maybe that's why markets take right after it was announced well. there's a message in problem where the fed reserve gave the message what they're doing they're seeing is green all right we have we're out of time gloominess we'll have to leave it at that that was in your cult and here's to joseph gagnon and that does it for now we'll have more news an hour and a half. rachel

martin you're broadcasting live from washington d.c. coming up today on the big picture.

it is. still. something if you want to. blow it welcome to cross talk computor all about the life and slow death of social democracy in the west an idea once deemed to be part of the very foundation of democratic values and economic prosperity is not only question today but also scorned by some is the west entering an era of radical ideologies and policies. that can. steer the. cross-talk the condition of social democracy i'm joined by allan meltzer in pittsburgh he's a professor of political economy and public policy at carnegie mellon university in new york we have richard wolfe he's professor of economics americas university of

massachusetts amherst and in chicago we cross the street stanek he is a research fellow at the heartland institute all right gentlemen this is crosstalk that means you can jump in anytime you want i very much encourage it but first marcia this is not the first idea to be batted around exactly at a time when free market capitalism is coming on and uncertainty as pervasive as ever the political and economic discourse in the rich industrialised north is shifting rapidly the current crisis has exposed the flaws of rampant capitalism as well as political forces and power with the global economy is experiencing is not merely a recession it is a nun president said post-war contraction in the developed world the government's first step then to socialize debts accrued by the financial markets the public sector was the first thing to suffer education health care public pensions full employment the basic provisions introduced as a bulwark against the precariousness of earlier decades were hardest hit what's

really missing is that steady average rise of the real way where the fruits of productivity are shared. hardly that's stopped we. brave new world of sort of milton friedman capitalism the great experiment of deregulation killed that natural progression that we had gone since world war two at the same time however many pundits have sounded warnings of capitalism steps and some have even heralded the advent of the never before seen socialism in two thousand and nine the american newsweek magazine wrote we are also shoeless now indeed continue financial disintegration leave little choice for western governments but for their bank bailouts and this means government oversight on a scale that would sound europe for example back into the one nine hundred fifty s. all the while generations of classical social democracy policies could be raised from the present and future the entire social democracy experience in the west has

its origins in assuring that the rise of radical and side democratic politics like fascism could not amount to societies again as this mindset and policy agenda decline it remains to be seen how the west will protect itself from the worst of ideological extremes to ponder their future thank you very much for that richard if i go to you first in new york when you hear the term social democracy and i think it's fair to say i think we all agree is that it's very much associated with the post-war era i mean the end of the second world war up until somewhere around now but it's a lot of people are beginning to question it so what does it mean to you in two thousand and eleven the term social democracy. well i think it's a leftover of the past it was mostly a reaction not so much to world war two as it was to the great depression the last time capitalism as a system collapsed it was a new policy regime forced on capitalist governments by the mass of people their

suffering their anger their bitterness about inequality and it was put into effect over the objections of the business community and the conservatives for many many many years it lasted really well but capitalism in a sense cannot afford it right now is cutting back sometimes over a period of time that lasts for decades and now because of the latest great crisis of capitalism an acceleration in cutting it back but i expect and i think i already see the reaction there to the beginning of a new groundswell to reestablish a last contract around social democracy it's already evident here in the united states and i think we'll be all watching that as it unfolds in the years ahead steve if i can go to you i mean richard covered a lot of ground there a very interesting answer right now you've been on the program before so you go first go ahead. i'm appalled at the nature of work is

you're proposing first of all capitalism is not die and it is spreading all over the world what's going on in asia and china well america alan we're not talking about jamal we're not talking about cattle ism per se we're talking about social democracy that's something a little bit different and is richard pointed out here and you know pretty good record we had a pretty good record for a number of decades now it's a question that's how this program was introduced so we're talking about social democracy obviously capitalism is part of that going on now and right now a good five percent of g.d.p. is twenty five percent of g.d.p. is spent by the government here forty five to fifty percent in europe that's hardly the end of social democracy i mean the germans have what they call social democracy and they like it and they keep it and it's their form of capitalism and there isn't the slightest sign that i can see that anything is going through it yes there will

be cuts in the budget but those cuts are coming after a very very large increases over the last five to ten years so it isn't true i mean we've just passed the health care bill we have a government which is into the money now and there's a lot of people are saying look if you look at the budget right now you can afford the thing steve what do you think about that because i mean there's it's easy to really try to force these i want to go to steve i mean it's easy to praise social the social democracy experiment and it's easy to criticize it is well it's a very interesting phenomena go ahead steve. i agree. with professor meltzer. in the eighteen hundreds there was a french philosopher an economist named frederick who said government is the great fiction through which everybody and gabbers to live at the expense of everybody else and i think that's a very good description of these socialist governments that professor wolfe

apparently believes are good the problem is that the fiction is dying it's dying because the reality of the bills are coming due governments all around the world at least in the united states north america. and europe and some in asia have been spending well beyond their means the idea that consumption can create prosperity to me is i think ludicrous consumption is not creation creation builds prosperity and as we have governments that redistribute income from some and to others we have governments that. hinder creation they hinder innovation going to keep it steve it's not clear it's fair to say that's a mysterious learned better and going to sleep in and say i'm going to one hundred everyone on the panel is that you know we have electricity voted for these kinds of

programs for decades ok so don't say governments i mean if we're talking about people voting for politicians that to give me more and more and more and make other people pay for it later well maybe we could surprise some commonality that i read what they did with it i mean to really answer to the major religions which raise your. hand i want richard in new york to go ahead get your. let me let me just respond to one thing that this notion that governments act as if they are the origin of what they do governments are elected and under enormous pressure from their constituencies and to explain what governments do without an analyzer and who's pushing them to do what is a very strange logic here in the united states this statement that we can't afford social democracy forty years ago when we arguably began that program in the aftermath of the great the depression we had levels of taxation of corporations much higher than they are today relative to individuals we had income tax rates on

the highest and richest americans a far higher three times what they are today it's extraordinary that we can talk about this inability to afford social democracy without noticing that the government's slow called inability is because it no longer taxes corporations and rich people anything like it did before when this whole social democracy got under way of course if you stop fancying those who made it harder it will creditors who are then you can't do it less is ignoring the issue. alan jump in first i'm very appreciative you guys grows a very very close here are alan go ahead. we never recovered from the great depression by nine hundred thirty eight even members of the roosevelt cabinet was saying we failed the the unemployment rate is still high we haven't been able to do much until the war the war made a great difference was because for the first time roosevelt had and coherent policy

with people expected to continue and that was something that the public shared they don't share government nowadays is not doing what its public wants of doing what its interest groups want at the moment those interest groups are the labor unions and this pressure more of big corporations who plays well ok labor unions are taking this really makes an excellent go ahead steve let's not jump in one of the extraordinary history belts amnesia here let's remember one simple fact right in the united states today in the private sector that dominates our economy six point nine percent of workers are represented by a trade union ninety three and point one percent of our working class in the private sector has no union to explain government policy based on the union movement as tiny and powerless as this is

a fantasy designed to obscure the issues when we all know that the distribution of wealth and income in the united states has become widely more already quarried richard let me jump in here stephen resources any value to the liberation organization or label it lazy abandon we want to break go ahead steve the national labor relations board right now is suing boeing to stop it from opening a plant in south carolina even though they have plant will not get rid of one union worker and will in fact create more jobs about forty percent of all government workers are in unions and they are a powerful constituency in this country when it comes to state local. and the federal government freidman seymore your obama administration and by the fraser informed them issue a warrant on israel's labor relations and strike the other mill male and outlaw all americans away and laid off the pride of the workers of the union in one state by moving to another which is against the law in the united states that's the issue it

has not they have pride anybody on your journey. we aren't even going to a break or going to go to a parade and after that short break we'll continue our discussion on social democracy state party. became. it was created to serve public interests. and to entertain. these days there's nothing easier than opening a new media outlet but there is nothing harder than revoking its license in case of

corruption. and. you can involve in a community where you have one large corporation controlling the building newspapers radio stations television stations the cable outlet you told me that that sounds like democracy public opinion versus f.c.c. broadcast blues on a large. margin here broadcasting live from washington d.c. coming up today on the big picture.

mission. couldn't take three. more charges free to make amends three. three. three. the old free blog video for your media project free media and on to our tetons tom . welcome back across town people go through and you were discussing if social democracy is dead. kick. start. ok allan if i go back to you in pittsburgh again i'd like to remind our audience why social democracy entire concept we call the welfare state or other kinds of

isms that you want to add to it socialism whatever but we have to remember it is a in the aftermath of the rise of fascism in europe in the one nine hundred thirty s. and the great depression and it was a political agenda to make sure that people were inclusive in society where there was some modicum of education people would get a modicum of some kind of health care a modicum of maybe some kind of job not absolute promises ok but inclusive thing it was a political agenda we see the ideas of social democracy falling apart in some parts of the world do you think that that's going to see the rise of radical politics again in europe in the united states. no i don't believe the people the well i guess they remains it will be cut back it will be cut back because it's that we've overspent because productivity is low and because when we transfer resources from bike to high taxes from corporations and the high

income individuals to welfare programs we increase welfare programs for we lower productivity growth and when we do it with bribes deficits we tell people to look at taxes are going to go up in the future and that deters investment so that's really where we are and that's where the europeans are and what i see at the moment is a total failure of government to be able to reach agreements about how to solve these problems i don't see a major player in the private sector i see in my view they are fascinated by the right ideas easily lay all right so instead you look great richard you know because this is crosstalk i don't think you agree go ahead. no i don't think a greedy not even a a little bit you know if we were all talking about a constant distribution of wealth and income this might be an argument that would make sense but we have a period of time in the united states above all of the vastly growing inequality of

wealth and income with money earned at the top wildly disproportionate to anything that anyone else enjoys precisely because among other things of the destruction of our trade union movement that's why we have such a low number of people in the trade union movement by the cut on taxes on corporations by the cut of taxes on wealthy people if that was not done if the act was done now by a no new social democracy compact all of these situations would change and the capacity of the government to pay for these programs would be enhanced and in terms of the politics let's take a little look the elections over the last few weeks in denmark bringing in a red block committed to social democracy the complete the first time since one thousand nine hundred fifty eight that the french socialist took over the senate in that country is remarkable and here in new york city surprising so many americans the upset of the european masses has arrived in the united states and we're seeing

more and more demonstrations that are pinpointing the inequality in the united states that drives and funds government we have a serious erection of this growing so it's a little crazy i want to go to steve in chicago steve go ahead because i like his message i just received what i know how in jersey ways please i'd like to go to steve here again i'd like to point out is that the whole social democracy project was to garner the inequality ok rightly or wrongly it was done the good way or a bad way and i was one of the reasons why that it's ok had steve you could reply to what alan said and what richard just said go ahead sir right now in the united states virtually half the households pay no federal income tax. the largest tax fair by far are the very top income earners they pay disproportionately more of their income in taxes and fees to the government. lower quintiles do by many marred by many measures.

he hasn't explained that he was actually these things are happening we have unions week he talks about the decline of the union in the private sector that is because the unions have failed to adjust to changing economic conditions over the years the unions have not been crushed by governments the unions are losing out can't present in the joys or even if he has your size in the air the ransomes decide how to build your own words they do you can blame it on whatever you want but you can't then make the your new million you lose in business it will all have a lot of help. out a lot of power to sell evil in government while. government unions do not go to the young the no margin for the no usually because the government here knowing they were already up that is why it was the end of the line is generally only you learned gentlemen we are all talking over each other here ok ok still. it happens

on this program i want to ask all of you is that it would say when we look at the crisis starting in jan two thousand a to the present you know we talk about what government should do but they shouldn't do but it's really the central banks everywhere very the ones who call the shots and now all have an opinion out now we have socialism for the rich and we have capitalism for the working class and the poor what do you think about that our. i'm opposed to the central banks bailing out banks i mean if people are i objected to the eight hundred billion dollar bail out when the bush administration did it i did it on public television i was invited into the treasury to because they said well what would you do and i told them what i would do i told them if a bank needs capital then the capital should be raised in the capital market half of it and then we'll give them concessional aid if they do but if they don't raise the money in the in the capital markets it dead and will take over the bank that's

what i think the europeans should do i think the europeans are wasting money terribly to keep protect the bankers and to prevent the greeks from leaving the euro i've written a paper column for the wall street journal which says that's a foolish policy we need to do much more time is our right governments are failing all right richard if i know how do you happen to let you know this whole region under richard here because it's two against one is open activity not only it's two against one so this program gentlemen we have to be fair to again was this president we want to talk about i want our insured richard in a new york would you comment on that what mother what i said earlier about we thought we have we have we have capitalism for the for the working class and the poor we have socialism for the rich because the new social contract is to make sure the rich stay rich ok and they're happy with that we can they have their congress is in their parliaments and their central banks in their pocket they have done very well here they live no so go ahead richard then you and i can be contradicted by

other gas go ahead richard. yes i think that i go back to the under cutting of social welfare by the inequality of distribution of wealth and income over the last thirty years that also allows the rich to have much more influence as the corporations have that's what we call neo liberalism on shaping government policy and that includes central bank policy what we've had since two thousand and seven when this crisis hit is what we used to call trickle down economics the central bank together with the treasury or with ever the government agency is bails out those at the top the biggest banks the biggest insurance companies the biggest corporations and it hopes may be that it will trickle down to everybody else we now know as we enter year five of this ongoing capitalist crisis that the trickle down didn't happen as most of us predicted it would not so now we confront the fact that we've wasted a lot of money dealing out the top keeping them in

a place they could call recovery while everybody else suffers through this crisis and now they have the nerve to suggest that having failed in this trickle down policy the solution is an austerity that is not just socialism for the rich it's the worst kind of capitalism for them as a sequel and they're not going to tolerate steve jumping go ahead steve. i believe the central banks have been major players in causing the booms they were major players in causing the bus and i will agree with professor wolf that what the central banks have been doing now is is i think not just wrong it is immoral they are in effect stealing from millions of people all around the world to prop up banks the federal reserve's main client in this country anyway and i'm sure the central banks in europe for the steel the same way are the banks they are

supporting banks that should have failed and allan meltzer is exactly right they should have been allowed to go down millions of americans overwhelmingly opposed the tarp but our congress and then ed let's remember this was a bush administration with henry paulson from former goldman sachs's guy cato gave us a tarp that poll after poll showed was overwhelmingly opposed by americans it never should have been done we should all let chrysler and general motors go down and i have no doubt that if they had it happened their good assets would have been bought by other auto makers and maybe some new automakers would have risen would have arisen i live near what is an ocean wisconsin and i was in juneau should just last weekend people in this country forget there used to be a big four automakers the big the fourth was american motors which used to be headquartered in in can osha when can osha went down part of that company was bought by chrysler people forget that erika motors used to own jeep i

have no doubt if chrysler and if general motors have been allowed to fail other automakers would have bought good parts of those companies and we would be rolling along much faster than we are now all right now we're doing it is a synergy i mean i would ask everyone to. even ran their blood and then i said to my should here alan if i go to you when we were talking about social democracy is there a new social contract in the air now because of this crisis. the old social contract is still here look this raving about about the income distribution is foolish nonsense the reason it's foolish nonsense is because he's entitled to his opinion but he's not entitled to his facts the facts are that the reason there isn't yards of research on the question of why the income distribution is spread the answer is because the failure of the education system we just have a large number of people who were illiterate and are no richard richard i want to give you the last word he simply are

a second scritches lot last last word go ahead. blaming the education system is what we used to call blaming the victim this is absurd already cation system is stalled for money we are cutting back across the pool of our state universities films because it isn't. the case and gentlemen gentlemen i want to thank you sincerely for a great conversation but we've run out of this entire thing so i guess a day in pittsburgh new york and chicago and thanks to our viewers through watching is here r.t. if you next time and remember crosstalk rules. let's

. say six.