>> rose: welcome to the program. we begin evening with two very interesting takes on america and its future. we begin with naill ferguson, his book is called "great degeneration: how institution december kay and economies die." >> while we spend a lot of times talking about how poor economies can improve their institutions to get richer, we don't talk about how richntries can get poorer. >> rose: we conclude with george packer. his book is called "the unwinding: an inner history of the new america." >> i the book appeals to people who are of different political persuasions who say "that's it.

that's what life in america has been this past generation. it's been a time of winners and losers, of old institutions that used to support middle-class people eroding and instead a kind -- a landscape where people are on their own and some people do very well and some people do not and the ties that have held us together as a people seem to be getting looser. >> rose: naill ferguson and george packer when we continue.

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. ferguson is here. his new book is called "great degeneration: how institutions decay and economies die." in his book he argues that the west is in decline and he examines the cause of what he sees as political and economic stagnation. ferguson is a professor of history at harvard university and senior research fellow at oxford university. i'm pleased to have such a learned man back at this table. welcome. >> i'm pleased to be at this table. >> rose: so how did this -- first of all, as i today you

when you sat down, i may be one of the few people who interview you who read the lectures a couple years ago because i got them from the bbc. >> not quite that old. it was last year. i did them as the reflections for the bbc. >> rose: which was a big deal. >> and then i discovered it's not a big deal anywhere else but in britain so it became a book. >> rose: what was the driven idea of the lectures? >> and the book. the idea is that while we spend a lot of time talking about how poor countries can improve their institutions to get richer, we don't talk enough about how rich countries can get poorer by allowing their institutions to go to rack and ruin. and i think there are two separate processes going on in the world right now, one of which is good-- that is that other countries, non-weps earn countries-- are improving their institutions. their economic and political institutions, the rule of law and so on and getting richer. great. the other process-- which is what the book is about-- is the degeneration of our institutions in north america and in europe which used to be the best and no

longer are. and that's what worries me. that's something to worry about. >> rose: let's tick off what institutions we mean. >> so i'm talking about first of all democracy. you know, the political system. >> rose: right. >> number two i'm talking about the whole apparatus of regulation which is separate because most of it doesn't come from elected bodies. three, the rule of law. the lawyers. and then civil society. the justice system. and then civil society, the things that we do when we form voluntary associations. the things that most impress visitors when they came to north america in the 19th century that really distinguished the u.s. from europe. so these four things really are the pillars in which our society rests. you can't really have a market economy without the rule of law. and -- >> rose: and regulation. >> and you need regulation. you can't have a completely unregulated free-for-all. so the question is how are we doing in these four dimensions? and the argument i try to make is that each one there are problems of relatively recent origin. this is not declinist book, by the way, i know you're quite

accustomed to pessimistic brits predicting decline. >> rose: there's been a turn in that, actually. >> i think it's a book urging reform. we're spending too much time going endlessly on about deficits and debts and quantitative easing. we're not talking about the structural problems holding the economy back. that's what the book is about. >> rose: so let's take democracy. it's not working because what? >> edmund burke has a great line about the social contract. he says "the social contract is between the generations. it's between the living and the dead and the living and the unborn." our democracy has broken that contract in a really profound way. when we talk about public debts, all the understood funded liabilities of medical and social security, we're talking about that breach of contract because what the baby boomers have done with democracy is that they have lived at the expense of future generations. >> rose: they've spent like there's no tomorrow. and there may not be.

>> tomorrow for them may not come but it will come and end. >> rose: leaving their kids with heavy debt. >> so the next generation and the generation after that have is going to be clearing up a pretty enormous mess. >> rose: or not be able to pay off the commitments. >> that's the channel. what's going to happen? either future generations will have much higher taxs than the current generation has got used to or they won't get the entitlements the current generation is currently enjoying. probably some combination of the two. >> rose: now there is an idea-- with respect to the debt, the long-term debt-- that for the next ten years we can sustain the debt that we have. >> measure conventionally, of course. >> rose: yes. >> but the problem is that if you just measure the debt in the conventional way-- which is to say here'she stated federal debt, here's gross domestic product, oh, it's not even 100%, we can relax-- you're missing the off balance sheet -- >> rose: it's what, 74%, 75%? >> depending on which convention you use. if you use the stuff held by federal agencies it's more. but really this is academic.

i'm trying to say no, no, no. let's include the unfunded liabilities, the off balance sheet stuff, which is much, much larger than that stated debt. then you realize to establish generational equity, to make sure future generations pay the same tax as the current generation you would either have to cut all government spending by about 35% or increase all federal taxes by about 65%. that's a measure of how unsustainable fiscal policy really is. a lot of the debate that goes on right now is far too technocratic for my taste. i would like us to get right down to the fundamentals. what is fundamentally wrong is that the inbalance between the generations-- and that is there wherever you look. for example, unlike in the relatively recent past, now people over 70 consume roughly double what people under 20 consume. federal expenditure and local -- >> rose: how much of that is medicaided? >>? >> most of it. so there's been a huge surge in the cost of medical provision.

but if you look at government spending across the board, including state and local, it's double what it is for the young for the elderly. so we have a fundamental generational imbalance. what i'm trying to say is when we look at our democracy, if we get behind the veil of public debt, get behind the veil of discussions about stimulus and austerity, there's a fund fundamental imbalance and things are not stacked up well for the younger generation. and that has to be a problem. >> rose: how do you address it? >> well, i remember-- because the book is a book with solutions-- that we must change the way governments account for their spending and their collection of taxation. we need to have the kind of the accounting principles that impose on corporations imposed on governments. where's the balance sheet? can we see that, please? we need to introduce something -- >> rose: and determine what the measurement is. >> right, and i think at the moment measures like debt-to-g.d.p. are unsatisfactory, understate the problem. >> rose: but beyond t argument of measurement is how do you determine whether a program is effective? we >> we need to distinguish

between capital expenditure and straightforward consumption. the way we account for public finances at the moment doesn't make that clear and governments are encouraged to slash the things that would constitute investments and to prioritize the pure consumption. so i think we have a major problem in public accounting. that sounds wonkish. but if we could change it, instead of running the federal government like it's enron, actually account for things properly, we would see -- >> rose: could the office of management and budget do that? >> of course. we know how to do this. there's a way of doing it to generational accounts. there's a way of constructing balance sheets. we just don't do it. we've got stock with conventions of government accounting that we would never allow corporations to get away with. >> rose: the rule of law, where has it ÷sj.t now? >> we used to have it and it used to be the end of the -- envy of the world. now we have the rule of lawyers. >> rose: are we a more litigious society than most? >> yes. example: southwest airlines suddenly found itself on the

wrong end of a class action brought by a chicago law firm on behalf of business class passengers on the ground of some technical defect with the free drink vouchers. now, this was settled, southwest folded, it didn't go all the way to court, and i think the plaintiffs got a free drink voucher each. but the lawyers made $3 million on that case and that's typical. that goes on all the time. corporations are constantly fending off this kind of litigation. >> rose: and it's easier -- they know it's easier to settle. >> of course. so the big corporation settled but the little guy can get taken out. >> rose: and taken out of bids. >> so this is the interesting thing. these problems i'm talking about weigh more heavily on small business than big business. we've developed a crony capitalism culture where the too big to fail institutions are fine, the little guy gets crushed. this is true in regulation. we've become the regulation nation and the burdens are much heavier if you're running a small business. >> rose: how big and powerful do

you think the trial lawyers' lobby is? >> very powerful. let's look at congress. it's about a quarter of the people in the house, two fifths of senators are lawyers and not surprisingly what lawyers really love is legislation that is so complex there that three there's bound to be litigation. who are the great winners as a result of dodd-frank, the financial regulation bill with its thousands and thousands and thousands of words. well, lawyers and compliance departments. it's rolling on, generating regulations and studies to decide what regulations are needed. complex city a problem. we already live in the very complex interconnected world but what we do is we then add an extra layer of complex regulation which we tell ourselves is making the system more stable because it covers every eventuality, there are thousands of clauses but it actually makes it more fragile. so that's something that i'm pushing for: simplicity. less of this stuff. more transparency. why does the tax code have to

run to nine million words more now? >> rose: everybody nose that that's a bad thing. >> right. yet why does nothing get done? >> rose: because of the political system. and because of the influence of money on politics. >> exactly. and also to come back to our earlier conversation, democracy doesn't represent the young and the unborn. so we can essentially carry on like this to the great advantage of the cronies, the great advantage of the lawyers, and the lobbyists and the current recipients of entitlements. >> rose: the establishment. >> if there is such as thing as "the establishment." that's a term i find unhelpful because i think what we're dealing with is new. i don't think this is an old familiar problem. i think the united states -- >> rose: i say "establish." meaning people who will have, in a sense, a stake in the system who have created through their own -- whatever hard work or energy or luck or good fortune or inheritance, a place in the system that they can function and they can have influence. >> i think that new

establishment as constitutes itself around wall street and washington. >> rose: transactional rather than making things. >> but it's also around the ivy league, places like where i teach with its kids of -- >> rose: but the real campaign -- and i think's some resonance in it to say, you know, let's not everybody rush to run a hedge fund in new york. let's think about creating companies that manufacture things. let's think about doing a whole range of other things. >> in theory, in theory. >> rose: may be my silly wistfulness. >> but is that really happening? what's actually happening is instead it's maybe going to business school you send your son or daughter to law school and it's not really a radical change. the truth is that starting a new manufacturing business in the united states is really quite difficult now. it's not -- >> rose: some people argue that manufacturing is not as desperate as we think and other people that are doing manufacturing in america who we

assume we have lost forever. >> that's for sure. and the energy revolution results, of course, of private enterprise innovating is definitely changing now and making it more attractive to manufacture in america. but we need to recognize that this country is no longer set up to be the best place to start a new business. if you look at any of the different indicators -- >> rose: but where is the best place to start a new business? , >> you can answer that question quite easily by going to the world economic forums' competitiveness index and looking at the countries that come top. there are 22 different measures of institutional quality. >> rose: give me the top five. >> the top countries are singapore, hong kong ranks very highly, new zealand. >> rose: hong kong. but not the people's republic of china. >> no, because china still has a long way to go with its institutions and that's something i also talk about. >> rose: but there's also a place where they're beginning to understand that state capitalism has too much power. >> absolutely. indeed, the trend in china is very clear. you go there, spend a month in china, the discussion is about

how can we transition to a rule of law system? how can we improve our institution. >> rose: but it is how can we transfer that? so we have a much better rule of law system than the chinese do. >> but we no longer have a clearly better one than people in hong kong and other asian countries. taiwan is catching up. >> rose: how do you measure that? how do you measure whether hong kong has a better rule of law than we do? >> there are a bunch of different ways of doing this. one is you simply do survey data and ask people which is what the world economic forum mainly does. the frazer institute in canada also does this. there, too, the united states has fallen behind all the other english-speaking countries in terms of quality of rule of law. and so on. but you can also look at the outcomes. so let's just ask, how long does it take, for example, to settle a claim against a debtor who's not paid up. the world bank measures that in numbers of days. it measures seven different business procedures in numbers of days. add them together and you get an index of how long it takes to do business which is not a bad

brocksy for the efficiency of institutions. there are only 21 countries in the world where that number is rising, where it's getting harder to business do business and the u.s. is one of them. wherever sells trend is to make it easier to do this stuff. to cut the red tape. mainly because developing economists said the reason that pru is screwed -- fernando desoto's same point. paul collier said the same about africa. we are in the process of generating roughly 3,000 new regulations every year from 63 different government departments and commissions and other agencies. so so we are wrapping ourselves in red tape. anybody watching this show who is running a small business, who's tried to start a small business will confirm what i'm saying. it's no longer the best place to do this stuff. and that really does concern me because i came here on the assumption that this was the international mecca for free enterprise. it just isn't anymore. >> rose: what is germany doing other than finding a way to export everything it can possibly make? >> well, of course, it does that

but that's not the only thing that it does. its system, if you just look at the simple metrics that i measured already-- either doing business, the perception of corruption, for example-- northern europe is cleaner, in fact, than the united states by the measures that we're talking about here. and so we need to stop flattering ourselves that we're the best. when i testified before the ways and means committee in washington for the first time, when i first started talking about this stuff a couple of years ago i was really struck by the fact that the ranking democrat on the committee, on the subcommittee, refused to listen to my oral testimony then walked in and said "son, you're hear to tell us that the u.s. is no longer number one and i'm here to tell you that it is." i said "you know what? my worry is that complacency? >> rose: can i tell you what was happening there? a soundbite. >> but it's a complacent soundbite. if we keep telling ourselves we're number one -- >> rose: that's a video for your next campaign. >> of course. but it's insidious.

because it means we allow these problems to steadily get worse and they're getting worse. more regulation, more red tape, it get mrs. complex to operate here and who are the losers? the next generation. >> rose: but at the same time-- you've heard these arguments before-- the sort of straightforward decline argument is not heard as frequently as it used to be. prance because they exhausted all those arguments. and you do hear people now from the president in the interview i did last night to other people arguing that the innovative quality of the american economy continues to be there. we're doing -- nobody has a silicon valley. nobody is creating as much in terms of new technology than we are. there may come a time-- as i think you suggested in earlier conversations and books-- that china will do that. but they're not doing that yet. they're simply overwhelming us by size. >> that's for sure. and the level of innovation is still far below what we see in the u.s. although it's rapidly -- >> rose: and stolen. >> there's a good deal of that, no question, intellectual

property is not -- property rights are not respected well. of course, the united states didn't respect intellectual property rights in its industrialization. you stole most of the stuff from tuk. i'm sorry to bring that up. >> rose: that's okay but that's what the chinese say. the chinese say, look, you had -- they say this with respect to environmental regulations. you had a chance to build up your manufacturing base without these regulations. now when we're trying to build up our manufacturing base you want to -- >> which is a compelling argument until you go to beijing and can't breathe the air. but there's an issue here which we're missing and that is let's just look at education. we are failing miserably at the level of secondary education, high school education. if you look at the -- >> rose: the institution of education. >> right. that's assuredly the most important institution, our educational institution. that's why social mobility is declining. it's by some measures lower now in the u.s. than in the u.k.! and i come from a country which used to pride itself on its

ridge jid class system. guess what? the american class system may now be more rigid than the british. >> rose: and we're going to talk about this later in the program but we now know that in an interesting way most economies are prospering because of what's happening in urban areas. that's where innovation is, talent is, and that's where -- >> and it raises productivity just moving people to cities because the networks are there. the chinese understand it. >> rose: they make commitments to it that are interesting. there are serious government commitments. that doesn't mean the government is going to do it, they make a commitment to do it. >> i'm going to be careful here because you called them my friends and that's not accurate. >> rose: but you have been arguing how they will prevail >> i haven't made that point. civilization said they're going to overtake us in terms of some measures of gross domestic product so we probably cease to be the biggest any the world in the foresee seeable future. but china-- and i make this point in the book-- china has its own set of problems that are

institutional. it's all very well to urbanize your population at breakneck speed but if you don't have the rule of law, if the party is not subordinate to the rule of law the system is fundamentally unstable. >> i think there's a growing recognition that they have failed in terms of corruption. >> they would be the first to acknowledge that. i've just been in beijing and the number one popular conversation is what can we do about this? bo xilai was brought down because he represented a threatening combination of populism and an extortion racket. revivaling slogans. that worried the mainstream leadership. >> rose: and guess who they put in charge of this? >> wang she shong. >> rose: who has been the do it guy in china for a while. >> rose: and it's very significant he got that job, surprising many people in the west, but that was because they didn't realize this is the number one priority. and he's advised fellow members of the standing committee to

read toqueville's old regime in the revolution. i said are you seriously reading toqueville? he said "not only that, i have my copyright here." he had in the his pocket. that's why we shouldn't imagine they're going to take over the 20th censure. there was an interesting relationship between china and the united states. it was symbiotic and highly beneficial to china because they got rapid growth. now things are changing and there's a loosening of the ties and a sense in china that they're our equals, no longer the junior partner and they expect to be treated as equals. that's striking when you go there. so i think we've entered a new world, a new world in which there is an equal at least in economic towns and the equal in cyberspace, maybe not by any

means an equal in other military realms but there, too. >> rose: in the capacity to -- >> in the capacity to wage cyber warfare. >> rose: i want you toe so the portion of china from my sbe veer with the president. here it is. >> they have achieved such rapid growth and they have grown so fast, almost on steroids, that there's a part of them that still thinks of themselves as this poor country that's got all these problems that is -- the united states is the big cheese out there try dictate things and contain our wise. so what you're seeing is the desire to maybe continue not to be responsible, not to be a full stakeholder, work the international system on something like trade for intellectual property rights.

get as much as they can and bullpen free riders and let the united states worry about the big hassles and problems. at the same time, a growing nationalist pride where they say yeah, we're big, too, and we should be seen as equals on a world stage and we're saying you can't pick and choose. >> rose: are the chinese prepared, ready, to be a stakeholder? are they prepared to participate in every way in terms of what we expect from the second largest economy in the world? >> well, it depends what that means. does that mean that they're going to be given membership of g-8. conspicuously they weren't there. does it mean they're going to be given their shot of running the i.m.f.? their shot of running the world bank? does it mean they're going to have really commensurate influence over the international institutions? >> rose: should they? >> without question.

i think the alternative of a cold war of a deepening hostility between the two is highly unappealing. we don't want to go even further back in time the anglo german antagonism that led to world war i. so it's much better to keep china inside this community of great powers but right now i think one has to recognize they're not there. the other important thing to recognize here is the exfont we may have to choose in there is a showdown between china and japan that is building. it's not about eye lets called value, it's a more general question about who our number one ally, our number one friend in the asia-pacific region is going to be. i think president's nightmare is being made to choose if those two powers come to a head-on collision and right now we are basically formally aligned with japan not with china. >> rose: by treaty. >> absolutely. and also by policy because as we

encourage mr. abby to pursue abinomicc is, the chinese are complaining and they see this as a strategy to line up against them. so i think it's more difficult than to say china you have to be a stakeholder. we have to recognize that we have some serious choices to make that we haven't yet made. >> rose: let me turn finally to the president of the united states you wrote a column in "newsweek" saying why the president should be defeated by governor romney. >> i got that one wrong. >> rose: yes, you did. >> at least the outcome. >> rose: but i hear you finding more things to like about the president than you have in the past. >> i can't help liking it when he really upsets his liberal -- his most ardent liberal supporters by turning out to have a pretty ruthless approach to national security. >> rose: you like that? >> well, i can't help it mainly because it's kind of a moment of truth for people who thought he was -- >> rose: you like muscular foreign policy and --

>> i think we can't combat terrorism without -- >> rose: can't use enough drones for you? >> i think if george w. bush had used drone it is way obama did the "new york times" would have called it a war crime in a heart beat so we must apply the same standard and it's interesting also to find that the president has changed his policy on energy. he's no long mr. green. he's egging the shale gas drillers on. so this president in his second term is far more of a realist. i think he always was a realist but what's interesting is he no longer has to be a realist exclusively focused on reelection free from that, i think he's thinking in a cool characteristically cool and calculating way about national interest. but as i said there are big strategic calls he has to make. my main objection, my main criticism of the president in that piece for which i was so vilified -- >> rose: you were. >> it was twofold and almost nobody engaged with these points. he allowed his own party in congress to determine the detail of legislation.

he has not been effective in controlling the congress. he's been a weak president in that sense. no l.b.j., no f.d.r. -- >> rose: oh, i just find that -- it's true. you can make an argument that you wish there was more l.b.j. in the president, that he was prepared to cajole and manage the senate. two things have to be set. it was a very different congress when l.b.j. was there. he'd come out of the senate as majority leader and the times were very, very different. in terms of the makeup of the congress. >> it's a more polarized system. exactly. >> rose: and how people get elected. >> but most people would accept that he does not have great rapport with congress and he as in not been effective. >> rose: or even democrats. >> his own party. leave the republicans aside. the second objection siff that there was no foreign policy. and i'm not the only person who thinks that. he's been criticize it think stra t.j. click the biggest problem that this president still has to sort out is his middle eastern policy which is all over the shop and has been since the arab spring.

>> rose: what would you like for him to do in syria? >> well, i think it's too late to intervene effectively now. there should have been earlier intervention. >> rose: even though you didn't know exactly the makeup of who -- >> rose: we were either for it or against it and we were for the arab spring once it was clear that mubarak could not be rescued in egypt. having committed to the arab spring, the correct policy would have been to ensure the kind of people we like in the region-- i.e. not the islamists-- would prevail. instead of that we sat in the backseat in libya, we've not even got into the vehicle in syria until the very last minute. and the result is, charlie, that the islamists are the winners of the arab spring and this is a massive hit to national security. >> rose: so take one example of this. what is it that you would have liked to see an american administration do with respect to what happened in egypt? they had an election. >> right. >> rose: and the muslim brotherhood won. >> exactly. >> rose: and their own became president. >> right.

>> rose: now what would you have had the united states do? >> if we could not preserve the old regime, let's call it the kissinger regime that dated back to the '70s, if that could not be sustained we had to have some influence over the shaping of the new order but we haven't had any. right now qatar has more influence over the brotherhood than we do. why? because the cut tarrys write much bigger checks to the egyptians, to the brotherhood government. >> rose: and to hamas. >> indeed. right now the middle east is being determined not by u.s. policy but in a free-for-all between rivals sunni and shiite powers and it is extremely alarming. >> rose: what is our role in that conflict? >> right now we're bystanders. we don't have a policy. >> rose: we take sides? what are you saying? >> i think we need to decide -- >> rose: and syria has the sunnis on one side and the sunnis being syrians and iranians and iraqis are on the other side. >> at the moment this conflict is not ending it's escalating and more and more intervention happens. we have to work out what our

policy is. to contend with what is the dig bishop. >> rose: but i'm looking at policy options you might suggest. >> what i'm trying to suggest is that we did not act in such a way as to gain meaningful influence -- >> rose: so we would have acted in egypt to give them a lot of money? >> conditional support rather than -- >> rose: to the muslim brotherhood after they got power? >> if we backed democracy -- >> rose: we'll pay you as much as the qataris will -- >> before president obama we were in favor of democratizing the middle east. some said it was a risky strategy but that was the policy and it's been continued under mr. obama. but continued in a very inept way that is producing more and more instability in the region. even to the point of economic collapse, charlie. that's come back to institutions and the great degeneration. we're trying to see a democratic revolution without any of the pillars of civil society, with high levels of it bill ratsy. >> rose: that's a problem. >> this will produce a much bigger source of instability than anything we've mean? the last 30 years. >> rose: and some of the people coming into power make this point. your democracy was not created

overnight. so -- it wasn't, either! it was not created overnight. >> this is certainly true. but the evidence that we have at the moment is that if you have a democratic experiment where the islamists are in the driver's seat don't expect it turn-to-turn out like jefferson's republic. >> rose: of course not. with respect, i have to ask you about this. john mccain's thing, you misspoke and you apologized. >> yeah. >> rose: how did that happen? >> if you're constantly being asked questions in public, it would be a remarkable man who never gave one dumb answer. that was my dumb answer of the year, i hope of the decade. i apologized immediately. the point i was making was that -- and maybe this was me speaking as a father of four-- we need to think about future generations and kans was encouraged to live in the

present. that's very clear from a lot that he said. not only in the long run we're also dead but also some of the things he said in that famous essay "economic prospects for our grandchildren." but it was completely wrong of me to relate his short termism to his not having children. and, indeed, to his having been-- at least in his early life-- gay. so i unresolveedly apologize far and i hope that's tend of the matter. >> rose: i would hope so, too. naill ferguson, author of "the assent of money, the great degeneration." george packer is here, his new book is called the unwinding an inner history of the new america. in it he says recent decades have brought a decrease of trust in american institutions and the crumbling of our social contract. packer takes a look at the people who have shaped u.s. politics and culture and ordinary american whose live has been affected by the unwinding.

the "new york times" have called the book "close to a non-fiction masterpiece." i'm pleased to have george packer back at this table. congratulations. >> thanks, charlie. >> rose: how did this come about? >> when i was still in iraq i began to think that the disaster there that anyone who went and had their eyes open and saw it once was not just a failure of individual leaders which it also was. but of american institutions they just weren't working, however much we threw at the problem we just didn't get anywhere and it seemed as if we were not the body politic that we thought we were. we just didn't have the institutional heft and nimbleness to do this really difficult thing. then i came home to the financial crisis and the bankruptcy of g.m. chrysler seemed as if almost every pillar of our society from the post-war period on was in a state of collapse. i thought this was a big

generational story and a question to be answered but i didn't want to answer it through a policy book. i didn't think i had much to add to all the other good bucks about the financial crisis, about the decline of the middle-class and political polarization. i wanted to do it as a novel except that it would off have to survive fact checking and to do it in a big panoramic way that would look at this history of the past generation through a handful of american lives intimately and on a big canvas at the same time. that was a hard thing to figure out how to do as a writer. >> rose: what the did you figure snout >> i had to learn to get away from what i do as a "new yorker" writer. leave out the first person, leave out the impulse to analyze and explain and conclude in a way to get out of the way of my characters and let them do the talking through me so the sentences would have their rhythms and their diction and their metaphors even though

they'd be in the third person and i would be the narrator. >> rose: you assume the reader can draw the larger conclusions from the individual lives and choices and consequences? >> i think there are conclusions to be drawn. they're not as definite as what you would read on the op-ed page or in the "new yorker" comment. they're a little broader than that. and i hope the book appeals to people with different political persuasions who will simply read it and say "that's sort of it. that's what life in america has been this past generation. it has been a time of winners and losers, of kind of old institutions that used to support middle-class people eroding and instead a landscape where people are on their own and some people do very well and some people do not and the ties that have held us together as a people seem to be getting looser. >> rose: do you see it as another edition-- albeit different to the volumes of america's decline?

>> i don't like the word decline because it suggests something terminal and something taking place over this hundred year or 200 year history rather than -- >> rose: so unwinding can be stopped? >> it can be stopped. it has been stopped. the civil war was a massive unwinding of the -- whatever unit the states had before. the great depression was a huge unwinding of every social institution and of government itself and it remade itself in a way that created a new cohesion and i don't think that's out of the question this time around, too. >> rose: you say "i wented to do something else, create a portrait of the country during years when freedom became maximal and the social contract frayed. i wanted to convey what this condition feels and looks and sounds like in individual lives, voices, nervous systems." how did you choose those individuals? >> so there's two different kinds of stories in the book. the main narrative consists of

about four or five ordinary people dean price who is a sort of serial entrepreneur in the carolina piedmont, the old tobacco and textile part of north carolina and it's a devastated region now because tobacco and textiles left during dean's adult life and he had to find a new way and became a truck stop owner which then collapsed under the pressure of wal-mart and multinational oil companies and finally the financial crisis and he sort of remade himself as a johnny appleseed vaelgs for biodees until a way that feels very deeply of that region. an almost religious fervor for resurrection of the country side in the seeds. the literal seeds canola seeds as well as waste oil from restaurants around him. to new hupz irresistible. as soon as i heard him on the phone after 30 seconds i said "don't say anything else.

i'm coming to north carolina to see you." i was afraid he would squander it on the phone. i didn't know i'd heard him tell his story a hundred times and every time it sounds fresh and exciting. >> rose: there was a story on "this morning" this week who about a farmer who used to be a tobacco farmer and that diminished greatly and he was looking for something else, now there's a little rise in something called chick pea farming and they're trying to make something out of that. for a while it was soybeans and there's been a search for something. these people who lived off the land. >> and who want to be independent and don't want to have to move to the city or work for a big box store and dean is exactly like that person. a canola was his first hope and that failed because he couldn't name price work competing against imported diesel. now he's doing restaurant oil in abundant supply. he's going restaurant to restaurant to collect it and to

use part of the profits to get school buses on to biodiesel. 40 so his store is one of hope but also disasters. groupsys, appeared you of suicidal despair. his partnership broke up he lost his house. >> rose: and who is jeff connoton? >> a career washington insider who went to washington as a young man enthralled with joe biden. wanted to attach his ambitions to biden and get to the white house through what he was sure would be the biden presidency. that didn't happen. and he became disillusioned with biden and politics and did the trick that people in washington do-- in fact most-- which is to go into lobbying and he made a pile of money as a lobbyist in the decade of the 2000s. >> rose: how did you find him?

>> he was a source on a story i was working on and as soon as i heard the trajectory of his career from bide on the the clinton white house to lobbying and then at the very end went back to government to work with ted kaufman who took biden's place and together they tried to break up the big banks after the financial crisis and reinstate glass-steagall and the quixotic things that didn't happen during that congress but that he -- in a way he saw financial crisis as his reckoning. he had been part of the problem and now he wanted to do something about it. so he also was irresistible. >> rose: ted kaufman is an interesting character because here's somebody who is a friend of joe biden who goes to washington as a senator knowing he won't be there. >> that was what liberated him. >> rose: and it liberated politicians. >> and it liberated connoton who didn't need to remain viable in the eternal revolving door between public and private. he had done that. so they could say no to the lobbyists coming to their office

and say we're doing this to the american people which almost never happens in congress anymore. of course it didn't work. >> rose: you used tampa as a backdrop. >> tampa is another character in the book. there's no single individual. there's a whole tampa bay metropolis which is really a vivid petri dish where you can see americans who wanted a big house far away from the core of the city and far away from their job and it was cheep and easy to do and it kept increasing in value until one day it stopped and the foundation of life in tampa bay collapsed and suddenly all these people were in foreclosure and unemployed and sick and the economy was in a tail spin and it suggested there was nothing underpinning the prosperity of the sun belt city, the sand states like florida and nevada, california, except housing and that was a

precarious way to face an economy. >> rose: and nor closure courts would deal with them in three minutes. >> it was dick kensian. next the judge would hear 30 cases in an hour. as one woman who lost her home and became a kind of unpaid advocate for people in foreclosure who attended all these hearings, she said it was like they spend less time on a foreclosure case on taking away someone's home than i would spend at the mcdonald's driveup window. >> rose: and what it represents for people who have foreclosed on was a lifetime. >> it is. for some of them it represents folly. i mean there were people who ended up in the offices of this foreclosure defense lawyer matt widener who's one of the characters in the book who got there because they decided to make a quick buck flipping houses. >> rose: that was different than people who foreclosed simply -- bought a house too big for them. >> that is true. although you can say both made mistakes. i think the flipping was

generating the housing bubble and was getting people in much deeper than they could. when the music stopped a guy who had been a yacht repairman, mike ross, suddenly had several properties on his hands that were falling in value steeply. he ended up practically homeless and he is now a home health aid and grateful for the job so there's a real -- things bottomed out and in tampa you -- it's where it all comes together. you see a whole way of life not working and people coming face to face. >> rose: is this story of the unwinding of america about the middle-class? >> no. because -- well, two things. one, there's another character tammy thomas from youngtown, ohio, who's definitely not middle-class. her mother was a heroin addict, she was raised by her great grandmother who worked in white people's homes in youngtown back when there was money and steel in youngtown. when steel left everything left. tammy had to raise her three kids by herself and had one of

the last good factory jobs in an auto parts factory for 20 years which kind of allowed her to survive. that's a blue-collar life which also became an endangered species. >> rose: do you think that's a central theme of the unwinding? >> it's the central theme. >> rose: i think so, too. >> it's the disappearance not just a middle-class as a socioeconomic group with certain income and education it's the disappearance of an idea that if you hold down a job and do it well and work hard you will have a certain place in our society. you'll be recognized and there will be institutions to support you. schools and banks -- >> rose: and your children have a better life than you do. >> that's essential. that your children will be better off and today something like 80% of americans don't think that's the case which is a pretty unprecedented number. >> rose: can you think this whole idea has urgency in washington? >> it's talked about.

sometimes with feeling and sometimes lip service. they're not acting as if it has urgency because you look at washington. i mean, i think 10, 20 years, people are look back at this time and see congress especially but washington itself as a period of absolute madness. as if no one was paying attention to what mattered and everyone was focusing on this little advantage they were trying to get today and tomorrow through this web site or that parliamentary maneuver. it's talked about but not acted on. >> rose: let's talk about the people in silicon valley. let's go from tampa to silicon valley. this is in a recent post. "life inside silicon valley can be a paradise for its winners of opportunity and reward. life outside falls further and further behind. all those highly-paid engineers with their generous stock options and unheard of buying power aren't making the valley more equal, they're making it less so."

>> i grew up there before it was called silicon valley. >> rose: called northern california. >> yes, the santa clara valley. that's to me what it still is. it sounds weird when i say "i'm going to silicon valley." where is it? what is it? santa clara was egalitarian, middle-class in the sense that you were saying earlier, a bit boring place. where the public schools were great and everyone went them exseptember to the screwups who got sent to private schools there were jobs waiting for people to go left from the high schools. then prop 13 happened which began the decline of california schools and the second was the information revolution, silicon valley. that began the process of turning the valley into a kind of grotesque distortion of what was happening in america with some people getting very rich and other people really struggling. >> rose: what's interesting to me as well starting with silicon

valley. >> rose: one reviewer ranked them in order of how i seem to regard their usefulness or uselessness to the republic. >> rose: and who went first? >> or last. last was sam walton which i'm not sure was entirely fair. >> rose: i'm not, either. >> it's hard not to admire him. he comes from the same world dean price comes from. >> rose: he valued prudence. >> he was a cheapskate and he was very careful and he also created a company, though, that i think represented -- benefited from and reinforced the trend toward a downward pressure on wages and prices. so that we're becoming more and more a retail economy, a consumer economy that didn't make anything. >> rose: that the nature of the company today? >> oh, absolutely. i think what wal-mart has done by demanding the lowest prices from its suppliers has driven a lot of manufacturing overseas

and benefited that places like dean price's county, rockingham county, north carolina, have gotten poorer. so people have to go to wal-mart to shop, they can't afford not to. and it's cleared out other businesses for a hundred miles. >> rose: but the flip side is some people make -- my father had one of those small businesses and so i know they that side of the story very, very well. on the other hand, you talk to these wal-mart people, they say that the people -- wal-mart is the poor person's best friend. so you agree sam walton should be -- >> he's a little bit -- he's an admirable american success story in that he came out of nowhere and built an empire and it's hard not to feel a respect for that. at the same time the empire he built i think has been a destructive force in american life in our economics.

>> rose: bob rubin? >> rubin and powell are tragic american figure in that they both are admirable and high minded and immensely talented products of the post-war meritocracy. they assumed roles in the key institution, powell in the military and in our foreign policy establishment and rubin on wall street and in treasury department. but they also became part of institutions that were becoming rot on the at the core. the bush white house and foreign policy apparatus and citigroup during the last ten years -- >> rose: but what's the point? they became part of institutions that were declining. >> they didn't understand that they were -- they thought those institutions were still healthy

and behaved as if they were still healthy so rubin didn't say, whoa, these c.d.o.s could down our economy and powell didn't say maybe this leadup to the iraq war is actually something i should throw the brake on rather than thinking i can maneuver it. they thought they could maneuver within institutional constraints because the institutions were still strong. >> rose: and powell spent three days at the c.i.a. he could figure out whether they had the information that subjected there were weapons of mass destruction >> and as long as -- when he won bush over to going to the u.n. to get a u.n. resolution he thought he was kind of leading the policy. he didn't understand that cheney and rumsfeld were doing an end run around him. so i think they're good men who became part of institutions that were eroding and that led to a certain downfall on both their parts. >> rose: newt gingrich. >> to me he is kind of fun, colorful. it's fun to write these profiles. the way i did it was to read their autobiographies, absorb

their language and figure out how they saw themselves. how they -- the sentences they used. the way they described themselves and to try to recreate that in my own -- in a third person portrait with a certain ironic distance on it but newt gingrich i think more than any other politician created the contemporary political world we live in. he came to washington to blow it up not build it up. he threw rocks from inside congress -- >> rose: but he began as a moderate republican. >> i think he didn't have the a strong ideology. he wanted power and what he saw in the '80s was the way to power was to polarize things and that drove him to the right. i don't think he is the most true blue conservative believer. i think he was interested in power and did what he had to to get it. >> rose: here's what you say about oprah winfrey. "watching many oprah always doing more, owning more, not all her viewers began to live their best live.

they couldn't call john tra travolta their friend. the laws of the inverse left them vulnerable to muggings, they were never all that they could be and since there was no random suffering and light, oprah left them with no excuse." >> that's the end of the oprah piece. oprah is another admirable figure who brought back books to popular culture and made people more tolerant and open. >> rose: but? >> but also has a kind of native philosophy which dean price also has and many americans do which is that the -- you can do it if you think you can and look at me. i did it. and hur example is not anyone can do it, it's oprah could do it because oprah had certain talents and opportunities. and i think it -- in this massive inequality that we're living with it becomes a bit of a fairy tale when oprah stands up to harvard and says "i'm here to so anyone can be here." i don't think that's true

anymore. >> rose: it's not true about jay jay s either. >> another fantastic talent, honest, brutally honest. more so than people in most public life. his autobiography is an interesting book. at this point he says "sometimes i look around at my life and think i'm getting away with murder." and that may be because in order to get there he had to leave a lot of metaphorical bodies by the side of the road. and there's something unapologetic about that. >> rose: dealing drugs or what do you mean? >> dealing drugs and getting rid of business partners and ruthlessly working his way to the top. and with jay-z you see talent combined with a kind of success at all costs ethos. his hero was scar face when he was growing up. he has -- >> rose: pacino. >> he styled himself after that figure and his fans worshiped him not in spite of but because of his willingness to do anything it takes to get to the stop. so jay-z stands up at concerts

and his fans hold up his corporate logo as if to say, you know, we're living it through you. do it for us. and that's another relation that celebrities seem to have with ordinary people these days. not so much you can come with me but i'll do it for you. >> in the end are you pessimist snick >> i sound it, don't? >> rose: yeah. >> i am when i'm thinking about the financial crisis or washington or just about any macro issue but when i'm traveling around rural north carolina or hanging out with tammy thomas in -- on the east side of youngstown, there is a refusal to quit and not just that but in imaginativeness and energy and humor that is is inextinguishable and maybe somehow particularly american. so there's no way i could give up on them. >> rose: good forout you. this is "the unwinding.

an inner history of if new america." captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org