[laughter] so without further ado i will go ahead and let him take the stage. Everybody, dean baker. [applause] thank you. I do like my dogs. I three well, i had three dobermans. Im here to talk about my book rigged which kind of is, things have been talking about for at least a couple of decades in economics. And i had a chance to put this together. Just to put it simply as possible. The main theme of the book is, we have had this huge upward distribution of income over the last four decades it is really not arguable at this point. It has been documented in a number of ways. You probably heard about the great book capital which really talks about wealth but in any case there are a number of good reports, solid data, documenting this huge upward distribution of income. One of my favorites, this is actually it showed that if you look at the United States and you look at the bottom half of the income distribution, it basically has gotten nothing since 1980. I will not stand by little or nothing. I know many that jump off it means if you count this into that, no. Its positive. The point is you have had for decades in which we have had substantial economic growth, substantial innovation and a large share of the public that has almost nothing to show for it. So is not really an arguable point. The question is why is that . In the conventional view among economists and certainly owes him on policy people, well, it just happens. That was technology. My feel bad about it. I kinda make a joke about this but on the one hand we have liberals who feel bad and the conservatives say thats good, we want more. So in both cases they see it as being something that happened. And the main point of my book is no, its not something that happened, it is something we did. And what i want to go through his three major areas. The first is globalization. Talk about trade, the impact of globalization on workers in the United States. The second one is the Federal Reserve board. And the basic point is that the Federal Reserve board is hugely important in affecting both the number of jobs in the economy and wages workers get. The therapist patents. That my son really weird. Why direct care about patents . They are huge amount of money. And the fact that a lot of people, including economist type people, do not seem to know that is really incredible. And it really speaks an enormous fail on in the economics profession. Starting with the story of globalization. The classic story is told as well. You know we just happened to be the case that theres all these people in the developing world willing to work for very low wages, very poor in they undercut all of our steelworkers and autoworkers. And that is just the way of the world. We have to get used if you dont have a College Degree or education you cant compete in the world economy. And again, we can be good liberals and feel bad about those workers who lost their jobs in ohio, pennsylvania and other places we can say too bad folks. When i want to say about that is the story is fundamentally wrong. And it is wrong in about every respect. The place rest of the book i pick up anything that we saw that in the primaries in march. I attribute this ai first saw this where they set Bernie Sanders is the enemy of the worlds poor. In the basic story, Bernie Sanders thing you know look to protect jobs for manufacture want to think this is been the story of development by china and the rest of the developing world. They got those jobs and led to him getting out of extreme poverty and we should really be very happy about that. And Bernie Sanders as their enemy. This is fundamentally wrong for a number of reasons. First off the idea that we had to displace workers in pennsylvania and ohio to accommodate the world sport in china and the developing world is fundamentally wrong. First off, the basic theory, the economic theory that i learned in grad school and i do not think it is change that much, youre supposed to have money going from rich countries to poor countries. Your spouse have rich capital from rich to poor countries. Then that would mean we would be running trade surpluses with those countries. They would be using the money, they will be bowing to build up their infrastructure, their Capital Stock and at the same time they would be able to support the Living Standards of their population. And that actually happened in the 1990s. We actually saw the rich countries as a whole with large trade surpluses, if you add in japan and europe they had large trade surpluses particularly countries like vietnam, malaysia, they are running very large trade deficits. I have a graph my positions you have a situation where south korea and malaysia would be richer than the United States on average if they continued that rate of growth. And they didnt. They often say this is the root of all evil after the financial crisis in 1997, developing countries began to run large surpluses. The story was a thought that you teammate large amount of reserves. The reason was if they lost in the financial crisis, nonno greenspan at summers and rubin imposed very harsh terms of these countries. They did not have to deal with after that. It was just my Lesson Learned in east asia but in latin america, south asia. Basically anyone in a position that came later reserves in the developing world did so after 1997. What that meant was these countries instead of running trade deficits borrowing money from the countries were net lenders. As a very perverse story. So the people argued for the current system, they were the enemies of the world poor, not Bernie Sanders. We can look at that. 1990 and 1997. You can ignore but that is not reality. The second point about this, a lot of people in developing world are happy to work for one dollar an hour instead of what they would do competing with factory workers in michigan ohio and all that. That is true. Guess what . There are a lot of really smart people in developing world that will be happy to train his doctors, lawyers, and high standards. They would be happy to work in the United States for lower pay in our doctors lawyers and other professionals. It is very difficult to do because we have a lot of protectionism for doctors, dentists and other professions. You get arrested if you Practice Medicine in the United States without having completed us residency programs. We want to assure high standards for our doctors. But nothing anyone can tell me with a straight face that you have confident doctors in germany and france. None of whom have passed the us residency program. This is called protectionism. And as a result our doctors on average get paid more than 250,000 a year. If you compare that to canada, germany and other countries is about twice as much. We pay a really huge prospect. The difference between what with power doctors, what we pay doctors in germany, france and other countries comes to about 100 billion a year. That is real money. It comes to about 700 per person. Im sorry, 300 per person for every person in the country. That is real money. And that is protectionism. But we never get that talked about. We do not hear about the ama being there because it is not even on the agenda. Let me mention one last point in terms of trade and globalization. A big part of our trade deals especially in the Transpacific Partnership. A big part have been 180 degrees has been about patented and copyright protections. And understand, those give incentives. With those of protectionism. And they create huge distortions in the market. And i focus on prescription drugs but you have situations where drugs would be cheap in the free market. Their athey are cheap to manufacture. You can get an oncall generic in india for 200. High quality, this the same sort of thing you get here so it is not you getting cheap stuff that will kill you. It is the same drug. That is equivalent to a 40,000 percent tariff. Invariably when i said to people especially commerce they look at me and say that is a patent. You can call it anything you like. It has the same impact on the market. And to give you an idea of the impact in the United States, will put that offer not because i will come back to patents in a minute. But the point here is that we may poor people in the developing world pay lots of money for things that would otherwise be very cheap. In other words, let them buy drugs and free market, if we let them buy software and free market, they would save large amounts of money. The friends of poor people in the developing world should be 100 percent opposed to things like Transpacific Partnership and for that matter the trips part of the wto requires them to pay patent protected prices for a lot of items that would otherwise be able to get at the free market prices. Okay secondary, again i read this with people you know educated people not grabbing someone off the street. In any case, i will talk about the Federal Reserve thats really interesting. It really matters a huge deal. How many people he knows that the fed raised Interest Rates in december . Okay good. I was so distraught by this because they raised Interest Rates in december. What did they do that . To slow the economy. And im not giving you any secrets. They say it. Its not like im reading their minds or whatever that was the reason. There were the job market is getting too tight. And you go okay, so you raise the point, Interest Rates by quarter point. On the point is this the end of the world but clearly the direction slows the economy. So lets say slows the economy, by 10 percent. At the end of the year you talk to somewhere around 150,000 fewer jobs in the economy. Now lets think about donald trump carrier show in indiana. How many jobs are at stake there . 700. With 2000 times as many in the state with a small Interest Rate hike that the fence, no paid attention to this. Very few people did while donald trump, 700 jobs in indiana good thing for those people. But you know, that got a huge amount of attention. The point is that the fed has a large control of jobs in the economy. The aone of the measures i have looked at, did a book a few years ago p1 of the measures we looked at was the gap between the measure of the level of unemployment. They come out awe look at the actual rate of unemployment and the measure. So we nothing theyre gone theyre just saying is a nonbiased measure. So they came out with a measure and if you look at that, the period from 1947 to 1980, on rz Unemployment Rate is about half percentage point below their measure. If you look from 1980 to 2012 it was four percent above. Even after 2007 it was still two thirds of a percentage point higher. So when it means is we had much more restrictive policy. High rates of unemployment by policy. You know the feds, if we talked with people that they all have the argument. They are concerned about inflation. But the point is they placed much more effort on containing inflation in the period since 1980 then prior to 1980. An additional point that we make in the book and i emphasize this in this book, it is not just to downsize the economy. So if they restrain demand in the economy so even Unemployment Rate of five percent rather than four percent, is not just that the economy is little smaller. It has huge distribution effects. We analyze this. We find that part of this is a very strong racial component to it. So we get it done by a percentage point will get the Unemployment Rate for africanamericans done by two percentage points. It is not a law currently but is a very strong relationship. The flipside of that, if we have the Unemployment Rate one percent higher than it is to percent for africanamericans. For africanamerican teens it is 61. So thats what we are putting out of work. Also hispanics it is about and a half to 1. So another story is the wage story. So as we talk about less educated workers, workers without College Degrees. Those are the people who are losing jobs. You know so if things get bad it tends not to be the manager that gets enough. It will be the waitstaff. Retail clerk, the manufacturer, the assembly line. Those are people that lose their jobs. And part of the stories in that book and i also emphasize in this book, if you look at patterns of wage growth over the last 40 years, the only time when he saw consistent strong wage growth for those in the middle and bottom of the income where the late 90s, years in which we so very low unemployment. So we got the Unemployment Rate down to four percent on average in 2000. That was when we saw a wage growth that was good. It was so much more rapid for those at the bottom. The 10 and 20 percentile. Then those of the middle and top. Things were going the right way. Well, the larger point here is when you have a fed reserve board committed to high rates of an employment with the idf any inflation that is downward pressure on wages and less educated workers. That was at the market, that was not god. It was a Federal Reserve board. The point is that is very much a policy choice. So to act like that was just something that happened, no. It is simply not true. Again, it was something we did. Again i make this point, they do this and if you ever talk, not that there are evil people but also is very sanitary that we do not want the economy to overheats. Like we are cooking a broth. Well i dont want the economy to overheat. But they are three people out of work and very few people realize that. I will add one more point and i will go on. We often had this argument about funimation, eliminating jobs and how we will see, they will not be jobs for less educated people because of automation. Now that may or not be true but one thing i can say is for the present it is clearly not the case. Two things to point to. One is, automation is productivity growth, it is not something new window exotic. Weve had it forever. And it is much more rapid in the 50s and 60s, periods of low unemployment and i should also say very good wage growth. Up and down the income ladder. So the idea that somehow we are seeing productivity growth, workers at the bottom of going to be screwed, no. Is nothing that does that. The other point is, you say wait a second, we are worried about automation. This really speaks to Economic Policy debates in the country. Were worried about automation destroying jobs at the same time that the fed thinks that the raise Interest Rates to destroy jobs. Im sorry that does not make sense. Either one of those could be true but they cannot both make sense. Obviously the feds dont think that this is going wrong so rapidly which is why they are raising Interest Rates. They want to have fewer people working so it is not that wage pressure, no inflation. The third area is patent policy. And i raise this all the time of economists. They invariably looking hug what he talking about . Well ill focus on prescription drugs because this is the area where this is a huge amount of money. We spend about 430 billion a year on prescription drugs. It is about 2. 3 percent gdp. I will give you metric used in the book, is a metric of comparison. What we spend on food stamps. You know i know a lot of conservatives like to beat up on food stamps. They talk about obamas foodstamp nation. It is the antipoverty program. We spent a bit over 70 billion a year on that. So we spend on prescription drugs six times we spent on food stamps. I just give you that as a metric. A lot of money is at stake there. How much will you spend if we snap our fingers and we got rid of patents and related protections . Almost invariably, the drugs were getting are cheap to produce. It is very rare that you have a drugs actually cost a lot of money to manufacture. So i gave you an example. This is a ratio of 400 to 1. That in the stream. But the ratio of 52 one, 101, that is not uncommon. Even 10 to 1, it doesnt mean you spend 43 billion a year for the drugs that we are currently spending 430 billion a year on. That is incredible. And the way i talk about this, it is the same way economists talk about tree protection. So for say want to put a 20 percent tax on steel. Everyone was a war that is been creating a gap between the market price and the protected price in your giving still companies incentive to pay off legislators and they will hire lawyers to extend this. All which is true. They might exaggerate but this is all true. Except when you have patents that raise the price not by 20 percent but by thousand percent. It is much more true. Drug companies have enormous incentive to go to congress and say we want stronger protections and they are pretty good at that. So they do that all the time. They misrepresent their research, push drugs for purposes where they may not be appropriate. If you turn on the tv, i dont want that too much t. V. But almost invariably see drug ads. I watched the news and that is an older audience but invariably see these drug ads. One of the tongue you equate i may not be that fond of ads but at least have some idea what im getting with the car. So i see these drug ads with dorothy hamill, the olympic figure skater was advertising. I dont know she still does it but she was advertising arthritis drugs. What information cannot possibly give me equate i mean i dont even know she takes it himself . She says i skate around i feel great now. And who cares . It is giving zero information. Obviously the drug company has done Marketing Research in their bedding that that will get me or someone suffering from arthritis to go to the dr. And say want to get this drug, i saw dorothy hamill. No it is not a good way to get medicine. Now they sometimes actually conceal evidence that these drugs are harmful. Any drug for arthritis brought by merck, turns out it can be very bad for people with heart conditions. And guess what else . A lot of people with arthritis also heart conditions. People died because of that. They have a really big incentive. If they were selling it at the same price as bottle of aspirin, they would have reason to conceal the evidence. Given a really big incentive. Also just the nature of research. Ive had discussions with people from the pharmaceutical industry. And they say their new competitives coming out soon on top of the 84,000. We just say that as a list price and we pitch it anyway. So we have assault industry of intermediate which is good. Thats because your list price of 84,000. But they say there drugs in the pipeline that would be competing and they might bring the price down to 40,000 or whatever. And after that is not good story. I mean it is a good story where you have a monopoly on the drug. But in a free market, when it makes sense that you have what seems to be, i am not speaking as a dr. Just a layperson. Seems to be a very effective drug for hepatitis c, does it make sense to spend a lot of money developing a second third and fourth treatment for the same condition would you now have an effective treatment for . I am not saying there is zero reason because im sure some people those other drugs would be better for. But i suspect forcing them to say we have two scenes of these Research Dollars will be best spent. It would not be developing a second third and fourth cure for hepatitis c. Will be developing a drug for something we dont have a treatment. My preferred alternative ill just mention and go on, but my preferred research is direct money. A lot of people look at me and ahave you heard of the National Institute of health to they get 32 billion a year roughly. Roughly 32 billion a year funding from the federal government. And they agree they do great work. They get the output and patents i make lots of money. But i would agree they do effective work. Sophie doubled or tripled the budget and you could have private industries do this. It is fine. But the point would be to research all be in the Public Domain. Both in that the results would be public, so everyone can benefit from that but also the finished products. It will be in the Public Domain and can be produced as a generic. And it would almost certainly be way better off having a system like that than the current patent system. Okay getting back to the underlying issue here. I just looked at this last night. If you just look at drug patents along, youre talking about summer in the order of 350 billion in extra spending. I checked this against the wage income of the bottom half of the income distribution. Social Security Administration data. About 1. 2 trillion. Sophie snapped her fingers and said okay, we got rid of this we were going to give money to the bottom half of the population. So make a real difference in most peoples lives. Now if you i know it is not as simple as that i understand that. Im just trying to point out the magnitude. When i talked about patents again, drugs are front and center. But we see the same issue in other areas. Mris, they charge you maybe 12, 13 or 1400. What is actually costly we need electricity, so want to be the xray and to give you the mri. Not 100 or 200 . Then of course with other products. My iphone. That is much more expensive because it is patent protected. And i think that stock, samsung and apple, every time one of them came out the new phone, the other immediately rushed into court with a whole range of patents and eventually resolved the suits. I think they agree to stop doing it. It is not a good use of resources. So you know again, i can go on and at more length that despite the point is that our patent system is going to be incredibly wasteful. And is a huge amount of money. Again, this is not something that just happened. Weve made patents longer and stronger over the last 40 years. It is overwhelmingly benefiting people at the top. There are no Homeless People getting fat over this. It benefits people at bill gates and other very wealthy people. I feet up on wall street and is only think i left out wall street. I beat up on the system of executive compensation. I argue that basically ceos run the companies in their own interest. Theyre basically ripping up the shareholders. That is why get someone like a the ceo of wells fargo, he broke the law creating these fake accounts. We can perhaps be sympathetic when youre someone like steve jobs who actually was innovative produce products for people. And made perhaps lots of money. But most of these people are ceos walk away with tens of millions of dollars a year. We talk about what was their contribution. But did he really do a lot for their business . Did john stop do a lot for wells fargo getting them called before congress and faces all sorts of charges . Probably not. But he walked away with over 100 million. Okay so we can look back over the last four decades. There has been a massive upward redistribution of income. It is welldocumented in ano one can dispute that. The main point here is we can undo this. And one last point, i am fine with tax and transfer policy. I spent a lot of my life young about Social Security. Im fine with that i think it is a good thing. But i think that one thing is to avoid having this upward a many different roles for the market so doesnt leave to the same inequality we see today. I think thats where the biggest dividends are. I will stop with that. Lets take questions. [applause] yes, sir . It is always good to hear you speak. I wanted to touch on the point of tpp and some of the other property protections in this policy. The previously mentioned that a lot of the freetrade deals are protectionist really because they have all of these, beyond the glitz and glamour of the building of global market, tearing down barriers, there are entire chapters about protecting trust and intellectual property. Could you talk a little bit more about why, why is there that disconnect . Why do you have people like jason furman or barack obama who somehow underestimate or just do not, they overlook those chapters that are more protectionist than in fact set up more barriers. It is a political thing happening there . What is driving that decision . Well, i cannot. Guest any individual. I appreciate the work done. Jason furman, i guess he is probably still the head of the council of economic advisors for the next three days. In any case, he has done a lot of good work and again, i do not know exactly his motives. But it is hardly a secret who was behind negotiating the tpp in particular. There were 25 working groups and the Washington Post did an analysis of the working group these were overwhelmingly representatives of the industry. So they are in the view that the mindset, this is about expanding World Markets and thats a good thing i have to support it and if you can point out to them that you know this is increasing copyright protection and those are protectionist, their initial reaction is like well thats a small sidebar. Again if you look at the tpp its 180 degrees e. Other way because theres not that much to eliminate in terms of traditional tariffs and quotas. Even the other countries everybody is in a wto so theres a limit to how long the those can be in case of the impact of reducing the various is very low. On the other hand the impact of increasing the tariffs could be quite large. The inclination of most economists is that a more that aspect in b if you could put their nos in insight on its right here in the chapter and read it its not a big deal so i think its real strong prejudices to overcome but the other issue why do we go to things like that, thats why takes the form it does. Thank you so much for being here. You were talking about protectionism in certain times of employment, medicine and law and i was wondering what your thoughts are on is her straight policy Student Loan Debt policies and how that helps justify the sort of increased wages for these types of professions when you look at medicine, doctors are coming out with over 200,000 of debt and they say thats what justifies the increased wages in comparison to other nations. Thats a good question. First off theres a lot of garbage in these forprofit schools and is different from what you are asking but thats something we need to crack down on. The Obama Administration is that some of us that we can go much further not letting people get so indebted with government debt. This is no question of regulating the market but you know the serious forprofit places want to charge people 20,000. Its a question about subsidizing and thats really pernicious because its taxpayer money at the end of the day you were also the person stuck with this worthless degree and 40, 50,000 in debt that never gets paid off. When you talk about doctors again we do have up fairly poorly designed Higher Education system and it is a bad story. I wouldnt say it goes that far in justifying the sorts of pay that these people get. If you use arithmetic you make 150,000 nearby realized its less for general practitioners and Family Practice that 300,000, 400,000 is common. Well take the average 150,000 a year and you 200,000 in debt. Often 10 years as thats 20,000 year, 120,000 in germany or france you are still better off. What i would like to say his reform of the Education System so someone doesnt have to take on that debt because we know it tends to discourage more low to moderate income people. Even if they can see at the end you get 250,000 a year as a doctor its scary someone coming from a background that doesnt have the money with that kind of debt. That doesnt justify the circumstance. Thank you for coming and discussing your book this evening. I have a question for you. What do you think of philips ideas books like science mark and never let a good crisis going to waste worry talks about the whole process of privatizing and forprofit and the production of Scientific Research and quality of research and eventually innovation and change. Thank you. I know phillip. I think the general point is well taken. When you have the privatization of research and the privatization of knowledge it takes to run a bad path for obvious reason. The point is you are trying to maximize profit and is not necessarily contributing anything malicious to people. If you havent corporation they want to maximize profits to what theyre trying to do is figure out how to get as much money as possible and again when im arguing for prescription drugs i have a different argument and i dont think there is pernicious on the side of the pharmaceutical industry or medical care in general i should say that i think the idea of trying to promote more Public Research where i propose further industries is you have to have a path of 20 years. You could have someone voluntarily give up after five years. Some shorter period with the condition that with the provision you have access to all the other research in the Public Domain. May have heard of the idea copy. You copy out the idea where you say okay something is really available developed by the presoftware movement in reference to software but can be applied more generically copyrights of any type that the ideas we are developing the software. Anyone who wants can use it as long as it is freely available. If you decide you want to have a path thats privatized you have to talk to us. That would be my vision outside of the pharmaceutical industry. Basically pharmaceutical industry want to do stuff on their own they are only concern would be the mighty be competing against an engineer so you spend money on research. You wont get your money back and its not your its your problem and you wont get your money back but if you want to do it go ahead and do it. There were grabbing a shortened patent term is you have all this Public Domain you can freely use. I take seriously the idea that you can get that research. There is a good study a professor at m. I. T. Did the study a few years ago looking at coding of the human genome and she found for genes that were done in the Public Domain there was a private company competing genes done in the Public Domain were much more, turned out to be much more useful. I forget the exact criteria but much more useful than the ones done privately. Understandably it stands to reason as economists we think in our research if we have Better Research itself that is supposed on going to do this and that cramped corner and no one gets to publish my results but nobody gets to see how i got there. No one thinks thats a good way for economics advance and thats true of science more general. Im sorry. Back in your student days on your way to your ph. D. You certainly must have been over and over again. There aint no such thing as a free lunch and listening to you describing things for instance the drugs and talking about but youre forgetting the famous west wing scene where is i think its josh lyman explains the cost of the second pill may be pennies but the cost of the first pill is a Million Dollars to get it licensed and approved in pain from the other ones that failed. You talked about patent protection but that patent is like a license like regulations in all these kinds of things. Thats what the most recent current president elect is coming in and the total discussion of draining the swamp so the point to you is its certainly true that begin to things on a path that youre talking about but the question is you can certainly unleash, you have to have licenses not just to be a doctor but to be a cosmetologist. You name it, you had to have a license to drive a car to pick up people to take them somewhere. All this kind of stuff. The ideas you are talking about are all these topdown insights that you are unwilling it seems like to allow staff to grow from the bottom up and my last comment is on the Federal Reserve pd no way the Federal Reserve raised Interest Rates that the m. Of obamas term and not at the beginning of the term. They raised at the end because they didnt care about trump. Hes quite happy to crash a bit during his years he wanted the mr. Schraders lowest possible because its good for government to be tomorrow money and people wont notice it. Taking the second first the fed indicated long before the december increase when everyone thought Hillary Clinton was going to be president present that they were going to raise the rates in december. I think the reason he didnt want them to raise the rates at the end of the term was the economy is going down the toilet and they were willing to raise rates when certainly the job market is much tighter. You have more reason to be concerned about inflation in 2017 than you did in 2009. I think thats a straightforward it explanation. I think theres not bad reason to be concerned but its straightforward and hard to get away from. There is no free lunch in my vote. I was talking about having the government pay for the research so what im saying is we are paying more than 30 billion for the drugs we snap our fingers on the free market 40 billion, 50 billion, pick your number. Think those are reasonable numbers. We will take 60 billion so we have traded 70 billion to play with what i said is you need additional funding for the research or the pharmaceutical industry says it spends i think its 47 billion a year in research that we have to do it that does. Theres reasons to think the public funding would be more efficient for two reasons the one you dont have the incentive for copycat and which probably arent that useful and secondly its in the Public Domain. Everything is public so people can see benefits from other peoples innovations. Say it cost us 60 billion, 70 billion or 90 billion we are still ahead somewhere in the order of 250 billion so im not assuming any free lunch but in talking about the different mechanisms of Funding Research what i argue is being more efficient but at the very least what i want is to get this on the agenda. Certainly being the economists are talking about and there are few. There is a great book against monopolies by david levine and michelle balder and i think they both work at the university of washington in st. Louis and i dont know thats still true. There are some other economists but in general its not an area of research but it should be because theres an incredible amount of money at stake and it distracts. Most of this seemed to feel thats important. There is a question up here. You talk about trade agreements and who knows what shape or form it might take the word what about the existing trade agreements which we do have. Im talking about nafta for example. You have 25 years of experience. Im curious if in your Economic Research have you reached any conclusions about the benefits of the opportunity cost of elimining Something Like nafta for the three north american economies and links to that if you want to address it, im curious about the wisdom of a free trade block or piecemeal country by country is specifically brexit in the wisdom for example of england doing free trade with america as opposed to staying within their deal. I know these are two separate issues. With nafta but i found striking a predictive result of nafta is the downward pressure of workers. It wasnt huge. What we saw in the period after 2000 with wto towards the impact of nafta but there is some Research Going on in areas where theres the most competition in industries in mexico that there was significant downward pressure on wages in those areas. So i think that was a negative for the story from mexico was not a good story and basic way they constructed their system to agriculture. One of the basic myths of the Washington Post that literally made up a number on this but i keep trying to pressure them to somehow get it correct. 2007 they were trashing the democratic candidates. All of a sudden they wanted to renew nafta and basic nafta has been great for mexico. The tpb has quadrupled between 2007. The actual number is 83 which is not a tripling where i come from. Anyway the myth but somehow spring break or mexico, mexico economy has grown more slowly since nafta than the u. S. Economy and you expect poor countries to converge with ref ref rich company rich countries. Hasnt happened. Maybe there did come it would be worse absent nafta which you cant rule out but indications are that their country has declined since nafta. If nafta put downward pressure on wages so sums shipment of jobs and a trade deficit on the order of 60 billion euros mexico now and the small cerp was. Their other factors there and the other issue is theres a professor at the Industrial School of cornell that documented a number of cases where companies threaten to move to mexico if their workers unionize. I think it was a bargaining tool. I dont think it has huge effects but i think the effects are clearly negative. In looking at u. S. And europe i look at the proposal for the tpb and you know this is primarily about regulation because already their trade, there really no formal trade terriers. The vast majority of which goes to zero or very low tariff so its not about trade heirs but putting in regulations which i worry about a lot of those regulations. A lot of those limit the ability of the state wanting to ban fracking if theyre able to do that. In europe gmos are more controversial here. It might jeopardize that and to set up a dispute tribunal is hard to justify if you arent familiar with the start special tribunal that only investors can bring cases before. When i talk to european reporters they thought i was summed up all making stuff up. Why do you need this . Is a good question but its in the Transpacific Partnership as well. I dont understand the logic of that self making zeros instead of a half percent per tariff that would be a good thing but thats not what ppp is about. The last point and if anyone asks me today i would recommend they go against brexit and obviously they used to love xenophobia to push that in a lot of our right lies. We will get our money for the National Health service. Those clearly were factors. Those were bogus arguments. The other indication we are supposed to be thrown into a recession or whatever with brexit. The idea was as soon as they took out the vote it would collapse and that collapse did not happen. I think there will be negative repercussions for the uk. They certainly have a situation, i mean we dont know what sort of barriers they have put in one hand you have an impulse that is very punitive and its punitive to them too. They are saying lets negotiate something that is the least painful to both of us might guess they would go on a punitive side and that would be bad news for them. You are not going to see the second Great Depression in the uk but i will make one qualification. I havent studied it closely but the big concern is in the uk is what will this du jour finance industry and almost certain it will hurt it because now you basically the finance passport you can do business. That wont go away and it will certainly go away with brexit. There will be a big hit to the financial industry. So thats why again i dont know of i want to push that too far because i havent studied it closely enough that i do mention that. Hi. My name is adam and i want to ask your question about the increasing of the nih budget. And certainly a big fan of bumping up the nih budget. They do great work especially for basic research that leads into applied research in the pharmaceutical sector. My question is if we have nih effectively assume the role of the farm sector and bring it down to zero these tariffs as you call them how are we to get other countries in the world to contribute to our research because we currently sell 75 of our drugs outside of our borders. What this essentially beef forfeiting all of that income and if we do that and other countries copy us maybe we are large enough to absorb that hit and only 25 of the revenue but what happens to a country like switzerland which has a thriving pharmaceutical sector and they are probably 1 of the market how are they going to survive obviously need some sort of international arrangement. What do you think you guys are doing with the tpp and the trips . Those are all very complicated so the idea that we have this natural system and i want to replace it with some complex system, no. We have a very complex system now and i want to put in place a different system for what i would envision as you have something where countries contribute to Research Based on their gdp and percapita gdp so the u. S. Expected to contribute a higher share of its gdp than say a country like the congo where they are not expected to make any real payment and use it to home. What i would envision and you would have to work this out in more depth but you would have some Rating System where you go okay here are intermediaries that it had a very good record in the sense that they have reduced good developments Good Research good drugs. You have contributed dollars. Heres a secondtier. Contribute 1 dollar to them and come out with 75 cents. You contribute a dollar in accounts is 40 cents and below that it doesnt count as all count at all. You need some sort of International Agreement and again if we could get an International Agreement and those are very complex you have marketing exclusivity and data exclude david exclusivity. Im talking about something very complex but what we have today is very complex as well. Thinking about the income, the methods you are suggesting and away understand it is it prevents the income from being pushed up so much and before it gets all the way to the top. Another way, let it go all the way up and then tax it from the top and have the government suspended as it sees right. Do you think there pros and cons to comparing them . The question is we are concerned with quality so do we address it as a before market market or alternatively do we say we let a guy get really rich and tax them and make sure everyone decides that. Im strictly in favor of going the former route for two reasons. One is we brought in our rightwingers they would be immediately jumping up and down. Okay you give us these high tax rates and youre going to take away her incentive. There is something to it and the more incentive you give them, you are putting a lot of money on the table to avoid taxes and the tax avoidance industry in the u. S. Is very big and very profitable to do private equity business to a very large extent is a tax avoidance industry and a lot of people get extremely rich. s exit 1 of the poor ones when uk private equity partners. People make hundreds of millions of sometimes billions finding clever ways to avoid taxes. Thats one set of concerns and the other one is a political one. It is very very hard both because people have this idea that you earned your money and you want to take it away and the other is okay you at even these people billions they are going to spend a lot on politicians and all these other things in think tanks saying how horrible it would need to tax it away. In my view it makes more sense lets not have a system that leads to so much inequality and if you can and do argue in the book you can do that and not pay a price. Im saying we could finance the pharmaceutical research and way thats much more efficient and doesnt leave people in my view someone develops a cure for type of cancer give that person 10 million or 20 million. Thats fine. Our pharma bro who got how much money for clever way to jack up the pricing. In a case thats what you dont want. Unfortunately there are a lot of cases like that. I left out finance but their partners of hedge funds who make hundreds of millions of your bread they develop a algorithm who are 100th of a second above the market rate they sell at back and they just made a tenth of a percentage point. If you do that many times a day you get very rich. Its not something that contributes to society. Hi dean. I wanted to ask a more general question of you because i have been having a debate with a friend who tends towards the libertarian side. And i think that he has a certain point about government inefficiency. I dont want to put words in your mouth but i assume you are more of an advocate for welfare state style government like what we have seen in europe in the past integrated. Maybe im wrong about that but i can understand that argument because i have another friend who qualified for medicaid after obamacare was put in but the efficiency, the inefficiency that she had to deal with was absolutely staggering. She was counting. She was taking notes. She had to contact the agency in d. C. Several times by telephone or by email before they finally finally for medicaid and then two years later they took it away because they said she didnt provide the proper documentation even though she had tried to. So that for me was kind of an eyeopening experience about the problems that come up when you are increasing the size of government and introducing more government programs. Thats a very good question. Im sympathetic to those concerns and a lot of what im saying in the book isnt necessarily increasing the size of government. Changes the way government acts so one of my pet peeves is the tendency in terms of government spending. If a government gives you a patent monopoly and the debt people oh my god when we doing to our children. These companies are going to charges 430 billion for drugs that would cost 40 billion in a free market. If the government imposed a tax its the same thing. Anyhow what im concerned about is we have to look at the way the government affects the economy more broadly whether its taxing or spending that is a wrap concern and worry advocate government expansion its generally and fairly narrow ways. Social security can i have done a lot of research its more efficient than the private alternatives. Ive debated a guy from cato and the oldfashioned onesizefitsall. Yeah oldfashioned kind of like the wheel. It does what its supposed to do and we wanted to be onesizefitsall. I decide i will put it in my furl 401 k or private things and thats fine. What to do things like that as well but in any case the idea of Social Security is supposed to be core Retirement Income and we want everyone to have it in having something very simple is a good thing too. The same with medicare. I should give you my wife is a private insurer. My wife has had lots of problems with private insurers. The government doesnt have a monopoly on inefficiency. I am hopeful and when i was talking about having the Government Fund the research i would say you contract out. The military sector week contract that out but on the other hand we do develop very good weapons. We may not like what they use them for but they are very good Weapons Systems and the advantage he would have the pharmaceutical researchers compared to the militarys theres no justification for secrecy. With the military they do have an argument for not putting their latest Weapon System on the web so isis or whomever can get it treated with pharmaceutical research what is your argument . We want people to take their research and use it. So again i think seriously governments can be inefficient and we dont want government to do things its not that. It does a lot of things but again i dont envision a future expansion of government. Two more questions. If there are two more. Thank you very much for your talk. Its really interesting. There are two factors that i would have wrought up as being central to the growth of inequality that you didnt really talk about and the first is the assault on trade unions that starts in the late 1970s and really develops through the 1980s until the current time and seems it seems to me thats absolutely fundamental for understanding the growth of inequality. The second was mentioned and he talked about it a few minutes ago, but its taxation and starting with proposition 13 in the 1970s, the tremendous regressive taxation system that developed in comparison say to the postwar years, massive tax cuts for the wealthy and those two factors really are arguably the most important ones. Taking the second one first two things on taxes. Before tax income which i will say is where you see most of the increasing inequality and there is Good Research on this. We definitely see lower tax rates obviously. We had 90 marginal tax rate back in the 50s. That has been largely offset by fewer loopholes so if you look at the share of income at the top 1 its down but not by anywhere near as much by just looking at that 90 versus 40 tax rate. Its not as important. The third i would say is there are a lot of people that do that work and they do some very good work. The Center Budget policy priority. They do really good work on that so people generally know that story. The other story lately that is very important and i do talk about in the book and its definitely in buying institutions. People arent interested in labor unions anymore so they go back to the late 70s unionization was around 20 give or take. Today im scared to say, i think we have about 9 so we see of plummeting in the share of workforce represented by a union and even more so in the private sector. It was about 20 in late 70s. We look to canada and the reason was that canada is because canada has a similar country. Its a very similar economy. If you go back to the late 70s is Something Like rudy 5 . Today it might be 32 so its down but down trivially. Nothing like the collapse is seen in the u. S. So the big difference canada has things like card check. You can sign up for a card signup and first contract arbitration. Also you cant fire striking workers. We have had a lot of changes in rules and norms in the last foredeck aids that it made it difficult for unions to organize and stay in business. Perhaps i mentioned this in a do talk about an in the book. One more question. Do you have a comment on the recent information about the six richest guys in the world including the bottom half of the planet text. Theres a study by oxfam that they richest people the obvious suspects bill gates and jeff the sosin Mark Zuckerberg and Warren Buffett and whatever his name is from mexico so the same people most of them from the u. S. And they have more wealth either calculations than the bottom 50 of the World Population. Speaks volumes of the inequality you have an awful lot of people who are incredibly poor. Obviously these people are incredibly rich. Divide that by 100 he still incredibly rich. In many ways the more dramatic story is how poor so many people are. Id have to check the exact numbers but i suspect i have more wealth than the bottom 25 of the World Population and its not because im a billionaire but because the bottom percentage is zero. We have people who are incredibly rich but the bigger part of the story is we have an incredible number of people a quarter of the worlds population in the order of 2 billion at zero which is a pretty dismal story. Thanks for listening. I dont have to be embarrassed like donald trump when no one shows up or his inauguration. Thank you. [applause] he will sign some copies of the book. Feel free to check out dean baker. Net. Dean does walk the walk and talked the talk so yes go over and get a book signed. [applause] [inaudible conversations]