From our studios in new york city, this is charlie rose. Ukraine has been beset by violent unrest since november of last year. It all began as a protest against president Viktor Yanukovychs refusal to sign a trade agreement to enter the European Union. It threatens civil war. A truce quickly broke down and renewed violence left at least 75 dead in kiev with parts of the capital city in flames. The European Union and the United States are putting diplomatic pressure on the ukrainian government, including the use of sanctions. Moscow opposes such moves blaming the problem in ukraine on extremist and outside interference. Joining me now is dr. Zbigniew brzezinski, who served as president jimmy carters security advisor and written many books and i am pleased to have him back on this program, welcome. Good to be with you, charlie so when we sat down before we turned the cameras on you said ukraine is a big deal. Why is it is a big deal . Because in many ways the issue goes beyond the ukraine, it goes to the heart of the issue, what will russia become over the next decade or so . Right now, putin is embarking russia on some sort of nostalgic, i think, irrational, in fact, imperial restoration. The Eurasian Union he wants to create, of course, centered in moscow, would really be a restoration of the soviet union minus some european portions and of course of the russian empire. I think that is driving him in the wrong direction, it is delaying the democratization of russia, it is preventing russia becoming a major european power, which otherwise it could be, within europe or connected to europe in some fashion. He has no interest in becoming a european power. Or he has made a decision not to go that route . Thats right, and at the same time he has made a decision that ukraine has to be prevented from becoming a european state. That it has to be subordinated, incorporated into the socalled Eurasian Union with moscow as the capital. And i think that is a serious threat to europe and of course a tremendous offense to the ukrainian people who just gained that independence some 35 years ago. Do you think he will be successful in doing that . Here i have to hedge. If push comes to shove and there is massive bloodshed and if the russians even send their troops in to ukraine, he will probably succeed in the short run. But the consequence will be lasting, intense fierce ukrainian resentment against russia, protracted unrest and probably eventually the collapse of the entire structure. I have been reading your tweets also. Here is one you sent on february 19th, 2014. Several days ago, shooting themselves in the head, putin and yanukovych are producing a generation of ukrainians who will passionately hate russia. Thats right. Thats right. And this is something you should think about, because the ukrainians are not antirussian, they are not antirussian and want to be more connected with europe. And thats understandable, better standard of living, more democracy, more freedom to travel and so forth. And if they move that way, russia eventually perhaps only after putin is gone, will move in the same direction. So it is a good thing and i think we ought to talk to putin about the fact that indeed it moves toward europe. It doesnt have to be antirussian and the proposition i advocate is that we say privately to putin, look, bear in mind ukraine could be like ukraine could be like finland. A country which is a good and open relationship with russia, which is not a member of nato, but which is connected with europe because the finns feel themselves to be a part of europe. That would be good for you, too, because here i think stupidly at this time, he is still encouraging yanukovych to play rough and to prevent what is happening and to heed the ukraine under the russian umbrella. And it could fall into a civil war. And a civil war with bloodshed spilling and more and more ukrainians hating russia which by and large they do not do at this time. Lets talk of options, three compromises you say one is between ukraines political parties, two is a European Union, ukrainerussian compromise and three is a u. S. Russia compromise, what is the most likely one . The most likely one is perhaps the first one. That is to say, the ukrainians do reach some consensus. But that doesnt resolve the issue, one which is the second point how much money the European Union is prepared to advance . And that is a serious issue and the europeans have to face the fact that if they want to be true to their word, they also have to fork over some cash. How much how many billions are you talking about . I think initially probably two or three to deal with the most immediate urgent problem. Over the next couple of years it could go over 10 million, 10 billion and so forth but that could be exhibited also by a rapid, more rapid Economic Growth in the ukraine, restoration of the rule of law, great opportunities for a safe, Reliable Investments in the ukraine and so forth. And finally what stands in the way is the russian reluctance, at least putins reluctance to let that happen. We all remember that putin said the worst day in the life is when the soviet empire collapsed. Precisely, that is his life. But the worst calamity of the 20th century, think of that, world war i, millions killed, world war ii, millions killed, the holocaust, use of atomic weapons in nagasaki and hiroshima. No, it is the collapse of the soviet union, a tyrannical totalitarian state. The United States is threatening some kind of sanctions, along with the European Union. Some would argue we should be able to foresee this kind of crisis coming and should have done more anticipatory planning and action. I agree with you. I agree with you. I dont want to settle scores right now but i think we were delinquent. This crisis opened up in november, we had plenty of time to reach a common position with europe, and then on that basis so engage the ukrainians and also quietly and construct if the but in a firm passion the russians. Why didnt we do it . Well, for one thing the europeans were not particularly anxious or inclined to step forward with some attractive financial offer. I think that was kind of shortsighted. Secondly, of course, we have been bogged down in the israelipalestinian negotiations. The syrian negotiations, the iranian negotiations, so we had plenty on our plate. Let me go off course here for a second, do you think any of those will succeed . I still remain kind of, to some extent hopeful optimist. I think the israelis and palestinians are smart enough not to reject the proposals and they will stall and criticize each other and maybe if things in the middle east, the israelis will find excuses then for not moving forward but i think initially they will probably accept with some complaints and reservations. The syrian business has become more difficult because we are so rigid on two issues, which i think do facilitate this. One we are insisting assad resign, on what basis does the United States decide that somebodys country should not have a president that has been its president . Is it because some of our friends, the sunni friend have decided to start filing a sectarian war with the think i think thats the wrong reason. Secondly, in any way assads term of office expires before too long if i am not mistaken it is like this year. It is. So why not let him serve it and then he can say he is not interested in running again. I mean, there are ways of going on these issues but we have adopted a dogmatic position which we havent been prepared to back, thank god, in fact that we havent because that would involve us in a sectarian war but we are sticking with it for reasons which are not apparent to me and in the meantime assad is gaining support in syria, he is doing better than the opponents, not the other way around. Do you think the saudis and some of the sunni supporters who are engaged by a shia conflicts, conflict are we are very angry at the president because they thought he allowed assad to cross the red line and didnt respond and viewed the president as weak for not do you think they have a point . No, because it is a war he started. As far as i know we didnt collude in the starting of the war, although we didnt slip into a supporting posture when he announced assad has to go and when they drew the red line about the chemical weapons, but we didnt start the war, i hope we didnt collude in planning it. And in any case it is not a war in which we have a stake, and it is a war in which we become involved, will be alone, i know of no country that seriously will go with us, even though some countries egg us to go in. So you are saying the audits and the emirates and the turks and qatar are not prepared to engage . Well, the turks have not engaged. It is qatar and the saudis. They have been supporting the rebels. They have been supporting but that is their business but they havent sent troops in, they havent used military action within syria. They have been taking in people and taking the shiites that are involved in this have been supported from abroad by shiite states. And what about the iranians and the negotiations about well, they play a role, they play a role in syria and if we want to compromise and syria endures it is better to have the iranians included in it rather than to have a compromise from which they are excluded and for which they have an incentive of their own interest and security to undermine. You know, back in 2002, when we went in to afghanistan, and over through the taliban, over threw the taliban you may be surprised to be hearing this, the iranians were extremely helpful. I know about that. I know about this, first of all they lost a lot of people to the taliban. Thats right. I mean, 40,000 casualties i think i mean a whole lot. Something like that, you are quite right. So the thing is we may have made some misjudgments here but the key point to me is, if we get involved in this sectarian war and as a consequence of that lebanon and jordan explode immediately, iraq will follow shortly thereafter and so forth we are going to be stuck there in our own probably for as long as we have been in afghanistan and iraq or maybe even longer. Do we have a strategy . Do you think, about you know where i am going. Well, i think we have a strategy for improving political opportunities in 2016. Well for the Democratic Party or for the Republican Party or who . The party is democratic so we have a facility that supports that but i am not being serious when i respond that way. I think the major problem is we dont really have a policymaking process. Thats my point. The lack of a strategy applies whether we are predominant or not predominant, in both cases you need a strategy. I happen to subscribe to the school of thought and i have been writing about this myself that we have to face the fact we are no longer living in the hegemonic age and america can not be the hegemon but we are still and we can manipulate and apply pressure, and use our weight to achieve certain objectives but we have to do it in increasingly with others in the case of the area we were just talking about, it is good that the russians and we are talking with them. It is good the chinese are more active, that is good too because any stability that is contrived only by us alone will not endure and if we are sucked into a war some of these countries will be sitting on the sideline and actually enjoying the fact we are getting bogged down. Putin who clearly sees this as his opportunity and he does have a plan, as you have suggested earlier, to expand the russian empire, perhaps, and at least reach some of the goal, reach some of the circumstances that existed before the collapse of the soviet union. That is absolutely true except my judgment this is a totally futile thing and nostalgic and ignoring the new realities that prevail, the countries he is soaking into this Eurasian Union, like kazakhstan, like uzbekistan and the other stans not to mention the ukraine he is trying to pressure into becoming a part of it are not inclined to lose their freedom, if they can avoid it. You know it is a human thing, look at the leaders of the stans, kazakhstan, uzbekistan. The current president s, 25 years ago were first secretaries of the soviet delegated to control the countries. One glorious day these countries became suddenly independent, and they became president s and have their own flags and their own states and their own ministers, he is have sovereignty, do you think they welcome the prospect of being members of the Eurasian Union in which putin presides in moscow the way stalin and brezhnev did in the past . No. Of course not. And they are doing what they can. We have been dodging, opposing, and that is what is making him frustrated but i think once he is gone and once he starts nationalism and instead of more european oriented middle class begins to take over will is a good chance that russia will follow the ukraine into europe and if it does, in one fashion or another it will become a truly important european state they look eastward periodically and what a rising power that remembers that 750,000 square kilometers of its land were forcibly taken by russia when china was weak. Where is china now . Because it seems more focused on its internal growth and Economic Issues than it is on playing a role on the world stage and so, therefore, it is left. Well, that is true up to a point. Unfortunately, i think the last couple of years some of the chinese who are enormously enebriated by the fact that china is coequal to the United States in some respects and will soon surpass it are raising issues such as the relationship with japan. Right. As to the relationship with the philippines, as the right to, to the seas and what is under the seas and so forth and the nationalist governments are more outspoken especially particularly the military. I deplore this and i think we contributed in to infamous wording on pivoting to the east, i think that was a very unfortunate word pivot because it has a totally military message and the chinese interpreted it as signaling we want to be preeminent in the far east and contain china. Yes. One last question about the ukraine, i mean, can you imagine that what do you think is the that somehow, probably some continued chaos because i think yanukovich will leave unless he is forced out and i am not sure we can force him out quickly. I think there is going to be some unrest continuing, the russians will do whatever he can to destabilize any successful government even if we cut some sort of verbal deal with the government so i think we are in for a period of insecurity and uncertainty but we have to stick to our guns and realize this is a big, big stake, i think the stake in the final analysis is whether russia becomes a european partner or whether it remains semi hostile. I will leave it as that. Charlie, always good to talk to you. Back in a moment stay with us. So how long did it take you to get here . I dont know. We got sort of waylaid in rapid city, thats where how long total . A couple of days, i guess. From billings . Yes. How far is that . Probably about 750 miles. It took you two days to drive what were you driving a dump truck or something . A subaru. Alexander payne is here, his much talked about film is nebraska, it follows a father and son as they journey from montana to nebraska to claim a 1 million sweepstake prize. The l. A. Times calls it a story that touches on family, memory, getting old and staying alive, here is the trailer for nebraska. So you told the sheriff that you were walking to nebraska . Thats right. To get my Million Dollars. This is woody graph. We are now forced to pay 1 million to woodrow t. Grant, billings, montana. This is his son. You didnt win anything. It is a complete scam, you need to stop this, okay . I never knew the son of a even wanted to be a millionaire. He should have thought about that years ago and worked for it. How much longer is he, what is the harm in letting him have a fantasy for a couple more days . This is his family. He is the talk of the town. Why didnt you tell us you were rich, woody . Yeah. We want to see what a Million Dollars looks like. And this is the woody is a millionaire. [applause] that would be wrong. Everybody is saying woody grant is a millionaire. Oh, it is no big deal. No big deal, geez. A million here, a million there. Newspapers are going to do a big writeup on you. Honestly, woody didnt win anything. You are a damned liar. Hey, hey, hey. Come on. Have a beer with your old man. Be somebody. I am pleased to have Alexander Payne back at this table, welcome. Thanks for having me. Talk about the origins of this film and what you thought you were making. Screen play reached me about ten years ago. I didnt originate it, it reached me because the scene is number is a and i am kind of the go to husker film maker and the producer sent it to me not thinking i would direct it but rather asking me who i thought might be a good director and maybe would i consider producing it along with them and read it . And i liked the humor and i liked the sadness. I liked the fact it would get me back into rural nebraska shooting which i had not done since about schmidt. So it is hard to say what i thought i was making. In my mind i always tell myself i am just making a nice little film, a nice little comedy but other stuff comes along with it. I thought it was about a man feeling like he had one more chance, a mans dignity a mans own respect, that this is what it referenced. I would not take that away from you, nor do i nor do i wish to but you would tell me if i was wrong . No, there is no right or wrong and the difficulty with interviews is that i would never wish to guide someone elses reading of a film. For me, however, when i was making it and when i watched the film and not saying anyone else has to get this out of it to me it is more about a man regular preparing to die, and to go over the hill and lie under a tree and the son offering to take him there and it is interesting it is about death. Well, there is no right or wrong, there is no accurate, inaccurate, but for me i found it very much informed by death and fixing to die and the son wishing to have one more chance to know his unknowable father and ask him the questions he may wish to ask him. And indeed by the end of the film when the father is driving through town and people wave goodbye to him, it is presented as though it were literal but for me it is quite dream like that as you are on your way out of this planet you wave goodbye to public acclaim to forces that oppose you, and to the love you never had. Take a look at this. Because there is a unique relationship that developed between you and bruce dern and he was here and in a monologue he talked about his experience in this film which really seemed to have had real meaning to him. He was the center of a film by a distinguished filmmaker, it was black and white, lots of other things, here is what bruce stern said on this program. He gave to me the things i expected to get from a father, support. My father gave me a chance to learn and a sense of privilege. Alexander put that on the back burner and came to all he my sporting events, did all of the things, asked and gave a damn what i did after school, i never got that at home, alexander gave me that. He cast me in the role because i think, because laura started in his first movie, citizen ruth so i dont, i only met him an hour and that was 18 years ago, but there was something and he is a movie fan so he sees a lot of the movies that i have been in and there was something in there that he felt he could use to surprise the folks. Does any of that surprise you . I have heard him say similar things. Versions of that before, and it is very touching. I dont really know what to make of it because i am just there hoping, helping the guy he did a good job in the film. You are doing what a good director does . I hope so, it is really touching, i dont know what to say about it. I do. But i mean, you specifically i try to answer as politely as i can but inside i am thinking do i really have to i mean, our Film Heritage is in black and white, and i dont think i mean it is only for commercial reasons it has left our cinema and never left fine art photography. You dont ask why do you shoot this black and white . It is just accepted it is a beautiful form and i think nowadays that recording visual information digitally and presenting it in so many. In hd and so many things look so vivid and so real i dont think we necessarily want that from the cinema. You want art in general and cinema in terms in what i think about transform the image, to give us the recognizable in a new way, and in a beautiful way, and the beautiful color images we see to me are half as beautiful as tech any color from the 1950s, that transform things and i think black and white is a beautiful way to do that. Do you think of yourself as an artist . I think because i am american and maybe a part of me has that old john ford classical hollywood artist. That is for frenchies or something but inside, of course i aspire to be an artist. I do say that i have i never refer to myself as an artist, sometimes in conversation i will say those of us who have careers in the arts, you know, but i think to be labeled an artist is for someone else you think it sounds a certain way but in fact it is an act of creation and that is what artists do. I aspire to fine acts of creation, yes. So how do you know what you want to do . It hits me. I go through life and i am reading. I mean my brain is working 24 hours a day, that is the same in everything i read and people i meet and experiences and even in dreams, quite literally 24 hours a day, looking for movie ideas. What is it about filmmaking . It why is it so exciting . I think those of us who love film and there are so many around the world we love life, we love stories, we love gossip. Yes. Obviously the thrill that narrative art gives us to live vicariously through the lives of others, the experiences, the stories of others, and there is something too beautiful and unique about making a film which is 150, 200 artists, individual artists working together toward a common goal and there is nothing like that in the world currently thats what i would love about it, you have a chance to be, you know, a conductor, you know, in a sense, and having skilled people take you places that you didnt know were possible because they have been unleashed by some idea that you put in front of them. Well, that is why i really take seriously the idea, you say conductor and i say director. Yes. Rather than being the creator of a film i feel like i am directing the creativity of others, fomenting and conducting their creativity so for example, the guys who put the lights never meet the violinists who play the score who in turn never meet the colorist who is doing the final imagery but i get to meet them all and enriched by it and i am in awe of their skills. Okay. Where do you put casting . All components of cinema are equally important but first among equal are screen play and casting. The text and the people . The text and the people because those are the two things the audience pays most attention to and those are the two things that give the editor difficulty in the editing room, unsound screen play and unsound casting. And you see an actor through his previous work, and you have in your mind from the screen play what that character is like and somehow you say this person is as close as i can imagine to the character i have in my mind. Yes. And i actually dont even make it a point of watching a lot of actors previous work i rely more on auditions, again being open. I dont watch a whole lot of contemporary films i am somewhat ashamed to say i watch usually older films and pretty much rely on casting to get to know newer actors and people say didnt you recognize him from such and such a movie, no i dont who the hell it is. Will forte perfectly good i have seen him on saturday night live and still never seen mcgruber, i hear it is not a great movie but he explains, but really, really funny but he auditioned well, i never thought about casting him in a million years. You wanted bruce dern to audition for you . I met him twice to speak about it. The first time was just sort of an initial meeting and i did ask him to come back for a followup meeting, not an audition, i wouldnt say that but my little pea brain needed a little bit of help and hear him say 30 words of the text, just to know, just so i can plan the film a built. And june squibb . Auditioned although i worked with her ten years. Did she mail it in . She played about schmidt. But i never thought about her on this part and she sent in an audition from new york and she did a brilliant think which more actors should do, she did, she performed it in two different ways one as a harridan and one as just but a nice but frank woman and it implied i can do it these ways or i can do it anyway your little brain can ask me to do it so that is a brilliant thing for actors to do. Heres another clip. Yeah. Dad, leave me alone. Come on. Let me take you home. I am going to lincoln if it is last thing i do. I dont care what you people think. Listen to me, you didnt win anything. It is a complete scam. You have got to stop this, okay. I am running out of time. You dont even have a suitcase. I am not staying there. Dad, i cant let you go. It is none of your business. Yes, it is, i am your son. Then why dont you take me . I cant just drop everything and drive to lincoln, nebraska. What else have you got going on . He is great in this, isnt he . I think he is excellent. What did he bring for you . He has, number one, i believe him when he sent in an audition tape and when i had him come into the office, just i believed him, i believed him, he felt as though it was someone from high school, whom i had run into at the Grocery Store in omaha, there is just a familiarity about him and i thought others would feel that too and also will forte has a natural sweetness i think comes through on screen. Someone wrote about you and said your characters, they described them as ruffled sorts, beached males and people who have become waylaid on lifes highway, stopped somewhere short of their own expectations. Does that resonate with you . It started with my cowriter and me that somehow the guy, the middle class guy who ask experiencing a discrepancy between who he would like to be and who he is became for us kind of a comic archetype and maybe that is what that writer is referring to. And that is the vast majority of people i think. Well i think so too. They represent humanity . Well i get asked sometimes why do you have such flawed hear character, is a typical question, flawed protagonists. I said well who is a perfect protagonist . You dont know what is in somebodys mind as far as their own expectations and only they know how much of those things sometimes your life can be much more surprising than you ever imagined, it could be ten times better than you ever imagined, all these things simply because it is a light that you couldnt have either expected or imagined, a life you couldnt have imagined. Like you, did you ever have, did you ever believe you would be a a film maker . My life is like a film, i have an idea, not a certainty in that american way, i know i am going, you know, i dont think like that, but i start to go in a direction and then be open, and take opportunities when they appear. With your success, are you convinced there is a place for filmmakers like you . Say what you mean by film makers like me. Someone who is telling these kind of stories you tell, stories that are personal and meaningful, you are not doing as you once described, you know, i mean, car chases and things like that, whether it is about wine or whether it is about schmidt or about lincoln, nebraska. I have nothing against a good car chase but look i am. How many car chases have you had in your films . Zero so far, but, look i was a teenager in the 1970s, which many people have identified as our last golden age. American movies and those films which we now consider classics. Yes, but even much smaller films, the human films, they were about people, those today would be considered more independent films or art films and how the studios are making roger korman films, i mean everything is completely reversed. At that time he was the independent doing correct and now the studios are making the big car chase films. However, look, i remain optimistic and i get to make the films i want to make. My budgets have to be low but look David Russell just had, you know, the studio spent 40 million or 50 million on American Hustle and now make 200 million and that is i am all for that model that he has glamorous stars doing interesting, intelligent things and making money off of it. So i think there is always a place look i want to see american movies about americans not always american movies which are cartoons, easily digested by the rest of the world and not to say we dont have a place for them, but we need cinema. It is the art form Everybody Loves most to give us context, and to mirror our experience in some way. And i want American Films about americans, saying i want french films about french and greek films about greek, we immediate need that. Lets take a look at this scene. How did you and mom end up getting married . I always wanted to. You didnt . She wanted to. Are you sorry you married her . All the time. Could have been worse. Well, you must have been in love, at least at first. Never came up. Did you ever talk about having kids and how many you wanted and stuff like that . Nope. Then why did you have us . Well, life just grew and your mother is a catholic so you figure it out. So you and mom never actually talked about whether you wanted kids or not . Well, if we kept on screwing, we would end up with a couple of you. We are talking about how you shoot a conversation, i mean you worked on it. You said i have worked on it a long time and we sweat over frames. David russell was here a couple of days ago and talked about the very same things in terms of looking at the frame and it was just quite amazing being excited about what an actor was doing when he was listening. Yes, but it is also in the cutting room as you know it is acting over time, and if you extend a shot either reaction or perhaps at the head of a shot before an actor speaks two, four frames, six the audience can be squelched or triggered by just those dribblings of frames. Thanks for coming. Thanks for having me. Much success at the oscars what is to the next film . It is a secret. Good enough for me, thank you. Alexander payne back in the in a moment, stay with us. For all the shortcomings though economics turns out to be a pretty successful set of tools for thinking about problems and analyzing solutions and understanding the way the world really works. And for many people, for much of the time, however, it remains a black box, a mystery, something that they have long since given up trying to understand. Stephen pearlstein is here. He is a business and economics columnist for the washington post. In 2008, he received a Pulitzer Prize for columns anticipating and explaining the Global Financial crisis. In 2011, he became a robinson professor at george mason university. Last month, he published a paper with the brookings institution, it takes on the ambitious task to deconstruct what has become a free market capitalism, the pursuit of maximizing shareholder value. He writes in the recent history of bad ideas, few have had a more pernicious effect than the one that corporations should be managed to maximize shareholder value. I am pleased to have Steve Pearlstein back at this table, welcome. It is great to be back, charlie you like this teaching thing. I do. It is nice. You know, you get to be a 60yearold and you say, i have one more act in me, and so teaching is a good last act. It is never bad to hang around young people is my attitude. No, no. Thats right. So tell me about maximizing shareholder value. We have grown up with this idea that role of a ceo the of a corporation is to maximize shareholder value. Thats what they are supposed to do. That is what we think and people he that is in the law and that it is this, it is in the nature of corporations but it is actually not true, it is not in the history of corporations it is not in law. It is something that came to be really in the late, late mean 1980s, corporations with exist for any purpose and lynn stout who has been studying this issue has been looking for even one corporation whose charter says our purpose is to maximize values to shareholders. She hasnt found one yet there is a myth that the law requires directors and executives to run companies that way but it is just a myth. Companies can be run for any reason, and they could be run to do that but they could be run for a variety of reasons. Then how do you measure corporate performance . Well, that is one way to measure it. One way is the metric of shareholder value . Right lets look at shareholder value, what shareholders do you think the people who say that is the only metric. The guys who are trading every tenth of a second buying and selling and talking someone who is holding it for a are we talking to someone talking about someone holding it for a which shareholder because they have different interests to right which shareholders are you talking about . Unfortunately what it has become is a license to run a corporation on behalf of those shareholders whose trade every day and every quarter. And it has a tendency to be shortterm. Share price a quarter. You know, it is interesting mackenzie did an interesting study with a group up in canada and they interviewed cfos, they surveyed cfos and how many of you would be willing to make a longterm investment that you think has a good payoff if it would cause you to marginally miss your earnings target for and only 45 percent said they would be willing to do that. Here is the interesting point about that, smart people like warren buffet who says he believes, he invests over the longterm, he doesnt look at the price of a stock in the shortterm and, therefore, he believes that it is, in a sense, how the company is meeting the future. The other people, jeff bezos runs amazon, has the same attitude. Right. And they are very successful people. They are very successful but you know the two things about those two companies you just mentioned and why they are able because theyre entrepreneurial founders they essentially founded their company and no one tells jeff bezos what to do and nobody tells jeff, no one tells either one of those what to do and most are run by journeymen who are hired by a board of directors. From a managerial class. From a managerial class and they dont have, they dont feel they have the power and they may not have the power to sort of disregard that. Okay. Do you feel this is changing at all the point that we are making here that the primacy of Quarterly Earnings should not be and ought, what ought to be done is looking at other, other indicia Like Research and development, like new markets like look, it is not a question of the shareholders should be ignored. The problem is the word maximizing because look, any good ceo will tell you, look there is no problem with shareholder, maximizing shareholder value because i know what it means as longterm not shortterm, they say it but dont necessarily behave that way and i also know i cant run a Good Corporation longterm unless i take care of my customers and unless i make sure that my community is a sound community and i have infrastructure and that my customers are well treated so they say there is no problem with that, because i have to balance the interests. The problem is in the five percent of the time when you have a real tradeoff to make Milton Friedman argued in 1970 there is only one social responsibility of business to use its resources to use in activities designed to increase its profits, anything else he argues is unadulterated socialism. He believed that. And you want to know about for his economic principles, but let me just stay with this idea is also you might say by maximizing shareholder value is increasing the opportunities for the company and increase i increasing my ability to hire more people, to invest in more places to do things that bring or spread the wealth that i am creating. Well, if that is what they were all doing then maybe we wouldnt be having this conversation. But if they are really making a lot of money, which they are, and they are using that money to buyback their shares, they are using that money to not sharing that with their employees who are not getting richer, so, therefore, not being able to bay more of their product, their employees are getting disengaged. I mean, imagine if i owned a company and you were working for me and i said, i really want you to work harder and smarter just so i can earn more profit. What do you think of all of these people who under the banner of shareholder activism, you know, are going around threatening to buy companies and well they are a part of this, they are a part of the infrastructure that supports shareholder value, because what those activist shareholders are saying is, we are number one, who, and three priority, okay . And if you are not putting us at the top then we are going to go and take over your company and we are going to throw you out and put someone in there who will put us on top and so they are part of the problem in fact that is where the problem began, charlie it started in the 1980s with the takeovers, it used to be before that we had managerial. Managerial capitalism and it wasnt perfect there were a lot of lazy not, lazy managers and not Competitive Companies and being run for a variety of reasons and the shareholder wasnt, wasnt primacy and thats why we got the takeovers because people said you know what, after a decade in the 1970s where shareholders did terrible they said hey, we you have to remember us and those companies that didnt they got taken over and everyone else got the message so that is where this began and that was necessary corrective, but now we have gone way, way over to the other side. What is the difference between Financial Capital and social capital . So Financial Capital is the money that is made available to companies so that they can invest in and working capital so they can grow and operate. Social capitalism is a concept that means there is another thing that is important to an economy besides Financial Capital, besides human capital, which is skills and training is social capital and social capital is sort of the glue that keeps society together. It cant measure it the way you can measure those other things, but it is sense that we are all responsible for each other to some degree, it is a set of norms of behavior that says we are not going to push everything to the wall all the time it allows us the freedom and i think the comport to take risks and to make longterm investments and to trust each other and that social capital has gotten eroded in this period in which businesses all that matters is the shareholder because when customers see that and when taxpayers see that and employees see that, that erodes social capital. Social capital is what holds us together. And if we continue, and simply maximizing earnings every quarter, what are we doing to a, the economy and b, you mentioned the social fabric and what are we doing to the ability of those corporations to maximize their own growth . Well, there are some studies that have indicated that during this period when we were supposedly maximizing shareholder value which is really from the late 1980s to today, that the returns to shareholders actually were less than they were in the period, say, from the mid sixties to the mid eighties when there was this managerial capitalism, and the returns were better. Now there is a lot of reasons for that, i wont say this is the only thing but it is sort of idea that putting shareholders first fact has really been mostly good for the executives and not as good for the shareholders. The companies havent been growing as much and the economy hasnt been brogue as much, and, you know, i think whether we talk about the wall street protest office a few years ago or talk about the tea party they are both sort of manifestations of the fact that people are a little unhappy with this capitalism that we have evolved in. And can you be a good citizen and still do a good job for your stock holders . Here is what i think i would argue. I dont want to impose on corporations my vision of what a corporate purpose is. There might be some corporations that are run to maximize shareholder value, there might be some that are run to maximize social things, there might be some that are very eke logically ecologically oriented and some that they think the best way to run the best way to run them is to have employees who are really happy, you might say google is run that way. Right. Okay. All i am saying is i dont want to impose a single metric on every company. It is the other side that wants to impose a single metric i am into homogeneous business ecology in which people have different priorities and see how it turns out. You disagree with Milton Friedman. There are a number of ways we can measure the purpose and role possess a corporation in our economic and social life . Yes. And the value of them, whether they are being successful, and i am not going to say that jeff bezos is running an Unsuccessful Company because he doesnt have a lot of profits, would Milton Friedman a say that is a socialistic enterprise. I dont think he, bezos would say that, but first of all Milton Friedman made that comment at a time when socialism had, you know, this sort of meaning that maybe we dont understand, you know, i dont even know what he means by that. Quite frankly. If a corporation is delighting its customers, if a corporation is energizing its employees and creating a good return to its shareholders not maximum but a good one i would say that is a pretty good enterprise and i would say that is a successful one and i wouldnt want to have that chief executive being thrown out become some activist investor says i can bring someone who can really push this to the wall and double their earnings per share next quarter. I dont think that is a good way to run an economy. Thank you for coming. Thank you. It is great to see you. Thank you for joining us. See you next time. Welcome to bloomberg west, where we cover the future of business. We are following a few big stories. Social messaging apps have cost the carrier 32 billion so far, and will cost them 54 billion by 2016. We will dig into that, in light of facebooks massive deal to buy whats up