it up and why are some nations just simply better than others most lou author of why nations fail sat down with me to talk about this very subject and finally while just basis is nifty little drone delivery gadget had everyone pumped about amazon recently the online retailers german workforce is none too pleased with their employer virtual purses and i discussed this very issue in today's big deal it's all coming up and it all starts right now. this week may prove to be an explosive one for the financial markets given the possibility that the fed may finally begin to pull back on its eighty five billion

dollar a month bond buying program now central banking officials face a delicate decision at a policy setting meeting this week and with stronger economic figures and a washington budget deal all eyes in the financial world will be on ben bernanke in june the fed had set out a three part test for reducing its monthly stimulus based on employment growth and inflation now recent data shows progress on the first two conditions but not the third investors have been trying to gauge the timing of when the central bank may start winding down its market friendly bond purchases and with many expecting the fed to announce a taper in march of two thousand and fourteen. now elsewhere just when you heard it all surrounding the n.s.a. snowden spying drama another twist and turn presents itself this time in the form of an i.b.m. shareholder lawsuits which accuses the company of hiding reduced sales in china a result of leaked information about the n.s.a. spying program now the louisiana sheriffs pension and relief fund. i.b.m.

a new york city federal court last week pursued is based on the assumption that edward snowden's leaked information about the n.s.a. spying on foreign nations and i.b.m.'s complacency with the program led to a loss in profits now the fund says the decline was a result of spook chinese government agencies and businesses who now fear buying equipment from american based companies however there are several logical non snowden explanations for the decline in sales as well now not just i.b.m. but cisco systems and microsoft also saw a pattern of declining sales in china recently along with the fact that the chinese economy is slowing and the government is reducing i t. purchases regardless the suit is allowed to proceed. and finally norway's government says no no to because scandinavia is richest nation has said the currency does not qualify as money however the norwegian government did rule that because one is an asset upon which capital gains tax can be charged profits made

from big one will fall under the wealth tax while losses can be deducted the european banking authority issued documents last week reminding consumers about the dangers of virtual currency is now according to the be a people using virtual currencies should quote fully understand their specific characteristics the not use real money that they cannot afford to lose the is not alone in its position on virtual currencies here in the u.s. the legalities of decline are still pretty big. well there you have it we'll be tracking all of these stories and keeping you posted on all the latest as usual. what are some nations prosperous while others struggle is a do or culture the weather geography well not quite now according to research or derren r.j. mogul who co-author of the book why nations fail the key is inclusive versus

extracted institutions earlier i spoke with professor r.j. mogul and asked him about the role of institutions in creating economic prosperity here's what he had to say. created these categories inclusive extract of institutions to benefit. inclusive institutions create. incentives and opportunities for prosperity. sitting in a framework in which people have secure property rights to a level playing field in which they can compete for different. different occupations or different businesses on the relatively free floating. trusted to extract of institutions which have been designed so as to exist it's. some people at the expense of the rest one of the common explanations for global inequality is geography and some places they just have more fertile land more resources natural shipping routes eccentric cetera but in this area as described pretty well in jared diamond's book guns germs and steel why was this theory kind of only valid during

key historical periods or is geography is important as important today as it was historically. well. actually our answer to that is a little more more nuanced so first of all you're absolutely right jared diamond's wonderful book guns germs and steel is one of the places where the very innovative theory in which geography is this is emerging as a key determinant of economic prosperity is is advanced but there are many other people who have suggested it for the present today they argue some places have disease environments that make it impossible for countries to grow they have a lack of access to see or to rivers or they have their own climate and there is fairly cold calls of evidence some of that based on our work before and some of it summarized in the why nations fail that shows that this argument is very difficult to maintain if you have countries that have very similar geographies behave very

very differently because they have different institutions and you have countries where very prosperous ones become a very poor relatively speaking because there is to keep up with so then people who have defended the importance of job or if you have been falling back and said well perhaps we have a sort of divide here perhaps job that he was really important to the fifty eight hundred stop to do a lot of world and in the modern world perhaps institutions become more important well actually in the book we also take that on also so we don't want to say that don't really doesn't matter at all but what we do provide some evidence for is dead . even if you want to go back as far as possible to the middle of the great will should do the ancient greece or rome again it's not joe graphy that's most important to understand it is the economic and political institutions it's not the job graphic factors that make one place prosper worse than other in fact you have

many many places all of them next to each other all of that having the same job will be some of them prosper some of them form complex civilizations some others don't and the difference again is in terms of what sorts of institutional choices they make what sort of radical wishes they picked and now you highlight the roles of institutions in creating inequality but what shapes the institutions themselves i mean according to karl marx technology itself influences the institutions got ask how does this whole that today. right so. i think marx did a great disservice to too are thinking of. these institutional differences by putting a very materialist. gloss on it sort of thinking that technology somehow as monarch from heaven calms and determines what sorts of institutions a society is going to. and we differ from that sharply we think that technology is highly and dodginess if you want to understand why the industrial

revolution started in the eighteenth century and in britain you have to think about institutions and institutions are of course influenced by economic factors they are of course influenced by you know whether you have an industrial technology but more importantly they are an outcome of a political process they are men made they are choices that we make and many societies that have access to the same technologies that have very similar histories ten end up with very different institutional i want to take a look at the u.s. now when while america has been fairly prosperous relative to other nations there is quite a bit of inequality still today. you have said that open political systems generate innovation and growth and this sometimes comes with greater inequality it begs the question how much of the inequality that america experiences today is due to innovation and growth and how much is due to extractive institutions. great

question i wish i knew the answer. so but you're absolutely right you've summarized it extremely well which is i think it is. naive to expect this society we dug in inequality inequality is a feature of every society that humans have created even the wants to go to terry and hunter gatherer bands have had their own version of inequality and tendency towards inequality gets exacerbated when you have new economic activity that which some people are successful some people aren't and economic inequality deaf or within ballance is something that we have to live with and it's also consistent with the will that was due to inclusive markets economic growth the problem comes when economic inequality i don't becomes extreme. or when it's translates into inequality of opportunity to a level playing field that i've mentioned at the beginning is a whole market of equals of economic institutions becomes the tilt of playing field

or most all men asleep economic inequality begets political inequality in which people with money become more and more politically influential in the book we tell the story of venice where this process of economic inequality leading to political inequality destroyed their nascent includes of institutions and turn venice from one of the most dynamic economies to tie in to a stagnant one so the fear for the united states is that we are in the midst of a similar process and i think the glass is health ward off empty probably a little bit more than health. you know more empty than full which is you know the full part is that us county. used to be very innovative it's still generating a lot of innovation and in some hospital we know quality is related to beat innovations there is there is a whole. plethora of new technologies dead require

skills that are scarce in the labor market day generate a lot of income for the innovators and as a result of that inequality increases as a result of its approach a part of this process of technological change structural change in the u.s. economy you have greater and greater globalization and globalization has brought a lot of inequality to the u.s. economy now i'm not suggesting that all of the you know equality is something we have to live with some of it could have been dealt with in other ways perhaps by providing more. broad based education and skills building programs so that more americans would benefit from the new technologies and better fiscal redistribution so that we have a better safety net but but there is a natural tendency for inequality from the from the wave of technologies that the world economy has has been experiencing over the last several decades but also. that was there an author of why nation fail. now coming up why law

is the volcker verbiage venerated or vilified alexis goldstein joins us to help render a verdict after the break and who does amazon blame for stealing christmas can't it's not granted rachel curtis and i discussed the first first major strike against the mega retailer in today's big deal and as we had you a quick break here's a look at some of today's closing numbers figure out.

what defines a country's success. faceless figures of economic growth. or a factual standard of living. the best rules in life are to the point and at first the bowker all seem promising don't let banks gamble with customer money. but to no surprise it's much easier

said than done now after three years and many many missed lines the vocal rule finally came to fruition last week now lobbyists activists and advocates from both sides are combing through the rule so who exactly are the winners and the losers joining me now alexis goldstein former v.p. of merrill lynch an occupy wall street activist and general know everything wall street. thank you for being here and now i want to start off by asking you under the volcker rule only three percent of the bank's total assets can be invested in hedge funds and private equity funds however you see a problem with this you say it's because of the way that bank employees are paid and they're paid for something that is carried interest can you explain the issue that you have with carried interest so carried interest is basically the way that private equity fund managers get paid in the ideas instead of taking some of their money and investing in the fund as a part of their compensation they actually get to share in the profits of that company so if the company that they're managing does really well they get

a chunk of the issues that i have is there's a little bit of a double standard so in the vocal rule that carried interest is not treated as an ownership interest and that three percent limit you mentioned is how much the banks can invest in these funds but that compensation that carried interest doesn't count toward the three percent limit so it's not seen as ownership for the purposes of the volcker rule on the other hand if you talk about taxation carried interest is seen as ownership and that's the justification that lots of lobbyists use for why it should be taxed at fifteen percent so basically my point is you don't get to have your cake and eat it too either pay the regular amount of taxes or treat it as ownership for the purposes of the rule you don't have to be able to have it both ways and right now they do carried interest it's ultimately a portion of profits that a limited partnership willy nilly shares with a general partner correct is are they willing to give over to the fund manager now why should a limited. partner and in general partner not enjoy the same fifteen percent that's

the fifteen percent benefit they get together on the same income if they're both putting in some of the risks when when they are basically in a partnership together why can't they share well often the managers aren't actually putting skin in the game i mean there may be something in them requirement that they shall have a little bit of money but they're generally not putting forward the same amount of capital as the actual company and especially for the purposes of the vocal rule when you have a big bank that has a three percent interest in a hedge fund or a private equity fund most of the time they're they're not putting you know they can't buy love more than that three percent and of course there are some exceptions which we can get into if you. apples to apples comparison and so i don't really think that they deserve that same preferential taxation because they're not really doing the same thing but it would would it just banks from lending to these fund because funds they're set up to make money whether or not we want them that's what they're designed to do the fifteen percent tax incentive is an incentive for lending is it not well i think it's an incentive for them to invest in private

equity companies but i don't know that that's necessarily something that i would want to advocate for i think that a lot there's a lot of risky gambling that happens there that's part of the reason the volcker rule tries to limit it so it's not like necessarily a small business right these are these are companies that are that are quite wealthy so i don't know that it's in the country's best interest to incentivize it right now are you saying the partnerships in the financial services industry is that they should be taxed more period and if so how much more should they be taxed you think well i think that carried interest should be taxed at the rate of a regular income of regular salaries so whatever that would be for your income bracket and typically these fund managers very deliberately construct their compensation to mostly come in carried interest and pay themselves a very small salary to maximize taxes look they're clever good on them but i just think that there should be a level playing field and warren buffett happens to agree with me and he wrote about that i believe it was last year saying this is why my secretary make pays more percentage in taxes than i do because of this special treatment and i think it should just be the same across the board. you recently published in one your articles and i read a quote from you here the policies procedures and limits mandated by the volcker

rule are mostly left for individual banks to craft on their own regulators to provide strict guidelines on the way that they should what they should look like now why would lawmakers leave such governing measures in the hands of the banks that they're intended to regulate make sure seems silly i think the short answer is it tends to mean i think this vocal proposal started very simple the law written by you know senators merkley eleven was several pages long and then as the lobbying got kicked in kicked up they wanted more and more exemptions so it got there in length there and i think that one of the thing arguments that the lobby. made that unfortunately the regulator said ok that makes sense to us is every desk is different you can't come up with one universal thing that all applied to the equity derivatives desk but also to fixed income you need to let us handle it and it seems like they have agreed with them on that point however that isn't to say that the regulators aren't going to go in if something doesn't look right pointed out you know i think if it if it looks funny hopefully the regulators will call it out but

that remains to be seen and i want to move on to shadow banking there's areas of the shadow banking system the dog front and the book world do not touch upon it all what do you consider the most pervasive problems in the shadow banking industry today i think there's something called a purchase agreement and i was thinking about it's going to a pawn shop maybe you sell your watch tomorrow you get a loan and maybe a week later you go and you buy it back and you pay some interest on that purchase agreement is kind of a fancy version of that instead of selling your gold watch you sell a mortgage backed security and that's a part of the shadow banking system that really hasn't seen a lot of regulation and it's froze up lending in repurchase agreements froze up in the aftermath of lehman failing and these banks couldn't you know basically pay their bills and so that hasn't been solved and so i fear that the next time we have a crisis we're going to see that same sort of problem come up how do you think we begin to fix the problem posed by the shadow banking industry i mean it seems

extremely large i don't even know how to begin maybe you have some idea what i think part of it is bringing it out of the shadows right repo is just one aspect of it another part of shadow banking is money market funds and the reason that's called a shadow bank is because people treat it like a bank account but it's not a bank account because it doesn't enjoy f.d.i.c insurance and so we either need to face facts and say people treat this like a bank account let's make it adhere to some of the rules that banks have to abide by or let's make it more clear to people that money market funds are not bank accounts and this is something that she would bear as advocated for let the you know the and the flow instead of always saying that it's you know one. you're always going to get a hundred dollars back for every one hundred dollars you put in so i think bringing transparency is maybe a good first step and reforming money market funds is a good first step you know this is a business development companies that are exempt from the vocal rule this is a loss in your opinion why well i think you can get around the intent of the rule now the intent of the rule says you don't get to gamble anywhere and you don't get

to do it through private equity fund up to that three percent or so and then and there are some exceptions there too but a business development company is the special kind of company that has to invest seventy percent in things like small businesses but thirty percent can be invested however they want including private equity funds the volcker rule says that you can invest up to twenty four percent in a business development company so if you take twenty four percent of thirty percent that seven a half percent that's still more than the three percent limit so it's just seems to me that it could be an end run around the intent of the rule and they could all just pile into these business development companies to get around alexis your insight and making this concise and digestible for most people would. be back very soon and i'm sure the spoken will develop a lot more. coming back that was alexis goldstein communications director of the. time now for today's big deal.

because she joins me now to talk about striking picket lines etc now i want to quickly by wednesday december twenty fifth well not so hundreds of workers at amazon and germany have walked off the job in an effort to pressure the e-commerce leader to settle on a wage disagreement now these are the first strikes against amazon anywhere in the world and today the strikers plan to rally outside amazon's seattle headquarters. a top amazon executive in germany said the workers were mostly unskilled and have been unemployed for a long time implying they should be grateful to work at amazon rachael i turn to you in a down economy when employers have so much power like amazon does do workers have much leverage when they go on strike in a place like germany they have significantly more leverage than they do in the united states and that has to do with germany's labor laws which are regarded as

significantly stronger and more in favor of employees then in the united states ok now according to reports in the german media amazon is accusing strikers a quote is quote from german media not us trying to steal first to know who herrera grinch led to the timing of his joke trying to give workers an overhand other than the labor laws so they could go both ways i think i mean clearly amazon in germany has a very strong need to get all of those packages done on time and get them to people by the time that santa's supposed to bring them at the same time so clearly they have a need for these workers but at the same time if people who are customers that amazon and who enjoy the services they provide feel like they're being screwed over but not because of management but because of the workers this could turn public sentiment against them so it really depends on how customers take it you know agree with the customers choose to side with here who the customers decide is the group

essentially right now with their dollars or with your euro and with their euro with your euro now then all done different from other retailers because of their online presence and it being so massive so this is something that we talked about on friday a little bit with a lot of malls trying to actually employ delivery in what amazon has a huge advantage that a lot of these other companies don't is that they don't have real estate right so they don't have the storefront the only real estate they have is digital so they can put that money in to improve customer service they could put it into improved wages and conditions for their employees if they think that that's going to be helpful and some of the some of the reports about warehouses particularly in the. united states for amazon employees don't seem great that can redeem a miserable do for very. little help or go on a ride you know the the the people working as elves in the amazon workshop don't seem to have a very good in terms of working conditions but yes so i think that the fact that they have that additional money that isn't being used for physical relooking where

exactly is could be a huge advantage why not let us trickle down if you will now there seems to be a bit of a backlash of these companies when they get to a certain size and it's a tipping point if you will as has amazon hit that tipping point in terms of public sympathy and whether or not people are. going to lock up all of the crazy things we've heard about amazon in the news recently right from the nifty little drone gregory drew you know the very do that five years away from ever potentially seeing this guys having nothing to do with f.a.a. regulation i think made some people go who cool but most people just roll their eyes i mean amazon is a huge company as you said and they and i think that they have a huge following but in the same way as the bill larger you are the more likely you are to garner kind of consternation from from people no longer going to want to should we expect to see do you think we should expect to see more strikes from amazon from amazon workers yes we'll continue to see them as same way wal-mart warehouse workers kind of continued to gain attention and gain solidarity with one

another i think that's what happened with amazon too and what i also think that warehouse workers from amazon and wal-mart and all these other places might unionize together there haven't you heard of her first marriage of hers is predicting the future as always and i love it for an hour you can see all segments featured in today's show on you tube you tube dot com slash boom bust are we also love hearing from you so please check out our facebook page at facebook dot com slash boom bust r.t. from all of us there boom but thank you for watching we'll see you next time.

we tried to tell you we warned you. the government is not publishing well we have been reporting on this show that they have to buy scheme well cause more than one hundred percent guaranteed outcome a crash in the real estate market and people will be underwater negative equity and the banks will need another bailout and the wealth and income disparity will increase yet again. i would rather ask questions to people in positions of power instead of speaking on

their behalf and that's why you can find my show larry king now right here on r.t. question. to me. i was a new alert animation scripts scare me a little bit. you know there is breaking news tonight and they are continuing to follow the breaking news coming in. alexander's family cry tears of joy and great things rather that there has to be adequate bread dark and a quart of water around online is a story made sort of movies playing out in real life.

i know c.n.n. and the m.s.m. b c news have taken some slight risk but the fact is i admire their commitment to cover all sides of the story just in case one of them happens to be accurate. that was funny but it's closer to the truth and might think. it's because when full attention and the mainstream media works side by side the joke is actually on here. at our team news we have to print press the good because the news of the world just is not this funny i'm not laughing dammit i'm not ok. if. he does talk to the jokes i will hand over the stuff that i've got to.

coming up on r.t.e. edward snowden speaks again this time it's to the people of brazil the n.s.a. whistleblower has offered to help the nation and investigate u.s. surveillance but this time he wants something in return details on that ahead and in texas the fracking industry is on fire literally homeowners fear of a controversial practice is lighting up their drinking water an in-depth look at the boom that's leaving the locals hostage coming up and in pennsylvania a bar of soap can land you in handcuffs two people spent a month in jail after police mistook homemade soap for cocaine we take a look we talked to the lawyer scrubbing their records clean later in the show.