ninety-seven years who is going to stand up and fight? is a very difficult situation

and that is why over two generations you see, if businesses can get away with it they will get away with it. at the same time we could build an economy in which workers are treated with respect, in which wages to at least, at least rise with productivity and full employment economy, and rich people would still be living very nicely. >> a lot of skill workers and defense contractors, how do you envision transitioning from that very specialized work to other areas that take those skills with them? >> some of these really boring technical studies fred mentioned in this book that is coming out we do go through that stuff.

the types of skills required to expand the green economy are not all that different from the types of skills that are required within the military. of course they don't match up personally and they transition and the thing people focus on when we talk about job losses, there will be job losses. we are going to cut the coal industry in half, that means half of the jobs are going to get lost but there will be more jobs in the green economy so it is a matter of thinking about how you do transitions in a fair way and if we had a superfund -- this is not my line but is very good insight. we need a superfund for people who are going to be displaced by the transition out of the fossil fuel economy. we had a superfund for dirt. what about for people?

i think that is an important part of the transition. >> you heard about a living wage. with you see equal living? what would be a good living wage if we talk about that? >> if we want to think, it is different for different communities. i have to say one number, $13 an hour would be a good minimum living wage for one person. there's a proposal now for raising the minimum to 10 which i support which is lower after you correct for inflation, the minimum rock-bottom minimum that people paid in 1968 in today's dollars is over $10 an hour. in 1968. i am not talking about special

places like santa monica, calif.. i am talking about if you walked in you are 16 years old and walked into mcdonald's some wearing east texas they had to pay you $10 an hour. that was the law if they were not going to violate the law. to say we will get to $10 an hour in this country which is a big fight and isn't even realistic politically is not really talking about progress. it is talking about reducing the level of regress we have experienced and to -- the reason i said 13, my colleague at the university of massachusetts, she did some research and asked the question there's a point at which if you keep raising the minimum there will be some discouragement in terms of employment and she thinks that

cut off is about $13 an hour. >> a big cry about prices. >> a little bit. it could a little bit. >> i was reading an article about waitresses. they make $2 or something an hour. if they had amend minimum-wage, it would cost us $0.10 more for our meal. >> that is a lot of my research does those kinds of comparisons. >> i am going out to dinner. i am not thinking about how much money i am spending. i am going out to dinner. if i'm spending $12.90 for a meal today and tomorrow that

meal costs me $13, but that arrow or that guy, that waiter or waitress is making a decent living wage, i don't think $0.10 is going to hurt me. i don't think what hurt anybody. >> i did this comparison. fred mentioned i was doing studies in different cities and one of the ones was in santa fe, new mexico which was the highest living wage standard in the country right now. i was part of the project to create the law. what happened in the city before the law, it was passed but it was challenged, there was a trial. while i was there for the trial, before the law was implemented, the reason there was a trial is some of the restaurants sued the city and said