certain class and then you have urban america which has a whole different experience in donald trump has talked about the murder rate. the first thing we have to get to is that we have different experiences and as key. the unity comes in that we love our country. not that we agree with each other afterwards airs on book tv every saturday at 10:00 p.m. and sunday at 9:00 p.m. eastern. you can watch all previous afterwards programs on her website. >> this is on. welcome to tonight's event with dean baker.

for those of you who may not know dean the only thing he likes more with joining as his dogs. that was my one joke. i have nothing else. without further ado i will go ahead and let dean take the stage. everybody dean baker. thank you and i do like my dog. that is the crew today. at least a couple of decades and economics. the chance to put it together. just to put as simply as possible. it has been documented any

number of ways. that really talks more about wealth. in any case we've have a number of good reports solid data documenting this huge distribution of income. it showed that if you look at that united states and you look at the bottom half of the income problem. it's basically nothing since 1980. and i have many commerce men that will jump up at me. and a large share of the public has almost nothing to show for it. the question is why is that.

it just happens. we have in the liberals the liberals who can't feel bad about it. .. a little bit long. the basic point is the federal reserve is hugely important in affecting the number of jobs in the economy and the wage workers get and the third is patents was that might find weird, why do i care about pens? patents are huge amount of money and the fact a lot of people, including economist type people don't seem to know that is

incredible. and enormous failing of the economics profession. we start with globalization. the classic story is what happens to be the case all these people in the developing world were ready to work for low wages, very poor and undercut our steelworkers, auto workers and that is the way of the world, we have to get used to it. you don't have a college degree, you can't compete in the world economy and liberals feel bad about workers who lost their jobs in pennsylvania and other places, too bad. conservatives. i want to say that story is fundamentally wrong. it is wrong in every respect. the place where i start the book i pick up on a theme in the primaries in march. i attribute this to box, wrongly indicted them. they said bernie sanders is the enemy of the world's poor.

bernie sanders saying i want to protect jobs for manufacturing workers in the united states. the argument was that has been the story of development in places like china and the rest of the developing world that they got those jobs and that led to them getting out of extreme poverty and we should be happy about that and bernie sanders is their enemy. that is fundamentally wrong for a number of reasons. the idea that we had to displace workers in pennsylvania and ohio to accommodate the output of the world's poor inside and the developing world, is fundamentally wrong and not hard to show that. the economic theory i learned that grad school is you are supposed to have many going from rich countries to poor countries, capital from rich countries to poor countries, the money should be going to the united states to china to malaysia to other poor countries. that matters because that would mean we would be running trade

surpluses with those countries, using that money to build up their infrastructure, their capital stock and at the same time support the population. in the 1990s, we saw rich countries as a whole had large term plus -- surpluses in the world, they had large trade surpluses and countries like vietnam, malaysia, very large trade deficits. they are going very rapidly. they are richer than they are. and south korea and malaysia are richer than the united states, financial crises in 1997, this is the root of all evil. east asian financial crisis

developing countries began large surpluses. the story is accumulating large reserves, the reason was the bailout from the financial crisis, alan greenspan and robert rubin, post harsh terms, they want to deal with the imf after that. that was a lesson they learned in latin american, south asia, anyone position to regulate reserves in the developing world did so after 1997. these countries instead of running trade deficits were net lenders, very diverse story so the people who argue for the current system were the enemies of the world poor, not bernie sanders is that is true in theory and with a look of the period 1997, you are welcome to ignore it but that is not reality. a lot of people in the

developing world happy to work on what they were doing. in michigan, ohio, and in the developing world happy to train as doctors, lawyers, dentists, and professionals, very difficult to do. and other professions, doctors want to know best. without having completed us residency programs. we want to assure standards for doctors. competent doctors, and in protectionism. and in canada, twice as much.

and the human price for that, the difference of what we pay doctors and wealthy countries, $100 billion a year, that is real money. it comes to $700 a person. and let me mention one last point, globalization. and and copyright protections. those are incentives. those are protections. the distortion is in the market. i focus on prescription drugs.

it is invariably drugs to be cheap in the free market to manufacture. and $84,000 in the united states. and the kind of things we get. getting cheap stuff, the same drug. that is equivalent to a 40,000% tariff. when i say that to people, that is a patent, you can call it anything you like and impact on the market. and 4 people in the developing world pay lots of money that things are very cheap.

and an and requires them to patent protected prices, premarket crisis. and educated people, and washington but in any case, and selling stock and bonds. and interest rate in december. fed rate, interest rates, why did they do it. and reading their minds.

and the job market getting too tight. and the direction is unambiguous. it slows the economy by a 10th of a%, and talking to route 150,000 you are jobs in the economy. let's think about trump's carrier show in indiana. how many jobs at the state fair? 700. 2000 times the small interest rate hike, no one paid attention to it. and a huge amount of attention.

and much more concerned the cost of job growth. and gerri bernstein a few years ago, one of the measures we looked at is the gap between the measure of full employment level of unemployment, the non-accelerated inflation rate of unemployment, we come out with that. we look at the difference between the actual rate of unemployment and the measure of the neighbor. not saying they are god but a nonbiased measure. from 1947-1980, the unemployment rate is half a percentage point below the measure. to 2012, it was a 4% point above. 2000 years after 2007 after the crash, two third the data

higher. it means much more restrictive monetary policy, higher unemployment and if they have their arguments. they are concerned about inflation. they place much more effort on containing inflation in the period since 1980 than the period prior to 1980. the point we make in the book, it is not just downsize the economy. we envision a story where the fed restrained demand and unemployment rate of 5% or 4%, not just the economy is smaller but has huge distributional effects. we analyze part of this is very strong racial components. if you get the unemployment rate down by a percentage point, we get the unemployment rate for african-americans down by two percentage points, strong's -- strong relations, very strong

relationship. the unemployment rate, one percentage point higher than necessary it is two percentage points fire than necessary, for african american teened 6:1. hispanics, it is 1.5 to 1% ratio. the other part of the story is the wage story. we talk about less educated workers the workers without college degrees, disproportionately the people who are losing jobs. if things get bad it tends not to be the manager who is laid off but the waitstaff. the retail clerk, the president manufacturing on the assembly line. those are the people who lose their jobs and part of the story we had is if you look at patterns of wage growth over the last 40 years the only time you saw consistent wage growth are those in the middle and bottom, in the late 90s the years in which we saw low unemployment.

we got the unemployment rate down 4%, year around average at 2000 and good wage stuff, it was more rapid than those in the bottom, the weight distribution, those in the middle and the top, things were going the right way. the larger point is you have the federal reserve board committed to maintaining higher rates of unemployment fighting inflation, downward pressure on wages of less educated workers. it wasn't god, it was the federal reserve, the argument for their policies, a policy choice. that was something that happened, simply not true. it was something we did. i make the point that we do this and they are not evil people but it sounds very sanitary. we don't want the economy to overheat and i don't want the economy to overheat but throwing people out of work, very few people realize it was one of the deck and i will skip to talking about patents.

but this argument about automation eliminating jobs, there is not going to be any jobs for less educated people. that may or may not be true. i don't know the future and i don't think any of us do. for the present, that is not the case. two things to point to, automation is productivity growth, not something new or exotic, we had automation forever. in the 50s and 60s, very good wage growth up and down the income ladder. we are seeing productivity growth, workers at the bottom, it is nothing that does that. we are worried about automation. this speaks to the quality of economic debate, policy debate, we are worried about automation

destroying jobs at the same time the fed think they have to raise interest rates to destroy jobs. sorry that doesn't make sense. either one of those could be true but they can't both make sense. the fed doesn't think automation is going wrong so rapidly to destroy jobs, that is why they have interest rates, they feel they want fewer people working so it is not that wage pressure. the third area is patent policy and i raise this all the time with economists. they look at me like what are you talking about you focus on prescription drugs, that is their life and their health but a huge amount of money. we spent $430 a year on prescription drugs, 2.3% gdp. a metric i use in the book, metric of comparison, what we spend on food stamps, a lot of

conservatives beat up on food stamps. the largest anti-poverty program, $70 billion a year on that, prescription drugs tween 9 times what we spend on food stamps, giving you that metric. a lot of money is saved there. how much will we spend if we snap our fingers and got rid of patents and related protections? almost invariably the drugs we are getting are cheap to produce. it is very rare you have a drug the cost a lot of money to manufacture. i gave the example of a ratio of 400-1. that is extreme but ratios of 50-1, 100-1 are not uncommon and even a ratio of 10-1 doesn't mean we spent $43 billion a year for the drugs we are currently spending $430 billion a year on. that is an incredible waste and the way i talk about this is the

same way economists talk about trade protection. if i say i want to put a 20% tariff on important steel, why that is bad, it is creating a gap between the free market price and protected price and giving steel companies incentive to pay off legislators and they will hire lawyers to expand, all of which is true. except when you have patents that raise the price not by 20% at 1000% or 10,000%, much more true and companies have an enormous incentive to go to congress, we want longer and stronger protections, pretty good at that so they do that all the time, misrepresent their research, they might not be appropriate, turn on the tv, almost invariably see drug ads because i watch the news. invariably you see drug ads. what are they telling me?

might not be that fond of it but i get some idea what i am getting with a car. i see their drug ads, the limbic figure skater was advertised in arthritic drugs. what can you give me? she takes a drug herself, skates around and i feel great now. who cares? obviously the drug company has done marketing research and what they are betting is someone suffering from arthritis to go to their doctor and say give me this drug or whatever. it is not a way to get good medicine. we see that for obvious reasons. they sometimes conceal evidence there drugs are harmful like drugs put out by merck, turns out it could be bad for people with heart conditions and a lot of people have arthritis with

heart conditions. people die because of that. they have a big incentive. if they were selling at the same price as a bottle of aspirin they had reason to conceal the evidence and give them a big incentive. also the nature of the search, had discussions with people from pharmaceutical industry, new competitors, talk about the 84,000, no one pays it anyhow, this whole industry of intermediaries. that is not useful either but there are drugs in the pipeline competing to bring down the price of $40,000 or whatever but that is not a good story. where you have a monopoly on the drug, free market would have made sense, you have i am speaking of the doctor, seems to be a very effective drug, but makes sense to have a lot of money developing a second, 3 and fourth street, an effective

treatment for it. and sitting down and saying those research dollars best spend, developing the second, third and fourth for hepatitis c, they don't have treatment. and a lot of people looking, and $32 billion a year from the federal government. and they get the output and couldn't get patents to make lots of money on it. if you double or triple the budget and have private industry do it, the point it is in the

public domain. someone working on a drug posting to the website, they benefit from that. the finished product, that is in the public domain, reducing generic. my argument would be way better off doing the system like that than the current patent system. getting to the underlying issue, looking at this literally last night, looking at drug counts alone, in the order of 350 billion extra spending and i check this against the wage income, the income distribution is $1.2 trillion. and going to give all the money to the bottom half of the income distribution would be the same as increasing wages on the order of a third. it would make a difference in their lives.

when i talk about patent again, and the same issue arrived, the mri, why is it expensive? was it actually cost? you need electricity, someone who knows what they are doing to give you an mri, and patents, it was much more extensive and for a long time, samsung and apple, and rushed into court for patent suits. they agreed to stop doing it. it is not a good use of resources. i could go on at length about this. there is a huge amount of money at stake. it is not something that happened, we made patents longer

and stronger the last 40 years and overwhelmingly benefited people at the top. and benefiting people like bill gates and other very wealthy people. i don't -- beating up the system of executive compensation. and they rip off shareholders, something like john stump, ceo of wells fargo in the news, they walked away with $100 million. we could be sympathetic, someone like steve jobs was innovative, made lots of money perhaps. they are hard-pressed to say with a great contribution was. did john stump do a lot for wells fargo. facing all sorts of charges,

probably not. walked away with 100 million. to sum up, we could look over the last we for decades, no doubt there has been a massive upper redistribution of incomes. and it was not something that just happened but something we did. the main thing is we could undo it. one last point which is front and center, spent a huge amount of life yelling about social security and why it shouldn't be cut. i am fine with that but the most important thing is to avoid redistribution in the market to begin with. you need different rules for the market so it doesn't lead to the same inequality we see today. that is where the biggest dividends are. questions? [applause]

>> always great to hear you speak. i want to touch on tpp and other intellectual property protections in those policies, previously mentioned a lot of free trade deals are protectionist, they have, beyond the glamour of building up global markets, tearing down barriers, there are entire chapters of intellectual property. can you talk a little bit more, why do you have people like jason furman or barack obama who sell these bills overall but

underestimate or overlook those chapters that are more protectionist. >> jason furman is the council of economic advisers for the next few days. i don't know exactly its motives. hardly a secret who is negotiating the tpp, 25 working groups and the washington post, you had a working group in intellectual property, people from pfizer, merck, microsoft, those companies but people from big drug companies and the software industry. what do we think there are going to do, designing a trade deal,

design something -- how do we disperse technology, innovation, the trade deal makes us richer. that was what went on. why do economists defend that? a lot of economists look at these things, it is a fear -- free trade deal. to call it a trade deal, use a neutral term. the view of the mindset expanding world targets is a good thing, have to support it. if you could point out patent protection, copyright protection, there is a small sidebar and if you look at the tpp it is the other way.

there is not that much to eliminate tariffs quote as, we have trade deals already, 6 of 11 other countries and even the other countries, limits to how high those tariffs could be at any case so the impact of reducing these barriers is fairly low. the impact of increasing barriers could be quite large. to aid that aspect and put their nose in, this is right here, you can read it and it is not a big deal. real strong prejudice to overcome but the underlying issue, why do we negotiate things like that, people with money and power want those deals and it takes the form it does.

>> thank you so much for being here. talking about protectionism, certain types of employment, medicine, law. i was wondering what your thoughts were on interest rates, student loan debt policy and how that helped justify these increase wages for these types of professions when you look at medicine, doctors coming out with $200,000 in debt and justifies increased wages in comparison to other things. >> a lot of garbage debt in the sense of for profit schools. and they can go further, not letting people get heavily indebted with government debt. this is a question, when they charge people $20,000 in the

pockets go ahead. and subsidizing and that is pernicious. taxpayer money and that the end of the day this person stuck with a worthless degree, could never pay off. we do a very poorly designed education system and justifying what these people get and $250,000 a year on average, is not that low. 400,000, $250,000 a year. it is $20,000 a year. compare that to 120,$000 in germany and france which the reform of the education system.

and moderate income, it is very scary for someone coming from a background where no one has any money and that is a problem. that doesn't justify the salaries we see. >> thank you for coming, philip's idea that he espouses books like science mark, never let a good crisis go to waste, the neoliberal thought collected, the process of for profit, science and scientific research actually lead to a deteriorating quality of research, and stifle innovation and change.

>> i read his latest work but the general point is well taken. when you have privatization of research and knowledge it takes it on a bad path the point is you will maximize profit. it is not attributing anything malicious to people but it industry, to maximize profits, how to get as much money as possible. what i am arguing for his prescription drugs, i don't think there is pernicious outside, the idea to promote public research, what i propose for other industries, a patent length of 20 years, they bounce that by treaty, you can have someone voluntarily give up the patent after five years, in a shorter period, the condition

that provision that you access this other research in the public domain. you have heard of copy laws, this idea where you say okay, something is freely available, developed by the free software movement but could apply generically to any copyright of any type but the idea was we are developing software, anyone who wants can use it as long as that is freely available. if you decide you have a patent on it and privatize it you got to talk to us. that would be my vision for patent outside the pharmaceutical industry, the pharmaceutical industry is responsible to arrest people if they want to do stuff on their own, their only concern would be competing against generics selling at generic prices, spending money on research and getting money back, that is your problem. in other areas what i proposed is a short patent period and the reward in a shortened patent

period is access to all the material in the public domain that you could freely use. i take seriously the idea that you get that research and slow research. there was a good study, heidi williams with a professor at mit, the study 50 years ago, un-coding the human genome. she found for jeans done in the public domain, a private company competing, jeans that were done in public domain, the patents on those is in the public domain were much more useful than the ones that were done privately. anyone could work for them. as an economist, better research is open, if we do this in a cramped corner, no one gets to see how i got there. no one exit is a good way for

economics to advance and through of science more generally. >> back in your student days, the way to your phd, you must have been over and over again, no such thing as a free lunch and listening to you describing this, for instance drugs, it only costs a few pennies but you forget the famous west wing seen, explains the costs of the second bill, the cost of the first bill is a couple billion dollars to get it licensed and approved and paying for the other ones that failed. talk about patent protection but patents i like licenses like regulations and all these

things, what the most recent, our current president elect is coming in holding a discussion of draining the swamp and so the point to you is it certainly is true we can do things on the patent you are talking about but the question is you can certainly unleash, we have regulations and licenses not just to be a doctor but a cosmetologist, you name it, you have a license to drop a card to pick up people who take them somewhere and all this stuff. the ideas you are talking about our top-down insights but you are unwilling it seems to allow stuff to grow from the bottom up was my last comment is on the federal reserve, you know why the federal reserve raised the interest point at the end of

obama's term they raised at the end because he doesn't care about trump. he is happy to crash it but during his years he wanted the interest rate as low as possible because it is good for government. you can borrow money and people won't noticeably >> taking the second point first, the fed indicated before the december increase that hillary clinton is going to be president and they were going to raise rates in december, the reason he didn't want to raise rates was the economy was going through the toilet and more willing to raise rates, the job market is much tighter today. you have more reason to be concerned about inflation in 2017 than you did in 2009. that is a straightforward explanation. i think they are wrong to raise rates. there's not much to be concerned but it is straightforward and hard to get away from there is no free lunch in my book. i was talking about having the

government pay for the research. we are paying $430 million for the drug, we snap -- $40 billion, $60 billion, we have $370 billion to play with. what i said is you deed -- you need additional funding for research, the pharmaceutical industry spends $47 billion on research so we have to do what that does. there are reasons to think public funding would be more efficient, people won't produce the second, third or fourth lobby which are not that useful and it is in public domain. people can see benefit from other organizations and learn from their mistakes. say we spend twice as much, costs $90 billion, we are still ahead by 2 $50 billion.

i'm not assuming a free lunch. we are talking about a different mechanism of financing the research that is hugely more efficient. at the least, get this on the agenda, the thing economists should be talking about and there are a you. there is a great book against monopoly at the university of washington st. louis. there are some other economists but in general it is not a major area of research and it should be because there's an incredible amount of money at stake and we are talking drugs, this people's health. most of us seem to feel that is important. a question up here. looking at the -- >> you talk about trade agreements, what shape or form it might take was what about the

existing trade agreement with decades of data, talking about nafta for example, 25 years of experience. i am curious if in your economic research have you reachedany conclusions of the net benefits of the opportunity or something like nafta for three north american economies and linked to that if you want to address it, curious about the wisdom of going for free trade law or piecemeal country by country, specifically like brexit and the wisdom of england doing free trade deal with america as opposed to staying within the eu, two separates but perhaps -- >> a few things. with nafta one of the things that was striking was the

predicted result with nafta, downward pressure on college degrees. it is not huge. what we saw in the period after 2000 dwarfed the impact of nafta but the research showed areas where there is the most competition, industries in mexico there was significant downward pressure on wages in those areas so that was negative which and agriculture, and the washington post, made up a number on the state. they pressure them to correct it and in 2007 trashing -- to renegotiate nafta, it has been great for mexico, and between 1987 to 2007. the actual number is 83% which is not quadrupling where i come

from. it has been great for mexico. it is widespread, mexico's economy is growing more slowly since nafta and the us economy. pretty hard pressed, the economy was even worse absent afterwards, you can't rule out but high pressed to tell a story since nafta. i don't think it has been a big negative, putting downward pressure on wages, directly and in the since you had some shipment of jobs and the trade deficit on the order of $60 billion a year from mexico, very small surplus, there are other factors. the other issue is nafta was a bargaining which and documenting a number of cases moving to

mexico where unionized. the effect was negative with educated workers is us and europe, a proposal for the tpp, this was about regulation, between the us and europe, massive amounts of trade, it is not really about trade but putting in regulations, i worry about a lot of regulations. might limit the ability of an area, a state wants to ban fracking. gmls are more controversial and more restrictions on them might jeopardize that, the speed settlement is hard to justify, a special tribunal that only investors could bring cases before. they thought i was a nutbar

making stuff up. they put that in because it is in the transpacific partnership as well. i don't understand the logic, making zeros instead of 1/2% for the tariffs is a good thing but that is not what the tpp is about. i recommended they go against brexit and they use a lot of xena phobia to push that and out right lies, we get more money from the national health service, those clearly were factors, those were bogus arguments. and thrown into recession, and have this collapse which there

will be negative repercussions, and integrated economy, the situation, and impulse in europe is very punitive, is punitive to them also. painful for both of us. since germany seems to be calling the shots on the punitive side would be bad news, you won't the second great depression in the uk but will be a drag in the growth. haven't studied closely but the big concern in the uk is what will this do to our finances? it will hurt it but basically have the finance passport the uk is part of so you can do business in the uk, that will go away with brexit, that is a hit

to the financial industry. i don't want to push that too far. >> my name is adam this but i wanted to ask a question about the increasing nih budget. i am a big fan of bumping into the nih budget, they did great work for basic research that leads into applied research in the pharmaceutical sector. if you have nih, and down to 0 tariffs, other countries contributes 75% outside the others, would that be forfeiting

all that income, we are large enough to absorb that hit with 20% of the revenue, what happens to a country like switzerland's which has a thriving sector, probably 1% of the market, how will they survive? >> good question. you need some sort of international arrangement, what do you think you guys are doing with the tpp? those are complicated too. i want to replace it with a complex system, we have a very complex system now and i want to replace it with a different system. i envision something where countries have to contribute to research based on gdp and per capita gdp. and a higher share of gdp, a token contribution, not expected

to makeany payment and say to whom? what i would envision, you need a fully worked on sort but a rating system, and very good record produced good research, contribute a dollar. the second tier, that accounts for $.75. is a third tier, they don't have a record at all, it counts as $.40 and below that doesn't count at all. that is the sort of thing that comes to mind that you would want so you want an international agreement and if we could get international agreements that go beyond marketing exclusivity, data exclusivity. it is simple and natural and

very complex. >> the income pushed up, the methods i understand breaks it down, and all the way to the target and redistribute it. another way, what if we let it go out and tax from the top and have the government spend its. do you think they are comparing? >> we are conserved about any quality, we address before market story to prevent people from getting so rich to begin with, and saying we let you guys get rich and everyone has fair income. i'm in favor of going the former

route for two reason's. we brought in our right-wingers. give us these high tax rates, take away our incentive. we exaggerate that. you are giving them a lot of money for them to avoid taxes to the tax avoidance industry in the us is big and profitable. private equity business is tax avoidance industry and some people get extremely rich in private equity. mitt romney is one of the poor ones talking about private equity partners, people make hundreds of millions or billions, finding clever ways to avoid taxes. that is one set of concerns. it is very hard because people have this idea, the other is

these people billions, they will spend a lot on politicians and other things saying how horrible it will be to tax it away. it makes more sense not to have a system that leaves so much any quality. if you could do that and not pay a price, finance pharmaceuticals in a way that is more efficient and doesn't lead to people becoming intimately rich. my view is someone develop the greatest your for cancer give that person $10 million, $20 million, thatis fine. the pharma row who got so much money for jacking up prices, in any case, that is what you don't want. a lot of things like that. i left out finance. partners in hedge fund, make hundreds of millions a year and what their contribution is developing a sophisticated offer

to get in on trades ahead of the competition. it makes an enormous amount of money. and they sell it back and made a 10th of a% but you do that many times a day you get very rich. >> i wanted to ask a more general question because i have been having a debate with a friend who tends toward the libertarian side which i think he has a point about government inefficiency. i don't want to put words in your mouth but i assume you are more of an advocate for more welfare state style government,

what we have seen in the past is degraded. maybe i am wrong about that but i can understand that argument because i have another friend who qualified for medicaid after obamacare was put in but the inefficiency that she had to deal with was staggering. she was counting, taking notes. she had to content the pertinent industry in dc 38 times by telephone or email before they lent her medicaid and two years later they took it away because she didn't provide the proper documentation even though she tried to. that for me with an eye-opening experience about the problems that come when you are

increasing the size of government and introducing more government programs. >> i'm sympathetic to your concerns. what i'm saying in the book is not necessarily increasing the size of government. it changes the way government acts. one of my main pet peeve is the tendency to think of government in terms of government spending. when the government gives you a patent, i love these kind of what are we doing to our children but we gave these companies patent monopolies, they will charge $430 billion for drug the cost is $40 billion in every market, we are not counting that. that is the same as if we allow them impose a tax. it is the same thing. i am concerned that we have to look at the way government affect the economy more broadly rather than just taxing and spending. that is a real concern and where it advocated government

expansion is generally a fairly narrow way so social security, a lot of work and research, it is more efficient than the alternatives. i debated many people, old-fashioned 1-size-fits-all, it is old-fashioned like the wheel. it does what it is supposed to do. we wanted to be 1-size-fits-all because it is your basic income. i decide i want more than social security, my 401(k) or other private things, that is fine. we got to do one thing on that as well. in any case the idea of social security is core retirement income. we want everyone to have it. having something simple is a good thing to do. i'm sorry about that, the private insurer. the government doesn't have a monopoly in inefficiency but i am mindful, when i'm talking

about the research, we contract out. the analogy i often make is the military sector, we contract that out and on the other hand we build very good weapons which may not like what they use them for but they are very good weapon systems and the big advantage you would have with pharmaceutical research as opposed to the military is there is no justification for secrecy. with the military they have an argument for not putting their latest weapon system on the web so isis or whoever can get it. with pharmaceutical research what is your argument? you want people to take your research and use it. i take seriously the government can be in efficient and we don't want government to do things that are not good at and that is a lot of things but i don't envision expansion of government

in this story. two more questions, there are two more. >> thank you for your talk, really interesting. there are two factors i would have brought up as central to the growth of any quality that you didn't talk about and first is the assault on trade unions that start in the 1970s and develops the 1980s into the present time. it is absolutely fundamental for understanding the growth of any quality and the second that you talked about a few minutes ago, is taxation. starting with proposition 13 in the 1970s, the tremendous

regressive taxation system in comparison to postwar years, massive tax cuts for the wealthy. it seems those two factors are arguably the most important ones. >> taking the second one first. i am deliberately talking about before tax income. most of the increase in any quality. we definitely see lower tax rates, over 40%, 90% top marginal tax rate. it has been largely offset by fewer loopholes. if you look at the share of income at the top 1% that is paid in cash, it is paid down but not by as much as suggested

by looking at 90% versus 40% tax rate so that is not as important. the third point is a lot of people do that work and they do good work, they do very good work on that they generally know that story. by institutions, there is a story that has a lot of currency, people are not interested in labor unions. in the late 70s around 20% give or take, talking about 9%, we have seen plummeting in the share of the workforce represented by unions even more so in the private sector, down 7, 20% in the late 70s but a few years ago we looked at canada

which most of them speak english, north of the border there is no remotely comparable decline in their unionization rate. of the 70s something like 35%, it might be 32%. it is down trivially. nothing like the collapse we have seen in the us. canada, they have things like automatic, you can sign up for union sign off and first contract arbitration, and fire striking workers, we had a lot of changes in his and norms in the last we for decades that made it difficult for unions to organize. that is a big part of the picture.

one more question. >> the recent information about the six richest guys in the world, the bottom half of the planet. >> the services studied, eight people, the obvious suspects, jeff bezos and mark zuckerberg and whatever his name is from mexico. they have more wealth by their calculations, 50% of the world population speaks volumes about the any quality. an awful lot of people, in some ways, these people are incredibly rich. amazing how much money this guy

had. i have more wealth than the bottom 25% of the world population, it is because the bottom 25% has 0 or negative. people are incredibly rich but the bigger part of the story is we have an incredible number of people, on the order of 2 billion people who have 0, pretty dismal story. thanks for listening. i don't have to be embarrassed like donald trump will be on friday when no one shows up for his inauguration. thank you. [applause] be change copies of the book. if you have a copy of the book.

hopefully check out dean baker, an electronic copy of the book for free. go over and don't forget to take care of it. [applause] [inaudible conversations] [inaudible conversations] >> you are watching booktv on