see. tonight on the big picture. author and columnist les leopold joins me for the first half hour in our conversations the great minds and i will discuss how and why wall street continues to thrive on the facts the middle class plus the bin laden has been wiped off the face of the earth in the u.s. close the chapter of the decade long war in afghanistan the student whose solution is to stay or grow its weekly role and tonight is america really is becoming

a super sized nation i'll tell you how the donald is leading the job rat race and its ability. for tonight's conversations of great minds i'm joined by an author and columnist his work is focused on holding wall street accountable for its crimes and raising awareness about the dangerous dependence of the american economy on the physical sector today is currently the executive director of the labor institute and the public health institute in new york and his latest book is titled the looting of america a wall street's game of fantasy finance destroyed our jobs and sions and prosperity and what we can do about it please welcome to our studios in new york leslie of

talking with program. thank you very much for having me thank you for joining us you start your latest article with the idea that it's tough growing old unless you're rich isn't that the new truth about pretty much everything in america it's tough being a college student it's tough being a teenager it's tough being a thirty something or a forty something or if it whatever it may be. an excellent point. we are the richest country in the history of humanity and yet we're making our people struggle for the very basics of what a decent life is and that's because we've allowed this the enormous sums of money to accumulate and the hands of a very tiny portion of our population and we refuse to do anything about it it's actually tragic. it is this is a well first of all to what extent is that the case how do you how do we get it not really concentrated well let me give you give me an example last year the top hedge

fund earner john paulson a plus in the company earned two point four million dollars and our two point four million an hour i calculated it that's the equivalent in one hour he earns is not just the average family of america in america earns in forty seven years one hour as it at a hedge fund equals forty seven years of income for the average american now that is preposterous outside arguably of the of the robber baron error in the lady eighteen eighty's seventy's eighty's ninety's you know up until teddy roosevelt went after them. we haven't seen that and arguably the roaring twenty's i suppose you know after the. party inclusion hoover basically dropped dropped taxes and dropped all the regulations but really those those two periods of time in america

were in many ways anomalies with this enormous concentration of wealth what is it after a period i mean if you go back before reagan the average c.e.o. is making twenty eight times with the average worker is making now it's three hundred something or whatever the numbers what is it that accounted for this change from free ready to post to it or its own now. well we embarked on this experiment basically to see if we could a race remember our memory everything we learned during the new deal during the new deal we learned and after the crash of twenty nine that you had to sit on finance it had become boring enterprise not a vast campbell and speculative. part of the economy and. very tight controls were established and they were reinforced during the bretton woods agreements in one thousand nine hundred four and they they dominated the post world war two era during our most prosperous era i believe ever especially for the

middle class we created the middle class it dominated all the way through the one nine hundred seventy s. and then the academic establishment the policy establishment said you know what we have too many anomic problems we need to change things and we have to rely on the free market entirely so we should do as much as possible so what we should do is deregulate finance and we should change the tax structure so that we lower taxes especially on the super rich they will then invest their money we'll have a huge boom and we the american economy will blossom well what happened is they actually ran out of real places to invest that money and there were no there weren't enough factories and services for them to invest in and what happened is a deregulated wall street they're not stupid they created a whole series of what i call fantasy finance investments and that's where the money went and that became the largest casino ever and of course it crashed it

built up the housing boom and then crash but it wasn't just houses that were the problem it was all these extra bets placed alongside and on top of and all around the housing boom so when one mortgage went bad five or six or seven investments built upon that mortgage or pool mortgages went bad as well. but the big problem was forgetting that you have to control finance if you're going to have a productive khan economy you know when we go back to that robber baron theory that you discussed at least those robber barons were producing real goods and services that mattered to the american economy today i defy you to show me what these hedge funds do that adds real value to the economy how does this vast speculative financial. cancer really on our economy how is it creating social and economic value for real people in america or anywhere else and i'm having trouble finding too many examples i can find hundreds if not thousands of examples of how

that work is actually destructive in addition to the huge crash that we're going through in one hundred twenty one at the end of the harding administer at the end of the wilson administration the top tax rate was ninety one percent as i recall. harding came into office dropped it to twenty five percent of my recollection is right maybe it was forty and then it went down to twenty five shortly thereafter coolidge kept a very low you know he called the you know the prosperity and and then you know prove or came in and it blew up this was the roaring twenty's basically this was from a period of time larry by her it was on this program. a few months ago and he went back and looking at the history of the united states and said that any time the taxes on the top one percent of the top two percent any time that tax rate was above fifty percent that we didn't have boom and bust cycles because those people

money was essentially precious to them and whenever tax that top tax rate dropped below fifty percent then we got thrown right into boom and bust cycles because the money was so hot it was so fast they were looking for places to throw it what do you think of that theory and does that comport with the reality that you've written about. well yeah and i've actually been looking at that closely recently i've decided that. i'm revisiting the eisenhower era and i'm starting to think that he was this great radical because he kept the income tax rate on the super rich at that point the top marginal rate in today's dollars it was those people over three million a year those people earned and those people paid ninety one percent on the next dollar on every penny. every penny after three million and then that rate stayed high it came down during the kennedy administration and it was at seventy percent

during the nixon years well i just looked at what the effective rate what people really pay those people earn at the top who are hundred families that average something like you know ten twenty million dollars a year it into clear income tax their rate is effectively sixteen percent and i'm going to tell you about these hedge fund their tax rate they hedge fund folks who are making two point four million dollars an hour their tax rate is fifteen percent because of a loophole in the law so think about that for a second those i believe the theory that you i ascribe to the theory that you just described which is that when you let a lot of money go to the top in the hands of a few evidently they a casino will start a some sort of speculative boom will start hey we might be having one right now in commodities the money has to go somewhere and if it doesn't go into print

productive investment look we built a university system during the fifty's who built the highway system we had the beginning of the space program we invested in people and infrastructure not in finance and this is this is in the consequences are huge the unemployment numbers are staggering. i the latest that i saw was we need something like twenty million jobs to get back to full employment that's something like at the rate that we're growing now people talking over growing at this great rate. it will take us twelve years to get anywhere near that number if we don't have any recessions. this is a tragedy waiting to happen it's not just that the rich are getting away. there are two problems with the distribution of wealth in the country first as you get these boom bust and these enormous crashes and the next crash could be bigger than the last crash. that's one problem that the but even

a bigger problem is we're not putting our people to work and it's incredibly dangerous for american society to not have its people working the affect the real unemployment rate the you know the you six jobless rate that the bureau of labor statistics calculates it's not nine percent it's fifteen point nine percent and leo hindery another guy looks carefully these numbers he claims it's eighteen percent this is it terrible and look tom you're an incredible student of history you know that prolonged chronic unemployment leads to bad things and when people think that they get desperate and they become prey to demagogues who will offer them simplistic solutions like military expansionism like fascism these things feed there that the petri dish is high levels of unemployment and what scares me the most is the political establishment has now lost its focus on job creation is

is completely obsessed with some abstract problem called the debt and deficit which is totally manageable if you put our people back to work and had a fair tax is the movie know there would be no problem at all and they're not focused on how to put people back to work there i don't see any ideas coming out of washington that would really do the trick. luz leopold we're talking with was the in seventy nine he won alexander hamilton laid out his eleven point plan to to george washington he was the secretary of the treasury. to his report on manufacturers and suggested that we have basically a protectionist policy the united states to protect its country which included tariffs that was put in place in seven hundred ninety three by and large by washington and by the legislature and stood until arguably reagan and then clinton the deputy oh. during that period period time for the first from from the

washington administration to the lincoln administration tariffs paid for one hundred percent of the cost of government the lincoln administration were wanted was two thirds of the cost of the federal government from world war one to world war two third of the cost of a government now our average tariff is around two percent rather than the twenty plus twenty to thirty percent it has been historically do you think that there is any place for a conversation about revisiting our trade policies. in today's surely there the reason i'm smiling is that my son just had his a.p. history test today. just did an excellent job of recounting the tariff history that he was supposed to know but it's a very good point in fact quietly countries do engage in field work until this protection is tariff regimes they're doing it subtly but you know china is steering its economy. we seem to be the only country

that doesn't seem to care about putting its people to work at steering its own economy ensure there is room for i would like to see terrorists that equalized environmental health and safety and labor rights because if you hat because then you could not import back into this country goods that were produced under adverse environmental conditions that contributed to global warming and pollution and that poisoned its workers and that were the workers didn't have the right to organize and. were being shot or intimidated you could place the tariff on a good to say look you know we've got to have a level playing field we want to trade we're not going to shut off trade but we're not going to allow. in a sense immoral good state coming in you know goods from child labor and such we're just not going to do that and the american people would understand and so would other countries you want to manage it so you don't get trade wars but you know who china is doing a great job managing it and nobody. is no one's going to put a dent if they're managing their currency something we gave up doing kind of in the

in one thousand seven hundred seventy one when nixon took us off the gold standard but you can still manage a currency without going on the gold standard there are a lot of things you have to do but you have to have a goal and the goal needs to be you've got to put your people back to work you've got to have to thrive. the pet programs that i would argue for tommy again. as a student history you know what happened with the g.i. bill of rights after world war two it was a phenomenal success and basically it allowed people to go to college for free and even gave them stipends. if we had free higher education at state and all public institutions free higher education it would bring down the unemployment rate something for years you can't it will not you can't outsource higher education you it would lead to a building boom on campuses families would feel in rich because they're not and

kids as well they would have to go so deeply into debt just to get a college education you would build up the skill level of the workforce and you'd have a sense of common purpose and. a common sense of the commonwealth while we're doing something good for our people it's not that expensive certainly a small financial transaction tax on wall street or a windfall profits tax on their bonuses and their profits all of which were derived from our bailouts to begin with could easily pay for it well into the end of some guts yeah and in fact in california that's that's what they used to have until ronald reagan came along and said no more free university california was we've got to take a break here on the other side i want to talk with you about pensions and a whole bunch of stuff we'll be right back with more conversations with author les leopold for a conversation. you

know sometimes you see a story and it seems so you think you understand it and then you glimpse something else here see some other part of it and realize everything you saw. i'm sorry this is the. wealthy british style.

market why not. why not what's really happening to the global economy with much stronger no holds barred look at the global financial headlines. report. back with more conversations with great minds i'm speaking with was leopold executive director of the labor institute for public health institute in new york and author of the book the looting of america i wall street's game of fantasy finance destroyed our jobs and prosperity and what we can do about it was a welcome back to the the the idea and should first of all i'm one of the things

that astounds me is how many young people people in their twenty's and particular teenagers people maybe even in their thirty's don't even understand what a pension is they they grew up in the world for one k.'s. first of all can you give us a quick summary what a pension is and secondly explain the why we've gone from most people having pensions to very few people having pensions and then third why those pensions or how those pensions the government employee pensions got wiped out by wall street. ok that's a good a good set of questions when we talk about these kinds of tensions there are called defined benefit pension plans which means you get a certain amount of money when you retire for the rest of your life and you can even get a kind of a rider on it words for the rest of your spouse's rest of his or her life so it's it provides a great like social security it provides

a great deal of security it's not like for a one k. when your money runs out it runs out the average for you for a one k. has forty five thousand dollars in how long can you live in american society at forty five thousand and forty percent of people. for one case is that averages ten thousand dollars so it's pathetic least well you can outlive it in a hurry. it used to be common understanding that you needed to pensions to to survive in your old age you got one with social security and the other one was from your employer which was mostly a private employer and during the fifty's and sixty's pensions became a big deal and that coincided with the peak of unionism in the united states i think in fifty three fifty five people were about one third of all people in the private sector were in unions and they negotiated these pension plans today there

are less than seven percent in the private sector in unions and companies realize hey we don't have to give people these pension plans anymore screw it no one is forcing us to do it so they're not doing it so today i think the number is incredibly small the number of people even in large corporations that have these defined pension plans now the last group of workers that have been in large numbers are public employees well that's because the unionization rate in the public sector is thirty five percent seventy five percent of those workers have to find. pension plans but they're under incredible the risks and the story is shockingly. sad and outrageous. one reason those pension funds are in trouble is that wall street systematically sold them the worst pieces of garbage that they had the. money to. yes and they got the rating agencies to give them aaa ratings and sometimes they

even were able to pawn off the worst pieces so look you're going to get a high return is no risk they say of course all of that money evaporated during the crash secondly the those pension funds lost value because they're invested in the stock market so when the stock market crashed because of wall street's gambling the pension funds collapsed and they have to keep paying out money in real time is people retire so even if the market even as the market went up again those pension funds have less money in them so that was the second big reason and then the third is that the state local governments do not have sufficient funds to put in them because there's so many people unemployed so they're like a low hanging fruit for right wing demagogues to go after because they see these people have benefits you the taxpayer no longer have so let's take it x. out and hack away at these public sector unions and bring them down to your level

well you know great your taxes may go down a fraction nobody has defined benefit pension plans and the what should be happening is that the that it shouldn't be the taxpayer that's making state local governments whole it should be wall street wall street created the damage why don't they pay now that they can afford to pay for the damage that they created it's really an outrageous. attack that's going on right now on public pensions. and like you said if this tax cut taxes success for young people in this country will have no idea what it is and they'll only find out when they try to retire around forty seven thousand dollars a year and realize. that is social security which they're also trying to privatized . but in the congressman from wisconsin. ryan paul ryan is you know that's his. dream is to help privatizing.

social security so that also will become more like a for a one k. in your own. private account and the government will not be responsible for. taking care of making sure that you get a defined benefit plan in your old age and behind all this i hate to say this is this incredible permission. philosophy of an rand which basically says you know life we all should be out there on our own and it's the most vicious form of social darwinism. and you saw how well that worked previous periods of american history and that's what they want to go through again go to again or all out there on your own you go as far as you can on your own. volition and if you fail you fail except of course if you're a wall street bank or a big or you're big enough because then when you gamble and fail you get bailed out and you can talk a great game about the free markets but you know for the biggest richest

corporations in this country there is no such thing well and that's when it counts and you're mentioning. the this is a pretty important point i think because it seems to me that there's two kinds of congo. there's there's two things motivating different things motivating the folks and two different groups of people who are on that side that are that are taking down the middle class one or the social darwinists the iran's true believers. the the the idealists frankly they think it's going to make a better world and the other are the predators they're the guys that you described on wall street who just say hey you know we can make a fortune doing this we spent a little money on brian some politicians we get some laws changed it's a blue poles we make even more money screw the middle class and it's a. wonder if you agree with that differentiation and b. to what extent do you think that the ideologues are driving this thing versus the

predators. well i think it's a symbiotic relationship but i think i actually think you're right that you know if you speak to some of these ideologues they're sincere. you know i totally disagree with them but they don't even realize that they're providing intellectual cover for the predators. and i think i think that's a fundamental feature of this modern turn to the right. and what you said about taking down the middle class i think people you know it's becoming almost a cliche but i think you're absolutely right we have to reinforce this you know during the cold war all our emblem our proudest achievement was building the middle class in this country every year virtually every year productivity went up and so did the average american wage of the of the non-supervisory production worker their

wages went up year in and year out in real terms after inflation and once we embarked on a letting the predators off the hook once we gave up on the new deal controls and we changed the tax structure by the mid to late seventy's productivity continued to go up it's gone up one hundred eighty percent since then but the average non-supervisory production workers wage which is about one hundred. one hundred million of us eighty percent of us work their wages actually gone down in real terms so where does all that productivity goes it goes into the hands of a few and they believe me they need their india lives for cover because if the american people ever get wise to really get wise to how they're being ripped off that they're going to get angry the question is are they going to turn right further or are they going to turn the progress of the direction and that depends frankly on people like you at the pentagon having an i.e.d.

outlet to discuss this i agree well as we have. we have just two minutes left just a little more quickly here. right now we have the second largest trade deficit in history we're going to trade a little earlier in the history of modern civilization the country that had the largest trade deficit was italy the year before mostly came to power that because they were engaging they had go try to free trade experiment very similar to what we've been doing for the last fifteen years or so on steroids and boom that led right to fascism how do we if there is another crash and and as the middle class is realizing how they've been screwed so many people. how do we make sure that this doesn't it was like the great depression hit us in germany the same way we had f.d.r. they had hitler. different result how do we how do we have something to do with that. what has to happen is that progressives have to get out of their issues silos you know for the last generation progressivism it's been defined by you know

environment or identity politics or poverty or labor it's been each silo has been isolated from the other and there's been no common. you know let's say a green jobs agenda which could unite people that when we went into the new deal there every every progressive in the country had a plan before there was a crash or already had a plan for how to deal with the robber barons and capitalism how to you know there were people who were very radical want to overturn it there were people who thought that we should have a more cooperative society the people thought we needed more government regulations i mean you know the story extremely well and they all had a plan so when the new deal happened there was no shortage of progressive ideas that were for the whole society how do you put how do you put the economy back together again we need a green jobs agenda.