>> she needed a little sizzle with this one. >> baby grace, eight weeks old, one of the newest things in the world and easily the best new thing in my world today. thank you, new hampshire. i love new hampshire politics. it is great to be here today. have a great weekend! good morning from new york. i'm chris hayes. the u.s. navy has broken up an attack by somali pry rats in the gulf of ohman and freed 13 iranian fishermen held hostage for more than a month. here at home, presidential kand dates are preparing for two debates, one tonight and one tomorrow morning in the finlg weekend before tuesday's republican new hampshire primary. i want to start with my story of the week, a victory for president obama. this week he announced four

recess appointments to vacant positions. despite the fact mitch mcconnell forced them to stay in session. the president citing his constitutional ability to make recess appointments. he named sharon block to the national board which is the administrative body that issues laws. he named richard core trick to head the consumer protection bureau. the bureau watts conceived by elizabeth warren as a kind of consumer product safety commission for lending products. >> you can't buy a toaster in america that has a 1 in 5 chance of exploding but you can buy a mortgage that has a 1 in 5 chance of exploding and they don't even have to tell you about it. we don't hand people a wiring diagram with a toaster and say, you figure it out. but you sit down to a mortgage

closing and it is sign here, sign here, sign here, sign here for 141 pages. >> despite the idea for the cfpd originated with elizabeth warren, the banks and the republican sent tris and sent nat had a collective panic attack when they floated the idea of warren to head up the bureau. cordury was the olive branch choice. this no, ma'am name went nowhere. the republicans were explicit about why. the bureau was the collection of a piece of legislation passed by both houses of congress and signed into law. they give us an opportunity to understand the real battle behind the scenes way from the cameras and lights. the vacancies he is filling and obstruction that created them are at the center of our politics. the place where the republican party opposition is most implaquable and least covered and where the 1% power over our

government is at its most potent and insidious. when you can martial citizen power to push for a new bill, that diminishes the power of some corporate interests. once the legislation is passed and the coalition assembled to advocate for it has disband, the 1% keeps fighting, work over the regulators who write the rules and block nominees to crucial bodies. they are most affected manipulating the rules of government that don't attract the attraction of the 99%. when they are about to issue a regulatory ruling, they pay attention, covering it in the industry newsletters and sending army of lobbyists. they understand their interests. they understand a consumer financial protection bureau threatens their power and profits, that labor regulations,

the ones that don't make headlines, especially those, will constrain what they can do. last week, we had cory robin on our show, whose new book makes a provocative argument that the core of conservatism emancipates the lower orders. at one point, he gave this as an example. >> the national labor relations board recently issued a ruling saying that all ployeemployers to post a notice informing employees of their basic union rights, just information. the employer lobbies have lobbied ferociously and had tremendous support amongst congressional republicans opposing that. >> 1% and the representatives in the republican party fight this stuff because it matters. it goes to the core of what kind of country we are and will be. kudos to president obama for striking a blow on the side of progress. joining me today rahan sa

lan, a columnist for the daley. thomas frank, the author of what's the matter with kansas and author of a new book. deepak progava, directory of community charnge. and returning to the program, krista free land, editor of thomson reuters digital. this issue is crucial to understand how washington works. there is an interesting conservative argument to be made, which is about regulatory capture, yes, exactly, this is what happens when you issue regulations. the people that can work that that a symmetry of pure. >> that's not a conservative argument but an argument the

conservatives swiped from the left. the argument about regulatory capture goes way, way back, the very first regulatory agency, the interstate commerce commission, which was basically born captured and progress siiv or liberals or leftists have been up in arms about this, ever since that day. the fact that industry is able to exert all sorts of control over the agency that you set up to regulate it. some dude wrote a book called the wrecking crew about the bush administration. luke at the department of labor under the bush administration or even something which your viewers might really not care too much about. when you completely underfund something and fit it with cronies of jack abramoff, they are not going to enforce it. look at the securities and exchange commission. look at the bank guy under bush

who posed and was holding a chainsaw. >> they had congregated to advertise the fact they were cutting regulations. a bunch had come with slicing m implement. i brought a chainsaw. >> one thing that's really interesting for me is the way that income inequality has turbo charged it. if you are paying people 100,000, a couple thousand dollars a year and they are regulating people making millions of dollars, the assumption is, we are going to outsmart you. they call it regulatory arbitrage. they say, we will arbitrage your regulations and we are smarter than you are and can hire more smart people than you can afford. >> or we will hire you away.

>> or we will hire you when you finish working there. that, you know, but i think you have to have some sympathy for the poor regulator, right? >> sure. >> there is a difficult, psychological environment they are operating. this great story about the sec guys having to take the megabus to new york for meetings and the bankers are flying in private jets. the temptation to say after three or four years of that, my kids are going to go to college and i am going to leave and go work for goldman sachs. if you imagine the person who plans to do that or sees the guy next to them doing that, i don't think they are going to be the world's toughest. >> the issue in terms of this a symmetry of power which is in some ways part of the nature of power in terms of concentrated

versus diffuse once. deepak, you work in washington. you guys have done a lot of stuff. how do you deal with the fact that we have this short attention span and you can martial people for the fight to pass the affordable care act but you can't martial them to carefully watch the first rule issued by cms but you can't martial them to look at the first rule of the federal reserve on card swipe fees while the other side certainly can martial attention to that. >> this is a really big deal. what the president did was outstanding. he took a stand for the 99% against the 1%. it has to be a permanent campaign against these interests. banks own the office of the comp controller of the currency. they sit on the boards of the local federal reserve boards. so the people have a regulator that can protest their interest on outrageous fees. something that's more important

in my estimation, most americans actually asked in a poll, do you want to have a voice at work? would you join a union if you could, say yes, even as the union members have plummeted in this country. the reason, employers mount these massive campaign and threaten to fire workers and do fire workers. >> you are sighing at our lefty slogan here, 99%, 1%. what is your sense of these sorts of -- this kind of hand to hand combat that happens at the level of the consumer financial protection

. i nominated richard for this job last summer. so you may be wondering why am i appointing him today. it would be a good question. for almost half a year, republicans in the senate have blocked richard's confirmation. i am not going to stand by while a minority in the senate puts party ideology ahead of the people that we were elected to serve, not with so much at stake, not at this make or break moment for middle class america. we are not going to let that happen. president obama speaking in ohio on wednesday. because it is 7:15 on saturday morning, we are talking about regulatory capture and i thought it was a very sophisticated version of the argument about regulatory capture which you hear on the right, the way in

which regulations can become means by which incumbent firms rig the rules in their favor and create barriers for entrepreneurs and people that want to get in the field. both of you had responses. you wanted to say something. >> i think they are absolutely right. you can have good regulation and bad regulation. when you have regulators, part of the point is that the existing lobbies are going to capture regulators and do what you are talking about. the core question is, do you believe in self-regulation by market participants, which was the prevailing view ahead of 2008. that was allen greenspan's big mea culpa was about the banking sector. we thought they were really smart and held their own self-interest in high regard so they wouldn't screw up.

he said, we realize that doesn't work. the point here isn't that they are not really smart. they are very, very smart. the point is, if you should create this computer game and set up a bunch of companies, a bunch of players all pursuing their self-interest madly. do you have a wonderful market economy or a car crash. i think a big reason you had the car crash and it started in the united states is that you guys lost the view that you needed someone in the center of the ring whose job was not to be a farmer and grow these businesses but whose job was to be the policeman saying, you can't go here, you can't go there. you might not think that what i'm doing is good for you right now but actually it is central foor t for the system. >> in terms of the policeman analogy, they describe themselves very specifically. >> that's natural that they would. one thing that i want to share with the viewers who are already

very sleepy is that you very rarely here the recourse rule. they relate to the rules of the game for the banks and one of those rules was, hey, guys, if you buy these aaa rated mortgage backed securities, don't worry about your capital cushion. if i'm a bank, i want to leave it up as much as possible to make a ton of loans. that's the rule. i guess all this can max out on that. >> right. >> that was arguably a proximate cause. if you want save stuff, go with the treasury. the banks are profit bad, profit hungry people unlike the noble public option. >> it is the taming that the problem? >> the constant effort to regulate and ensure in a way that's going to create and make

something safe intrinsically dangerous. >> the failure you are talking about there is not so much a government failure by s&p and moody's. >> which are protected monopolies. >> they are explicitly. >> what you just said. >> what ruined these guys is the market forces. the desire for profit and the way they figured it out. >> before we get to that, i want to go back to the earlier comment that you made that if only we reduced the regulatory burden on people that want to get into the financial sector, you would have all kinds of zesty competition. what's really ironic, i'm very sorry to report this to you, that was the logic for repealing glass steegle. that's why they did it. you know what happened? the megabanks got megamega. >> just so people are aware.

that's slightly obscure. glass stealing was a law that separated investment banks and commercial banks, the vanilla, you have depository accounts and investment banks are higher risk, doing deals and things like that. the two had to be kept secret under glass segal. that was revealed in 2000. >> i am championing a public option for banking. >> i find this argument novel. >> public option for banking or try to do something intrinsically risky and dangerous. >> for something short and protected. >> two questions. reihan. first of all, if we lived in the world of your public option, would you not rescue the scary dangerous casino banks? would you let them go under? >> absolutely. in the european central bank, you have a situation where banks are being able to use bank loans as collateral. >> i am not defending the system. >> i am not saying that you sr.

>> i am just asking you a question. in your utopia university. >> in my utopia universe, it wouldn't just be banks that would have a line it would be individuals, anybody that wants to charter a new bank. glass steegle was not to increase the chartering of narrow banks. if you want to start a narrow bank, you can charter it. >> deepak, i am going to let you respond. >> canada, germany, other countries with banking systems that had high levels of regulation, don't have huge foreclosure crisis, they made small reasonable rates of return doing plain vanilla business. >> the key in canada, canada didn't have glass steegle, which is a real important point. they had universal banks. the key difference in canada, the key difference in canada was canadian regulators said bozle 2 is not good enough. they said to their banks, we are

going to require you to hold more capital than bozle says. the canadian regulators said -- >> we can happily get into that. let's take a break and come back and i want to make sure the people are keeping pace on what p bozle 2 is. yoo-hoo. hello. it's water from the drinking fountain at the mall. [ male announcer ] great tasting tap water can come from any faucet anywhere. the brita bottle with the filter inside. the two trains and a bus rider. the "i'll sleep when it's done" academic. for 80 years, we've been inspired by you. and we've been honored to walk with you to help you get where you want to be. ♪ because your moment is now. let nothing stand in your way.

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bolz bozzle 2, you are tuning in thinking what is pozle 2. we are talking about a crucial, central issue in american political economy. this is what occasioned the crisis, what brought the world economy to its knees, what may still bring it to its knees, what that is created a wide swath of destruction, human misery, joblessness, foreclosure and bankruptcy was the way in which banks were regulated or not regulated or able to gain

the regulations so as to create an appearance of sol vency while actually being fundamentally doing things that were excessively risky and led to insolvency. if this sounds arcane, this is it. this is what happens. >> warren buffet had a good line for it. he said, when the tide goes out, you see who is swimming without a bathing suit. everybody was skinny dipping. >> bozzle 2, right now, there is international regulations for how much capital you need to keep. what do you keep on your books that you lend against? >> and the quality of capital. what counts. >> what counts as good stuff. >> if you are trying to get a mortgage, your bankers need to look at all your assets and they view different assets difrnlt that's what the great banking regulators do when they talk to j.p. mortga

jpmorgan. >> one of the things that has driven me crazy, all of it has been about the process, can he make the recess appointment or not, no one is saying, what is this entity with the four letters? what is it doing? what is it tasked with doing? one of the causes for the crisis and the furies about what came about. you had a part of the banking sector regulated and part of it unregulated. one of the things it is tasked with doing is looking at those places that have previously been unregulated. >> the nonbank banks. >> the nonbank banks. the cfpp is tasked by dodd/frank to regulate them but cannot without a director statutorily. the most crucial aspect of what think can do is look at credit reporting agencies, debt reporting agencies, all that stuff has been largely

unregulated. the cfpp is there to regulate the nonbank sector and could not without a director. whatever the politics are, i want to stress and we should show the website, because i have been impressed so far in spending some time with their website and with what they are doing and how user friendly they are being, with how proactive. it is very web 2.0. you can report problems with mortgages and credit cards, working on simplifying disclosure. then, i will shut up and let you guys talk. simplifying disclosure is one of the places where the banks will say part of the reason we have 141 pages is because of regulatory rules that say we have to disclose, this, this, and this and they are doing all these interesting stud dis. they have a heat map of what people found confusing on disclosure forms so they can sort of see over time. all this by way of saying, this agency which has been sort of the token for political battle all week, which people have been saying is, you know, does he

have the right to make the recess appointment, is actually doing substantive things that matter and apply directly to what brought us into the crash there? end of lecture/rant. deepak, how much energy do you think there is around? one of the things you do and one of the things i want to have you on the show, you are an amazing liaison in what is happening in washington and communities around the country. center for community change has working people on the ground up against bankruptcy, foreclosure, joblessness. i wonder the connection between -- tom was saying during the break, does nibble care that the cfpb person was appointed. >> i think people care a lot. this is about what are the fees people get charged. should people have sub-prime loans that have outrageous interest rates? the forms we fill out, understanding them. no one in this country understands the forms they are

signing at the mortgage process. we have had a massive foreclosure crisis. there is a deep strain of populous anger how the financial sector has made billions of dollars on the back of ordinary people. if we can show that having a regulator in charge who is on the side of ordinary people, not captured, can actually deliver transparency, decency, eliminate some products that are toxic, i think it will make a huge difference. >> is there any danger of pushback? one of the jobs of this kind of regulator is going to be to make it harder to get a lot of forms of credit. one of the reasons the crisis happened, it was too easy to get credit in the united states. these better regulated financial systems we have been talking about with fondness and affection, which i think is correct, are places where it is a lot harder to get a mortgage. do you think there is going to be any danger of pushback?

>> there was studies done, the myth put up by some commentators that the investment act was responsible for the national crisis. remember this narrative? >> sure. >> the studies of the portfolios of cra loans show they were as safe or more safe and more sound than regular loans. mink when you have good underwriting standards, decent interest rates, transparency in fees, somebody in between helping people navigate this process, you can actually get credit out safely and profitably. crazy idea but we can do it. >> community reinvestment act passed. >> in 1977. >> 30 years later. it essentially required banks to, a practice known as red lining. it was very common in which it was very, very difficult to get loans from banks largely in minority communities. black and latino communities. they required banks to run an audit to who they were lending to and pushed out money into a lot of these communities that did not have access of credit

before. the performance has in some ways surpassed the banks that have lobbied vigorously again it. tom frank is going to say those two things right after this break.

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covergirl trublend has skin twin technology. other makeup can sit on your skin, so it looks like...makeup. but trublend has skin twin technology to actually merge with your skin. how easy breezy beautiful is that? trublend...from covergirl. we are in the thick of a discussion. tom frank is here with us. tom, you wanted to respond to something you said and i cut you off. >> i love the debate about the cra. i just want to point out community reinvestment ath did not mandate that banks hand out loans by race and neighborhood. it didn't mandate that anyone

hand out fraudulent or bogus or liar loans. the really ironic thing, of course, is if banks were only too happy to be lending to the kind of people that could be deceived by predatory lending practices. finally, that law is still on the books where are we in another housing bubble here? i've always been amused. >> i think also in terms of what exactly the practices were that were going on during the bubble. you hear these things. here is one example, something called yield spread premium, wonky but important. krista comes in and she thinks i am trying to get you the best deal. i go and look at all these loans and i am getting a yield spread premium. deepak has a loan at 6%. i am going to charge you 7% and pocket that 1%. i am trying to get you into the best loan. you think i'm acting as aph

fiduciary when i am not. there was a process of information that was shot through the entire industry during the boom years. i walk in and think someone is looking out for me. >> probably, you are going to sell me an arm to make me feel good about the transaction. for the first year or three years, it is going to be looking fantastic. i might not look too far out in the future. >> one thing i want to throw out. recently, a terrific left of center economist who did a neat paper looked at the earned income tax credit. the idea behind it was let's increase labor participation among folks who have been excluded for a long time. the trouble with that is at the lowest end of the labor force, quote, unquote, you happen to depress wages when you increase the number of people that go in there. had you had a negative income

tax, you would have had higher wages for the folks that are working but lower labor participation. people would have another option. you decide what you care about and you do something to solve that problem, that problem you care about. the trouble is that you push the balloon down in one place and it goes up in another. similarly, she made i thought a very important part. when you are trying to increase access to credit, these for-profit guys are going to do a lot of things to increase access to credit, some of which we are going to like and some which we are not going to. we have gone too far in that direction. we have to pivot back. not all good things go together. >> the point here is that they are separable. >> we are trying to get it right each time and we are always going to create new pathologies. >> this is philosophically

profound. >> we have done it in the past. we used to have one hell of a great middle class nation. these things were under control. we didn't have -- >> when you think of the number of people that are excluded. i want to get at reihan's core point which is central to how we think. it is very global. let's talk about it in terms of finance. i think it is central to how we think about the response to the financial crisis. it is starting to be articulated now. you have had jamie with one of the most interesting testimonies to the financial crisis inquiring commission was from jamie dimon. he talked about -- the ceo of jpmorgan, his daughter called him up and said, why is there a financial crisis, what's going on? he said, it is the kind of thing that happens every five or seven

years. she said to him, well she said, why are people making such a big deal of it? >> good point. >> that's a delightfully self-serving anecdote. >> it is being fought out right now over bozzle three, which is we can not regulate better. this is going to be my pro-canada moment. mark carney, who is going to be the top dog international regulator, gave a speech in washington addressing this head on. he said in no other area of human endeavor do we say, it's okay, we are not even going to try to make it better. i don't think regulators are god. i think they screw up all the time. you can have regulatory overreach. let's at least try. >> when you build on a flood plain, we have been good about build willing dikes and dams. the lesson here is, yes, we can.

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because we are liberals, we believe in sharing here. how are we doing? the other recess appointment obviously made that got a lot less attention and i think this also points to something that i was trying to illustrate in the story at the top of the hour is, these things don't make headlines. the nlrb, a certain set. the chamber of commerce has been hammering on the nlrb and the republican primary and presidential primary field. mitt romney is running ads in south carolina against obama's handling of the nlrb. point here is this. the national labor relations board which was constituted by the wagner act, signed in the new deal, it is essentially the

judicial body that oversees the enforcement and education of labor law disputes for private sector employees in this country. the nlrb has essentially -- was not functional for the first 14 months of the obama administration. it could not have a quorum. it had five people. it only had two. finally, they got it to three and when those appointments expired, it was back down to not being functional. the reason these three appointments happened was because the nlrb was not functioning. it would be as if the supreme court didn't have enough to rule on any cases. that was the case for 14 minutes. no one really knew about it and no one much cared except for the chamber of commerce, which was happy to see the nlrb not operational and enforcing labor law. the approximate cause of the way it has become political is the case that the nlrb brought a case against boeing when boeing

threatened to move a plant from washington state to south carolina and the ceo said on tape, we're not doing it for economic reasons. we are doing it because of the labor problem, because the machinists keep striking. under the wagner act, you have a statutory right to strike. that is a protected right in america to strike. you cannot retaliate for exercising your statutory protected right by moving the company. so the general counsel brought a case on this and this became a huge rallying cry. here is lindsey graham explaining what's at stake to his compatriots in the republican party. >> if you don't see this as government overreach at its worst, at pay back politics at its worst, you shouldn't be leading our party. you can have a civil discussion about how the nlrb approach with obama nominee appointees is going to destroy job creation in this country. this is to the heart and soul of

who we are as a party. >> this is to the heart and soul of who we are as a party. deepak, you want to say something? >> i love this is south carolina, a return to the 19th century and nullfy kags. we don't like the rights that workers have so we will try to prevent the agency from enforcing those rights. that's what this is about. it is about destroying the rights of workers to choose to join a union which is critical. >> let's talk more about that, mitt romney in our running ads down there. we will discuss it right after this. [ male announcer ] how can power consumption in china, impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses

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nlrb is the topic we were just discussing. you wanted to say something on that. you said you had -- >> no, the point i was just going to make to depress us all is i don't think the issue of sort of stagnating middle class

wage which is is what we're talking about here, is as simple as a question of unions have gotten weaker in the united states and that's what's happening. >> that's a big piece of it. >> i think it's a piece of it. the thing that worries me much more, i think what we're really seeing is the american worker, the manufacturing worker, and increasingly people doing white collar jobs, being he can posed to the full force of technological change and globalization. you see it now. a lot of people are talking about the resurrection of the american manufacturing. and the price at which that is happening is wages falling hugely. what used to be $35, $45 an hour jobs are becoming $10 to $15 an hour job. better to have a job than not a job but to me the scary story about what's happening in the global economy. maybe we're living through a period when the huge middle class is being hollowed out and how do we politically deal with that? >> a job as a janitor, home care

aid be a middle class job? it absolutely can be. where there are unions, they are. >> the point is autoworkers were once janitors, especially, home care aids in terms of what their wages were, social status, the amount pow arer they had -- >> but the period in which he had got paid more was a very different period from the one we're living in now. and right now those jobs, i would pause it to us all, without having a solution, are exposed to much fiercer competitive pressures than they were in this golden period when those wages went up. >> i want to put in a plug for the fact we'll be discussing the way in which private equity, private equity industry and a firm, bayne capital headed by one mitt romney, held usher along the transformation you're talking about. >> when you look at boeing, for example, it's interesting. they're now shutting down facilities in kansas and consolidating operations in washington state. what is an implication of that? one way to look at it is, well,

it ultimately doesn't matter. have you this labor dispute, let's consolidate there instead. the thing is they are a very powerful incumbent. so, one of things you see happy -- one of the things we do when there's a downturn, very aggressive monetary stimulus, perhaps a case for that, but what happens with that is that it's designed to encourage certain kind of innovation. it is what you might call exmroe tattive innovation in which you increase the scale of operations. when you do that you do that by substituting technology for labor. that's not very good for labor levels that contributes to a larger kind of slack employment markets. what you really want to ee is exploratory innovation. that's what you get when you have really competitive micro-economies, new intrants. the nlrb is a side hoe. boeing has a legal department and they're going to fight those battles. then we'll just have them in washington state. that's cool. they're going to keep piling on enormous profits as long as they don't face ferocious

competition. >> the point here, it's not just boeing. the fact is there has been a concerted political effort to attack the nlrb to stand in the way -- >> it's a side show 37. >> it's want a side show -- >> if you're an activist in this space, you won't think it's a side show. >> i just want to go -- -- >> let's talk about -- >> hasn't boeing faced a lot of competition? international aerospace universe has a lot of strong participants. actually, that's been the big shock boeing has faced in the past few decades, is the rising airplane manufacturing powers from other parts of the world is. >> we have a different view. it's true that airbus -- >> bombardier, our canadian friends. >> but the thing is, all of these firms are national champions protected by their respective countries. companies with lots of public contracts that protect their position. the thing is that boeing sort of might lose on a super jumbo deal

with one country or another, but they are much more tightly defended and protected than a truly competitive sector. >> i want to respond to this. i think this is -- this idea of this sort of -- you know, that you addition the response here that you have to a lot of the mrobz and the political economy which i find attractive and intellectually honest and intriguing, is that we have a problem with insufficient competition. incumbent interest, rent seeking, corporate government access keeping people out. and i think that -- >> there's only a fuel employment in that scenario is with leverage. you don't have it through two companies. >> one, we've seen there are different ee qua lib lee yum. right now we're in one in which that's a skewed distribution. the second thing, how many airplane manufacturers are we going to have in the snus certain industries that are just not going to be that much competition. we'll talk about mitt romney's jobs record and how he helped sort of bring about exactly the transformation in the american

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through diet and exercise, alli can help you lose one more by blocking some of the fat you eat. let's fight fat with alli. ♪ good morning from new york. i had to stop my guests from speaking. i'm chris hayes here with joshua, author of the book "buy o o outof america," chrysta, and thomas frank, author of the new book -- can we put that up on the screen? >> congratulations. >> it's hard to write a book. that's "the buyout of america." the u.s. economy added 200,000 jobs in december, the latest jobs figure better than expected. total of 1.6 million jobs gained

in all of 2011. good news is that unemployment fell to 8.5%. the bad news is that unemployment remains unacceptably high at 8.5%. jobs and job creation are at the heart of the 2012 presidential campaign. in fact, mitt romney's campaign is built around this one central message. >> well, having spent my life in the private sector, i understand where jobs are created. >> those years in the private sector helped me understand how the economy works. >> i've created jobs. i know how it's done. >> i spent my life, my career in the private sector. >> i spent my life in the private sector. >> i'm a private sector person. >> i've beb in the private sector. i know how jobs come and go. >> we should give credit where due. mitt romney was astonishingly successful in the private sector. but that does not make him a job creator in the term that's become so popular. ceo of bayne and company and founder of bayne capital,

private equity firm, here's what romney did. they borrow capital to buy existing companies, they attempt to make companies more profitable in short term, by cutting expenses, firing staff, busting unions, cutting salaries, health care and pensions. they reward themselves with large fees and bonuses taken from the company's cash flow and sell off the business and reap the profits typically leaving companies load down with debt. in some cases it worked out well for companies. the point is that romney wasn't a job creator so much as he was a wealth creator for his partners and investors, making millions of dollars for them at the expense of businesses often and communities around the country. josh, you wrote an entire book called "the buyout of america" and one reason i want to add you on here is we hear private he can quhe can quit and it doesn' mean anything. there are hedge funds, private equity, venture capital, they run together in my head. explain what is private equity and what role did mitt romney

play in its sort of glory days. >> good morning. thanks for having me. >> great to have you. >> so, private equity firms started out as leverage buyout artists. michael milken funded them. . >> gorden gecko, corporate raiders -- >> some coming back in association with mitt romney. they changed their name cleverly to private equity but they're the same guys. they buy companies, a lot like you or i would buy mortgage, like you've been talking about in the last couple segments. they buy a company by putting, say, 20% down. then having the company borrow the 80%. then the 100% goes to the seller. so, the company's responsible for repayment. if you bought a company that might not be in a cyclical industry, and which has very reliable cash flow, and you could take a modest return, it can work. but that's not the way life works. that's not the way wall street works. so, during the boom, things

exploded. so, we had private equity firms raise enough money both from investors and then from banks to buy companies. in which today they own companies employing about 1 out of every 10 americans. very quietly private equity firms own companies ranging from hca, largest hospital chain, to dunkin' donuts, which we're enjoying right now. they are pervasive. the biggest employers in the country, have a big include on the country and few people realize it, but more people are becoming aware of it because of romney's candidacy. >> one of the things i think i found interesting in doing research on private equity, and i was talking to someone on wall street who was talking me through this. he said private equity is responsible for bringing the values approach and culture of wall street to main street. in this way, if there's some widget factory in peoria, illinois, with 500 employees and there's this kind of -- there's a kind of vision of the relationship between the ceo and workers, that is a bit more, sort of paternalistic and part

of the community, in comes private equity and says, look, you have a whole bunch of inefficiencies. you could outsource this to china for ten cents on a dollar and maximize your profits. >> i think that's the story the private equity firms want to tell and may not want to get out there. the reality is typically they don't help the businesses. even if you're just looking at a pure earnings perspective. mitt romney owned bane capital, owned it, from '92 to 2001. anything that happened at bane n my view, most anybody who knows the story well, it's him. so, during his time, ten biggest investments, five went bankrupt yet bane did very well. if we look at the five biggest investments that bane made under his watch, including domino's pizza he likes to tout -- >> domino's, sports authority, and staples, the three success stories. >> right.

domino's is at best a mixed story. once bane made it public, 11 of the next 12 quarters, negative same store sales, negative sales compared to the pizza industry. it got to the point they had to change their complete pizza recipe. the neat 2009 commercials -- >> most amazing. they ran an ad campaign saying our pizza is absolutely terrible and we understand that. we're going to try to make it better. i mean -- >> that's exactly right. and it worked. it worked very well. domino's has recovered. it got to that point under bane capital. yet bane made a lot of money. you know, intellectually and as a business journalist, if bane and private equity firms improve businesses by cutting jobs, it's an interesting debate. but that's not what happens. they cut jobs and then typically hurt the companies. >> is there -- why is it the case that it has been destructive? i think, you know, there's -- let's take the best case scenario which is that they do improve productivity.

they do improve efficiency. there's also the argument the private equity guys will tell you they revolutionized management across the land because mitt romney came in and taught people about how to look at a cost curve and project cash flow and do all sorts of analysis that had been cordoned away in the ivy league -- this is a huge knowledge transfer into the boardrooms of america. if that was the case, why -- why don't these deals work out? incentives misaligned? intentions of people running the private equity firms? what's the problem? >> i think the main problem is when you buy a company and put it in so much debt, for example, it would take 15 years of cash flow to pay off a seven-year loan, or you take on way more debt than you can afford, just like if we do it on a personal level, we're going to struggle. we're not going to fix the piping in our houses if we do that to our homes. >> ultimately, this is an important point, when you say,

well, they take on the debt -- we'll get to randy johnson, who's an employee of a company that was bought by bane capital in a second. when they take on the debt, right, bane now owns the company, right? so they have to -- if the company goes bust, they lose their equity, right? don't they have an incentive to make sure they don't go bust? why doesn't that work, is my question? >> sure. short term their goal is to raise profits enough to pay the debt and get rid of the company or take dividends against the company before the bottom falls out. and that -- they look for companies where they think they can do that that are steady enough and leaders in their industries like a sealy mattress where they can handle this kind of -- these kind of cuts for three, four, five years. like in the case of sealy, another bane capital company, here comes tempurpedic out of nowhere, sleely offers no flip mattresses, last much less time. keep raising the prices. ultimately, here comes a competitor kicks their butt and sealy is now close to bankruptcy. >> we'll talk to randy johnson,

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i would like to say to mitt romney, if you think you'd make such a good senator, come out here to indiana and see what your company has done to these people. >> we had no rights anymore. >> they cut the wages. >> we no longer had insurance. >> basically cut our throats. >> i'd like to say to the people of massachusetts, if you think it can't happen to you, think again. because we thought it wouldn't happen here either. >> that's a brutally effective political ad ten kennedy ran in

1994. feature workers of a company bought by bain and ended up laid off. randy johnson was also on the receiving end, ampad. they were fired the employees, offered to hire them back at reduced wages, and hundreds of workers lost their job. bain capital made more than $100 million on ampad and related deals. thanks for joining us. >> glad to be on. >> i sort of -- i guess i have a good sense of why you are speaking out. but i'd like to hear from you. what's motivated you to -- you're in new hampshire, my understanding, and you've been talking to a lot of reporters about what happened to you. why do you feel so strongly about needing to talk about romney's record in this respect. >> let's put it in perspective that i've been talking about this since '94. every time he run for any office, i've said the same thing. there's a lot of press on it.

but the fact that romney's running for president has elevated this. he's using his job creation record. i think this time around instead of different in 2008 is we didn't have contested primaries on both sides, so now it's become a hot topic. >> randy, tell me what happened when bain capital came into own the company that you were working for. what were the changes you saw step by step? >> right. to be clear, bain capital purchased ampad and ampad was distressed in 1992. my plant was purchased in 1994 from smith corona, the typewriter company. we are the only thing left making money at smith corona because typewriter business was going down. >> understandably. >> they took advantage of the law by going in an asset sale and buying the assets. employees didn't come with it. union contract didn't come with it. salary and hourly were kicked to the street. they brought in security guards. they walked us out of the building and said, if you want

to work for us, have you to fill out an application. we turned around, filled out applications. once we had over 50% plus one, they had to recognize the union but not the contract. we went back, streamed back in slowly but got most of the folks back. 205 roughly ended back out of 258 hourly. they started taking out some of the egypt, taking it to non-union plants, which all the other plants were non-union. we ended up in a situation trying to bargain with them. basically, we couldn't get anywhere with them. we couldn't get seniority rights for older people. so they could pick their shift or what machine. and 12-hour days they went from 8 to 12-hour days. it was really hard on some folks. it was a brutal time when they took over. we tried our best to negotiate a contract. by september 1st we ended up in a labor dispute. >> randy, i want to play devil's advocate for a moment. you're working for a company making typewriters. obviously, technological change

meant that the typewriter business declined. there's a phrase called creative destruction, right, that the way the capitalism moves forward is that the old must be, you know, washed away and destroyed so that the new can be born. weren't you in the wrong place at the wrong time? what is your response to that argument? i think that's a argument that defenders of mitt romney would make. >> well, and i think if we take a close look. and we made office supply products, folders, hanging file folders, tablets, which are still used today. we weren't high-end wages. we were middle of the road. we could race our family on it. with would give some, we would offer to do that but they didn't give us a chance. they said, this is terms and conditions, your benefits are gone. we had to pay more for health care, retirement package went with smith corona that went bankrupt one year later so we lost our retirement basically. it was just -- i mean, the process itself was really bad. three weeks into our strike is when we found out the bain

capital owned us and that that the ceo was running for senate in massachusetts. i mean, to me that was an opportunity. when the story broke that mitt romney was running for senate and then had this plant, basically putting everybody out of work at that point, then the kennedy campaign called and said, can we put some folks in an ad? we had nothing to lose. we were on the street, was trying to get a contract. we'd do it again if we had to, i'm sure, all the workers -- i stay in touch with many of them through facebook and they told me, keep fighting. i know that at that point in time, when we -- we decided to go to massachusetts and follow him around wherever he went. all we wanted him to do was make a phone call, tell them to bargain in good faith. if they needed something, wage reduction, then show us. they wouldn't open a book. they wouldn't tell us anything. >> randy, the ads that we played from the 1994 senate race, there's a new iteration of that. this is an ad from moveon suggesting this is going to be a dominant theme in this campaign.

here's moveon with steel workers talking about their experience. >> i worked in this plant 3 years as a steel worker. >> i spent 34 years in this steel mill. >> bain capital came in with mitt romney and his cronies and shut the place down. they walked out of here with millions. they left us with nothing. >> this community's never went the same, never going to be the same. thousands of jobs lost. i don't see where he's creating anybody's jobs. >> tell you he wants to come in and help this country? he'll raid this country just like he did this company. that's what he does. >> pretty brutal ad there. randy johnson, josh, how typical is this experience that randy was through and some of those steel workers? >> unfortunately, it's pretty typical. there's a company called dave barring and maybe this will hit the core. "new york times" in front of the whole paper story on him not that long ago talking about that bain made a the lo of money, a

lot of companies, combined them together. goes bankrupt. then seemen's buys it after bankruptcy. the way the article is written, everything's fine because that's what people who ran the company said. reality is bain cut research and development spending from about 10% to about 6% at this medical device company. that's why it went bankrupt. the debt and lack of r&d spending. after bankruptcy they pumped up r&d spending and the company recovered. my issue is that a lot of bain-owned companies made cuts simply to pay the debt so they could take money out quickly. and then the companies collapsed. it didn't help the business. it's not good for business. it's not just not good for the workers, which i care a lot about. it's not just a worker issue. it also hurt companies. >> josh, author of "buyout of america" and randy johnson, former employee at scm in indiana, bought by bain capital. thank you for your time.

another book, tom frank that is correct changed america's political discourse. we'll talk about it right after this. [ woman ] my boyfriend and i were going on vacation, so i used my citi thank you card to pick up some accessories. a new belt. some nylons. and what girl wouldn't need new shoes? we talked about getting a diamond. but with all the thank you points i've been earning... ♪ ...i flew us to the rock i really had in mind. ♪ [ male announcer ] the citi thank you card. earn points you can use for travel on any airline, with no blackout dates. ♪

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puffs plus lotion is more soothing than common tissue, and it delivers our most soothing lotion for every nose issue. deepak joins us. so, when wall street created took down our whole economy costing us $16 trillion in household wealth, around 7.5 million jobs. people were angry, took to the streets, confronted their congressman and demanded, well n the view of thomas frank more freedom for wall street banks. mr. frank, are you flummoxed by this and you write, the revival of the right is as extraordinary as it would be if the public had demanded dozens of new nuclear power plants in the days after the three mile island disaster. if we had reacted to watergate

by making richard nixon a national hero. >> we sort of did. >> yes, exactly. i guess the first question is to you is, you know, you lay out in the book this paradox, which is you start with the -- an expectation the political consequences of this crash would be similar to the political consequences of the last big crash, which was the great depression. we know how that story goes. in fact, here's -- here's fdr making the case for how the previous both political and intellectual regime and bankers and everyone soeshd with them discredited themselves through the crash. here's fdr, first inaugural. >> the rulers of the exchange of mankind's good have failed through their own subborness and their own incompetence, have admitted their failure and have advocated practices of the unscrupulous of money-changers stand indicted in the court of public opinion, rejected by the

thoughts and minds of men. >> that first sentence is amazing. the rulers of the exchange of mannedkind's goods have failed through their own stubbornness and encompetence, admitted their failure. >> what a man. >> there are circles in which we operate, left liberal circles, expectations of another fdr moment. >> that's right. but it was broader than that. this was the beginning of billionaires filled with pundit talk from 2008. everybody expected that. "time" magazine that ran a picture of obama morphed into photoshopped into a picture of fdr in 2008 -- or actual that was 2009. this is across the board. people thought we were in for this replay. >> and what materialized instead, in your view here, is that you essentially had this reactionary backlash as embodied

by the tea party which led to a series of policies that advocated, you know -- >> well, the stuff we're talking about earlier in the show. you know, this is a direct result -- and i -- it's a result of the crash. hard times politics through the looking glass. but it's still hard times politics. >> why is it -- if the paradox of the book that it sets up is how did it become the case that this expectation of a sort of turn to the left or a rejection of the -- of sort of the lmodel before the crash became this hard times forceful conservative reaction to it, what is the answer to that question? >> wow. well, you know, if i told you, then you wouldn't buy the book. >> oh, come on, tell us! >> okay. the answer is, it's -- i mean, i have several different ways of getting at it. like, you can say, look, the right got there first with the most money. the first tea party rally, i was

at this thing in february of 2009. they were out there less than a month after president obama had been inaugurated and screaming out in lafayette park in washington, d.c. about the bank bailouts. it was very effective. doing it right away, as soon as he was in and bush was out. but, i mean, the broader answer is that they have built a very convincing replica of a hard times social protest movement. this thing looks like populism, you know. they don't just mean the tea party here. i mean across the board. the whole conservative comeback. they talk -- i mean, maybe with the exception of mitt romney, but he's trying to develop this, you know. but these guys talk a really good populist game. glenn beck, the 9/12 project. for the world, this looks like a 1930s sort of political club, this sort of -- in my interpretation it comes out of a frank cappra movie. that's my theory about it.

>> one of the things i want to ask you is, there's -- to stay with this analogy. i think a lot about this. why did we not see the kind of politics emerge in this crisis as we saw in the great depression. two things that strike me most is obama's timing is more similar to hoover than it is to fdr. people forget that the depression was quite -- had really been going on for quite a while. hoover had overseen a variety of failed attempts to correct it. hoover was more proceed active. >> in some ways he was but he never -- with hoover there was this internal resistance. he really did believe in rugged individualism or whatever, his frame was. there's more parallels than that. i actually have one of the most fascinating things i found in the course of my research was the history of bailouts in the 1930s, hoover bailed out banks

but they did it very, very differently. what obama did is -- well, first, you start with george w. bush bailing out banks in the hoover way. strict cronyism, you know. like they were -- they were very serious about this crony -- all those goldman sachs guys bailing one another out, this kind of thing, handing out money to executives, all those bonuses, all that sort of thing. all of that had happened in the hoover days. but obama did something very different than roosevelt. obama accepted that, brought in timothy geithner to run his bailout program. roosevelt, by contrast, you know, completely rejected the hoover approach. you know, the open-handed bailout. >> in fact, he attacked hoover for it on the campaign trail. one of the ways in which he -- >> that's how he won. >> yes, right. >> but here's the thing. in our time, who's out there railing his bailouts? who screaming in the park? we all know the answer to that. it's not -- it's not liberals like you and me. i mean, i wish i were, you know. i wish i were. >> isn't occupy wall street doing that? >> they are now. three full years after the financial crisis happened.

which actually is about -- is good timing. you think 19312 is the year when all the protests really broke loose in the great depression. >> i have one more question for both of you guys. isn't the international context a factor, too? if you think about the 1930s, there was people believed a real alternative to capitalism. actually, we forget this now, but from the outside, i think this was completely wrong, but from the outside, the soviet union looked pretty great. >> that's right. >> which i thought they were lying. >> they. -- they were killing people, right? >> yeah. >> they were murdering people. but they were also building factorie factories. they were electrifying. they were industrializing. that was part of the global political discourse whereas today what strikes me as really sort of one of the key issues for everyone is, okay, we see industrial global financial capitalism is not working perfectly. >> but what is the alternative?

>> does the left have a clearly articulated alternative? it does not. >> you know who does? you know who does? >> it's really hard. >> you know who does? who has the alternative? it's like the -- you know, the hard, hard, hard right -- >> ron paul. >> right. >> you know, so it didn't work the first time. you know why? because you still had little bits of government intervention here and there that were tainting the experiment. have you to get rid of those, make it pure. by the way, we laugh at this sort of thing. you know, we -- highly educated libs laugh at this sort of thing but it is appealing. it's appealing in a lot of the same ways the soviet union was in the 1930s. >> compared to the hand-wringing of the left because the left hasn't come up with pay way of saying, yes, with he can have growth, the economy, without all this bad stuff. >> but this is -- i'm going to -- okay. shameless pitch here. there's a whole chapter of the book comparing the appeal of this utopiaen capitalist idea to

the way that the soviet union appealed to people in the 1930s. it is a strangely exact parallel. >> originally -- >> that's the point. >> we'll talk more about tom frank's new book and the backlash that happened in the wake of the crisis. why do we have aflac... aflac... and major medical? major medical, boyyyy! [ beatboxing ] ♪ i help pay the doctor ♪ ain't that enough for you? ♪ there are things major medical doesn't do. aflac! pays cash so we don't have to fret. [ together ] ♪ something families should get ♪ ♪ like a safety net ♪ even helps pay deductibles, so cover your back, get... ♪ a-a-a-a-a-a-a-aflac! [ male announcer ] help protect your family at aflac.com. [ beatboxing ]

♪ here comes your man discussing tom frank's new book and deepak, had you a question you wanted to ask about the back lash in response to the crisis. >> how many of the underlying condition for the rights of tea party was racial anxiety, changing country, going to be a majority 50% people of color, first african-american president, in a time of economic crisis, how much is that a key condition? >> you know, of course, it's impossible to measure. there's all kinds of outward, you know, racism that you saw manifested at this these things. i didn't go into that de-n

detail of the book because i was focused on their economic arguments which i think is the core of their appeal. it may well be that that is some kind of underlying psychological condition. you think about the way -- the language they always use to describe barack obama. he's alien, he's somehow -- there's something wrong with him. he is a foreigner? he a stalinist? is he harboring all kinds of people with wacky ideologies in the white house? i forget which -- which tea party spokesman or conservative said this but he is -- you know, he's like alien matter in a body. we have to expel him. >> but what's interesting about that, i was thinking about that when i was reading the book, i've been thinking about and thinking about writing about the phrase take back the country, take back america. actually, that's migrated between left and right. take back vermont f i'm not mistaken is the phrase people

campaigning against gay merge in vermont then which howard dean prop rated to take back america from the bush administration which now in barack obama's -- is now appropriated by right to take back the country. >> i'm going to use it to take it take it back from bain capital and lb -- >> right, of course. >> all these taking backs is, you know, you brought in the question, deepak, of race into the conversation. but i think instead of the great american debate, the left has won the culture wars and right has won the economic wars. >> that's true. >> the right is correct. >> is there -- >> isn't there tea party crony capitalism that neither political party was speaking to. >> absolutely. >> they were the first people -- >> that's their ace in the hole. they talk about this stuff in an extremely compelling manner. you know, i wish that my side could, you know, get off their butts and -- and get out there and talk about this in a way that wasn't -- >> in fact, this cronyism point, which is what you spent a lot of time articulating in the first

hour, right, is that the most -- i think the most sophisticated version of the tea party argument an argument about crony capitalism and an argument in which the way -- the access between washington and wall street. >> there's one thing -- one last point that i wanted to -- about the book that i want to bring up which is the complete failure of the democrats to even show up on the battlefield of these ideas. you know, you look at the obama administration. it's reverence for experts and expertise. franklin roosevelt didn't have his massive deficit spending program or social insurance programs or any of that stuff because by saying all -- you know, the experts say this is a good idea. we've all read -- i have all these wonderful economists in my cabinet they're going -- >> although, he did. >> well, up, he had some, but they were extremely heteroorthodoxy. what he was doing was -- >> democrats are part of the winners. the democrats are -- >> what? >> part of the winners. democrats draw their political elite from the plutocrat class.

>> absolutely. >> but republicans are better at pretending. >> i have the funniest -- yes, please. >> but they have this reverence for experts and expertise that, a, i think sells really poorly in peoria. b, walks right into the conservative credit teak of liberal elite. they're forever talking about people like you and me as the liberal elite. what do they mean by that? it's all -- >> you read books. >> and, hell, i write books. >> you write them, that's worse. >> you are part of the liberal elite. you had something to say in your last block. >> thanks very much. the basic thing i want to throw out there is that when you think about efficiency, we use this term efficiency, folks in private equity and it means a lot of different things. for example, you can tall about allocatetive efficiency, where are we applying our capital, which games are we choosing to play. operational ee quishtcy. you've chosen a game, how well are you playing that game. and then there's adaptive

efficiency. that's the whole idea of coming up with new games to play, new processes, new products. so, when you think about what private equity does, part of the issue is in our tax code, we have a very, very strong preference for debt finance over equity finance. >> absolutely true. >> so, that's the situation where what private equity does, it's trying to allocate capital better within a firm or across firms and also trying to enhance operational efficiency by saying, hey, you have huge debt payments so it's going to discipline you. the same way folks say, if i don't make a mortgage payment, i'm not going to save, i'm not going to build assets otherwise. the thing we really need to make an economy grow, to make job and wage growth increases adaptive efficiency. that's not the stuff that a private equity folks do because they're doing more of this ground level combat. the problem with adaptive efficiencies, we're not going to have a lot unless you have a lot of new entrants in the economy. that's why i fixated on this. >> i know. >> these guys are doing something that i think is valuable in term of taking what

we have and making it work somewhat better, that is, delivering it at lower costs, et cetera. of course, there's going to be a lot of dislocation and displacement there. the way to create new employment is not by saying, well, we're going to freeze smith corona but we're going to kind of have this new exploratory innovation. that's where we have a desperate shortage of which is what you see with mounting corporate profits and very low levels -- >> and low levels of investment. malinvestment, lack of investment is one of the main problem, if not the main problem in the economy right now, aside from the long secular trend and rising inequalitity. [ male announcer ] what makes you trust a company?

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the u.s. armed forces. retire as a three star general while richard kavosos was four star general. thanks to "up" viewer for catching that and pointing it out. we contacted the army. turns out they couldn't tell us who the highest ranking latino in military history is. in just a second i'll tell what you i didn't know when the week began. right now it's time for a preview of "weekends with alex witt". >> we'll take to you new hampshire, south carolina and florida this morning for the latest word from the campaigns on the ground there. the gop candidates are on the trail, then hunkering down for debate prep. two key debates this weekend. we'll tell what you they need to bring to those stages. office politics, i'm going to put our boss before the cameras. oh, yes, you do not want to miss that. you'll love this, chris. i mean, it's phil. all coming up. >> i can't wait to see phil. what do we know now we didn't know last week? we know the economy added

200,000 jobs in december and unemployment ticked down to 8.5%. we know there's mounting evidence the economy is finally actually coming out of its post-crisis doldrums. the economy added 1.9 million private sector jobs in 2011 up from 1.2 million private sector jobs in 2010 and up from the more than 4 million jobs lost in 2009. we know at this point in his is thepy, george w. bush made 61 appointments while obama, even with the appointment of richard cordray and three new board members at the national labor relations board has made 32. 61, 3. we know this won't stop conservatives from throwing a hissy fit over it. even the words chutzpah to describe john lue. we know he's a man who thinks the president could order interrogators to crush the testicles of the child of a terror suspect if the president saw fit.

we know that he has never been held to account for his role in crafting the torture regime. we know republican obstructionism in the senate is so total and complete the president was even forced to reappointment this man, william boreman as printer of the united states. after serving in that role for a year, william boreman was forced to appoint his deputy because the senate never confirmed his nomination. printer of the united states. we know rick perry spent about $364 for every vote he got in iowa. we know in at least one poll he is tied with our friend buddy roemer in new hampshire. thanks to scientists at queens land there's apparently a new hybrid species of shark produced by two distinct species mating. we know such hybridization is extremely rare. we know they suspect global warming is responsible for altering ocean temperatures and expanding habitat of one of those types of sharks. we know earthquakes in youngstown, ohio, on christmas eve and on new year's eve were

likely caused by fracing, natural gas extraction method. we know the process of ripping the fossil fuels we need from under the earth and released trapped carbon into the although months fear is putting us on a path toward possible catastrophe. entire coalition in politics is accelerating us on that path. thanks to a futures gone awry, starbucks will be raising coffee prices. they cried foul over speculation driving coffee futures and we know starbucks purchased a lot of coffee futures locking in a price on expectation that coffee would keep rising. but we know the coffee prices went down instead and so starbucks will leave consumers paying for their wrong bet. we know futures markets are supposed to smooth the volatility in prices of vital commodities but that recently they often seem to do the opposite. timely, thanks to "new york times" we now know -- or once again reminded that while america prides itself on

functioning unrivaled social mobility it is actually less mobile than most industrialized democracies. we know such socialist such as denmark have higher percentage of people born into poverty who make it into the top income, and rising inequality like the kind over the last 30 years moves rungs on economic ladder further apart and creates more space for people to fall through. we know we have seen in the last decade a definitive betrayal of the promise. while we do not know what comes after, we know it must be far more equal if it is to be just and stable. what do my guests know they didn't know when the week began? progresso. it fits!

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oops. [ powers down ] uh-oh, flobot is broken. the "name your price" tool, only from progressive. call or click today. that's the undone, our building mates here at 30 rock. great album. i want to find out what my guests know they didn't know when the week began.

first off, deepak, what do you now know you didn't know at the beginning of the week? >> i had my confidence restored that the federal government can actually do things that make people's lives better. yesterday the obama administration came out with with a proposed rule that would reduce red tape for immigrants that want to be citizens and allow hundreds of thousands of parents, spouses, kids who have u.s. citizen relatives to be able to get a green card. big deal. doesn't go far enough. but it's a major step forward. >> i'm glad to hear that from you because you have done a lot of work. you and i have talked. as a reporter i've used you. the rules, touchback rules, they're getting -- >> it allows people to do some of their processing here in the country rather than leave the country for three or ten years and be separated from their loved ones for long periods of time. big deal. >> thanks. krista, what do you now know? >> i know the republican party cares more about ideas than it cares about winning. i think that the people who

emerge from iowa are a very interesting gripe of representatives of the key strains in the republican party, right? you have the social values with santorum, you have ron paul who represents really interestingly, probably the only guy out there right now, a different sort of extreme libertarian answer to the financial crisis. then you have mitt romney who represents winning. >> right. >> it's going to be really, really interesting, actually, to see how that debate works out within the republican party and i think in the country overall. >> debate tonight and debate -- republican debate right here tomorrow actually on our network. so, we'll be following that. we'll be talking about some of it tomorrow. >> this is only new for me, not necessarily new for the world, but i read a wonderful book by a guy called robert whitaker called "anatomy of an epidemic" and early on he notes 1 in 76 americans is disabled by mental illness. that number 20 years ago was half as big. in the 1950s it was one-sixth as

big. for whatever reason, we've grown more affluent, yet compared to countries much, much poorer, much more inequality, but have this extraordinary number of increase in people who can't work, socially isolated because of mental illness and the controversial thesis is that it is due to our heavy reliance on psychopharmaceuticals. it is an incredibly beautifully written book. very compelling and speaks to a deep problem. 1 in 76. a ton of us are related to people that have this problem. it's something -- >> or friends. >> when you think about the labor markets, these larger problems, you know, one social problem i often find is that if all you have is a hammer, all you see are nails. >> that's a great recommendation. i'm going to look that book up. tom frank, very briefly? >> i know that boeing is pulling out of wichita. we were supposed to feel so sorry for them because they won't be able to ditch their factory in seattle but they are ditching their one in wichita. you know, in some ways this

is -- this is really meaningful to me. the kind of corporate ingratitude and disloyalty. this is -- the entire kansas congressional delegation was going to bat for these guys to get the tanker deal a couple years ago. i mean, they got tons of subsidies from wichita and the state. there is absolutely nothing that can stop these guys. i mean, it's profit above everything. >> my thanks to deepak from the campaign for community change, chrysta, thomas frank, thank you all for getting up. thank you for joining us today. coming up next is "weekends with alex witt". tomorrow morning msnbc will honor gop debate which means "up" will only be on for an hour. we'll have lin-manual miranda. you can get more information on twitter. see you tomorrow. ut without my . are you crazy?

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