>> rose: welcome to the program. to want, david brooks, a columnist in at the "new york times". >> so we've got two separate political yup verses and you can put the greatest people on nert the supercommittee, these two parties are not going to come together. we're going to havea bad decade. >> rose: we conclude with dovsideman, his book is called "how. why how we do anything means everything." >> one day a historian will look back at the last 20 years through the lens of the ideas that permeated society a these ideas will have been amoral ideas. ust do it." "it's just business." oo big to fail." "ged is good." "man is rational so let's give

him carrots and sticks to extract performance out of him." those ideas maybe did their job when we wanted scale and growth any which way, but today we need to go from "greed is good "to "good is good." from "gist do it" to "just d it right." from "mans rational" to "man is in search of goodness and meaning."

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: we begin tonight with a look at politics. today, the deficit reduction supercommittee announced it had failed to reach an agreement. the committee was chargedith a task of finding at least $1.2 trillion in budget cuts over the next decade. the panel co-chairs jeb hensarling and patti merry released a statement after the

markets closed. this failure could lead to automatic spending cuts starting in 2013. here is what president obama had to say earlier this evening. >> i will veto any effort to get rid of those automatic spending cuts, domestic and defense spending. there will be no easy off ramps on this one. although congress has not come to an agreement yet, nothing prevents them from coming up with an agreement in the days ahead. they can still come together around a balanced plan. i believe democrats are prepared to do do so. my expectation is that there will be some republica who are still interested in preventing the automatic cuts from taking place. >> rose: joining me now is david brooks. he is t a columnist in at the "new york times," as you know, and i'm pleased to have him back at this table. welcome. >> gat to be back. >> rose: let's startith washgton and the supercommittee. wherdo wgo from here? we're going to have a bad decade. they failed where a bunch of other people have failed. we've been here before. it was boehner and obama and we've been here several times.

and it's not their fault. i spoke with the members of the committee during the whole process. they worked hard, they worked in good faith. from their own perspectives they took some ris but it's... the structure is just wrong. we do not ve... >> rose: meaning what? the truck which you are of congress... >> the underlying structure of american politics. >> rose: ah! >> we ve a governing party. in the '30s it was the democrats, in the' 80s it was the republicans. now we don't a majority party. we have two minority parties. we have two parties that represent about 30% of the population each. so we have two minority parties with minority mind seths who are stuck in their minority cocoons and neither has enough power to impose on the country a governing in addition and neither has... both of them are too rigid to create a high brit comprose vision so we've got two separate political universes. and you can put the greatest people on nert the supercommittee. these two parties are not going to come together. so we're going to have a bad decade. >> rose: why didn't somebody create the supercommittee in the

first place then, knowing that? did they think this was somehow going to be an exception in >> i don't think so. i think they went in with realistic sense. maybe there was a pipe dream but i don't think anybody really had much hope. thdemocrats nominad patty murray, the person in charge of the senatorial campaign. so she was not away from politics. >> rose: she was not disconnected from the two. >> so there was an effort either kick the can down the road or el just say "we'll make an effort. we'll coveour rear ends. then we'll have a phony sequester. and they all have the faith in both sides that the election will solve it. let's take it to the people." and they are completely wrong about that. the elections we've had... we've had this volatile shift. and basically what happens, they're not positive elections. people are not given a mandate to do anything positive. they're negative elections. 2008 we really didn't like the republicans. in 2010 we really didn't like

the democrats. >> rose: yeah, but the president had a majority in both houses of congress. i mean, why isn't that a mandate? >> well, heot a mandate because people didn't like george bush. but what's interesting about the current political moment is usually the parties are on a seesaw, when one party's up; the other's down. now they're both down. so neither has the country behind them. so even when president obama tried to say we're going do the stimulus package, health care, this is our democrati vision, the country recoiled because they're not naturally there. and the same thi with the things the supercommittee was dealing with. it's two things. how do we have an economic poll city to enhance growth? how do we have a fiscal policy? we don't have any o those things in government right now because we are so fundamentally divided. >> rose: there is a dilemma for governments across the world. the british government has a question about a growth strategy or an austerity strategy. this is one of the central dilemmas of our time. everybody s too much debt and

everybody needs to grow. >> but the british have a political system they can push through an agenda. i guess the central problem heresy think we all know-- at least 80% of the country knows what the solution is. it's like that middle east peace process. you know solution. it's getting there politically is the hard part. >> rose: so it's the brand bargain >> i think that's basically it. we circle around the same issues the supercommittee is having. have short-term stimulus because of tune employment rate. have a long-term medicare fix, you have to do that. and then increase taxes. that's the basic deal. means test some programs. if you look at the committees, the biparsan policy center, the brookings institution, the heritage, i.e.i., they have different versions of the same deal. >> rose: bowles-simpson. >> boes-simpson. so it's the deal. the questi is, is the problem in washington or is it out in the country? i think it's fundamentally in the country. >> rose: it's not washington?

not our system? it's the country? >> i think the underlying problem is americans are still unwilling to pay for the amount of government they demand if you're 65 and you're in medicare you paid in about $145,000 into the medicare system. you take out if you're an average medicare recipient not $145,000, $450,000 of benefits. that's a sweet $300,000 of benefits. not too many people would want to give that up. so as long as people aren't going to want to give that up, politicians are going to be terrified. let me tell you... >> rose: but then why are the republican politicians unafraid of the fact that they are arguing that somebody has to give that un? >> well, i think they're going to have to give that up. and i give may remember lot of credit for coming out with a medicare package that will make people pay some serious cuts. paul ryan came out with a

package which is a little more radical if you want to put it this way. >> rose: but doesn't deal with social security. >> right. but i would say it's politica suicide and the democrats acknowledge that and a lot of republicans acknowledge that. >> rose: that the reason the president has been very, very his tent to step forward and say "this is what snipt this is what you'reo do and this is the way a president ought to act? he ought to exercise leadership but i'm scaredplitly to do that?" >> i think the president knows what needs to be done. i think he wants to do it. but he hasn't eve come out with the a real fiscal plan. he's come out with approaches. he's come out with calls but he's never said "here's my plan." he's never dwhen paul ryan has done and said "here's a democratic way to get to balance." he hasn't done that for the obvious reason that if you're trying to reelected it's phenomenally hard. >> rose: your colleague tom friedman 1ed "here we are on the eve of a major budgetary destation by yet another bipartisan committee and does anyone know what president obama's preferred outcome is? exactly what taxes does he want raised and which spending does he want cut?

the president's politics on this issue seems to be a bowl of poll-tested mush. >> rose: i agree with tom on that. i admire president obama, he's hanging in there in the pools because a lot of people feel the way i do. disappointed but he's still a reasonable guy. but you're president of the united states. your country has no economic policy. your country has no fiscal policy. that's your job. and i think he' held back. >> rose: america likes strong political leaders. they want boldness. >> rose: >> and they want a sense of "where are you going?" president obama gave a speech at georgetown which he's very proud of-- justifiably-- called "the new foundation." foundation for what? what kind of economy are we building? and i think supreme a sense we've allowed ourselves to have institutions which have vs phi sod we need to reform entitlements in a big way. we need reform the tax code.

pick four or five things. one o them he's already doing, education. doing quite a good job there. energy, i think he's doing a mediocre job. not without success. take four or five big reform agenda, that's from franklin roosevelt and teddy roosevelt did, lay it out there. that's a 60% or 70% agenda and if you present beam that agenda say starting with the tax code, nobody's going to leek all of it but they'll like that rong agenda because you are laying the foundations. and the tax reform was the test because many people-- include the president himself-- said "we've got t reform the tax code" and everybody knows what the shape of reform looks like. absolutely everybody. lower the rates and get rid of loopholes. and he didn't come outith a plan. he embraced it front from a distance but never said "we're doing this." >> rose: just laying out what he wants to do, is prepared to do about cutting entitlements, i

mean, can't he make that case that in these economic times it's essential to do thi >> well, here's the case where we have a disagreement between the two parties. we currently is a fee-for-service system in medicare which charges people... >> rose: and everybody knows it's not good. >> everybody knows it's not good. so the republicans believe that if you... what they call premium support people. a system. we give people the subsidies, they'll buy their own insurance, yoll have competition, and at will lower costs. a lot of docrats don't believe that will work. and so that really... and so the democratic approach is take the current system and quash down the costs with some innovations in there and the republicans to go for this competition. my view-- and, frankly, i'm impressed by mitt romney-- his view is let's create a system where there's both and see who's right. he laid out a plan-- and i give him credit for this-- based on the plan that pete domenici and alex rivlin put together and that was to create two systems,

we'll see which ones work. but he hasn't been willing to lay out either of those systems in a compelling way for the same reason he hasn't been able to lay out a tax reform, innate caution. rose: but he said "i'd rather stand for something than be reelected". >> yeah. . >> rose: he said "if the price of not doing anything is the price of having a second term, i'll take one term." >> well, a he's one of the most competitive people youl ever want to meet. he wants to win this election and, you know, that's fine and i'm sure he looks at the republican party and says "for the good of these people...". >> rose: does she a cynical view of politics which is right? >> i guess i go back to my original take on him. it helps to have lived in chicago to get obama which is to say chicago hasle two political cultures. it's got the lake front culture which is progressive, which is idealiic, which is hope and

change. it has a neighborhood culture and that is a tough clear eyed king pride in the cynicism. he is both those things. >> rose: but he and richard dayle dayle gee very different view about how to fact politics. rich daly has a much more bolder approach to politics than barack obama. >> right. >> rose: and he knows chicago as well as barack obama. >> that's true. so the theme of our conversation is why hasn't he taken that big step? and i guess i would say if i were his advisor cutting medicare, all of this involves two things, getting rid of pretty serious tax loopholes, at least on the upper end, and really doing serious medicare reform. ose both stink. and it takes... you he to be a certain sort of politician willing to do the things that stink. as i reel my mind back through

history, margaret thatcher was willing to do that. e did things that people stunk and people didn't like it. other people who were not elected, paul volcker did it, but he was at the fed, he didn't have to run for reelection. but ronald reagan tolerated the volcker crackdown on inflation. >> rose: and sported it. >> and supported him. so that stuk. it takes a certain sort of person willing to do things that really stink. >> rose: what about romney? what about the way he's campaignd? what about what you know about him gives you some sense that he deserves a serious look by america. >> first i was not thrilled at all with his cpaign four years ago and i say that because i had the same take everyone had. it was artificial. it was phony. when you see him at a business group it was good, when you'd see him at a conservative group he was terrible. artificial. he gave a convention speech at the convention which was among the worst speeches in american history which is say something. so i'msort of impressed by this. he took an honest look at his own campaign, took full

ownership of the failure and did a correction and he's emerged... i've never in my life covering politics seen a candidate impre as much from campaign to campaign as romney has. and as one professional politician told me just this ek "when you try to evaluate a candidate, don't look at how good they are, look at the growth curve." people who canmprove over the cose of the campaign are rare and worth paying attention to. i would sayhe's done that. he's had very serious plans, a little risky on medicare but the debate performances have been quite good, shown a deft touch. that's not to say people like him in the party but i think the reasons he's disliked in the party will make him a reasonably formidable candidate in the general and democrats are a bit underestimating his political skls. >> rose: and do you believe that he can address with success the question of core character and authenticity and, you know... and not a flip-floper? >> yeah, i'm very intrigued by

how effective this is going to be. there are certain video which is by next fall we will all be familiar with. ones like him at the debate with ted kennedy saying how pro-choice he was. but, you know, somebody like me... >> rose: and he's professor life. >> right. somebody like me more center right, when they say he doesn't believe a lot of things he's saying my reaction is "yeah, i'm counting on that." >> rose: (laughs) >> i want him to be a problem solver. i'm not looking for good or inspiration for mitt romney. >> rose: so you don't want him to be barack obama, you want him to be mitt romney? >> i want him to the way barack obama could be. >> rose: hers an interesng thing aboubarack obama. i said this to george will the her day in washington. what kind of marks do you give barack obama on foreign policy? he said "very good." which raise this is question. i said th ss to rest the question that you need a certain kind of experience in order to be a good president on foreign policy. >> i wouldn't necessaryly go out and puherman cain in the white

house. >> rose: by my point is the estion that was raised by many people in 2008 was not experienced, he's been a state senator and since he's been in the senate he's been a campaigner and so therefore he goes to the white house and he effectively conducts a smart foreign policy and especially having to do with terrorism. >> everyone's wrong about everything. if we look at the campaign if 2008 here's a guy with great vision for america, i worry about his management skills. he runs the white house pretty well. has free-standing debates. very calm in a crisis. generals are very complimentary of the way he runs a mting. then vision is where the downfall is. >> rose: take foreign policy. look at afghanistan and pastan. they had a big review which i thought was criticizeed for being too long but if you talk to the people inside they said he was very thorough, very good, pushing the envelope at every level. they me a decision to have a

counteriurgency rather than counterterrorism. they seem to be going back to a counterterrorism. does that mean that that process made the wrong decision? >> well, i think they would say we always knew we were going to give it a certain amount of time. i think many generals and people in afghanistan would tell you when you announce your pullout date at the same time you announce your commitment you've undermined most of what you're about to do. >> rose: so that was a huge missglak i think most military people would tell you that was huge mistake and very dispiritg and then there again it's chicago politics. he's covering his left flank by announcing a pullback date. so i think he made the right call. i think, again, foreign policy, quite good. >> rose: i've never understood covering the left flank? what kind of pressure is he getting from the left of his party? what are they saying to him? >> well, there are two things... >> rose: not going to march in 2012. >> liberal voters are with him completely. i've never seen a president with as solid a base as he has. >> rose: so what's the threat from the base? >> here's my pop psychology view. i think this is t first white

house that stays up nights reading th blogs. >> rose: i'm sure. >> so i think they're stung. they're stung when they say during the debt negotiations they got outdid by the republicans. they got stung by criticism from the left because it's their community so i think there's a awareness of that. at the same time they know 95% of democratic voters are with the president. they still think he's doing the right thing we have beenome disappointments that are natural. so their base politilly is solid but the debate, the professionaliberals, as they would say, are critical and i think they feel and react. >> rose: and loud. >> and loud. and they... you know, i've never had the guts to tell president t president this, but dwight eisenhower... >> rose: youe telling him now. >> i'm telling him now. he was... his last day in office was asked, you know, do you think the press has been fair to you? and dwight eisenhower said "i don't think there's anything a

reporter can do to hurt me." >> rose: (laughs) >> and that's the right attitude. i mean,here's a guy who had been through d-day. he'd seen some stuff. and i think that's exactly... rose: the man who ordered d-day and said "if, in fact, it fails it's my fault." >> right, so he'd seen what real horribleness is. so i think regardless of whether it's true, that's absolute the right attitude. people-- whatever i write, whatever the bloggers write-- either we don't matter or pretend we don't matter. >> rose: two things about republican politics. one, do you think romney will go all out in iowa and if he wins it's over? >> yeah, i still... i may be wrong. i thk he's the only plausible candidate and if everything we know about politics says you have to be a plausie manager, plausible executive, youave tv ground game, have money, you have to seem orderly and safe. that's everything we know about politics says romney's going to take it.

the oblem is the republica electorate may be different from any other ectorate ever and maybe they'll go for gingrich. i don't think. so but i ink maybe romney will get it. but there are a lot of republicans throughout who think e want a good debater." if they did that, that would be a party committing suicide. >> rose: how do you explain newt gingrich? >> he's a great debater and this is a party that thinks they sold out with john mccain, they've sold out with george bush, they went mainstream. >> rose: george bush 41 and 43? >> oh, yeah. certainly 43. and so they want... >> rose: because he was a big government conserveive? >> a lot of it is the war against the liberal media and newt takes on liberal media. you should see his press secretary's e-mails to me, they're not pleasant. >> rose: what would they say? >> you know, he's just rude. it's... i don't want to exaggerate. >> rose: i'm just trying to get a feel for him. >> it's like "you're the "new york times," screw you."

so he takes on the favorite enemy of a lot of the republican primary. >> rose: that's the battle they want to have. >> i enjoy the plesh glur that but i thi most pple want a plausible manager and newt gingrich is many things, a plausible manager, a guy who is going to sit in the white house and run an administration... well, anybody who saw him as speaker of the house knows that'sot agood story. so i assume they'll go with the plausible manager but maybe not. maybe they'll go for the woman in delaware. >> rose: she lost, by the way but there is this also, the sense that republicans so much want victory that they will in the end decide who is most likely to give them victory? or who's most likely to satisfy their heart during a campaign? >> you're... that supposition supposes that human beings can take a realestic view of the

universe setting aside their own personal preferences. that sometimes happens but often not. so the people who really don't like mitt romney, most of them think "tha guy can't win, newt gingrich can win." so they see the reality they want to see and that's part of the universe we live when you have two parties that have become ideological cocoons. you see the reality and so they can pretty well persuade themselves that newt gingrich is as plausible a general election and can daet than mitt romney. people not the cocoon will think "that's crazy." but that doesn't mean that will happen in the primary. >> rose: what's the debate going to be about? a the role of government? a referendum on sfwloob >> i fundamentally think it's a referendum on barackbama. there's some people arguing well he can shift it to romney. but you look at past presidential campaigns, the presidential approval rating, the last one is extremely

predtive of the election. so if you're a president and your aroval rating is 52, you're going to win. if your approval rating is 45, no matter how much you trash the other guy, you'r going to lose. so obama is now 43/45. if he is going to win he has to get it to 50 and then he'll win. so i think it won't a choice but a referendum on obama. >> rose: here's what else interests me. there is, as you know, in science this of a theor of everything. einstein thought about it, steven hawkings thought about it is. there a theory of everything that explains where we are today in america that looks at what we are and what we face and looks at china and in looks at our deficit crisis and our necessary toy invest in the future that somehow there's a narrative tha will explain where we are and how we get to where we ought to be? >> well, basically in america we have a government problem but not a countryproblem. the country real think healthy

and i wouldn't bet against us after the bad ten years we're about to have. they because you look at social indicators, they're heading in the right direction. crime is down. divorce rates are down. teenaged suicide is down. especially people under 30. teenage pregnancy rates are down. abortion rat are down. we're in a period of social repair. the second thing w have going for us is we have an ability to settle in a new place and create vast networks with our business partners, our friends and neighbors and that's always been our character. one of the ways you can tell a rich society from non-rich is how quickly can they build complicated knelt works of human beings? we're still good at th. so the underlying strength of america is still the strengs that alexis detoqueville saw in the 183. so my base take is that american society quite healthy, american

politics is the problem. so american society needs to change our politics. needs to change washington... >> wel we've go a bit of a... there's a book called "the rise and decline of nations." as institutions get old they ossify, special interests accumulate and that's what happened. and somehow that has to be swept away. i hope... tom friedman wants to ha a third party this will come in and i wish him all the luck, that we'll have third movement standor reform. >> rose: 22? >> or wherever. i wouldn't put much money on it. i think it will take a fiscal crackup like in greece or italy then we'll get serious. but i look at china and i cheer them on and i've been there a few times in the press and i still... there's no country on earth of equal size that can take people from all around the world and join them together in social networks or in business

networks the way we can. wear cross roads nation. china will never be that. >> rose: because of the diversity of our population? >> social trust. incredible social trust. we... you know, there's a famous study of southern italy and they d tremendous trust within their family so they can build family businesses. but when it came time to he strangers they couldn't do it. we trust strangers all time. and so we have these ability in cambridge, maachusetts, or utah... >> rose: or in north carolina. >> to bud incredible social networks. or a biker gang. they come and go and they fade. they don't fade. but we still he that instinct. the most impressive and most accurate western ever made was a movie called "mihdar ling clementine" a john ford movie with henry fonda. it wasn't typical where john wayne rides into the wilderness alone. it's about the formation of a

community. they a build school, teacher comes to town, a dentist mes to town, there's a newsper it's about communi building. that was what the west was really like. and he cap captures tha >> rose: while you were saying that after the last book on the brain,s whereour curiosity these days about things non-political? >> it's gon more into values and virtues and so one of the things i've been thinking about is a transformation from a culture of self-effacement to a culture of self-expansion. and if you go to the 1950s there was a culture that said "i'm no better than anybody else and nobody's better than me." over the last 30 or 40 years there's been a rise of self-approval and narcissism so one study that illustrate this is, gallup organization in 1950 asked high school seniors idea yoa very importantern? " in 195012% said yes.

they asked that qstion again 2005 and it wasn't 12% it was 80%. so you see a different sense of who you are. a sense of, yeah, i'm really important. i'm the center of my rld. so there's been an expansion of ego and narcissism where a country if "time" magazine asked americans are you in the top 1% of earners a 19% of americans are in the top 1% of earners, we're impressed with oursees. and especially men, by the way. men drown at ice the rate as women because men have more confidence... >> rose: self-assessment. >> they think they can swim afr drinking. so this expansion of self leads to problems. one spending because if you think you're a very impressive person you want to spend on yourself as debets your station. so consumption over the 20th censure i have very flat and then it takes off in 1970. personal debt is 43% of g.d.p., shoots up to 133%. compensation, executive

compensation. through the 20th century companies were making money but c.e.o.s didn't ask for $20 million compensation packages because it would have been shameful. there were social norms against that. but starting again around '70 and '80s they became very impressed with themselves. they asked for that money. polarization. if you think my grasp upon reality is weak, my opinions are actually right, then you think i need the other side to compensate for my ow errors. but if you think you have 100% of the truth, then the people who disagree with you are just in the way. so these are a series of real world problems that have a values root, a loss of sense of our own sinfulness, a loss of sense of the struggle within ourselves to be good and the capacity for evil we have. a loss of self-doubt. and if you take some of the scientific research that you cover on this program, a lot of it is about how easy it is to deceive ourselves, how it will well know about what's going on

inside and so i think that research encourages a kd of modesty was we're not as much in contt. we should be modest about what we think we can control, what we think we can know. i ink that's... >> rose: i'm not sure this is contra evidence but we have been people who were dreamers who didn't step some conventional wisdom about themselves have been the people who have changed history. >> rose: and i would say mility is not low self-esteem. it's lack of self-preoccupation. so you're not thinking... so take warren buffett. he said "i only had ten good ideas in the course of my life but i knewhen not to act when i had bad idea." so it's true some people suck swede incredible arrogance but some people succeed because they have a sense of self-discipline and order and a sense of

self-restraint. quoted dwight eisenhower before and the older i get the more i like eisenhower. when he was three he wanted to go trick-or-treating and his mom wouldn't let him. she said "you're too young." so he punched the tree in his front yard until all the skin wore off his knuckles. mom sends them to his room, he cries for an hour, she finally goes up there and binds his wounds and she says to him "he thatonquers his on soul greater than he that conquers a city." and eisenhower writes 76 years later this was the most important event in his life because he became aware he had this rage inside him and he built restraints against him and eisenhower was not a guy who lacked for self-confidence. he committed large numbers of men and women to battle but he had a sense of his weaknesses and a sense of self-restraint and how to correct for my own weaknesses. i'm not sure this is a culture

that reminds people all the time of their own weaknesses. we have more of a culture where we remind ourselves and remind our kids how special they are and they believed us. there's ju a whole change of studies now being done-- especially on young people-- on rise of self-esteem, rise of narcissism. one of them that you ask people do you agree with ts statement? "i'm a very impressive person? i find it easy to manipulate people. i love to show off to show how extraordinary i am." that's what psychologists call the narcissism test. that score has gone up 30%. another thing we see is incredible hungenow for fame which was not a big virtue 50 years ago. you didn't actually want to be mous. now people want to be famous, one study i saw i think they asked high school kids or 25-year-olds would you rather be justin bieber's personal assistant or president of harvard. of course people would rather be justin bieber's personal

assistant. there's the reality t.v. celebrity culre which is all about branding yourself, broadcasting yourself, displaying yourself. >> rose: there's also the notion of how you measure life. >> i'm in the middle of this extraordinary experience where i asked my readers to send what they call life reports. people over 70. and it was... how would you apprise your life? i've gotten several thousand back now. they're addictive to read, people are honest. and one of the things we learn is people are much happier with their professional lives than withheir private lives. people said "professionally i didn't set the world on fire but i liked being a teacher. i liked start mig own business." and people who srtamily businesses strike me as the happiest of all people. really a sense of satisfaction. >> if the family is involved in the business. >> and then the prite life there's a lot of... i was a bad husband, i wish i'done this

differently. >> rose: i wish i spent more time with my kids. >> i just read one with a man... they're all over 70 who said "my six-year-old whehe was six brought home a family picture and i wasn't in it because i wa at work." by the way, anotheresson... the number of people who said this struck me "i married too young." if you read through hundreds of these-- as i've been doing-- it's a real lesson about marrying young because a lot of people married beforehey knew themselves and as a result they wasted either a couple years or maybe 13 or 20 years with somebody who made them lonely. >> so there are all sorts of things running through. the other thing is how lucky people over 70 are because so many of them in their lives, they grew up with... developed work habits in a time of scarcity in the depression and many of them, because it was still a industrial economy, they did real physical labor and they grew up in the '50s and '60s at the time of incredible expansion

so they were traveling around the country completely sure they'd gate job. now i don't think we have either of those things. we don't have the work ethic of thscarcity, not many people work in factories, and then you can't... they don't have the self-confidence that there's going to be a job for me. we don't have that either. so they had fortunate lives. but the final thing they had hard lives. i think all lives are hard. this is something i don't think 25-year-olds know, i didn't know when i was 25. bad stuff happens. >> rose: you mean the loss of someone that you love or illness... >> someone will tell me about what it was like to put his son in... his ashes in his grave or in the grave next to his own moer and father, a woman watched her son get hit by a car. another lost a husband. there's stuff that happens. and it reminds you of just the incredible importance of resilience. so when you read these things i think our colleges should teach

two subjects: how to choose a marriage partner and how to develop resilience. these are really important traits and, of course, we teach none of that because i don't think we know what to say. >> rose: it's going to be a great book. thank you for coming. >> always a pleasure. >> rose: dov seidman is here, the founder and c.e.o. of l.r.n. he helps companies develop ethical and corporate culture. he writes about that cllenge in "how. why how we do anything means everything." i am pleased to have him back at this table. welcome. >> great to be here. >> rose: there's a new forward about bill clinton who basically says in this forward-- and you two have become friends-- he says "when i was in government everybody debated two questions. what are we going to do and how much will we spend? after my presidency i wanted to bring people together to focus on more important questions. regardless of what we want to do or what amount we have to spend on it, how can we maximize our

efforts and expand our impact so that our good intentions turn into real change?" so this is one thing. you got the clinton forward. tell me what else is here? >> rose: what sells here? the world has come to how. when we first spoke... we talk about how connected the world had become. we come from connected to interconnected to interdependent to morally and ethically interdependent. we are so intertwined that the behavior of any one person can affect anybody else halfway acrosshe world in ways it couldn't before. one banker at his trading desk in europe can lose $2 billion for his firm overnight, wipe out bonuss for all of his coeagues send more risk into the markets but at the same time is one vegetable vendor and a few dud buddies in tunisia armed with cell phone cameras a k spark revolution towards freedom throughout the middle east. i wrote we had entered the era of behavior. we are so deep in the era of behavior.

and the scottish moral philosopher david yuan said the moral imagination diminishs with distance. there is no distance in the this world. we live a crowded theater and we ought not to shout fire. so i think 're in the era of behavior which is how we do what we do. how we engender trust in our relationships. how we collaborate, h we innovate and how as leaders we create environments, nations, companies, organizations so full of trust that people lean , take the riskecessary to innovate, to create the human progress we desperately need around now. >> rose: but i want you to help me understand. we've had, as you know, two huge things happen since 2007. one is an economic collapse and, b, an arab spring that you mentioned with respect to tunisia. have these events changed your sense of how it happens? >> they've revealed how morally interdependent that we are that we rise and fall together and

they reveal the values that have guided us. you know, one day a historian's going to look back at the last 20 years through the lens of the ideas that permeated society and these ideas will have been amoral ideas. "just it." "it's just business." "too big to fail." "greed is good." "man is rational so let's give him carrots and sticks to extract performance out of him." those ideas maybe did their job when we wanted scale and growth any which way but today we need to go from "greed is good" to "good good." from "just do it" to "just do it right." from "man is rational" to "man is in search of meaning and happiness." occupy sweet about meaning. >> rose: are things like oupy wall street going to behe change agents of our time in terms of going to the values you are suggesting? >> they are demanding a "how" conversation. let's get real and be truthful

about how we've been living and the kind of change and we thinking of fundamental wes need to go on. i swat a c.e.o. the other day, he runs one of the largest companies in the world. he was vulnerable with me. he said dov, it took took them 17 days to get rid of mubarak and he had military aid. what if my consumers or employees got rid of me faster because they didn't like how i lead my sdmaen look what happened with netflix and bank of america. they tried to impose a pce increase, and 800,000 csumers got together, self-oanized on if net and said "we're out of here." bank of america tried to impose a $5 increase on the debit card and consumers got together and said "we're not going to have it." >> rose: netflix hasn't recoveryed yet. >> even though they apologized. >> rose: go ahead. >> no, you go ahead. >> rose: well, no, itas a dramaticisreading of consumer reaction. >> well, we here in a die logic

two-way world. we're having two-way conversation here. there are no pyrotechnics here. the entire cultural of the charlie rose show is how we relate to each oer. netflix tried to have a one-way conversation. all conversation has to be two way. what occupy wall street is about is let's have a dialogue. but i think it's about... if i can return to that, it's about one more thing. there there's a lot of anger out there about perceived injustice. >> re: it's about fairness. >> i think we need to think it's about something even deeper. i try connect rome, occupy wall street, oakland, tahrir square. i think it's notbout anger but anguish. we're all connected. people want to participate and people want to control their destiny. they want companies to trust to safeguard their confidential information. but people want to get on a journey of meaning and have a career and people are saying

"i've played by the rules, i haven education and i'm not on track, i can't even get a job." so i think it's about the human dignity that people are crying out and saying "i want to play, i want to participate and get on a path that's sustainable." >> rose: at the same time, there's a sense thathe system doesn't work. the because i did this stuff. i played b the rules. i was a good person. and >> that's why they're trying to tear down the system. t when youear down... when two too big to fail... the final nail in its coffin happens in egypt when mubarak is thrown out and when too big to fail turns to penn state when papa joe can get tossed out on a phone call the protesters are saying "this system is standing in the way of my ability to get on track so i'm going to tear it down." the problem is when you tear things down you create freedom, you create space. you create freedom from dictatorships, oppression or a system getting in your way.

but freedom, too, which is in our tradition, freedom to pursue happiness, freedom, too, requires values and frameworks and principles and the hard work ahead of leaders is to create the opportunity for freedom, too which is to root ourselves in values. >> rose: what do you do? what kind of engagement do you have? >> we we have to look at the forces at shape in their organization and how individuals behave. then we create platforms where we can ent the hearts and minds all of tir ople to help them navigate the risky areas of their lives but to transcend that which is legally required of them do what ethically inspired of them. we help them live the values. we're in an eraordinary time. chevron is now the human energy company. sis scow now the human network. dow is now the human element.

allied bank says "w speak human." delta airlines is advertising one ounce of humanity is stronger than 500 tons of steel. these companies understand they've entered a new era. let's have a rationship with our people and consumers not through how we make money or our products but what who we are and how we stand for. we help companies translate these proclamations into behaviors that allow them to win in the marketplace. the competitive advantage has shifted in this behavio to how we do what we do. in two fronts. we are not having a crisis every 20 years. if weid we can stay the core, hunker down,e resilient when we have a boom-and-bust cycle and get going and have prosperity f the next ten to 20 years. but we are experiencing a crisis every ten days, in some cases every ten hours. so n more than ever we need a

bull, what to ensu we don't careen side to side that simultaneously propels us forward and the only thing that can protect you from lurch from greed to fear are values. >> rose: do you think most people want to live their values? they want to but they become corrupted or they become... develop an attitude that is not a winning philosophy? >> all behavior comes from values. we have no choice. we're living from values. our deepest convictions. there are two types of lues that guide behavior: there are situational values and those guide what we do in the situation. >> rose: and then sustainable values. >> sustainable values. we can think in terms of what we can and can't do. how much we can get out of each situation and we tend to have transactional arm's-length relationship with people. then there are sustainable values. these values literally sustain human relationships. we know what they are: honesty, integrity, truth, trust and hope. and in the last ten to 20 years,

we were in the grip of sustainable values and we scaled them in our operations. we built massive organizations that scaled sustainable vues withules and policies and carrots and sticks to extract performance out of pple. now we need to return to sustainable values and i'll illustrate this for you. if i a friend came to you, charlie, in crisisnd said "i ne $2000." you would not have a "how much conversation. you wouldn't say "call your credit card company and raise th persol debt ceiling. you would say "how are you living your life and how can i help you get back on track?" >> rose: you say lots o things in this book and lots of things in the consulting you do. you say is it technological advances that r becoming... eating a persistence of memory in electronic form. >> my reputation, whatever it, is i hope it's worthy of being herebut it preceded me before i got here and wilstay here

long after i'm gone. everything we do is in digital footprints and travels around. and we can no longer control our story we can control how we live our lives and conduct ourselves. the problem is and the challenge is that technology has thrust us together faster. people in companies today are in global supply chains. for one of them a cow is a stake. later this evening for somebody else it's a sacred being. one person is e-mailing another and they can't tell from the e-mail name if they're e-mailing to a man or a woman yet we thrust them together and say "work it out. collaborate. do good together." so technology in some ways has outstripped humanity and we now need to reject inject humanity into everything we do and scale it through our values. >> rose: what's the story of the new york city doughnut vdor who trust his customers to make their own change? >> well,o there was a guy seing doughnuts and i wrote

about him. i discovered him and he competed with someone across the street. they each had an eally prized fresh doughnut but he outsold this guy 3-1. the only innovation is he had a tray of change and he trusted his customers to make their own change. throw how he related to them by saying "i trust you" he generated theloyalty and outsold competition. this strategy of giving trust away has gone global. the rock band radiohead made more money when they trusted their fans to pay for what they thought music was worth and they got more out of that album than when tnk put a price on it. ritz-carlton trusts its employees up to $2,000 a day to solve a customer problem. and indonesia, a country fighting corruption at large scale, stead of asking... instead of more controls, gulf stream into honesty cf face and take food off the shelves and put none a jar and make

their own change and there are 10,000 of these and they put them in schools to teach the habits of probity and honesty. >> rose: what's the mission of your company l.r.n >> to inspire principled performance. we think principles and performance have to fht each other. i'm a moral philopher who wears a suit for a living and i bring it to the rough and tumble world. i always felt moral city the foundation o capitalism. very few people know aaron smith was the chairman of the moral philosophy department at glass cow university. so in the 1990s i ran around th theessage ofow and people said it w utopian. thennron happened and people said "we need to get things rit." but we were misguided. we built up sarbanes-oxley. i argued we need cultures that do it right. >> rose: you mean too much regulation was a bad idea? we needed something else? sarbanes-oxley was a lot of...

added on a whole level of regulation >> it became albatross. if someone goes offshore to money launder, it's working. that's why they learned not do it on shore. but if we create cultures committed to doing the right thing, people won't think to behave that way on shore or offshore. with this global economic cris it's very different. it used to be that i would meet c.e.o.s, they woulder that message and say "this matters. i'd like you to speak to my goal cooper." everybody want a great goalkeeper but no one nots to play goalie. i'm speaking metaphorically. that's the geral counsel or chief risk officer. the idea was behavior was parked overere. make sure we don't go to jail or pay too many fines and penalties but leave business to us. this time around the c.e.o.s are keeping the conversation because how all 11 players play the game matters in an independent world. >> rose: tom friedman writes about you and frequently calls me about you to say "you ought to see the column, read the

book." and he says "dov seidman argues in our hyperconnected and trarns rent world how you do things matters more than ever because so many peop can now see how you do things, be affected by how you do things and tell others how you do things on the internet any time for no cost. so it must be with us, we need to get back to collaborating the old-fashioned way, that is people make decisions based on business judgment, experience, prudence, clarity of communications and thinking about how not just how much. that's a good summary. >> absolutely. >> rose: what was in the one note of biography because you had this remarkable record. it harvard and oxford. what was the... what was a euro a moment forou? >> you mentioned harvard. i got a 7970 on the s.a.t.

i studied for six months and i got a 980. i grew up dyslexic and i think the moment i started it was in fifth grade. i remember being out loud, i was so scared to g called on that i was in the present and went up to the ceiling of the class and tried to figure out the human dynamics, when will they call on me? and all i did was practice that paragraph? and i survived by being fascinated with the human dynamics andhen i finally got into college and they start me in remedial english but history and psychology were taken. but if if i were a history class i would have flunked because i could not have read 500 pages and if ever a seeming curse would turn out to be a blessing, the only open class was a moral philosophy class. but moral philosophy rewards you for reading ten pages and wrestling with ideas, good versus bad, how people work. and i just lit up i studied seven years of moral philosophy

and every conversation room in my company is named at a moral philosopher. it's not a eureka moment but a journey of being passionate, about right over wrong. i always struggle with why does doing the right thing feel inconvenient, unprofitable? dangerous, unpopular? i think that's the world we're entering. >> rose: it's also... much of the world is based on fear rather than hope. >> many business managers say hope is not a strategy. show me a plan. i tell them slope the greatest strategy ever known to man tind. kind. remember when f.d.r. said "you have nothing to fear but fear itself." that means don't se hope. when people don't have hope they lean out of the world. they're scared and hunker down. when they're full of hope they lean in. see it as a source of meaning, see people in it as a source of relationships and theytart to think up possibilities. and when they think these points

they start to innovate. no strategy worth pursuing has a fighting chance if at its core there isn't an abundance of hope. >> rose: dov seidman, the book is "how." great to see you. >> pleasure to be here. thank you. yed borpo cro niomsecamungnionnspocaoredy rose communi b