well i'm john berman in washington d.c. and here is what's coming up tonight on the big picture america has become a nation of the haves and the have nots with a higher income inequality than the likes of venezuela kenya and even yemen so what's brought us to this defining moment in american history and how do we close the gap between the wealthy elite and everyone else and that is speaking of the house of pain are really happy that our economy is on the brink of recession and can the department of justice stop florida's war on voting all that and more in tonight's big picture rubble and in tonight's daily take it looks like the republicans effort to crash the economy is finally paying off and boy are they bragging about it is there any chance will show

a little remorse for their actions. but that i'm conversations in great minds i'm joined by timothy noah timothy is an american journalist and a senior editor at the new republic where he writes the t.r.p. column as well as a political blog he's also contributing editor to the washington monthly and frequent commentator on the c.b.s. news program sunday morning twenty ten he was a national magazine award finalist in the online news reporting category and he wrote the chatterbox column in slate magazine for ten years and if he is the author of multiple book books including his latest the great divergence america's growing inequality crisis and what we can do about it joins me now in the studio thanks for being with us thanks for having me the great divergence you mention that paul krugman and better this phrase if i call he did yes the. the period from one

thousand nine hundred thirty four to one nine hundred seventy nine had been characterized by the harvard economist claudia golden as the great compression because incomes became steadily more equal. and picking up on that terminology been called the period from one nine hundred seventy nine to the present day the great divergence the opposite was happening incomes were becoming more than equal and why why has nobody really been talking about this seriously it seems like this is like a major change in the history of america what people are talking about it now but they haven't been for most of the past third of a century which is how long it's been going on for a long time condiments weren't sure whether it was real whether it was some strange blip on the screen. and then once they recognized that it was real that the trend had reversed itself and that incomes were becoming more unequal they struggled to

figure out what was what was causing the problem and. finally it was really just in the last decade that it started to come into focus what what is causing this this great divergence and what is the well there really i should say there are two there are two inequality trends that are happening at the same time one is the famous one percent versus the ninety nine percent and that's a huge run up in incomes for those at the very top and that was discovered in two thousand and three by thomas piketty and emmanuel so as we have a graphic of this if i could just show this and you can comment on it we can pull that since the one nine hundred eighty s. the rich are pulled away do we have that there we can get this this was one thousand nine hundred seven in one thousand nine hundred eighty three the great compression period and here we have the great divergence and this is the top twenty percent these are quintiles fifths the bottom twenty percent is actually not just flat lose. if you if you look at it if you go all the way to the top one percent

what you'll see is a doubling of the income share since one nine hundred seventy nine this is one hundred twenty percent that would be two hundred that would be off the top of that right so that's the one percent versus the ninety nine percent and then the second trend is a more complex trend and it's it's the divide between skilled labor and less skilled labor between people of college degrees and people who don't between people who have graduate degrees and people who didn't go to college. and that has multiple causes one cause is that the high school graduation rate level off in the one nine hundred seventy s. and so we didn't see a continuation of the trend that it held through most of the twentieth century which was that as technology. became more sophisticated and technological demands on the average worker became greater the education system was able to raise the

skill level of workers that stopped in the one nine hundred seventy s. at the same time you saw a falling off of the college completion rate. another issue is the collapse of labor unions. union density the percentage of workers who belong to private sector unions is down to seven percent which is right where we were at the start of the new deal. and that has been a tremendously important cause offshoring has contributed some trade has contributed some although only recently. until pretty recently until really the mid ninety's. the united states was not really trading very much with countries that had significantly lower wages that changed of course with the rise of trade with china which manages to be a rich country and a poor country at the same time now you mentioned the the divergence in college completion for example or college degrees graduate degrees undergraduate. when

reagan became governor of california education was free in that state and and most of the land grant colleges the abraham lincoln had founded. were. damn near free you know through the forty's. for a long long period of time and by the time reagan's presidency was done. that i mean first of all he had ended the free college in california but it had become basically a trend across the nation is that one of the things that is driving this i mean we now have a trillion dollars in college debt which is something that in the fifty's and sixty's and seventy's was unimaginable people didn't graduate from college right well that's that's a fact and the college completion rate and that's keeping a lot of people from going to college in the first place it's a cause. universities have priced themselves out of the market for a significant segment of the population the inflation at colleges and

universities has been relentless since one thousand nine hundred seventy nine and in recent years it's actually the inflation has actually been faster and public universities than private ones isn't that they've price themselves out of the market or the we we the people the government institutions have stop subsidizing them and the university of california was free it wasn't like everybody who worked there didn't take a salary it well it's both certainly pell grants the available funding for pell grants is down. and but you know the basic problem is rising cost i think. one of the solutions i propose in my book is the imposition imposition of federal price controls on college tuition increases which i thought when i mentioned in the book was this wildly radical idea that i sent my book off to the printer and barack obama said almost the same thing at the state of the union address and what was really striking is that it didn't it didn't cause that much controversy we've seen

an explosion of for profit educational institutions project in the last decade and a half two decades but most in the last decade and along with that growth of those institutions comes an explosion in the number of people who are in debt largely as a consequence of those institutions so i mean they're there they run boiler rooms where they call people and trying to get the rights on them they're there they're right there they're mostly federal aid mills is that part of the problem. well it's an attempt to address the problem but so far the record has been fairly dismal attempt to to to vulture as they do it at will and it's an attempt to reach a population that is not being terribly well served by the colleges by the nonprofit sector but yes it's the evidence suggests there were congressional here. as a couple of years ago it was discovered that these companies were making money hand over fist even as the default rates on these loans was going through the roof now

the federal government is trying to impose some limits it's being i think a bit more timid than it really should be strangely the great defenders of a lot of these shysters turned out to be the republican party you would think that they would be very wary of anything that could be characterized as poverty pimping but in this instance they because it's called for profit. they have to be in favor of it and that i mean the g.i. bill after world war two brought that population of basically poor people or people who were added below the middle class into college education well middle class people yes it tremendously increased the college age population we need something analogous to the now well. again i think that the problem is is cost i think that. we certainly need to increase the level of funding for pell grants

and we need to i think the president was right to impose a limit on. interest rates on student loans but if the basic good is becoming it is out of control and it's cost we need to address that i was reading just the other day in the new york times about ohio state university and you know the president makes two million dollars a year there and he was saying gee maybe we should think about closing down our airport. it makes no sense and yet you know the argument made by some is the availability of pell grants and there's an argument that's being made in conservative circles against pell grants right now and other forms of student aid because they say that by providing this aid what you're doing is you're driving up the price you're increasing that that price inflation and in public education or and in private education any kind of education second or education and they're opposing it because you know there's money in there that you know so

somebody will come in but if you look back at the g.i. bill there was just an incredible amount of money and you know my dad went to college on the g.i. bill my wife's dad went to college became a lawyer became this internal job for the state of michigan on the g.i. bill and and there was no inflation in prices then and there were no price controls it seems to me pell grants shouldn't be inflationary because they're not available to everybody they're only available to low income people if you take away pell grants. what colleges will do is they'll just admit people who aren't poor. so i have a hard time following that argument well could that argument i mean what about the argument that college should basically be free for everyone if you jump through some kind of hurdle most of the european countries if you do a military you're a military service for example it will ultimately i think that would that would be great and of course if if if the government were paying for college education it would probably impose some pretty strict direct price controls and it's that would get you back to that you can i'm more oversight and you wouldn't have

a university president making two million dollars i guarantee you they were in the sixty's and seventy's probably the eighty's and close to that so we've kind of. gone through the college thing he said the second problem or the second condition that led us to this was the collapse of unionization that's right and again i remember ronald reagan you know you made a deal with patco before the election they supported him because he said he was going to support them as soon as the election was over you know he stuck the night . after the break can we can we get into the great ok will more conversations with great minds to. the climate of american power continues. things in our country. might actually be time for a revolution. and it turns out that

a programmer drink at starbucks has a surprising him. you know sometimes you see a story and it seems so you think you understand it and then something else hears you some other part of it and realize that everything is ok. i'm sorry welcome is a big issue. here is what i. love and they alone i felt they'll get the real headline that none of them are the problem with the mainstream media today is that they're completely disconnected from the viewers and what actually matters to those viewers and so that's why young people just don't watch t.v. anymore if they want news they go online and read it but we're trying to take those

stories that people actually care about and transfer them back in t.v. . mr. waller back to conversations in the great minds of timothy noah timothy is an american journalist and senior editor of the new republic where he writes the t.r.p. column as well as a political blog he's also the author of multiple books including his latest great

divergence america's growing inequality crisis and what we can do about it let's go back to what we were we were talking just a did. actually the author of only one book this is my first book i've read a couple of other books over the first one i've written well congratulations and so that's. it's an achievement of this book in particular we talked about college and then we started on unions here and how trying to hold together the pieces of what is causing this great divergence and how we might put it back together and you noted that the level of unionization right now is where it was before the wagner act the national labor relations act was passed in thirty five and a great deal you know had commenced basically how did that happen well the the new deal really caused the labor movement in the united states to blossom because of the wagner act and i actually wasn't so much because of specific provisions in the wagner act it was merely the symbolism of the wagner act caused

a lot of ferment and a lot of activity so you saw the economy unionize. increasingly in through the one nine hundred thirty s. and one nine hundred forty s. reaching a peak in the early one nine hundred fifty s. . and of around thirty percent was nothing got up to close to forty percent within the private sector. and you. in the in the early one nine hundred fifty s. what's often referred to as the treaty of detroit negotiated by walter ruther with the big three automakers where an explicit deal was cut that that workers would get regular. pay increases commensurate with product of eighty increases which was a good deal for both sides. created a fair amount of stability for the bosses and it allowed workers

to share in the fruits of their of their labor if they were contributing to the company's product to vittie they saw their incomes rise what happened to the labor movement was that the government slowly turned against the labor movement obviously labor has had a hard time with the advent of globalization and that's been true around the world but labor in the united states has had the additional burden of government policies that have been increasingly hostile to labor organizing starting with the one nine hundred forty seven taft hartly law which parts of which labor has been trying to repeal ever since most recently with the card check bill that passed in congress that failed in congress a couple of years ago. reagan as you note. there crushed the pack union patco was a public sector union so it doesn't have any direct relevance to what was happening for private sector unions but it was

a very symbolic moment and at the same time and probably more meaningful in a practical sense was that reagan appointed the first blatantly anti union leader for the national labor relations board no republican before him it ever done nobody had been quite so so. strongly opposed to. labor labor rights you know to remember back in at the time of the treaty of detroit in the early fifty's i have a quote my. from a president of the chamber of commerce it sounds like if you saw it today you would say oh that's a union leader who's saying that he was talking about what an important and necessary part of the economy labor unions were you would never catch the chamber of commerce saying that today well there was a variation on that in two eisenhower's letter to his brother edgar in one hundred fifty four he was talking about if anybody should try to do away with these things i don't recall if you mention ization but he talked about social security and farm programs and things like that he said you know but there's these few oil men down in texas they're small and they're stupid. so the so the peak

the collapse i guess just follow the taft hartley tester was kind of a slow acting poison on the labor movement that created the right to work for less states that's right and it just became more and more difficult to organize in my book i describe an attempt to organize a wal-mart in colorado and it's just heartbreaking because you can just see how thoroughly the deck is stacked against any attempt to unionize when when the company is big and powerful and does not want to light and is determined not to let unions in and. it's sometimes said that although it it is illegal to prevent workers from trying to organize unions the penalties are so slight that it is it makes no economic sense for the bosses to obey the law after world war two harry truman was whispering in the ear of the germans about how to put

their economy and their country back together and written into their constitution is that any company that has over a thousand employees must have at least fifty percent of the members of their board be representatives of labor within the company those kind of institutional structures are not uncommon i mean that specific one is kind of unique but the variations of that are not uncommon in european countries. i think eighty two percent is the rate of unionization sweden for instance right now it's right and you have less and less adverse. ariel culture i mean people the one complaint people have about labor unions in the united states is that they have been very adversarial but you know walter ruther i write an awful lot my book about the example of walter ruther richard was really trying to push a more cooperative model. and it was not the labor unions that rejected that it was the bosses the bosses got very interested in labor cooperation when international competition suddenly put them on the ropes economically but when

times were good they they told them to get lost there's actually. one remarkable thing that i think is the president of g.m. said to walter ruther about one suggestion he made he said you know walter that's a really good idea because it's your idea we're not going to do it. that's that's really in your face quite remarkable the inequality in the united states has exploded we have a we have a graph of this comparing the united states to other countries. from japan and sweden down here in the bottom this is income inequality ratio versus health and social problems based on the call this is from from wilkerson pickets were you know the equality trust in the u.k. quality trust or u.k. and and the us not only is at the top but we're almost an outlier here in this in this graphic how. how did we get here i mean you've talked about education and

labor but is there is there some grand you you know find theory of this and what are the consequences and we also see that these social problems we're almost off the scale on that you know things like poverty obesity lack of trust drug drug use teen births paul those things we beat everybody in the world and we write well david that's really kind of two points one is that income inequality does seem to correlate with all sorts of bad things in this is when you look around the world in the one. that is i think the most proven is poor health consequences and poor health consequences for the entire society not just for those at the bottom inequality seems to be bad for everybody in societies not just. those who are failing to share in the riches of the united states is what i say in my book is that yes income inequality is a global trend. it has been for roughly the same period that i'm talking about

going on under in one thousand nine hundred eighty s. well again all of these countries were were less than equal or most of them more or less on equal in those days but it's a global trend but is not a universal trend i can cite to you countries that are comparable to the united states that have either seen income. inequality go down or where the rate is more or less the same in france for example it went down for a long time lately it's come up a little bit but the net change since the one nine hundred eighty s. is virtually nil so it doesn't have to be that way but it does tend to be that way where the united states is different is in two ways our level of income inequality is greater by most measures. and in addition the rate of. income inequality is increasing is faster in the united states than it is in these other countries so in my book i don't address so much the

global questions because i think those are big factors that you know it's kind of hard to hard to reverse problems that exist on a global scale but to the extent that things are different and worse in the united states i did try and address that so the education situation is certainly worse in the united states than in europe it used to be that europe did not educate. the majority of its population. they thought we were sentimental saps. having everybody go to high school then about the middle of the century they realize they had called that wrong and by the end of the century they were beating us at our own game another college completion rates are greater similarly labor's taken on the chin around the world but you don't have anywhere you have the labor movement in such desperate straits as in the united states the republicans in comparable countries. in terms of development advanced industrial democracies has the republican party made inequality worse in the united states just throw out

a total of well saying i haven't it sounds mean and partisan to say so but larry bird tells in a two thousand and eight book called an equal democracy looked at the data bar tells i should say he says in the book that he does not vote for president and that the last president he voted for was ronald reagan. so he he's not a partisan guy but but is his research had very partisan implications he looked at white house is going back to one thousand nine hundred forty eight and he found that under democratic presidents consistently going back to one nine hundred forty eight the biggest income gains came at the bottom and tapered off as he went up the income scale under republicans precise opposite the biggest income gains came at the top of the income scale and tapered off as you went down to other things one is that overall there was more economic growth under the democratic presidents than one of the republican presidents and and finally

a nonpartizan kaviak which is that once you got above a certain level once you got about the above about the ninety fifth percentile then those partisan differences started to break down really rich people did very well under both democrats and republicans are what are they continue to in the two minutes or so we have left here i'm curious your thoughts on the occupy movement we were all everybody was screaming about debt and deficits and then the occupy movement happened and now. well this kind of conversation is not that i'm home and well they've they've put the issue they've they've got all of us talking about income inequality. it was you know when i started the book it was i actually had to change the book and change some passages in the book just before i went to the printers because i had passages that said well this is really important but nobody seems very interested in this and suddenly in the fall of two thousand and eleven a lot of people were interested in it as the occupy wall street movement was having

an impact the media got interested the president who had always been somewhat interested really started talking about the issue and more the chairman of the council of economic advisors started doing some some very interesting work. on income inequality. and he produced something called the great gatsby curve that showed that high income inequality seems to correlate with low mobility so even if you don't care about income inequality you have to if you care about mobility it's remarkable absolute remarkable stuff and a great book the great diversions of the known thank you so much for being with us and thank you so much appreciate your time to see this or other conversations of great minds go to our website and conversations in the great minds viacom. coming up after the break the department of justice is telling florida governor rick scott to stop his war on voting but will he listen all that and more in tonight's big picture rumble.

of american power continues. things are so bad. might actually be time for a revolution. and the troops are going to drink your starbucks there's a surprising greeting here. you know sometimes you see a story and it seems so you think you understand it and then. some other part of it and realize that everything you thought you. are welcome is a big issue. here you want to. look into the aloneness so they'll get the real headline with none of

them are the problem with the mainstream media today is that they're completely disconnected from the viewers and what actually matters to those viewers and so that's why young people just don't watch t.v. anymore if they want news they go online and read it but we're trying to take those stories that people actually care about and transfer them back in t.v. . to the capital account i'm lauren lyster.