Conversation and we like to talk a lot so there is conversation in social media. I think this whole week has been about learning. I come from a small town where it is very politically homogenic. There is not much chance for people who dont think the same to get their opinion without being ridiculed. Being here has given me an opportunity to learn other viewpoints and also to get my other ideas out with people. High School Students across the country discuss the precipitation there cipitation sunday night at 8 00. Tom perkins wrote a letter to the enter of the wall street journal in january about income inequality. He later apologized for holocaust analogy. He says part of the reason he wrote the letter was because the attacks on his exwife who is in the audience at this Commonwealth Club of california event. He spoke with Fortune Magazine senior Senior Editor about what he calls the demonization of the one percent. It is about one hour. Thank you, caroline. This truly is my favorite part of the evening. Its never as loud as id like it to be. Good evening and welcome to tonights meeting of the Commonwealth Clubs inforum, connect to your intellect. You can find inforum online at inforumsf. Org. Im adam lashinsky, thats adamlashinsky on twitter, Senior Editoratlarge for fortune and your moderator for the evening. Tonight, were here for inforums event, tom perkins the war on the 1 . Tom perkins, seated next to me, is cofounder of a Venture Capital firm kleiner, perkins, caufield byers. An alumnus of harvard and mit, hes a renowned businessman and, as everyone in this room knows, an outspoken capitalist. In january of this year, shortly after his 82nd birthday, is that correct, tom . Yeah. He wrote a controversial letter to the editor, which was published in the wall street journal. The letter has since gained notoriety for the parallels it makes between jews in nazi germany and the current 1 . Here in the bay area, toms comments on income inequality feel particularly relevant, given the current tensions brewing among san franciscans and what it is known as the techie community. Without any further introduction, please join me in welcoming tom perkins. [applause] tom, i want to start at the very top, which is to ask you what the catalyst was for your writing this short letter to the wall street journal . Well, i think frustrations had been building up for a long time about what i see as the demonization of the rich. It was a particularly nasty attack on my exwife, which triggered my response. I thought, being a norwegian knight, i should ride to her defense. I spilled a little more blood than i had planned, but im not sorry i did it. I should point out that your exwife, danielle steel, is in the front row of the auditorium this evening. She came to hear you speak. You refer to an attack on her. Explain. Where was this attack . Whose attack was it . What was the attack . I dont want to spend a lot of time on this. Nor do i. Over the years, the San Francisco chronicle has had a series of attacks on her. I wont go into all of them, but there have been a lot of them. Among one of the attacks is shes numberone bestseller usually on every book. New york times, number one. Obviously, her books are being read in San Francisco, but theyre never reported in the chronicle, ever. Anyway, that is what started it all. You decided to write a letter. You were angry about an attack in the San Francisco chronicle, so you wanted to write about income inequality. Tell everybody briefly what you said in the letter and what your goal was. Well, it turned out to be the most widely read letter in the history of the wall street journal, which of course is surprising. Its because i used a forbidden word. I used the word kristallnacht, which shouldnt be used ever, i suppose. You shouldnt compare anything to the holocaust, for example, because its incomparable, and the same with kristallnacht. Anyway, i said, is there a progressive war on the 1 that could be like the kristallnacht . That got everybodys attention. I made the point that in germany, 1 of the population was jewish. A mad, fiendish dictator used incredible political skills to focus hatred on that 1 and used it as a steppingstone to power. I saw a parallel between our 1 , here in america, and that 1 . Thats the parallel i drew. Youve subsequently apologized for having used the nazi reference. You quickly follow that up by saying you are not apologizing for suggesting that victimizing a small minority is a bad idea, period, and that was your point. Correct . That was my point. I just would like to talk about this word for a minute. The wall street journal on february 4th ran a rather long oped piece, which i have extracted to be very short. Its by a professor at harvard, ruth wisse. Shes a professor of yiddish and comparative languages. She has written a couple of books about the nazis and the holocaust. The headline is the dark side of the war on the 1 . Two phenomena, antisemitism and the american class conflict, is there any connection between them . In a letter to the wall street journal, the noted Venture Capitalist tom perkins called attention to certain parallels, as he saw them, between nazi germany jews and american progressives war on the 1 . For comparing two such historically disparate societies, mr. Perkins was promptly and heatedly denounced, but there is something to be said for his comparison of the politics at work in the two situations. Then this is, are you unemployed . The jews have your jobs. Is your family mired in poverty . The rothchilds have your money the parallel that tom perkins drew in his letter was especially irksome to his respondents on the left, many of whom are supporters of president obamas allies against wall street and the 1 . The ranks of those harping on unfairly high earners are playing with fire. Anyone seeking to understand the inner workings of such a campaign will find much food for thought in mr. Perkins parallel. I think our overall goal for the evening is to explore as much as we can the subject of inequality, and why inequality is such a hotbutton issue. On the subject of her academic point, it was written in a very academic way. Its clear thats her profession. You must see the difference between, on the one hand, a 1 , a small minority that was essentially powerless being persecuted by a majority, and on the other hand, a small minority that is extremely powerful. That has all the resources of modern society and wealth being persecuted, ill grant you, by a majority, namely the other 99 . Although, the group youre actually referring to is, at various times, several hundred protestors who are angry. No, i think the parallel holds. The typical german had never met a jew, but some of the jews were extremely wealthy. They owned the Large Department stores, and so forth and so forth. They were very prominent. I think its a very good parallel and it holds. Youre saying that the average occupy wall street protester has never met a rich person, or somebody who rides a google bus. Is that your point . Probably, i think so. Do you concede the point that now, youve chosen to speak for the 1 . I admire you. Not only do you have the courage of your convictions, but you have them repeatedly. This isnt the first time youve stepped up to defend yourself. The 1 has certain advantages and ways of defending itself that an ethnic group that is being persecuted, that is small, does not. I bring this up to ask you i think ive answered that already. I think if germany had had american gun laws, there would have never been a hitler. Now, thats controversial. If nazi germany had gun laws . If germany had americas gun laws. Americas gun laws, making guns widely available to the public. To anyone who wants them, yes. That the jews then would have been able to defend themselves . Hitler would have never come to power. Interesting. So there. Were really straying off topic, and we wont dwell on it, but youre a fan of our current gun laws . No, not particularly, but its in our constitution. Im a fan of that. I dont have any guns. Ok. [laughter] we will agree to disagree. We will agree that we wont illuminate your thinking anymore on the comparison of the rich 1 with the jews in nazi germany. Id like to talk about the nature of the persecution of the 1 , here in america, right now. Sure. Id like to start with some facts, which are always useful. They may or may not be useful, but go ahead. Well, well see. First of all, i dont think anybody has any idea what the 1 is actually contributing to america. Let me just get into that very quickly. Ive got it here somewhere. Let me talk a little bit, before i do that, about the persecution of the rich. Id like to take the Koch Brothers. There are three of them. I know one of them, bill, who has nothing to do with the other two that are highly political. Theyre all big contributors to charities and so forth. David koch was on the board of new york presbyterian hospital. The hospital was going bankrupt, so david gave 100 million to the hospital. That was interpreted as koch buying the hospital for the purposes of firing the nurses and destroying the nurses union. There was a big rally and all kinds of important people showed up. The nurses said, the Koch Brothers have a plantation mentality, antiunion to the core. Harry belafonte called them white supremacists. Then, lets see, letitia james, who was head of the union, said, rightwing, antiunion profiteers like david koch should not be meddling with health care in new york city. All have to stand together against the Koch Brothers coming to new york city. Tom, so far, these arent facts, other than the 100 million. The rally and what people said are facts. Oh, i see, the facts are what people said, but you wanted to talk about the contribution that rich people make, which i think is an interesting line of discussion. Lets just start with simple arithmetic. Lets say youre a successful author. Your income is taxed at a little over 50 if you live in california. On your death will be another roughly 50 tax. Out of the dollar you originally made, you kept 25 , 25 cents. You gave 75 of your lifetimes work in the form of taxes, not including property and other taxes. Thats on an individual basis. I just learned something today that i suspect nobody in the audience is familiar with, maybe you are. If you sell your home and youre making more than 250,000 as a family, there is a capital gain on the home. Lets say you sell it. You want to buy a retirement home or something. Obamacare has added a 3. 8 tax on your gain. How many of you knew that . Oh, quite a few, all right. I didnt know. Finally, let me get to the actual statistics. Ill make this brief. The top 1 i got this from the tax foundation. These are facts. The top 1 of taxpayers pays a greater share of the income tax burden than the bottom 90 combined, which totals more than 120 million taxpayers. In 2010, the top 1 of taxpayers, which totals roughly 1. 4 million taxpayers, paid about 37 of all income taxes. This is a big jump from 1985, when the top 1 paid a quarter of all income taxes. Indeed, the income tax burden on the bottom 90 has dropped. The bottom 50 pays only 2. 4 of the total taxes. The top 10 of taxpayers, the top 10 , pays 70. 6 . The argument of the rich are not paying their share, as obama likes to say, and they could do more, and so forth and so forth lets be clear about what were talking about. The argument is that there is a war against the rich and that the rich are being persecuted. Were not having a conversation about whether or not the rich are doing enough. Your argument is that the rich are being persecuted. Thats your point. Is this the persecution that youre referring to . Well, of course. I think that taxation, i wouldnt say its a form of persecution, but the extreme progressivity of the tax rate is a form of persecution. The extreme progressivity is not new. Secondly, its its getting worse. First, it got better, to use your terminology. Now, its getting worse, to use your terminology, but its not unprecedented. The republic thrived and withstood high taxes before, and likely will again. Im trying to put this in the scope of history to ask you where is the persecution in that . I think if youve paid 75 of your lifes earnings to the government, youve been persecuted. Lets just sum it up that way. Meanwhile, lets get back to the 99 for a minute and talk about them. They are not doing very well. Theyre doing extremely badly. Their income, ive got data on it. In 1985, the average family making 250,000 a year paid 40 income tax. Today, they pay 47 income tax. About half of that increase is obamacare. I think we can all agree. Nobody is having a wonderful time with taxes. Well, its an interesting point. I think everyone in the room would agree. Its part of the reason why people came out to hear this conversation. The 99 , for lack of a better expression, because its an inelegant and imprecise measure of those who are not super wealthy, are hurting, to make a generalization. There is income inequality. You are agreeing with that. I am totally agreeing with that. The question is what to do about it, first of all. Secondly, there is a perception that you ought to address. There is a perception in the country, in San Francisco specifically, that the people who are making this great wealth essentially dont give a damn. Well, i give a damn and im concerned about whats happening to the non1 . San francisco doesnt like the experience of becoming a suburb of the Silicon Valley. Thats whats happening. Explain. I feel like San Francisco, relatively speaking, especially in the technology community, is thriving as a center of job creation, of Wealth Creation. That isnt what i said. How is it becoming a suburb . Because the people in Silicon Valley are living in San Francisco, more and more and more. This is a trend that will continue. Why not . Its a great city. It has wonderful restaurants, great culture, a beautiful bay and everything, but an effect of that has been to drive up rents about 30 . What to do about that . I dont think theres much you can do about that. Thats inevitable. As Silicon Valley thrives, which it is, more and more people will want to live in San Francisco. Then we have the phenomenon of google buses, which i just find it almost incomprehensible to get angry about google buses. We started google and if they want buses, thats fine with me. To break the windows in them and rough people up, i think is preposterous. Now, we have google boats. Are they going to be out there shooting at the boats . The specific issue is i certainly dont mind stating mind my opinion that boorish behavior is boorish behavior. Everyone should say that breaking windows in buses is a bad idea. The question is a philosophical question. Number one, should the city specifically be reimbursed handsomely for the use of its facilities, namely the bus stops . Number two, if we encourage Companies Like google and google is not the only one if we encourage them and their employees to opt out of the Public Transit system, is it only going to make the Public Transit system work . Again, do we care . Do we care about a good Transit System . Is there a question in there . Yes, do you care about, do you have an opinion on using city resources . Do you agree with a philosophical point that, for example, Public Transit, Public Infrastructure is a good thing . Of course, of course it is. Its available for everybody. Google is paying a fee for using the bus stops. Belatedly. Well, but theyre paying it. Now, is google responsible for the rising rents in San Francisco . Indirectly, yes. What can they do about it . Nothing. Now, we started down the path of what can be done about income inequality. Id like to get on to that point, actually. I think that income inequality has been with us for a while and its caused by policy failures. I think theres been a huge failure of social policy, fiscal policy, and Monetary Policy. I hope i dont put you all asleep as i touch on those points. Lets start with social policy. Fifty years ago, Lyndon Johnson did two major things. He did the civil rights act, which is marvelous, magnificent, and i think without criticism. He also did the war on poverty, which had wonderful aspirations, but which has been an absolute and total failure. It has caused all kinds of problems. First of all, theres more poverty more now than there ever has been. When johnson started out, the government was spending roughly 1 of its Gross Domestic Product taking care of the poor. Now, thats closer to 5 . Thats a huge increase. Theres 77 million americans on food stamps. I think the biggest problem that johnson unknowingly created was the destruction of the lower end of families in america. Now, back in the 1960s and early 1970s, the divorce between whites, blacks and hispanics was about equal. It was about 12 across all those sectors. The war on poverty made it possible to have single mothers supporting their children without a working man in the household. The numbers have just changed radically. The divorce rates have skyrocketed. To use a victorian term, the birthrate out of wedlock has gone from 12 , which is pretty much uniform across all races in america, to 40 now for whites and over 70 for blacks. So im clear, youre drawing a Straight Line between the failed war on poverty and income inequality today. Im drawing a Straight Line between the failed war on poverty and the increase of poverty, yes. You started by talking about social spending. I think, as ive read and listened to comments that youve made, you generally would subscribe to the theory that we have more government than we need, that we spend too much on government. First of all, that government spends too much generally, is that a fair point . Well, government is a giant beast that has to be fed and the only way to feed it is with taxes. Taxes will just go up, and up, and up. I think obamacare is probably the question i asked is, in your opinion, does the government generally spend too much . Yes, it spends more than it takes in. It takes in 3 trillion a year in taxes and it spends closer to 4 trillion. Dont forget, we were talking about tax policy earlier. Youre against higher taxes. Other people are for higher taxes. Presumably, we could raise taxes to pay for these things, which gets me back to the question of do we spend too much . Well, we do spend too much. There are so many examples of that. I dont think i need to taxes will rise. Now, theres been discussion by nancy pelosi. Youre familiar with her . Our congresswoman. Our congresswoman. Your congresswoman. Of a wealth tax, it would be 2 per year on your wealth. Somebody said, well, lets say youre retired and your wealth is in your house and its worth a Million Dollars. She said, well thats no problem, the government will just take a 2 mortgage per year and thats how well get the money. She has also talked about a valueadded tax and much higher taxes on the wealthy. The beast will be fed and taxes will go up. I dont know which, maybe perhaps all of these things will happen. The irony is if you took 100 of the 1 s income and wealth, were only talking about a 1. 4 Million People. That total would run the government for about a month. Other than social spending, where would you cut . I think that were getting into an area where my bona fides are stretched very thin. We really should have a panel of experts but of course, they wouldnt agree with each other. You might as well go with what i have to say. [laughter] well, you are the man of the hour. We have no alternative. I dont know, i think entitlements are the obvious place that the cuts have to be made, but theyre built into the law so thats extremely difficult. Id like to skip on. Excuse me, before you do, i ask this line of questioning to try to flesh out a point. Which is, for example, one of your greatest successes in your illustrious Venture Capitalist career was genentech. Genentech was one of the first and most successful biotech companies. Did genentech, and does genentech benefit from basic medical research that the National Institutes of health does . Yes, more at the university research, but yes. This is good use of the federal government . Im all for the federal government funding basic research. Im for a strong military, and so on and so on. We could go down the list. Entitlements are what is eating up the budget. So to be clear, Companies Like tandem and compaq, which you invested in and made a lot of money in, and helped and create a lot of jobs, also benefited from military and other basic research by the United States government into the internet. Without which, none of this industry, none of the Silicon Valley today would exist. Youre wrong on that. Tandem did no military business, at all. No, not directly, but the infrastructure that was established by computing. Adam, youre barking up the wrong tree. Im not going to go there. The squirrel is in a different tree. [laughter] i want to get back to the policy problems. Its the social policy, number one problem. Fiscal policy, lets talk about that. Well, we spend too much. [laughter] yes, we spend too much. The numbers are just incredible and our debt is astronomical. The official debt is 17. 2 trillion today. That includes social security. Thats roughly 105 of our Gross National product. Now, if you were an individual and you were earning 100,000 a year and you were spending 105,000, you had no other assets, youd obviously be in trouble. Its worse than that. The unfunded liabilities of medicare, medicaid, fannie and freddie, and so forth, adds up to 68 trillion, on top of the 17 trillion. We really have a debttogdp ratio of pretty close to 400 . Now, many European Countries have that, but many countries in the world dont have that at all. Australia has a ratio of 20 . Norway has zero. Norway has the Largest Sovereign Wealth Fund in the world of over 1 trillion. Policy matters, fiscal policy matters. It seems to me that the debt will not be paid back. Theres no way to pay the debt wait. Let me finish. Wait, adam. I want to ask you, briefly, how those factors that youre discussing contribute to income inequality . Well, it contributes to being so far in debt that you cant spend in things you should spend on because youre so hopelessly committed. Inevitably, the taxes will just rise, and rise, and rise, which i dont think does anybody any good, 99 , or 1 or whatever. My point is, were, i think, on a knifeedge, with this incredible debt, which cant be paid back. I mean it just cant be. Its supported by faith in the dollar. Now, churchill took the uk off the Gold Standard in his second administration. Do you know who took us off the Gold Standard . Nixon, i assume. Yes, nixon. After that, it was just print money. If you have a recession, print money. Stimulate the economy. Have inflation . Print money. Devalue the dollar. 1 in 1970 was worth 1. Today, its worth 17 cents. Let me make an observation as a way of moving on to other subjects, which is i dont want to move on. I have a few more we need to cover before we go to the audience. Is there a dissonance here . This horrible situation you describe is coexisting with this great period of Wealth Creation and job creation, and the formation of great new Companies Like twitter, facebook, linkedin, and google, that are in turn causing the consternation that weve come here to talk about tonight. Yes, and that gets me thank you directly to Monetary Policy. Youre welcome, but briefly on Monetary Policy, because its the evening time and nobody wants to hear about Monetary Policy. All right, lets hear about it for a minute. Weve had low Interest Rates for a couple of decades, a little more. Very low. Historically low for a long, long time. Now, investors with capital are seeking return on their capital. These low Interest Rates, the rate on a 10year treasury is 2. 3 , i think, today. Very low, so investors are seeking returns of 7 , 8 , 10 . An incredible amount of money, to get directly to your point, has flowed into Venture Capital. Now, when Eugene Kleiner and i, the late Eugene Kleiner, my dear friend your cofounder of Kleiner Perkins. Cofounder. When we started Kleiner Perkins, we tried to raise 10 million and we couldnt. We raised 8 million, and that was the largest Venture Capital fund in the world. Everybody said, what are you going to do with it . Well, it turned out, we had to start our own companies and so forth to make it work, but thats a different story. Now, we have, i dont think anybody knows how many hundreds of billions of dollars in Venture Capital. The amount is immense, and that is causing the boom in San Francisco. Within a mile of here, there are probably 1,000 startups. In your opinion, these are good things. No, not necessarily. Why not . Why not . Because these startups students are dropping out of mit in their junior year to go to San Francisco and do a startup, but theyre not starting companies. Theyre writing software applications, which are products. Theres a huge difference between a product and a company. Their only route to liquidity is to sell it to google, apple, whatever. Most of them will fail. Thats fine because theres so much money around, they can fail and then fail again. Theyll keep getting financed. Its not good for them. Theyre not getting the education at mit they should have gotten. They dropped out. Theyre not learning how to be entrepreneurs. Theyre just writing software and applications. There are so many millions. Somebody probably knows how many millions of applications there are already are, but theres no great shortage of them. I see the building boom, the housing boom, and all of this as a result of terrible Monetary Policy for 20 years. I grant your point on Monetary Policy. This situation you described of a flood of Venture Capital, flooding essentially what, to paraphrase you, are a bunch of bad ideas or insufficient ideas, ideas that wont be real companies. Isnt this the great capitalist freeforall . Isnt this just the market at work . Yes, it is. When the Interest Rate goes back up to 3 , it will stop. Or, no, 7 . Excuse me, i misspoke. Its a fascinating line of argumentation youre making, i think. Some successes will come out of this. Its like a petri dish. Some of them may bloom and blossom. Kleiner perkins has been pretty good at picking them. Wasnt it like that in your days as an active Venture Capitalist as well, maybe at a smaller scale . You invested in young companies. Maybe they had a hairbrained idea. Maybe they had a great idea. Maybe they were going to make money. Maybe they were going to have to go get a real job. Right . Well, i could give a speech on Venture Capital in my sleep, which would put you all there, too. [laughter] i think that the unique thing about Kleiner Perkins, and sequoia, and i think the other great Venture Capital firms is the management skills that they brought to the ventures. Typically, they would help the entrepreneur build his team. They wouldnt expect to find a team already built. Whos going to become the Vice President of marketing of a startup number 780 . I understand. The Venture Capitalists can fill that role, provide all that help, and get the thing going. Thats the difference between an angel investor, who just sprinkles gold over everything, and a Venture Capital investor. Im not slamming around conway, because i think hes very good, but not all are. Youve referred to, in this conversation, about the 1 . Youve referred to this 1 as the most creative part of our society. Would you explain that . Because the war on the rich as been framed initially as the richest 1 , not the most creative 1 . Well, theres a high correlation. Look, i guess kleiner and i were in the business of creating billionaires. We didnt do so for ourselves. Well, we did all right, but 20, 30 billionaires that i could name that weve created. Look at google. Im confused. Is there a correlation . There is a correlation. Couldnt there be a creative poet or a creative artist who is among the most creative 1 in the country . Why would you correlate creativity with wealth . You are jumping into a completely different philosophical universe. Youre talking about value, not wealth. I am talking strictly about the wealthiest 1 , not the brightest, not the best poets, etc. Creative, though, was your word. Well, yes. The wealthy 1 creates jobs. Thats where they come from, not the government. God, the government cant create a job to save its soul. It spends millions and you get nothing. Or, i must say, the government is right now the biggest Venture Capitalist. Look at solyndra, which has been beat to death. Even Kleiner Perkins, we have an Automobile Company that borrowed money from the government. Not on my watch, but youre talking about fisker . Im talking about fisker. Anyway, the government is in the Venture Capital business. Everybody is in the Venture Capital business. Youre bound to get some good out of all that. You mentioned to me earlier that youve been involved in controversy, all your career. In your current controversy, you seemed surprised that the current partners of Kleiner Perkins are not on your side on this debate. I dont really want to talk about that. I think basically, they didnt have to say anything. Instead, they threw me under the bus, but im a big boy. I have had a lot of controversy in my life. For a long time, i was the worlds foremost misogynist for firing patty dunn and Carly Fiorina of hewlett packard. Then, when i was involved in genentech, i was going to destroy the world by releasing frankenstein bacteria, as new forms of life. There was a journalist in the chronicle maybe some of you remember, charles mccabe, who just castigated me every day on that. When i started my Laser Company in the 1960s, the rioters in berkeley thought it was a death ray. [laughter] yeah. The year i ran the San Francisco valley effectively was a year of extreme controversy. Herb caen called me, essentially, an idiot in charge, doing something he has no qualifications whatsoever to do, which was true. [laughter] the guy i hired, helgi tomasson, was still there 27 years later. Its almost time for audience questions. You mentioned herb caen. You started your comments by mentioning the San Francisco chronicle. Are you surprised that the San Francisco chronicle has a populist tone in its pages . [laughter] i think theres only one newspaper in the United States that doesnt have a populist tone, and its the only newspaper in the United States thats making any money. Thats the wall street journal. Point of fact, other newspapers make money. Its not the only one. I believe usa today makes money. The New York Times makes money. Thats not a newspaper. [laughter] and the New York Times does not make money. Im not sure, but its a public company, so we could go check afterwards. We could go check. Anyway, the question that i asked is, are you surprised . Youve made comments suggesting that you are surprised, shocked, upset, or something by the chronicles tone. Well, i read the chronicle every day. I want to know whats going on in town. I never read the editorial page. I could predict the editorial page. I dont need to read it. I read the New York Times every day, and the wall street journal. I dont get my information off the internet, like everybody else does. I think i know a lot more than people who do get it off the internet, but thats a matter of personal opinion. You also mentioned to me earlier that youve noticed a difference in the reaction youve gotten in the last handful of weeks, between people who email you on the one hand and people who comment about you on twitter on the other hand. Would you share that with everybody . Its very interesting. Ive received a huge number of letters and emails, all very supportive of my position, 100 . The twitters are all pretty negative, and its an age difference. Older people use email and younger people twitter. My last question for you tom. You were asked when theyre not playing video games. [laughter] you were asked recently in a Television Interview if you feel youre connected to reality. During that interview, you talked about your expensive watch and the yacht that you used to own. Your response to the question of whether or not youre connected to reality was, im paraphrasing, i give a lot of money to charity. Well, i do give a lot of money to charity, but that has nothing to do with my connection to reality. I think, philosophically, probably no one can prove that they are connected to reality. [laughter] im in the same boat with everybody else. How about you, adam . [laughter] youre a celebrated interviewer. Are you attached to reality . [laughter] my guess would be that one of the ways you answered the question was also that, although your immediate family is doing fine, you have relatives who live in trailer parks. I think the point you were making was you know poor people. Well, i wasnt born into the 1 . I used to be a paperboy, which is now of course illegal because of child labor and minimum wages. [laughter] i used to bag groceries and babysit, etc. Thats outlawed, but so it goes. We have a wonderful, vibrant audience here with a wonderfully vibrant interview subject tonight. I want to invite you to stand up and go to the microphone to ask questions. Ill remind you that these need to be questions. If they arent questions, i will apologize in advance for being rude to you, to remind you to ask a question. Sir, please, go ahead. Yeah, thank you for coming tonight. I appreciate you visiting this audience. With socioeconomic disparity or disinclusion, however you want to say it, particularly in cities, being really the civil rights issue of our time, and you being so connected, too, youre a brahmin of financial value creation. You being connected to people like google founders, not to mention the vc community that you run in. Would you be willing to be part of, say, a fund in which you give 1 of your money to, and help manage that fund and the use of that fund that harnesses the entrepreneurial talent of San Francisco, to address urban Poverty Issues that the tech economy or the emerging economy at large is exacerbating . I think i heard most of that. Im not part of such of thing, but such a thing is being organized by ron conway and marc benowitz. Benioff. Benioff, excuse me. Im not familiar with the details of it, but they are trying to do exactly what you have said for the benefit of San Francisco. I dont know if you caught it. At the very end of it, the tail end of his question, he injected the premise that the Tech Community is exacerbating the problems of poverty in San Francisco specifically. Well, theyre not. Theyre just making enough to pay higher rents, but i dont see that as exacerbating the problems of poverty. Thank you. I wanted to say as a reminder to our radio audience, this program is presented by the Commonwealth Clubs inforum connect your intellect. For more about inforum and its upcoming events, please visit us on facebook or follow us inforumsf on twitter. Tonight, were hosting tom perkins, the war on the 1 , and we have another question in the audience. Please. Hi, mr. Perkins. Im a student at stanford law school, and in my free time from playing video games, two of the things i do are well, we started electronic arts. Thats great. [laughter] one of the things i do is work in the Community Law clinic, mostly with spanishspeaking people from East Palo Alto. The other thing i do is i teach a class on californias finances. From these different contexts, ive gleaned, first of all we need to have your question. Im sorry. This is a question for tom perkins. What do i tell the people i work with in East Palo Alto . If you could speak to them, what would you say . Thank you. I feel very sorry for them. I wish that the war on poverty had not been such a fiasco, and then they wouldnt have the problem that they now have. The solution will take a very long time. It depends a lot on education, which is getting worse because of, frankly, the teachers union. Its making it impossible to have quality schools in the inner cities, and so on and on. There are no quick answers to these kinds of questions, im afraid, at least not from me. From barack obama, yes, they flow. Over here, please. Hi, hello. Well, good evening. Thank you very much for coming and sharing. You made a lot of statements about pointing fingers, but one of the things you didnt address was the role of Financial Literacy, the role of access, and the role race plays in a lot of these things. If you could, just highlight maybe your thoughts. How are you bringing Financial Literacy to a lot of these communities . What are your thoughts on some of the ways youve contributed to that, or just opportunities to do that . Yeah, i think i got most of that. Silicon valley is a meritocracy. It is simply a meritocracy. Race has nothing whatsoever to do with it, but blacks are underrepresented in Silicon Valley, unfortunately. Now, theres a group here in San Francisco. Theyre successful black businessmen of all kinds. Theyve formed something called wall street wizards. What theyre trying to do is teach young blacks about business and how to succeed in that. Last year, during nation black Awareness Week that may be the wrong title i agreed to speak to that group. All of the mentors showed up, and not a single student, not one. It must come from the individuals. It cant all come from the government or a program. If the individuals dont want to learn, they wont. Please . Yes. You cited johnsons war on poverty as a disaster that led to more poverty and increased the number of children born out of wedlock. What should have been done back then that would have had a different outcome . I think the answer to that is very, very long, and im not sure i have all those answers. We certainly did the wrong thing. What the right thing would have been, im not so sure. I would encourage you i have learned that you are able to form an opinion on almost anything, tom. It is your opinion that the war on poverty has been a failure, but that is not accepted fact. Oh, wait a minute. Now, come on. No, you dont know that there are not factors, that things would have been even worse without the things that were done. Thats conceivable, but i think hes asking a fair question, which is broadly speaking, what would have been the better policy route than the policy route that was taken in the Johnson Administration . Well, i think johnson had absolutely no idea that what he was doing was wrong. It looked good and everybody approved it, but it had the result of destroying families. It just did. Then that destroyed the education of the children in those families and so forth, so it had a cascading effect. The rate of poverty is higher now than it ever has been in history. There are 77 million americans on food stamps. Theres no way i dont know how bad it could have gotten. I dont know. Ill take a shot for you. Instead of the programs that the Johnson Administration did put into place, if the Johnson Administration and the Nixon Administration instead had focused on deregulation and making government smaller, that we would have less poverty today. Thats a trap and im not going to go into it. I think if money had been spent on improving the educational standards lets face it. We are, i dont know, 64th or something among the nations badly educated. Weve totally underinvested in education. Weve made it very, very hard to get a good education in the United States. If i had to pick a single thing, thats what i would pick that should have been done differently. Please . Could you comment on the fact that your own example of fiscal responsibility, norway, is a social democracy . Are you advocating social democracy for the United States . [laughter] im a knight of norway. Ive got to defend it. There are no tall no tall poppies in norway. No tall what . No tall poppies. Well, its the old adage, the tall poppy gets cut first. Everybody is pretty much the same. Theres no poverty. There are no rich. Theyve left norway because they didnt want to pay the taxes. Its not an ideal example. I just threw it in because theyve been so extraordinarily well in husbanding their resources, namely their oil. Norway has been the numbertwo oil exporter for decades, next to saudi arabia. Theyve saved the money. Some day the oil will be gone, but theyve got the money. Look, if i were 20 years old, of course, i think im in my midlife crisis now, anyway. [laughter] if i were 20 years old, id try to go to with australia. Australia is, to me, ive spent a lot of time there, the way california was, when i came here in 1957. It was upbeat, positive, can do, unaware of all kinds of problems. Thats the way australia is now, and all we do is worry about our problems. When you do go down to mountain view, you dont think of that, or when you walk around market street, you dont think of that as an upbeat, cando environment . Well, not seventh and market. Thats a good place to were getting too local on this conversation. Go ahead. Hi. I work at genentech. Id first like to thank you for creating my job. [laughter] secondly, knowing a little bit about genentech, i know a huge chunk of our revenue comes from medicare payments. You had mentioned earlier cutting entitlements. That would significantly cut our revenue. Thats one example of a publicprivate Revenue Partnership or whatever. Theres also construction, infrastructure, and education you mentioned. If this revenue that is being spent by the government isnt going to create jobs, what is it doing, if its not helping keeping people employed at genentech . Hang on. I think medicare is great. Great. Its one of the biggest Entitlement Programs there is. It is. Its just underfunded. You want to make this Entitlement Program bigger . No, i want to make sure it doesnt go bankrupt. Theres a difference. I dont understand. You dont understand . If we need to cut Entitlement Programs, then we need to cut Entitlement Programs. Adam, medicare will go bankrupt. Its inevitable, so taxes have to be spent on medicare. I am for that. The entitlements that youre against are . I didnt say i was against entitlements. I never said that. You said they needed to be cut. Yes, because thats the bulk of the budget. Theres very little discretionary cutting you can do. The military and a handful of this and that, but entitlements represent most of the budget. If youre going to cut the budget, which we have to do because were so deeply in debt, youve got to start there. There are good ones and there are bad ones. The bad ones are . I doubt that 77 Million People need to be on food stamps. Food stamps, ok. Next question, please . Hi. I have a speech impediment, so in case you dont understand, ill be happy to repeat myself. Im part of the 99 that aspires to be the 1 some day. I work 70, 90 hours a week to make sure that some day, hopefully, ill become the 1 . Do you think this could be potentially an image problem for the 1 . There are billionaires out there who we love, like steve jobs, musk, bill gates. Do you think that instead of calling this the war on the 1 , if we could actually address it as the race to the 1 , things would be a lot better for everybody . I think thats a brilliant rebranding. I totally subscribe to it, but my message is the demonization of the 1 . I think thats true, and its new. Its, frankly, new with the obama administration. We never used to have a demonization of the 1 . We wanted to be in the 1 . We admired them. I can remember when i was a little kid, john d. Rockefeller would go around and give dimes to the little children. I thought, how wonderful. Id like to be john d. Rockefeller and give dimes. This whole tone has changed in the last very recent years under this administration, i think. Do you think its because of obama or is it because of the 1 not being philanthropic enough . Not being philanthropic enough, is that what youre asking . Right. Ive discussed the taxes. The 1 is carrying the government. At least the top 10 is carrying the government. Weve talked about that. Its not bad to be in the 1 , obviously. I think people, like yourself, still aspire to it and should. Hard work and so on can get you there, plus the right Venture Capitalist. Over here, please . The president has proposed a lot of commonsense ideas around immigration reform, around infrastructure spending, but at every turn, hes been road blocked by the republicans in Congress Failing to want to agree with him on moving a policy agenda forward. What are your thoughts on simply the politics of no, as opposed to proposing an alternative agenda . Im neither a republican, nor a democrat. Ive gone both ways. I voted for jerry brown, which then he raised my taxes 30 . [laughter] president obama made an immense political mistake. Hes not a politician. Hes a brilliant leader in a certain direction. The mistake was to push through obamacare without a single republican vote. No other president would have done that, because it just wiped out any hope of cooperation with the other party. In spite of all his talk about reaching across the aisle and so forth, nothing has happened. You can blame it on the republicans, but i blame it on a huge strategic political mistake. Its the president s obstinacy in wanting his agenda passed that is to blame for the other partys intransigence . I think its what you get when you elect an amateur president. Tom, is that really fair . [applause] hes a politician who was elected by the people of the United States, not once, but twice, so why the namecalling . Ive looked at his resume. [laughter] youve never met an entrepreneur who had never been an entrepreneur before, or a Venture Capitalist who had never made an investment before . I wouldnt make him president of the United States. Over here, please . Hi. You just said that its not bad being in the 1 , but youre also talking about the demonization of the 1 . We do know exactly what happened to the jews in europe, so im actually curious what the fear is. It cant possibly be ghettoization, or deportation or extermination. I get your question, but were almost out i do want to understand what the actual fear is . The fear is wealth tax, higher taxes, higher death taxes, just more taxes, until there is no more 1 . Then that will creep down to the 5 and then the 10 . The money is in the middle. Thats where the money in america is. To pay for this government, its going to have to come from the 99 , not the 1 , in the form of taxes, valueadded taxes. I promise you, higher taxes, everybody. To be fair, im sorry to tell you that this is toms penultimate word and he will get the last word. Your point is, to her question, that your concern is a decrease in the overall quality of life in the United States, including for rich people, but not only for rich people. No, thats right. As opposed to ghettoization, extermination, and other horrible things. Im talking about economic extinction, not physical extinction. Before coming here, i was told that every speaker gets a question on how to save the world. The precise question is, and this is the way that inforum ends all of its events, what is your 60second idea to change the world . Ive been thinking about this as i was listening to you ramble on. [laughter] ive got it. Its going to make you more angry than my letter to the wall street journal did. I highly doubt it, but lets hear it. Youre not ready. Thomas jefferson, at the beginning of this country, thought that to vote you had to be a landowner. Now, that didnt last very long, and the vote was given to everyone, but the basic idea was you had to be a taxpayer or a person of property to vote. That went by the boards. Margaret thatcher tried to change that in england, in what became called as the poll tax. The idea was that every single citizen of the uk had to pay something in taxes, even if they got it back in subsidies elsewhere. If you didnt pay something in taxes, you couldnt vote. She was thrown under the bus by her own party for trying to push that through. The tom perkins system is, you dont get to vote unless you pay a dollar of taxes, but what i really think is, it should be like a corporation. If you pay a Million Dollars in taxes, you could get a million votes. How is that . [laughter] [applause] youre right that i dont agree with you. Youre wrong that im angry. I would point out to you the flaw in your argument. Since everybody pays sales tax, and anyone who drives a car pays taxes for that, then were right back where we started, in the wonderful place where weve evolved since thomas jefferson, with everybody having the vote. Thats not income tax