tonight i am pleased to introduce tyler to politics and prose. he holds the terrace chair in economics at george mason university. he is the bloomberg opinion columnist, has written regularly for "the new york times" and contributes to a wide number of newspapers and periodicals. his previous books include the class and create stagnation. in his new book the business, he examines the tension between american trust in big businesses and the importance of the

american economy. he argues that corporations, despite americans ambivalence towards them are essential in in the balanced productive and progressive society by spurring innovation, rewarding talent and hard work and creating a bounty by which americans have come to depend. walter, deputy editor of harvard business review writes that he writes a compelling defense of big does i this finance and the tech industry. both their critics and their defenders will benefit from reading this book. he will be joined in conversation tonight by edward, u.s. national editor for financial times and author of the retreat of western liberalism. please join me in welcoming tiger and edward. [applause] thank you, thank you very much. thank you very much for that introduction. it's a delight to be here. i've met tyler a million times

iand we've been friends for many years. we don't always agree with each other, but i think that i can confidently say that he's not just an example of disagreeing without being disagreeable but disagreeing without being disagreeable and being far more knowledgeable at the end of it bad when you began, and that is invariably the case. we do agree on some things, but what we get into productivity a little bit in the talk but let me just quickly emphasize tyler's productivity, but we just count we have had the greatest technician, wonderful short book that came out in 2011. we've had average is overcoming for good food and economies, we had your commonplace and and now this. averaging about one a year is that right? >> one every three years. it speeds up house we get older. [laughter] but t anyway, that is a lot of books. one thing i will say before il kick up the questions, it's

unusual for an economist, most wait for the data and they wait and wait and then when it comes, they torture it sufficiently and until it confesses with k. are seeking to make. tyler is very different from most economists. he reads as much with some history as he does on economics and uses his intuition which from others it is quite rare so how do they stick to the intuitive this evening? >> let's start by imagining 20th century ago in pennsylvania or ohio and most of their jobs have already gone to china. their main street has been hollowed out. they've gotten used to shopping and wal-mart that wal-mart is now pretty thinly spread because

everybody is beginning to shop at amazon. they have friends used to work at wal-mart and were not paid very well, not particularly happy campers. they thought people that they know the drive 50 miles to the amazon fulfillment center, they are always tired, they didn't get much feedback, they can't join a union, they hav had to gt permission to take bathroom breaks. why should the people of the town in this 20th century pennsylvania love big business? >> i will start with some data if you look at the income in west virginia it is about the same so we have here, think of middle america as completely devastated, but that's not quite true for the entirety of it. i would stress the point the most distressed areas are generally those that are lacking big business. a lot of those regions will never come back. i don't think that there isnk an answer that they ever saw the

problem. migration does work. i am all for better policies to encourage migration. so, i think people if they can they want to move to areas where there is a lot more business and that is the case for big business for them. >> wha >> what would you say to those that are running stores on main street, not just the people that work at them but those that ran them, they might have cost a bit more and i'm guessing it would be by the consumer to show wal-mart and now amazon and got it is the result of the preferences, but is there not another measure thereof what makes a community clinics >> keep in mind both societies face choices. they can do things and less costly ways or they can stay p put. or you can bear the transition costs to grow and have lower prices for virtually all consumers, and especially as

time passes you have a better, healthier, probably more secure. shthere are recent studies we he shown how big that was, some of it is automation of course, some of it is simply regional rebalancing. back in california or new york and capital flows to these places. >> in your book you make a very strong case that even though there is a -- >> okay. does you make a very strong case, maybe keep yours down whyn while mine is up, vice versa. it's working now. you make a very strong case although there is more market concentration you don't see signs of the abusive

monopolistic behavior in terms of price gouging and so forth by these companies but let me just mention a few statistics that might not be exactly precise. in the supply market, you have got office depot and staples and three quarters of the market and in car rentals you think you've got a lot of brands but all of them are run by kurds enterprise except for washing machines you think you've got 50 brands that 70% of them are run by maytag. it's getting more concentrated. nike's 86%.

you see the concentration of power. why has that not a bad thing? >> been a bad thing? >> if you look at the prices by the consumers what y you find in the individual markets there's more competition, not less. you have bigger national brands often amazon and wal-mart are further examples. large brands in general are lowering prices so it isn't like some of the old monopolies. if you simply look what are these sectors in the american economy for the prices that have been somewhat out of control? is basicallyim healthcare and higher education, each of which is fairly business impoverished. so, i think that we have allowed too many hospital mergers but most of the things you mentioned have the selection and prices over time but have done phenomenally well. airlines in eacairlines in eachl market there are just as many carriers ase. before, number of air miles, travel is comin goin, and thein restrictions we couldo

better yetlo by a whopping foren airlines and domestic u.s. ctmarkets, that is a government restriction on trade which i would gladly remove. more and more americans are able to fly each year. some healthcare aside, i don't think that it is a story of rising monopolies and the numbers are out. >> we will get back to that. let's just get to the heart of the book. when i looked at your numbers and trust and business in america, i was delighted to see that it's lower than it is for trusting the media. i think it's about 2% lower, 8% of americans trust big business and 10% trust media done mostly by big business. this is only exceeded by congress i believe.by >> that is correct. >> how did that happen come and talk us through a little bit of what you think it is about the

big business at least in the abstract that they think they hate about it and why. >> i think that it comes in waves so in part we are at the time people are trusting many institutions, not just business as you mentioned, and business is a kind of collateral casualty, but i think also real events but the businesses have had some role in these. the financial crisis in income inequality. i think thatne the role of the business or the responsibility is often overstated, but you certainly cannot say that it's been zero, and then i think in general and internet social media culture, you see the phone abilities of everything, everything is talked about, every joke made at someone's wih it a is an abstract thing out

there and it's very easy to trust. >> i believe the federal reserve used to be much higher than it is. it's gone down quite a bit.s >> that's correct. is it another element to that? >> i think someel of it also is that we rely on business to do one thing, precisely because big business is highly effective, so simply and contemporary culture the more you talk about something, the easier it is for the something to acquire a negative tag. and also we often evaluate businesses by the standards of people, so the lesson that an economeconomy is in an personal, businesses are not your friend they might sell you wonderful books as is the case here, and a sort of pretended to be your friend in their advertisements. we are with you, with your family, but at the end of the day you need to evaluate him in personal terms how to do the job are they doing at improving the

economy and politics and society and not did they ask what my friends, why did they keep me on the line 23 minutes when i only had five minutes to fix the problem. and i think that resentment towards business event grows. >> you mentioned airlines being much less monopolistic than you might suppose. but i'm sure everybody can share their united stories on american airlines or delta. the feeling is it's certainly not competition in terms of the quality of service. maybe that is because we as individuals because of the technology and price discovery or just ruthlessly driving the cost lower that is what we are after. but in terms of the competition, that is the market. a lot of what frustrates us about airlines is that the airport do not have real

markets. my colleague hasat written about this at great length. airlines have created per mile a form of transportation. we now take that for granted. flying used to be relatively dangerous for a long time now it's been safer than driving. and i think it's amazing. >> there are fewer people flying. it is more possible, they are more useful, there's more connections. we may finally put in that field of high-speed rail in california. but other than the trains in the country unlikely to be very important, they have a whole burden that we've moved from the system. but i think the american airport system is one of the expedition networks ever devised.

and it actually worked surprisingly well. >> mitt romney said that, corporations are people if frequent flyer those plans are often an attempted solution into the goal is to make you feel loyal to them. be a little cold-blooded and ruthless enough to resolve the pragmatic bottom-line questions in different areas how good a job are they doing you will find some sectors where the record is pretty abysmal for the education train wreck.otal but for most of the goods and services we consume, the record of companies, it's quite excellent what do you say for the price of higher education

where the markets go wrong and big business is acting, why is it acting badly, what is it about the market that's gone wrong? >> i don't think we understand why the for-profit higher ed. some of it is easily available. you had companies set up to capture that revenue. but certainly that can't be all of it. there were areas where they work well. it gives people supposedly normal four year degrees. it hasn't caught on and it's been worse than just mediocre it seems to me.

it's even higher than high in the works wonderfully. the there are plenty of knowledge-based services you pay for and they work perfectly well. the reason we don't understand't the limit like the two or four year degree seems to go much better than the not-for-profit. >> you mentioned in your complacency. the silicon valley created a culture of conformity. if looks like the draft is uniform and this is spread in many places but also the impact of the technology in our lives and the sporting that we do has

created a risk aversion of the conformity, and is silicon valley decreasing entrepreneurialism to this effect in america society? >> silicon valley, by far it is the most rapidly productive and innovative part of our economy. it's easy to use that for the mediocre or even destructive ways. you could spend your whole day on your page and it's not going to make you more innovative. that is a somewhat significant spillover, but you look at how it connects people with common interests. getting ideas to start the companies, so all technologies. there is a kind of rough and bumpy patch at first. typically, we learn how to use them better as they get older. that doesn't happen automatically. it's exercise and both the class

and radio have their rough patches early on to some extent. they still do, multiple radio is wonderful. but the key is the focus on the ideas being communicated and recognized intellectual battles have to be rethought all the time, don't claim the claim that technologies, don't blame the companies that sell you their radios, just realize you can't take for granted that your favorite idea and when a new set of communication technology comes along, you've got to make your case all over again. people desperately dislike that. >> ..

>> and small business creation. and it has to do with market concentration so too the biggest decline of retail and you're much more likely to buy your retail from a l brand so company such as nordstrom has good data what people want and what they don't want and then they can adjust relatively effectively compared to the eighties if it is antiquated them by some dynamic new company comes along with those

established companies with much better data. to see if there is true innovativeness and that's completely new and remarkable. i'm not worried that retail has not progressed. >> that accounts for roughly three quarters of book sales they use to be physical sales i like it i carry on my ipad i'm not complaining about that at all. that trudged a trillion dollarrs valuation whatever the president says it's a very powerful company in these

directly for the most part what they are doing is buying up companies and to absorb whatever technology that that is where it tends to stop with those acquisitions. >> there is a lot in there i would challenge. >> but my question is tell me there is no abusive power going on. >> if you look at google or other search engines . go does not collect data that is fine

being. if china there is no google i use being it is fine google has not stopped innovating google is the leading player in that. the wide the use e-mail service and you can get it for free youtube was a mess before google tookve it over and then made the comment sections believe it or not these to be worse and then copyright violations it is arguably the greatest institution that is what wikipedia is meant to be google has not stopped innovation at all. i am not against google absolutely not there are many social networking sites first of all there is fortnite out

of nowhere there is snap you can write a blog. there is twitter we interact on twitter sometimes. that is as it should be done and e-mail are so many contacts in your cell phone but the social networking with people to me you've probably seen facebook. >> is good for amazon good for america quick. >> unconditionally know but to date it is i have spent so much money on amazon it is embarrassing.ba i could buy three books a day i love browsing in bookstores but typically i buy on amazon but keep in mind independent

bookstores that used to be & noble nowbarnes it is dwindling but now they are making a comeback i am happy about that so i understand in the independent bookstore. >> is the state of virginia or maryland spending taxpayers money to get amazon to move here a good way quick. >> i don't think so i think it would have gone where it had gone anyway. i am opposed to them and then the broader chapter that that is the crony capitalism and we don't need to do it i used to call it crystal city what's the new name?

and now you need to upgrade the subway stops we should do that anyway. but just to give them cash it would not. >> you point out in your book the impression washington dc is the popular view and you push very strongly againstst that there's only $3 million so procter & gamble spends double that is that a measure of how little bigig business thinks in washington or how cheap quick. >> it's a little bit of both the ball policies that voters approve of keep that in mind

some dominated by business with defense procurement there are clearly numerous cases most of those are spent if you look at donald trump in the white house most american businesses disapproved but what he's doing with predictability in the rule of law and what he's trying to do on immigration. rightly so so if the businesses are pulling the strings that if trump tweets at all often against the ceos to demonize them. so it is a mixed complex pictur picture. >> let me pick up another example. business spent a lot of money on that tax cut he has made a

lot of noise but it was massively beneficial. >> we have the tax rates at 21 percent so we are in the range of that with the obama administration of 20 percent in my opinion 28 percent like 23 or 24 percent one thing big business did was take us in the direction the democrats wanted to move in so yes you can blame business even trumps advisors say 21 percent is too low. so even there i'm not sure if it was business or if it had to be very low. >> you mention disapprovingly

the essay milton friedman wrote to maximize shareholder value and what i agree with that if you aim for that only you will this if you are in other pursuits then you could be profitable long-term have we reached a point where shareholder must be reformed quick. >> it depends what you mean by ,reformed so also with john mackey ends socially conscious capitalism but i don't think there's any single right answer for all economies probably your goal should be profit-making to capture the market share if you're doing something to interact more

with the environment then we would need a broader range of conception but you need to make money to stay in business overreacting is i think he just went too far. >> i have two more questions with a rapidfire round so the other question i wanted to ask you, fortune 500 companies strike me as being very different creatures to the trump organization to be privately held orie cargo that don't have hr with the political reaction of social media trump prefers to hang

out with other people if you look at the guest list there's a lot more private companies very different creatures from horporation so should we be using different terms or subdividing what we need that one - - mean by business quick. >> some of that is regulation for the demise of the shareholders and as you know more and more companies in percentage terms are at an accelerating rate but this is very concerned with diversity and hr departments it is the privately held companies go larger but ina some ways

becoming publicly traded companies and owes those of the privately held companies they are not publicly traded on the stock exchange before they go public but in some ways we see differentiation the important thing is to keep ahead of the framework so they have a chance to compete. >> they will know that the rapidfire that you mentioned something to say it is underrated and then a quick explanation as to why. >> i love comcast. it gives me internet service and cable tv the nba finals are approaching i do think

there is so crony capitalism in their maybe that is optimal or desirable also with cable television and satellite the future is five g a much more active supply and that market is more competitive you can say how many other companies do you more good than your cable company? that is a shortrt list believe it or not they are people in the room and they turned out okay. [laughter] underrated at least in washington dc. we just don't know which yet. i have been a skeptic all along that maybe it is underrated maybe they'll take

off first in china and everything elon musk has done my goodness that is remarkable but it is very impressive. >> i have never used ali baba so actually there is a longer standing history of orintegrating and it seems to be quite remarkable that they are ahead of amazon i'm not sure the chinese do. >> i'm not sure how he is rated i like the idea of have mayor be president realizing is not just the voters of the party they're working for i would just like to see him a lot i don't know i'm not rushing to d judgment but i have

seen some encouraging sign signs. >> "game of thrones". [laughter]y >> just last week we sat down and said we have to try one episode it was the very first time we watched one episode the production value is better than most movies it is complicated it was a mishmash of super contemporaries i didn't love it i could see how somebody could get into it so it is overrated. >> so let's go to questions we have 24 minutes speak clearly into the mic. >> my question is talking

about people as consumers to consume they have to have an income do you think it's reasonable the richest man in the world pays his workers nothing at a performance center they get ten or $12 an benefits limited they are supervised to how many boxes they feel if they don't fill enough boxes two hours in a row then you are fired. the amazon fulfillment center comes to an area sometimes it lowers the wages. >> most of the people who work for amazon get a better offer than where they were many of those high wage jobs but for

the most part they were higher than what was there before and a greater chance of promotion that's why a lot of people work for amazon. >> a lot of those people don't work for amazon they are under contractct. >> but is still making the job better. >> tech stocks particularly the behemoth large portion of the s&p 500 market capitalization and the index fundsry with every 401(k) but the product uses artificial intelligence for privacy or to increase division or social or political division. and they are all running on devices that are electric and

are fueling a demand for coal-fired electricity. i am worried about the tension between setting retirement incomes on the future profitability of these industries and the other risks that they prevent and of solving those would be slowed down as a consequence. >> the whole industry and without those consumed and to be a genuine concern and the notion to regulate that more

law most don't seem to give a damn that the people themselves don't care but the greatest risk to their privacy is not big tech so i would consider banning facial surveillance to think that privacy should be respected but big tech is very low on the list there's a lot more we could say that i would offer in response. >> how do you think of generational challenges in the perception of big business quick. >> data shows they will - - young people are susceptible

some of have the income of age some are slower than earlier periods and with the internet age could be greater skepticism young people today i think they also care more that if youou care more about more things you are more easily alienated or have an opinion about institutions but just to get carried away with observing the negative we do see a lot of social injustice through the younger generation but it does mean you will have criticism but then if you could get the excess cynicism from those institutions which are working pretty well.

>> this could be a question for the twoif of you. >> if we could establish order. >> one of the things with the federal reserve under the trump presidency stephen moore you said something along the lines he believes capitalism is a more important system than democracy and that was pretty typical evidence and the most successful capitalist nations and they all strike me

so it'ss all about growth together in much wealthier societies. >>. >> [laughter] he was not very good student and not what he thinks about democracy and then to be independent and i was being

mischievous. >> and and to stay driven to espionage and with those security concerns were due still have the free market approach and to be appropriate

and to sa say. >> and that is a security issue i agree with president trump or many other things and that europe was not supporting that move and you have to wonder of the western alliance and we would entertain exceptions and those are remarkably few and with that communications infrastructure. >> i am a lawyer for a lot of big businesses.

and then to protect their place in society and then getting in position and then we can't trust them to do it they keep doing and small business pays lower rages and is more likely to be biased and at the end of the day there still something about that.

>> but my question is it is more necessary for companies to be socially socially conscious that it was down to the bod profit margin and with those socially conscious business to combat with the sentiment growing for my age maybe in a couple days the co-ops didn't work and that

the socially conscious and on fossil fuels and that he wants to be more green. and to beware of hypocrisy. but the ratio those that say they do we need to be very careful. maybe those metrics and then just to push back a little bit

so then if you look at the various financial services bills coming to congress every year and then just to compete against those consumer groups and then one bill that was pretty well then it was somewhat known. >> and then so don't understand they were doing something unpopular and far

more are many and with that scarcity of resources and much of the bill and then congress and have more expertise and that would limit the pernicious influence. but i was curious with high-tech r&d for preferential rights doesn't make it well to speak for itself it was

fundamentally broken because it takes so long and china is doing this and i have looked into this a bit. with a small versus large business. and then to figure that out. >> and information on hiring practices to know how much more people are paid than other small businesses.

it reeks of something like collusion between businesses if they set wages and the idea to pay for a market price to negotiate having norms in place and then otherwise it's bad look on a resume if that is real collusion are beneficial to the market. >> there are anecdotes that it might am not sure of the final correct answer you can quickly earn three or $400,000 per year but the president getting

320,000 in the third or fourth year it is not that tragic. of those anti-er monopoly policy like the suburbs like northern virginia or maryland that will do more to fight monopoly. >> and then to represent workers. i have always a been bothered i

don't want to be black and white but if they stopped business from colluding where they collude away? and left to their own devices to take into account are they more socially conscious. >> there is a number of different issues. that via the orders of magnitude and a carbon issue that we should address that that led very well past the cost-benefit.

>> not you should always let big business do whatever it wants and in many areas but the actual reality is much more positive toward business than the rhetoric. >> is that because they are forced quick. >> yes. you want institutions that are strong enough to actually help us clean up the earth or like toyota has done with the previous there is reason that big business is so good to have highly capitalized easy to spot agents tasked and that is a better way to go very often. >> i am a retired labor

lawyer. if corporations are more productive then why are wages still stagnant as a very small percentage of the population. >> wages are growing at a slower rate than they used to i think the greatest criticism of american business it is too bureaucratic and not innovative enough they ought to look for ways that we need more scientific breakthroughs greater competition progress is slowing down i don't view it as the main villain but that is the direct criticism. >> have comment on income

inequality you said it doesn't have a responsibility for income inequality there are opportunities for business to work on that problem or should the solution be income transfer or whatever quick. >> that's a huge question. one is thinning out in the middle which i think is a failure that business will do a better job when it rest on our schools that people at the very top and so much more some of it is globalization and i do think china is a good thing. i think some of it stems from those causes that is my

fraction of a minute response. >> you mentioned healthcare and capitalism work very well at the same time we see every single democratic candidate with a slight nuances can you talk how you see the market and what can be done collects. [laughter] >> the health care system in singapore you have to spend your money. i don't think we will ever get there the americans have good private health insurance don't want to give it up there is that status quo bias. and then to take more risk.

and with gdp depending on income and education. >> the financial times classified one of the 12 best books of the year. i want to give you two statistics the first from india that is not the us but has about the fastest rate of the world about seven or 8 percent for several years now that the book on happiness just came out with 160 countries so the question is

the link between growth and happiness. like implying in virginia economic growth is always associated with well-being and even in washington which is more shocking than that or chevy chase a few steps from where we are and with life expectancy it's absolutely shocking and in the zip code that you could but now the question to those statistics. >> let me take money and happiness.

in the long run they are massively correlated retirees decide canada australia new zealand et cetera not the other way around it's for the long time horizons thank you for coming. [applause] >> is just like we find out china is not deserving. >> we have copies of the book available on the register. >>

>> and any environmental issues. >> with those current injustices going on in the country and the issues for me

in 2020. [inaudible] and that those issues in our healthcare and to a formula a decade ago. and that campaign finance and the issue