>> funding for overheard with evan smith is provided in part by hillco partners, texas government affairs consultancy and its global health care consulting business unit, hillco health. and by the mattson mchail foundation in support of public television. and also by mfi foundation, improving the quality of life within our community. and also by the alicee3 kleburg reynolds foundation and viewers like you. thank you. >> i'm evan smith, he's the feisty host of a daily msnbc talk show whose first book greedy bastards rails against government -- it hhs him exploring the root causes of unemployment from one end of the country to the other. he is dylan ratigan, this is

overheard. >> ♪ >> smith: dylan ratigan, >> ratigan: it's a pleasure to be here. ú&anks so mucc for having me out. >> smith: nice to have you. i want to ask please the next ttme you wwite a book i would prefer a title with a point of view. >> ratigan: you know, we. [laughter] >> smith: no, no point of view at all visible in this title. >> ratigan: well, with this one we didn't wwnt to let people on to our point of view early. we. >> smith: make them wait. >> ratigan: . . .we wanted to sort of encourage them to read it to figure out what we were trying to go for. >> smith: right. you, you -- you, you would not be wrong to say that the genesis of this book and of the argument in it is anger. >> ratigan: yeah. >> smith: .although as you

pointed out to me a few minutes ago you're notú really angry anymore. >> ratigan: yeah, well, it's an interesting -- writing the book was an interesting experience and quite honestly verything that you just described, having the opportunity -- to be able to communicate and meet as many people as, as you're able to meet in a situation like this is actually remarkably inspiring. that book was actually three books. the first book was just a documentation of everything that was crooked that i could find that would have mm in a frothing rage. >> smith: could be a multi- multi-volume set actually,3 right? >> ratigan: i wasn't sure whether it was, i was writing a book or whether it was just some sort of, a personal exploration of, of -- of frustration and anger. and i got to the end of that and it was clear that it was not worthy of publication. was it useful? i saw no point in writing a book that tells you how screwed up everything is. because i'm quite certain that everybody in america knows things are screwed up. >> smith: right. >> ratigan: there's a great debate about why they're screwed up, how they got screwed up, how you can get them to be, to be not screwed up, we don't need a tremendous amount of journalism that just explains to you that things are misaligned, that we have wealth inequality, unemployment, poverty.

two -- basically, that we have two sets of rules as a country. everybody knows we have two sets of rules, one or greedy bastard or greedy bastard-like behavior and one for everybody else basically. the question is if you're going to insert yourself as i've hosen to do into this conversation, is what is the solution? what is the path forward? for me, it's been an interesting transition and very rewarding. >> smith: and resulted actually in your being optimistic. >> ratigan: i have never been mooe optimistic actually. >> smith: imagine that actually, optimistic about the future. >> ratigan: yeah, see, kid -- people think i'm kidding. i've never been. >> smith: that's almost illegal these days. >> ratigan: .more optimistic actually. well, the thing is be careful. don't mistake me for a hopium dealer. >> smith: right. >> ratigan: like there aae people out there that. >> smith: hope, hope, hopium. ú& ratigan: hopium, yes. >> smith: hopium. >> ratigan: there'' hopium dealers everywhere. that's a good business. and they, they, they set you up with the hopium and you take a big shot of that. you're like, ahh, feels great. it's going to be -- then it wears off and you're like hang on a second, i still don't have a job. there's still no investment in our country. >> smith: right. >> ratigan: we're still in these wars. go down whatever the list is. >> smith: yeah. >> ratigan: and sooi think it's critical not to, to confuse understandable

optimism that is contingent on the way we choose to act. >> smith: yeah. >> ratigan: and hopium as a &-political power, commercial success, whatever that might ú&. and the reason i'm so optimistic is because in writing this book i was.when you look at healthcare and you're like, man, 5% of the people in this country account for 50% of our healthcare costs. >> ratigan: it's not because they're bad people. it's because they're sick. >> smith: yeah. >> ratigan: 95% of us aren't sick so you're like, okay, that's reat. but then if you look at how we manage our healthcare we don't focus on the 5% that are spending 50% of the healthcare costs to help them be healthier, we just make sure we have lots of really, really good sickness treatment system so that when ou get a.have to go back to the mergency room for the third time in a week, they have another machine for you. that is an atrocious system and remarkably expensive. >> smith: well, in fact we don't, we don't even go beffre the 5% gets sick, we don't do nything at all to, to modee, you know, kind of preventive care. >> ratigan: we don't sell health. >> smith: model behavior to prevent ... >> ratigan: we seel sickness treatment. >> smith: right. >> ratigan: i talk about dr.3 brenner in the book from camden, new jersey who &-thh population of camden,

new jersey was 30% of the healthcare costs. -nd he goes anddhe asks for a meeting with them and says i see you go to the emergency room three times a week. >> smith: yeah. >> ratigan: now do you enjoy and they say, well, no. smith: no. >> ratigan: .i don't, you know. and then we say, well, how would you feel if we got somebody to work with you and maybe reduce the number of times a week you're going to the emergency room? simply by having you take your diabetes mediciie regularly, which you're not doing. or simply by having ou take &-every day.d the block >> smith: yeah. >> ratigan: .which you're not doing. anyway, this sort of, i mean, this remarkably simple stuff collapsing the cost of healthcare by 50% in camden, new jersey, 50% reduction by targeting the right 1% of the population. >> smith: yeah. >> ratigan: david kennedy with crime. 2/10ths of a percent of the violent crime in our inner.south central and new orleans and detroit, all the sort of real, hardcore violent crime that you read aaout and hear about and have fear about in this country, it's committed by about 2/10ths of a percent of the pooulation of those communities. >> smith: yeah. >> ratigan: david kennedy out of the ohn jay school of criminal justice is not on no big national campaign, no huge undertake.he says

why don't we get about 14 or 15 of the most powerful and interested people in those communities, the coaches, the moms, the dads, the, the, whoever and go sit with one, one of the kids in the 2/10ths of a percent and ask them not to shoot people. >> smith: seems, seems like a simple idea. >> ratigan: how about you don't shoot anybody? >> smith: righh. >> ratigan: guess what? 50%, i'm not making this up, there's a 0% reduction in violent crime. and so for me as i see the people that are doing it right, whether it's david kennedy, whether it's dr. brenner, i can go on with that. >> smith: yeah. >> ratigan: .you realize that what we need to do is look at these sorts of things, okay, and then look at our own communities and say how can we apply some of these techniques in our hospitals, in our sccools, in our communities? it's a stunning moment in time. and, and -- and, and we're, i really believe about to see a really, a renaissance in terms of super &->> smith: yeah.ctual. >> ratigan: .solutions. seeing where the cost of

things are going to go down going to go up a lot. >> smith: before we, i mean that, that's exactly the, the, the takeaway from this book. i think this is probably the cause for your optimism and the optimism of anybody that reads the book. but i want to come back to this question of. >> ratigan: yeah. >> smith: .of the two sets of rules because this is very much of the moment, this idea whether it's occupy wall street and the idea that, you know, the, the 1%%have a set of rules. >> sith: .and the 99% have a set of rules, whether you agree with that or not, this whole conversation abouu vulture capitalism that wee heard in the south carolina primary where companies come in and they buy their own set of rules, enrich themselves at the expense of people. and iiknow you make a point of saying in the book i'm not anti-capitalism but there's a problem when the system ultimately produces the small number of winners and large number of losers. >> ratigan: well, you have, we have to. >> smith: right. >> ratigan: .understand a little better what capitalism actually is. >> smith: right. >> ratigan: capitalism is the act of investors and entrepreneurssand educators aligning interests to solve problems. if they do it ell, they create jobs and make money. it's a very simple thing.

capitalism. >> smith: do you think people agree with that definition? >> ratigan: it doesn't matter whether they agree with that definition. &->> ratigan: if you're going to use the word capittlism. >> smith: yeah. >> ratigan: .and you're going to have a system that doesn't have any capital in it, you're a liar. [laughter] >> smith: right. >> ratigan: so you got to come up with a new name. i ca that exactionis right? >> smith: is, is tt romne a liar? >> ratigan: mitt romney's a lilshats doingapis yes ll of their moneyd u ears. >> smithrit.>> ratigan: .but ale >> mith: right. rig:.bef i can. >> smithyh. get off of thesesell you off.

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n'wa towllh,ta thwa some value for somebody sowhere.and if we d'tnvt i some way that has value for so som, 'ree3 not going to, we're goong to lose ouris so that way the ttreshold for the judgmenn for the plme oreurs. >> smith: yeah. >> rat value in the investment?d ne of those thresholds because he had tottlly detached risk. >> smith: yeah. >> ratigan: so he said it's not my money.3 i want to sleep with pop stars and movie stars.buunerl nd polygram and we're good to go. th d seagram's basically goes near bankrupt beeyn esthings. that is a classic example of detached risk. the same exact scheme of -udgment, which is personal self indulgence without any

resppct for the imperative to, to invest in a way that creates value, is the entire culture of wall street. >> smith: but, but, but dylan, i hear you and it makes sense. >>mi:.buthreoe to this, and again i'll come back to. >> ratigan: no, no, please. >> smith: i'll come back to mitt romney. >> ratigan: ah >>mi: cae tt romney was a.speaking of my governor who is not free spending. >> ratigan: please, sure. taedroey: he among others utcali for prcapitalism. >> ratigan: mm-hmm.3 >> smiih: the argument romney made back was no, you're, you know, weav many instances in which the scheme that you've dcr atouered actually has produced jobs. >> ratigan: right. >> smith: has created wealth. >> ratigan: yeah. >> smith: haa created mpieth he,ve thh years. >> ratigan: very rarely. >> smith: .employed 100's of thousands, cited staples and heit aho bc hecompanies. >> ratigan: you want to get itns i mean. ú& smith: well. >> ratigan: .there's o. yolok. >> smith: .so my point i guess is it's easy to criticize when it doesn't, noyo b t ralo. >> ratigan: sure. >> smith: .when it doesn't work. >> rattgan: yeah. >> smith: buthe e snc in which it does work. >> atigan: yeah. >> smith: and for those people the system seems to be working just fine. rig: .d he hoi would ask you to evaluatt that. >> smith: yeah. >> ratigan: because life is an experiment. rit?

everything we do is an experiment. >> smith: right. >> ratigan: you have all varying outcesrit? y lk e,, m not going to indulge the sort of all the outcomes but i could walk you through.for every outcome that you could give me that claims to have created jobs in an lbo ruur. st yeah. >> ratigan: .i can ive you 10 outcomes where jobs were destroyed. it's a math issue. buth's reallnot the ppint of what i'm tryyng to say. >> smith: yeah. >> ratigan: and th'sot the reason i would indict mitt romney or, or that, atuses. the only thing that we control as human beings in our lives for every day of our lives as long as we live o ien. we have no control ver outcomes. we like toorofspeo ntl tces we can't do it. >> smith: right. >> ratigan: which means that y he syemanyo want to evaluate that system, an educational st, hethcare syssem, an investment system the on qstn a of that system, the tax code, thh trade policies, the banking policies is: what is the intent of that system? what, why is it that we waat

to have the tax code be like this? what are we trying to aceve.ú >> smith: yeah. >> ratigan: .for our country by doing this? what is the intent of whatever iis sohaishentt creating a business where a small group of men can borrow other people's money toake over businesses and then sometimes reate jobs. usually not create jobs. honestly, i'm trying to avoid villainy and heroes ú&cause if mitt romney was the problem or baracobama or newt gingrich, we would round them up right now and de tht. i can assure you there are. >> smith: they're -- they're symptoms, they're not the disease. >> ratigan: they are showing you the disease is. >> smith: yeah. >> ratigan: that inste hang stewhe te is to align interest between investors and entrepreneurs, doctors and patients. >> smith: right. >> ratigan: .teachers and ssen. >> smith: right. >> ratigan: .communities and their, their.which is the only reason you have a reason we're here. right? &-get the benefit of more shared information and more awareness and more &-misaligned we are and how we might be able to -- to realign the frustration ú&vel with the greedy bastardism that has preventing that gngp.

>> smith: yeah. >> ratigan: so you see the tea party and the occupation and you e esthgs ppening and it's not for me.like my opinion of mitt romney is irrelevant. y bie tt capptalism is basically making money at all costs with no rules or the ability to write theerules aa you see fit, mitt romneyis grt pilt. if you believe that capitalism is the use of capital through aligned interests, both human potential and financial pontl,o lvprles and work together to actually, to, to do something, then that's not what we haae. ratigan: i look at basically, there's two i call it the westernmerica. financing model, which is emblematic of a lot of what you see in places like austin, like northern california. i can point to a string of places that use it, which is basically a cultuue of how, what do you want toodo? how do you want to do it? at t gal what are the metrics? how we going to measure it? and okay let's try it, see what happens. >> uh-huh. >> ratigann we don't know what's going to happen.

but as it goes we'll make choices. >> smith: right. >> ratigan: we'll have clearú code with each other. that's western finance in the 21st century. then you have eastern finance, which is we can use implicit mathematical vaaue of everybody else's stuff. and then we can go to our licis thhama equation and guarantee them cheap giveaways to the constituents, which alloos the politicians to keep eijo, vecap product to the american population and allows the financial institutions to socialize all of the losses3 and privatize all the profits. >> smith: right. >> ratigan: and so there's a shift in the intent of the eastern financing model that has failed. it's like a failed experiment. it started in '99 and ended in 2008. a culture of experimentation should be encouraged. >> smith: it ended with the lehman brothers collapse? is that.? >> rigan: llitnded when we hhd to go to the government for $30 trillion dollars in synthetic money ú&de up at the federal reserve to cover the thing up. >> smith: right. >> ratigan: that was prety much thend of the >> smith: so you, you don't think -- i mean, in that case you don't think that the government's decision that this has become very. >> ratigan: sure. >> smith: .controversial, even clint eastwood is now in the middle of this conversation.

government decision in view of what happened. >> ratigan: yeah. >> smith: .to bail out the -uto industry was the correct decision or not? >> ratigan: i think that that's the wrong question. >> ratigan: and i'll tell yowhy. if, if you have a daughter who is a heroin addict in san francisco and you rescue her from her heroin addiction in san francisco and then set her up in austin with a pile of heroii, have you done. but you had no choice to get her out of texas, right, or to get her out oo california? so i mean obviously you had to bail them out. >> smith: right. >> ratigan: well. >> smith: your perception is that the bailout fundsswere. >> ratigan: .that's not my perception. >> smith: .were, were, were essentially enabling the addiction? >> ratigan: it's not my perception. again these, it's interesting the, the, the wood choices are interesting. there's, this is a. >> smith: i'm still back on hopium so. >> ratigan: right, i understand. [laughs] >> smith: yeah, word choices are interesting. i agree, yeah. >> ratigan: so there are capital requurements on this, in, in ourrworld e get together every year that do what's called the basel iii accords, oo bbsel ii or basel accords. and the basel accords are meetiigs of mathematiciaas and finance ministers around the world where they decide

as a matter of fact how much money has to be retained at all the banks. and what they've decided with that is basically the answer is basically no money has to be kept at the banks because we can create a synthetic mathemaaical calculation of the future ability for people to pay their bills, which has nothing to do wiih capitalism. it has to o with mmth and whether people can pay their bills. and so the suggestion that upon finding out -- well, what we found out in 2008 was the math equation was wrong..3 so basically in 1999 they said we got a math equation. we're going to calculate whht everything'sswwrth and we'll see what people can pay and then we'll manage to that and we'll issue credit toothat and that's great. and so, and we'll do it with none, none of our own money so it won't really matter. and the more we leverage the more we make, we'll go 100 to 1, blah, blah, blah. well, they found out after, you know, whatever it was nine years of that, that it was an unadulterated financial disaster on a scale that no one can really comprehend because remember if you spend a million dollars a day since jesus christ was born, you wouldn't spend a trillion dollars.

and we are in for $30 trillion dollars and you didn't fix the problem because the problem is a lack of capital requirements in the financial system. >> smith: right. >> ratigan: as long as i can invent debt and give it away without having.as long as i can ay to you or anybody in this room you now owe mm $100,000, start paying. that's awesome. i don't -- and i don't have ú&y money. >> smith: right. >> ratigan: that's jp morgan, that's citigroup. ttat's wells fargo, that's bank of america, so you want to buy a house? i'm going to give you a $400,000 loan, a $200,000 loan, whatever it is to buy that house. i don't have any of that3 money. it doesn't matter because i'm too big to fail and i'm backed up by the government. you're going to pay me back. i'm going to take the money. if, if the proverbial manure hits the fan, it's somebody else's problem. that system was not corrected in 2008. the banks wwre made bigger, not smaller. >> smith: yeah..3 >>ratigan: the swaps exchange, which is where all

this happens, wwich is the only dark market n the planet. >> smith: yeah. >> ratigan: .from the 1400's, so in america we have a belief if you do it in public, chances are that it'll be less conflicted, less predatory and less obnoxious, right? so we put stocks on an exchange. we put bonds on an exchange. weeput commodities on an exchange. when we did that we took away the profitability from all these big banks because of computers and all the rest. so then ttey said, well, we nned a special thing that we can only sell to each other that's in a backroom, which is what, the, the, which is what they're doing. and what happens now is every time there's a default on that credit insurance, because it's not on an exchange and we can't see any of it, they go to the government and say, well, we've insured everything. we've insured your oil supplies. we've insured your food supplies. we've insured your electricity and housing funding supplies. and in addition to that, we have, you know, aboutt5 or $600 trillion dollars worth of idle bets just on things we think might happen. kind of like online gaming.

>> smith: yeah. [laughter] >> ratigan: and we can't really tell one from the other, because there's not an exchange and, you guys think i'm kidding. this is literally how it functions. and so they go to the government and they say why -- should we, the government says why shoold we have to ppy out on all, on $500 trillion dollars of online gaming that you guys just made between each other in new york? and yeah, there's no real good reason for that but the problem is if you don't pay &-completely annihilate your oil supply, your food supply, yyur housing supply, your electricity supply and everything else. and so it's like they walk into a room with a ag. >> smith: well, with a bomb, with a bomb strapped to their chest. >> ratigan: .that's full -- well, it's more like they walk into the room wwth a bag full of diamonds. >> smith: yeah. >> ratigan: actually that's not true. they walk into the room with a bag with about 4 or 5 diamonds in it and the rest of it's horss manure and then they, and it's this huge bag of horse manuree3 with some diamonds inside of it. >> smith: yeah. >> ratigan: and then they say we're going to ask you to pay us the full value of this bag at, at per diamond prices. >> smith: even though it's not full of diamonds.

>> ratigan: and there's a couple diamonds in there. >> smith: right. >> ratigan: .that if you lose them you're going to have a real political &-away people's energy ande food supplies you're really.i would hate to be in your shoes. >> smith: yeah. >> ratigan: and so diddwe have to give them $30 trillion dollars to get, to, to resolve the failed experiment that was originated by bob ruben and bill clinton in 1999 and expanded under george bush and all the rest of it? yys, we did, because it was a terribly disastrous experiment. if you're running a laboratory and the place burns, you're like, well, that experiment went badly. i guess we just burned the building there's nothing inherently evil or terrible about having a failed experiment. all of our lives are a it's totally fine. we will perish if we continue to invest in obviously failed experiments that we refuse to acknowledge have failed because of the ego of the scientists involved. >> smith: yeah. where america has found itself and that is really what the biggest issue is. >> smith: i'm being old that we're about to be out of time. let me just get this.i'm supposed to be optimistic at the end of thiss >> ratigan: mm-hmm.

>> smith: this is what you -- this is what you tell me? [laughter] you're optimistic because. >> rattgan: i've never, it's on. >> smith: .you are bumming me out actually. >> ratigan: no, no, that's okay, listen. it's one of those things where you first have to fully comprehend. >> smith: okay. >> ratigan: you, you can'tt3 cure cancer. >> smith: yeah. >> ratigan: .if you don't understand the cancer. >> smith: all right. >> ratigan: and so just, you got cancer, you can say llsten. i don't know what it is but i'm going to go in with a knife in the kitchen. >> smith: yeah. >> ratigan: .which is what you see a lot of our political solutions are like that. they're like i know you, you got cancer. here'' the kitchen knife. i'm coming. and you're like please don't cure me. okay? and, and what i'm saying is we have to have a collectively, a better3 understanding of what the, what, what.let's not forget analyzing. they want us to be confused all the time. >> smith: yeah. >> ratigan: if we know what we're intending to do, which is to have aligned interest with investorr and eetrepreneurs, doctors and patients, teachers and students in all of our communities all over this country, i guarantee you that is what will happen. >> smith: okay. well, there's the hope. there's the optimism. >> ratigan: and that is the realization, which is that. >> smmth: right. >> ratigan: .when you disengage from playing that sort of new york, washington

shell game for power. >> smith: yeah. >> ratigan: .the democrats want power. no, the republicans want power. no, the democrats -- well, hanggon. all you guys are taking money from the exaat same people and you're bbth doing the same thing with the tax ú&de. you're both doing the same thing with the banks. you're both doing the same thing with trade. our entire investment policies, and so you haveeus fight about, you know, all these things that have nothing to do with the core. >> rrtigan: .and then, and, and the more we all fight with each other, as long as we don't agree to anything, all of us, nobody agree to anything, then they keep power. all of us, nobody agree to anything. then they keep power. >> smith: yeah. >> ratigan: as soon as all of us agree to one thing, they've ot a problem. and, and so my goal is to encourage people to find the disagree to because that's -- >> my head is spinning. >> it's going to be great. come back, talk about solutions, politics. >> come back on your tour. >> 100%. >> thank you very much. >> thank you, dylan ratigan. [ applause ]

>> funning for overheard with evan smith is provided in part by hillco partners, texas ggvernmmnt affairs health care consultingobal business unit, hillco health. and by the mattson mchaal foundation in support of puulic television. and also by mfi foundation, improving the quality of life within our community.3 and also by the alice kleburg reynoldssfoundation and viewers like you. thank ou.