Transcripts For CNN Your Money 20120128

and continuing to go down. you still have record number of foreclosures in florida. you still have median incomes suffering, middle income families suffering. >> florida is an epicenter of the housing crisis that put us into the great recession of 2008 and 2009. cnn senior political analyst david gergen joins us from jacksonville. david, mitt romney is not only focused on president obama, he's got newt gingrich to deal with as well. florida was one of the states that was hardest hit by the housing crisis. its unemployment rate remains above the national average. so is tuesday's primary going to end up as a referendum on whether voters who are focused on the economy can get behind mitt romney as the man to best fix it? >> reporter: probably so, ali, but i must tell you this has become such a personalized race. romney and gingrich have gone mano a mano in the several debates and we've had sort of a boxing match between the two of them an i think that is the more dominating way people are thinking about this and whether mitt romney has a better plan than newt gingrich does to fix the economy, it's gotten so personal. having said that, i do believe that the debates have now put romney in a commanding position heading into tuesday. he's very likely now to win the florida primary and trade after the debate with cnn thursday night put the chances at 90%. he's the heavy favorite here now. if he wins florida, he's more likely to win the nomination and then his economic plans and policies are really going to be put to the test. i think most voters haven't sorted out quite what he's going to do yet. >> in these many debates, we really do tend to lack specifics. once in a while somebody comes up with a plan that's highly specific and we in the media world set about to try and test that plan. but generally speaking, the idea of creating jobs, lowering taxes, the idea of tax reform, the generalized idea of health care and immigration is not specific enough. stephen moore is with us. president obama emphasized this notion of fairness or unfairness of our economic system when he talked about taxes during his state of the union address. listen. >> when americans talk about folks like me paying my fair share of taxes, it's not because they envy the rich. it's because they understand that when i get a tax break, i don't need and the country can't afford, it either adds to the deficit or somebody else to make up the difference. >> now, i'm going to presume, stephen, that you don't even agree with the premise if somebody gets a tax break that they don't need that it adds to the deficit because there are people that argue that that creates economic growth or stimulates spending or investment. but you don't need to read too much into what the president was saying to see the connection this he's drawing, particularly to mitt romney who this week revealed that he made close to $43 million over the last two years but paid a tax rate of about 15% because most of that money was investment income and that's what the law says. capital gains is 15%. i'm sure you don't like the president's plan to make sure that millionaires pay at least 30% in taxes. but what's your sense of -- can you acknowledge the fact that there are people that think the current system does seem unfair? >> hey, it seems unfair to me, ali. i've been writing about this for 25 years. i think the tax system is an abomination and needs to be blown up and start over again. here's one problem that i have with the president's message. leaving aside how much millionaires should pay and so on. look, we have an economic crisis on our hand. mitt romney has been saying about 20 to 25 million people unemployed. there in florida you've got, you know, so many homes, millions of homes and millions of homeowners underwater on their mortgages. so my point is really shouldn't we be emphasizing economic growth as the first principle rather than fairness. i think that's a vulnerability for the president. i'd like to see the republican candidates, mitt romney and newt gingrich, really hitting harder on that exact theme. look, fairness is fine. but what we need is a rising tide of economic growth that has john f. kennedy said lifts all boats. just to dovetail something david was saying, you know the problem republicans are having right now is that they are slugging at each other and forgetting the adversary here is, of course, the guy they're going to have to face in november. >> whomever the successful candidate is going to be may go into this presidential election limping a little bit. diane swonk, we learned the u.s. economy grew at 2.8% in the fourth quarter, the last three months of 2011, compared to a year ago. it's nothing to sneeze at, 2.8%, nothing to celebrate either. we're looking back all the way into 2010. and what economic growth has done, it's come down, it's leveled out and then it's started to go up again. i guess the theme of this recent recovery is slow and steady and it's a major part of the reason why the federal reserve chairman, ben bernanke, says he's not ready to pop the champagne corks when it comes to people getting back to work. listen to what he said. >> in light at the anticipated modest pace of economic recovery, the committee expects that over coming quarters the unemployment rate will decline only gradually. >> all right. so let's just take stephen's point for a second, diane, and put aside the fairness discussion whether or not you think it's correct and talk about growth. what comes first in the recovery of this economy, economic growth or jobs which put money in people's pockets which then causes economic growth? >> clearly you can't have growth without jobs, that's the bottom line. i think it's really important to understand that much of the gains that we saw in the third quarter, although it was an acceleration in growth, came from a catch-up in inventories. now that that catch-up from the auto sector, after the japanese earthquake last spring, now that that is sort of playing out, that won't be there to support growth. in fact domestic demand, final domestic demand slowed quite dramatically. over 2% of that 2.8% gain was inventory gains alone that won't be there to support growth in the first quarter. and it's why the fed is so still very concerned about growth in the u.s. economy and trying to provide some level of certainty in terms of providing stimulus for the economy through its communications when there's so much uncertainty and just, you know, a lot of lies and things going on in the political spectrum that i don't even want to address. >> you know, diane, can i just mention something about this. we had an editorial in our paper called the zero decade. we've had close to zero interest rates by the fed now for five, six, almost eight to ten years. and this idea that we can keep stimulating this economy with a free flow of money and record low interest rates, i'm just not so sure, diane, it's a strategy that has worked very well. this has been a lousy decade for growth with the fed holding those rates down. >> let me interrupt you. >> hang on. it's a good point because i don't know -- diane, i want you to answer this, but i'm not sure the fed is saying they can stimulate any further. we're at zero. >> right. >> i think all they're saying is we're not going up. what's your answer to that, diane. >> actually no, i don't think that's true at all. i read your editorial, stephen, and i didn't like it. i didn't agree with it because i don't think it was very informed on what the fed is trying to do. agree or disagree, the fed is using communication strategy, learning from the great depression and learning from the mistakes of japan that you can do more at the zero boundary. that canes was wrong that there's nothing you can do. in fact the fed has done a lot. they did a lot when they announced the mortgage buy back program and retriggered a program in terms of any kind of mortgage lending in 2009. the announcement effect of that alone was tremendous. so the fed expanding their balance sheet, doing out of the box thinking has had a major effect in terms of stemming the losses and triggering some level of growth. the problem is the head winds. and i believe the greatest head winds we face today are political in nature and political uncertainties from europe, the middle east to the u.s. those are our biggest stumbling blocks and we probably agree at some level on that level. >> david? >> yeah, i just wanted to make a couple of points. i do think this conversation illustrates and underscores what dianes was just saying. the conversation in politics does not seem to me to fit very well the nature of the problem, the structural problems that we have. the center of the argument is whether the tax rates ought to be raised on the upper income. you can agree or disagree with that. but if you raise them, that's not going to solve some of the structural problems. >> that's right. >> we have a real problem with creation of jobs. with this growth that we've experienced in 2011, the economy today is bigger than it was before the recession hit. and yet we have six million fewer jobs than we did at that time. we have had a real problem creating jobs, and i don't know what the answer is to that. even if you keep interest rates at zero, that is not going to necessarily create the jobs. so where are those jobs going to come from? i think the candidates have to engage at a more macro level and help us understand what their alternative paths are out of this so that you do get a more vibrant economy that creates jobs. >> i know you and i weren't in the same place for the debate but you're taking the words out of my mouth. i feel like throwing pillows at the screen saying come on, guys, give me details. that's the conversation we need to have. stephen, you're a big fan of paying the bills. i've got to pay the bills so hold on, we'll come right back sdmnchts the top man in president obama's check team says you won't have him to kick around much longer, regardless of who wins the white house in november. there's going to be a change near the top. i'll tell you about it when we come back. [ male announcer ] the cadillac cts sport sedan was designed with near-perfect weight balance from front to back... and back to front. ♪ giving you exceptional control from left to right... and right to left. ♪ the cadillac cts. ♪ we don't just make luxury cars. we make cadillacs. when bp made a commitment to the gulf, we knew it would take time, but we were determined to see it through. today, while our work continues, i want to update you on the progress: bp has set aside 20 billion dollars to fund economic and environmental recovery. we're paying for all spill- related clean-up costs. and we've established a 500 million dollar fund so independent scientists can study the gulf's wildlife and environment for ten years. thousands of environmental samples from across the gulf have been analyzed by independent labs under the direction of the us coast guard. i'm glad to report all beaches and waters are open for everyone to enjoy. and the economy is showing progress with many areas on the gulf coast having their best tourism seasons in years. i was born here, i'm still here and so is bp. we're committed to the gulf for everyone who loves it, and everyone who calls it home. since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪ tim geithner told bloomberg television this week he does not expect to be part of president obama's administration should the president win a second term. that's hardly news. his impending departure is the worst-kept secret in washington. but the timing of his latest remarks is a bit curious. cnn polls continue to show that four out of five americans feel that the economy is in poor shape and give the president low marks on his handling of the economy. david, i want to ask you this because you sort of connected the threads on the economy and growth and fairness to politics. is the timing of secretary geithner's comments designed to make it clear that a likely target of many republicans is on his way out so don't spend too much energy on him and the policies he's associated with? >> i'm not sure. i don't read a lot into the timing of this recent statement because he's made it clear before he's only staying on because the president really pressed him and he's now simply saying i don't think the president is going to do that again. the president obviously has come to rely upon tim geithner. he's turned to him to have frequent conversations with the europeans, especially chancellor merkel and others about the euro zone because there's such fear that that could upset the apple cart. hillary clinton is another example of someone who is also leaving. but it's also an opportunity. when someone leaves like that, you have an opportunity to find the next person who can send signals about your intentions. if he finds someone who is not only well respected internationally but is a deficit hawk, someone who is really committed to bringing this debt under control, that would help him working on capitol hill, help him politically, help him with the financial community, he's got an opportunity now to reach out to the financial community, the business community in ways that tim geithner for whatever reason hasn't been seen as the bridge that we're looking for. so there are a lot of things you can get that are plusses for you as a president when you have a major job opening like that. >> stephen, what's your take on this? >> i don't dislike tim geithner personally. i think he's a good man, and in fact i think the fact that he understands financial markets has been pretty critical for this administration. but i'd also have to give him pretty close to failing grades. the statistics that you just rattled off about how half of americans still think we're in a recession, obviously we've had a very mediocre at best recovery. and so i think that, you know, one guy i'd like to see brought in just as some food for thought here would be something like paul volcker, somebody who was very involved in the big recovery in the 1980s. we need a big, robust expansion. the big problem for the president right now is even though the economic signals are suggesting a pickup, a lot of americans aren't feeling it at home. >> which leads a lot of people to the question we started with about fairness. diane, i want to get back to this idea that we have an economic system that is unfair to millions of americans. we continue to say that it now appears that capitalism itself might be on trial. so forget the politics for a second. as an economist, do the numbers tell you when you look at all the economic indicators out there, do or can the numbers tell you that america has an unfair economic system? >> absolutely. i mean we have neglected education in this country. we hit a peak in educational attainment in the 1970s as other countries continue to educate people in the 1970s moving to the 1980s. at the very moment the information age and ideas were being rewarded more than manual labor. the bottom 50% of income earners in the united states has stagnated or lost ground in terms of income since that period of time with the top 90th percentile or top 10% who have graduate degrees and more education were beneficiaries, because there was a shortage of them. that gap between the 50 and 90th percent was filled with debt. that was more expedient for us in our capitalist economy with deep and liquid capital markets at the time than educating our people and sending them to educate themselves. we had the gi bill and all kinds of things. we took people from the farms and brought them into the factories. we educated them, made them literate. we did things that were pushing education for much of the 20th century. at the end of the 20th century, gave up on that. that's a structural problem that is absolutely relevant in the numbers and it gets to the broader issues that we were talking about earlier that, you know, the candidates are not dealing with the real structural problems in the u.s. economy. you know, dealing with these sound bites of unfairness in income and equality. they do exist but they are rooted in very decade-long problems. >> are we going to get to that point, stephen, where we're all listening to these debates or whatever candidates are doing an saying, hey, we've got some real options, one versus the other on the table, that would be real solutions for our economy? >> well, look, i think this big issue, just to frame this whole debate, it's going to be a debate between fairness being pushed by president obama and hopefully a growth platform by the republicans, probably mitt romney. and i think that's really the decision americans are going to make. do they put fairness ahead of growth. i reject this idea that if the economy grows, it only helps rich people. diane, if you look at the data from 1980 through -- >> i didn't say that it only helps rich people. i just said the income inequalities are there. >> it's also true that the middle class did pretty well over that period, a 30% increase in real incomes. the problem has been the recession has just crushed people and we've had no recovery in incomes, wages or jobs. >> all right, good conversation, folks. we'll hope that the conversation does get more specific as the campaign goes on so we can actually start to evaluate where those choices should lie. david gergen, stephen moore and diane swchonk. housing continues to be missing in action during this economic recovery. florida has been particularly hard-hit and it just happens to be holding a primary on tuesday. that's why our own christine romans is there. she'll be with us next to break it down on "your money." hritis. i had some intense pain. it progressively got worse. my rheumatologist told me about enbrel. i'm surprised how quickly my symptoms have been managed. 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[ male announcer ] enbrel. the #1 biologic medicine prescribed by rheumatologists. florida is big in the news with that upcoming primary, so let's take a look at florida's housing market. it's been particularly hard hit. if you look back to 2006, you'll see that florida's home value, which is the line in red, were actually higher than the national average. this is tap cal, by the way, of the states that were hardest hit, in some cases arizona, nevada. in the green you see the national average over the past year. you can see while the national average has declined somewhat, florida has been in steep decline and the prices there have now fallen below the national average. at the same time, foreclosures in the state of florida have skyrocketed. this is typical when you see a continued decline in home values, because people stuck in those homes who have lost their jobs cannot sell those homes to make up for their mortgage payment so they get foreclosed on. christine is in jacksonville, one of the hot beds in the housing crisis. it's actually one of the worst places in the country for foreclosures. christine, what are you seeing, what are you hearing there? >> well, the bigger they are, the harder they fall. that's what that chart shows you have there and it's what people are grappling with here. here in jacksonville, there are other parts of the state worse than jacksonville, but in jacksonville, almost half of people are underwater on their loan. just about every neighborhood has an abandoned house or a foreclosed house or a house that's now falling into disrepair. you know, look, we went this week with a guy named scott nicholas who's a realtor. we went door to door with him as he was checking to see if people lived in some of these houses because the banks were looking at them and trying to figure out which houses they could sell, which houses people were still living in that they had to be negotiating with those people to figure out where they stand on their mortgage. some of these neighborhoods -- in fact, scott says he goes to some houses and the people who live there don't own the house, they're renting from someone. they have no idea that house is in foreclosure. we also talked to an attorney named chip parker who represents lots of people who are fighting foreclosure from their banks. listen to how -- listen to the terms that he puts this state's housing crisis in. >> jacksonville is a beautiful, vibrant city. and it is being attacked by a cancer from within. house by house. and what we see in these neighborhoods, established neighborhoods and new neighborhoods, you start to see vacant houses, decaying lawns. you really lose a sense of community when your neighbors all of a sudden have gone. >> reporter: so home prices here down from the peak $80,000. median home prices down $80,000. orlando is a little worse, miami is a little worse, down about 40% here. you can see it's about 50%. imagine the value of your home cut in half, really limits your options, doesn't it, if you're a homeowner whether or not you're underwater. >> which is why when we heard the debate in jacksonville on thursday night, those social issues didn't come into play all that much. if you could get past mitt romney and newt gingrich sniping at each other, it was all economic issues. even rick santorum wasn't doing that in florida. >> reporter: yeah, and you know anybody who's going to cast a ballot on tuesday or in the general election, clearly they're going to have some sort of housing baj baggage and jobs baggage. 9.9% is the unemployment rate here. a real estate professor said you're not going to fix the housing crisis until you fix the jobs crisis first and foremost. but he also said when he runs studies going back as long as we have any kind of data about housing, five years from now, his best assumption is that home prices will be higher, because all of the ingredients are there, right? record low mortgage rates, home prices that are so low, affordability finally. he said you've got to clean out, which is kind of a brutal term, but clean out these foreclosures, the people who have been blown out, and start fresh. but right now you've got a delay in that cleanout because the foreclosure -- there's still the shadow inventory of homes -- >> that's exactly right. great reporting. thanks so much. you look like you're having fun out there on the road. suits you very well. christine romans in jacksonville. the american dream is at risk and many say inequality is at the heart of the problem. is fixing inequality the key to fixing our economy? that's next on "your money." ♪ ♪ you and me and the big old tree ♪ ♪ side by side, one, two, three ♪ ♪ count the birds in the big old tree ♪ ♪ la la la [ male announcer ] the inspiring story of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. ♪ ♪ you and me and the big old tree side by side ♪ but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the charming outfits. take away the sprites, and the storybook narrator... 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[ male announcer ] sustainable solutions. fedex. solutions that matter. keeping the american dream alive, president obama said this is the defining issue of our time in his state of the union address this week. listen. >> we can either settle for a country where a shrinking number of people do really well while a growing number of americans barely get by, or we can restore an economy where everyone gets a fair shot. >> who can disagree with that? will cain, i'm putting you on the spot, will. you say that the things that have made the united states what it is today, capitalism, democracy, the industrial revolution, none of them were ever based on the idea that the economy does or should reward people equally. you've actually come armed with a chart that proves -- >> that's right. >> -- that income inequality debate is off base. tell me what you're talking about. >> i think the conversation focuses on the wrong question. it constantly asks how are you doing compared to someone else, when the real question is how are you doing? and the system that happens to benefit the most people on the face of the earth also results in inequality. what i have here is a chart that shows data from the last 2,000 years of human stichbs. >> -- existence. this is the life's work of angus madison. it shows for the first 1800 years, we made not much north of $500 a year on average. but something happened 200 years ago, something. call it the industrial revolution, capitalism, democracy, whatever it may be, it wasn't a focus of economic equality. it just so happens that 500 years ago, we were all equally poor. today we are unequally rich. >> very interesting. harold mierson is editor at large of the "american prospect." an op-ed for the "washington post." >> what do you think? >> i think james watt invented the steam engine in britain and the industrial revolution began. even as karl marx, no fan of capitalism he, even as karl marx noted, industrialization and capitalism produced a quantum leap at that point in human productivity. that was the main change was human productivity. and that's why that chart looks the way it does. i mean the chart is not wrong. the average wealth of the average person began to take off first in britain as a result of this invention, and then as other countries grew industrialized, there too, as in china today. but i think this is a separate question from the question of how equal or unequal incomes are within a given country. >> i don't think it's a separate question, harold. i think you give a lot of credence to the industrial revolution as it should be but you dismiss the effects of capitalism going on simultaneously. and i think that the problem here is when we talk about inequality, we start to erode the concept that allowed that chart to go through explosive growth 200 years ago. when you constantly evaluate relative wealth, you threaten absolute wealth. the fact is, we have all gotten vastly more wealthy over the last 200 years with a total ignorance towards equality, economic equality. >> let me ask you this then, harold. you recently wrote that as the american middle class is thinned out, the idea of america as a land of opportunity has become a farce. now, what happened to the concept that i think is so important here, this concept of social mobility or socioeconomic mobility, the idea which you could not do in 1 a.d. or 1600 or 1700 a.d. the idea that you can be born in one socioeconomic place in life and die in another one. do we still have that in america? >> not nearly enough. what many studies show is thwe measure it by intergenerational mobility. can sons do better than their fathers and can daughters do better than their mothers. that's been in decline in the united states for the last 20 or so years, and there are other nations in europe, in northern europe in particular, that have surpassed us that also have greater equality of resources and wealth. so i think the chain is broken down here. the ladder has a couple of rungs missing. i think there's a whole strat um of jobs, jobs in manufacturing in particular, which have disappeared. actually that's one reason why presidential candidates of both parties, not just barack obama, but also rick santorum and even mitt romney are talking about things to help the return of american manufacturing because that's one of the things that's broken in this country. >> and you both draw the same conclusion. with the industrial revolution that got us to this place of greater productivity and/or wealth, the fact is that thing that made america and built the american middle class does not exist to the same degree as it did some time ago. hold on there, will, because i want to transition from this. the thing that made america so great may be disappears. it's something that will's friends like to call american exceptionalism. it sounds like an idea that our elected officials in washington could actually agree on. so why it's turned into exactly the opposite. what is this american exceptionalism anyway on "your money" right after this. i'm good about washing my face. but sometimes i wonder... what's left behind? 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[ female announcer ] purifying facial cleanser from neutrogena naturals. all right. american exceptionalism. republican presidential hopeful newt gingrich says it's an idea that he embraces and president obama doesn't. >> if you are for american exceptionalism, for us, if you're for american -- if you are in fact in favor of a strong america in a dangerous world, you're with us. if you're for a weak america that tries to appease its enemies, you're with obama. i think that's what this whole campaign will be about. >> kind of interesting. so he thinks american exceptionalism stands in stark contrast to european socialism. american exceptionalism is a hot topic in the race for the white house but it's an idea that dates back all the way to the 1800. it's the idea that america has a unique identity and ideology. will, it's often interpreted to mean that the u.s. is superior in several ways to other countries. you're a conservative. i hear this more from conservatives than anyone else so tell me to you what american exceptionalism means. >> first i'll explain it from a romantic perspective. last block i went back 2,000 years. michael lewis wrote a book called "money ball" and the manager of the oakland a's says i have always despised and feared failure more than i've enjoyed success. you've heard bill parcells, troy aikman talk about this. failure is key to success. that happens in the united states, but today we pursue policies like too big to fail and entitlements to deny the repercussions of failure. but the second part in america is we've never been debill tatd by fear. in money ball they are wondering how am i ever going to hit this guy. lenny dystra says screw it, i'll stick him. he walks up there and he does. that is america. we are never afraid to fail. but we will allow people to fail. if you allow people to fail and celebrate those that risk failure, you'll be exceptional and we have it. >> i have to tell you, harold, if that was what i heard as a description of american exceptionalism on an ongoing basis, i would give it a big hug every time i heard it. is will making any sense at all? >> he is unless you're not a fan of the oakland a's. >> i'm not, harold. >> i don't know how american exceptionalism got narrowed down to that. it's a much broader term. and, you know, when newt gingrich uses it, it's simply a way of his making the allegation that barack obama is not really someone who loves the united states. >> right. that's how it often comes across. >> right. so that's a campaign attack, which plays to newt gingrich' base. more seriously, i think it refers originally to the fact that, yes, america is less social democratic, less socialistic than europe and that's 'impeerically true. the one most distinguishing feature of america is that we're entirely a nation of immigrants and that creates a very different kind of nation and a nation bound together by love of country and not for love of we've been here for 800 years so that's a real difference. >> let me ask you this, will, in the debates on thursday in jacksonville, newt gingrich plays to this a lot. he talks about the fact that i am not going to accept that america is in decline. if you want that, you're with barack obama. so linking the idea of america being in economic decline with the idea that you don't believe in american exceptionalism, i follow the economy very closely. america is in relative economic decline compared to china and compared to india and brazil and places like that. that is an economic fact. does that make me anti-american to say that? >> no. this allows me to explain the practical applications. i'm fascinated to see if harold disagrees with me on that. that rugged individualism that i described through the oakland as, that manifests in things like six-month unemployment benefits versus three years in france or endless unemployment benefits in germany. it manifests with a weak social safety net with low entitlements. it is ruthless, it is heartless but it creates a workforce that is mobile, that moves. it means we work through our economic problems through this process. that is the manifestation of the romantic vision of american exceptionalism that you must do or you will fail. if you do, if you push west, if you are a creative destroyer of capitalism, you will be celebrated. that's the practical application. barack obama to many conservatives threatens that. >> a recent pew research study finds political conservatives are especially likely to believe that their culture is superior to others. i'm pushing you on this will and i keep pushing back, to the idea of while your description of american exceptionalism is remarkable, i don't know that's how others are using it. in the united states, 63% of conservatives take this view compared with 34% of liberals. so if this is the case, republicans like newt gingrich have a point that there's a clear political divide on the issue, harold, or are liberals just self-loathing. >> no, liberals are not self-loathing. i think the idea that you want to make america better and that occasionally means, yes, you see what other countries are doing and look at the best practices that they do and, you know, we can adapt those to our own modes. yes, france has unemployment insurance that's longer than ours, but germany has a way of keeping workers on the job even during hard times, and this is something that liberals and even some conservatives here support. so it's not -- you know, it's a more complicated picture and i think you can love the country but still want it to get better in all kinds of ways, obviously. >> i tip my hat to will for the finest explanation and most romantic explanation of american exceptionalism that i've ever heard, including movie references and sports references. harold, great to see you, thank you for joining us. harold myerson and our good friend will cain. thanks, fellas. we heard the president this week tell american companies to invest in american jobs, but what role should business play in fixing the u.s. economy? 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[ female announcer ] live the regular life. phillips'. metamucil uses super hard working psyllium fiber, which gels to remove unsexy waste and reduce cholesterol. taking psyllium fiber won't make you a model but you should feel a little more super. metamucil. down with cholesterol. two weeks ago we began focusing on capitalism on trial here in this country. on that show arianna huffington said one of the big' problems of american capitalism is the interests of business of misaligned with our social values. she said if we want the best ideas we should speak to roger martin, a dean at the university of toronto school of management and the author of "fixing the game, bubbles, crashes and what capitalism can learn from the nfl." why should companies focus on their communities as well as their shareholders. >> those are the things that make a company succeed long term. if they succeed long term in serving their customers well, being good to their employees an their communities, the shareholders will do just fine. if they focus on the shareholders without thinking about the customers or their communities or employees, then shareholders won't do very well. >> how far do you go with this? the issue right now in the united states is this competition between washington and businesses about whose responsibility it is to be hiring people, to bring jobs back to america, to open factories. is that a company's responsibility? >> well, i think the company's responsibility is to produce great products and services that get them customers. the great management guru peter drecker said the first job of a company is to acquire and keep a customer. i think if they were doing that and focusing on that, then the jobs would follow. they'd need to have employees to be able to do more of that. >> all right, cnn money's poppy harlow was in davos for the week and she had a chance to speak to kiss so's ceo, john chambers, about this idea of aligning miss goals with social responsibility. here's what he said. >> you've also got to create jobs and give back. that's something i am deeply committed to and i think it's something that all american on. >> alexis knows about this, the ceo of the gen youth foundation. you have worked on and covered wall street. business leaders have been telling you privately they have enough problems just trying to run their own businesses without taking on social responsibility or responsibility for propping up the rest of the u.s. economy. let's just talk about this. what moral responsibility do american companies have both in terms of philanthropy and charity and giving back to their communities and in terms of hiring more americans? >> the rule is growing precipitously and look at where we've gone in the past three to four years, this recession. if you look at the change in 2010 versus where we are today, almost every ceo in the country realizes that they have to be giving back to their communities. in fact, their shareholders are demanding it. it's becoming a bigger and bigger issue for business. the question for business is whether or not they can ultimately have an impact. and that's been the argument, is government making it more difficult to create jobs and to give back to the local communities, or is government creating more regulation, which is stifling business and innovation in i'll tell you, i work in the not for profit sector right now in childhood obesity. i see this story every single day and i'm spending more time with corporate america than ever. they are giving back at a greater rate but i'll also tell you on the other side of the ledger it's extremely hard for them to work with the government. it's extremely hard for them to get past the politics of the business environment to effect real change and, in fact, you and i both know when the stories are focused on them they tend to focus on the bad. you don't hear the stories of the good that corporate america is doing in giving back to their communities. those stories largely get ignored. >> what do you think of that? back to your point, roger, there are companies, particularly at a smaller level, at an earlier level that don't confront some of these things that alexis is talking about and all of that regulation starts to set in. despite the politics with the discussion in america most of these regulations have been in place for a long time or were put in place because of a lawsuit or something like that. it is not that this administration came in and dumped a bunch of new regulation but it does seem to be a mantra that government is standing in the way of companies doing the right thing. so to your point that if a company's only job is to create good products and keep customers where is the conflict here? >> well, i really don't think there is a big conflict. i actually think that in many respects people and companies say there is a conflict. they say, well, i can either support creating shareholder values or serve my customers and employees and that's just a false dichotomy. it's a false tradeoff. and the companies that i think say as alexis said that you can do both by serving your customers, your communities well, you will create shareholder value and jobs, i think it's just that mindset. it's not a tradeoff. you can do both and the modern company that succeeds will recognize that it has to do both and they will figure out ways that they can do both. >> and one of the things that we're seeing more and more ali, you're hearing about this every day, is the role of the social impact bond, right? that is being capitalized from the business community and yet the interest on these bonds, right, if you're thinking about it, it's coming out of the private sector but the interest can be returned from the government sector. right? it's going to reduce their expenditures on many of the social issues we're addressing whether it be welfare, whether it be imprisonment, a variety of different things. the question now is can the government properly look at the private sector and figure out how to make a public/private partnership work? that public/private partnership can create jobs, can create innovation. we've seen it coming out of the recession. green jobs, infrastructure jobs, right? when done effectively it can have an enormous impact but they have to treat each other as equal partners in order to get the real return on investment, particularly in something like job creation. >> all right. great talking to you, as always. roger barton is dean of the university of rotman school of management. from tuesday's florida primary right up to november's presidential election americans will have a lot to think about heading into the voting booth. i'll tell you what to leave oust the ballot box if you want to help fix the economy. my x, y, z is next. this was the gulf's best tourism season in years. all because so many people came to louisiana... they came to see us in florida... make that alabama... make that mississippi. the best part of the gulf is wherever you choose... and now is a great time to discover it. this year millions of people did. we set all kinds of records. next year we're out to do even better. so come on down to louisiana... florida... alabama... mississippi. we can't wait to see you. brought to you by bp and all of us who call the gulf home. i thought i was invincible. i'm on an aspirin regimen now because i never want to feel that helplessness again. [ male announcer ] be sure to talk to your doctor before you begin an aspirin regimen. talk to your doctor, and take care of what you have to take care of. a nonamerican watching primary season would be forgiven for forgetting that the u.s. constitution does in fact enshrine the concept of separation of church and state. but america at its founding as it is today was a diverse society comprising people of many faiths and denominations and some who had none. the founding fathers wanted americans to have the right to subscribe to their various creeds in freedom without fear of discrimination or persecution that state sanctioned religion might press on. many americans are religious and the most religious seem to be running for president judging how often republican candidates invoke their faith in their speeches or quote from the bible. a recent study by the university of missouri shows religion still has a major impact on how americans vote and as such it helped define the platforms that candidates run on. the study's author he says, quote, it's on par with class issues as far as why people vote and he says religious voting tends to correspond with traditional conservative political values. i don't want to over play that study or over simplify it by suggesting that the more religious you are necessarily dictates where you stand on social issues like abortion or gay marriage. i don't have enough data to know that is really true. despite some candidates' best efforts those types of social issues haven't taken center stage so far this election. that's because the number one issue on voters' minds for the past four years whether or not you are religious has been the economy. religion and the economy are not disconnected. my degree is in religion and what i learned at university is that most faiths strive first to organize society with an aim to prosperity. they largely just differ in details and approach. with that common goal in mind it would be best if we kept our religion to ourselves during the campaign or at least out of the presidential race. we should avoid getting distracted by president obama's muslim ancestry, mitt romney's mormon faith, or questions about whether newt gingrich's short comings in his family life may or may not contradict his own faith. these issues are not entirely unimportant but they are unimportant to the most important matter facing america and that is the economy. that's my xyz. thanks for joining the conversation this week on "your money" here every saturday 1:00 p.m. eastern sunday at 3:00 p.m. make sure to check out my new ok with christine romans how

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