Transcripts For WHUT Moyers Company 20121022

And creativity in our society. The bernard and addry rapport foundation. The john d. And katherine t. Mcarthur foundation. Committed to building a more just, verdant and peaceful world. More information at mackfound. Org. The bessie and jesse sync foundation. The hkh foundation. Barbara j. Fleischmann, and by our sole corporate sponsor, mutual of america, designing customized individual and Group Retirement products. Thats why were your retirement company. Welcome. The new gilded age is roaring down on us. An uncaged tiger on a rampage. Walk out to the street in front of our office and turn right, and you can see the symbol of it. A fancy new skyscraper, going up two blocks away. When finished, this high rise among high rises will tower 1,000 feet. The tallest residential building in the city. The New York Times has dubbed it the global billionaires club, and for good reason. At least two of the apartments are under contract for more than 90 million each. Others, more modest, range in price from 45 million to more than 50 million. Simultaneously, the powers that be have just awarded donald trump, yes, that donald trump, the right to run a golf course in the bronx which taxpayers are spending at least 97 million to build. What amounts to a public subsidy, says the indignant city comptroller for a luxury golf course. Good grief. A handout to the pollute contracts. This is a city where economic inequality rivals that of a third world country. Of americas 25 largest cities new york is now the most unequal. The Median Income for the bottom 20 last year was less than 9,000. While the top 1 of new yorkers has an average income of 2. 2 million across america this divide between the super rich and everyone else has become a yawning chasm. At no time in modern history has the top 100th of 1 owned more of our wealth or paid so low a tax rate. But in neither of the two president ial debates so far has the vastness of this astounding inequality gap been discussed. Not by mitt romney. Who is the embodiment of the predatory world of financial capitalism. And not even by barack obama, whose party once fought for working men and women against the economic loyalists. So just in time, if not too late, comes this definitive examination of inequality. Pollute contracts, the rise of the new global supervich and the fall of yaef one else. The author is chrystia freeman, whose journalism is steeped in years of covering robber barons from mexico and india. Once Deputy Editor of the globe and mail in canada and the correspondent for the Financial Times and the economists she is now the editor of Thompson Reuters digital. Were joined by matt taibbi who has made the magazine Rolling Stone a goto source for understanding the financial scandals in rural america. Who can forget his 2009 article on the Great American bubble machine. Which describes Goldman Sachs as a great vampire squid wrapped around the face of humanity relentlessly so jabbing its blood funnel into anything that smells like money. Welcome to you both. Income inequality has soared to the highest level since the great depression. With the top 1 taking 93 of the income earned in the first year after the recovery. The first full year after the recovery. Why are the two candidates not talking about inequality growing at breakneck speed . You know, i think because it is still a taboo in american political life. And in american cultural life. One of the economists i talked to who works for the world bank, and he said to me, you know, and hes a specialist in income inequality. He said when you go to think tanks and you say youd like to do a study about poverty, they say thats fine, thats great. Were happy to fund it. Because writing about poverty makes everybody feel good. And feel that theyre being charitable. But if you say i want to study income inequality, and even most dangerously, i want to study whats happening at the very top of the distribution, what they said to me is the think tanks immediately pull away. Because they say our donors wont like it. And that actually challenges the whole economic setup of the United States. And of western capitalism. Its very, very threatening. And i think that thats why youve had the billionaire class. You know, the minute barack obama i would actually say rather gently suggested that the millionaires and the billionaires should pay a little bit more, you had immediate cries of class warfare from the plutocrats, and very emotional. You know, there was an activist investor who sent an email to his friends, the subject line is, battered wives. And in the email, he compares himself and his fellow multimillionaires to battered wives who are being beaten by the president. He actually uses those words. And i thought it was really interesting, in your book, how you pointed out that bill clinton himself responded to obamas criticism by saying, you know, i would have done it a little bit differently. I think, you know, you cant attack these people for their success. And i think thats very relevant, because if you go back in time it wasnt always this way, but i think the shift really began with clinton and the new democrats. I think after, you know, Walter Mondale lost in 1984, the democrats decided, you know, were never going to lose the funding battle again. And they began this sort of imperceptible shift where they continued to campaign on social issues, the same way they had before. They retained their liberalism in that sense. But economically, they began to side more and more with wall street, and more and more with the very rich, and theyve, i think weve now reached the point where Neither Party really represents the very poor in the way that the democrats maybe used to. And so thats why you dont see it in the debates because Neither Party is really an advocate for that kind of left behind class anymore. It is the people at the bottom. But its also the people in the middle. You know the middle class is being hammered. Those jobs are hollowed out. And where are the people pulling back and saying, okay, technology revolution, we love it. Globalization. I love that, too. And i think its great people are being raised up in india and china and now africa. But lets think about how our society and our politics need to change to accommodate this. And no one is doing that. Meanwhile the guys at the top who are making who are doing so, so well, actually are saying, we need to slant the political system even more in our own favor. Why are we so passive about this . Well, i think first of all, the poor in this country have been incredibly demoralized. Whether its the relentless attention of, you know, bill collectors, or if you go to poor neighborhoods. I was out in queens last night interviewing a kid whos been stopped and frisked 70 times already. Hes 22 years old. You have this constant interference by the police, if you live in a bad neighborhood. There are all these obstacles to getting up, and rising up, and having your own voice. And also, i think, in the media we get these res all rightless messages that being poor is your own fault and people who are rich deserve to be rich. A lot of americans are disillusioned about their situation. They believe on some level that if theyre poor they deserve to be that way. So theyre reluctant to go out and revolt the way maybe europeans in the last century, early in the last century would have. Left unanswered. Left unanswered, where does this vast inequality take america . Well, i think to a very bad place. And i see two real and present dangers. One is, that you see an increase of the political capture. Of what . Of the political capture. So the people at the very, very top capturing the political system, and most usually, i think, something that an economist who i call william boyter, he calls it cognitive capture, where he says look, its not like this vast conspiracy. Its not as if, you know, everyone is on the payroll of the plutocrats, this guy, okay, hes now the chief economist of citigroup. He wrote this when he was an academic economists, so hes hardly, you know, some kind of markist on a barricade. His argument was that part of the reason the financial crisis happened is the entire intellectual establishment, not just people inside investment banks, but regulators, academic economists, financial journalists, had all been captured by the financial sectors vision of how the economy should work. And in particular light touch regulation. And i think there is a broader cognitive capture of, you know, you might call it the intellectual class. The public intellectuals. Around, maybe the inevitability of plutocracy. As matt was saying this motion that if youre poor its your own fault. Youre part of this dependent 47 . Unions are very bad. All of that sort of stuff. I think that that cognitive capture increases and i think what you see increasingly is, you know, elites like to think of themselves as acting in the collective interest, even as they act in their personal vested interest. And so what i think you end up seeing is social mobility, which is already decreasing in the United States. Increasingly squeezed. You see particularly powerful sectors, finance, oil. I would say the Technology Sector is going to be next in line getting lots of government subsidies. And meanwhile i think you see much less money spent on the things that middle class and the poor need. Thats why you have this, you know, full bore attack on entitlements. Right . Why is the plutocracy so enthusiastic about cutting entitlement spending. Because they dont need it where was the outrage when the 5 trillion or 6 trillion in bailouts was coming their way. I really worry about that. The other thing that i worry about is you do start actually stifling economic growth. So you know, if you want my dystopia scenario of the United States is america is moving into a more latin america style economy. A few incredibly rich having just great lives, and then people at the bottom really struggling. We both lived that. We saw that in russia, it happened in the mid 90s. You both cut your teeth in journalism covering russia. What do you take away from that that is relevant to whats happening in this country . That experience completely shaped the way i look at the present situation in the america. In the mid 90s, suddenly when russia became a quote unquote capitalist society, you suddenly had this instant division of the entire society, into this very, very tiny group of people at the top who had more money than anybody in the world. And then there was everybody else who had nothing. And they got it through privatization. The government sold off the resources. Sold in quotation marks. Thats the key part that i think people dont understand. What happened in russia was really a merger of state and private power that empowered this one tinely nil cls. There was this moment in russias history called loans for shares. Where a few people, a lot of them were exkgb types, were essentially handed the jewels of russian industry by the people in the yetten government. There were companies that were put in charge of their own auctions, so they they were all in charge of their own auctions. All in charge of their own auctions. So you would have an auction for an oil company, and a bank would be put in charge of that auction, and the bank magically, you know, would win the auction for the oil company. Which was worth billions or even hundreds of billions of dollars. And thats how they instantly created this super wealthy class of people, and everybody else had nothing. This one story for me, this image that ill never forget. I went to a coal mine up in the Russian Arctic north, where workers hadnt been paid their salaries for nine, ten months at a time. And when i went to the mine, the mine owners, the first thing they wanted to do was take me to their bright, shiny new lounge that they had built for themselves and show off their brandnew slate pool table that they had built with the money that they werent paying to their workers. That to me perfectly expressed the divide in modern russian society. You have these people who are living off nothing on the one hand. And then you had these super wealthy people who had been enabled who just kept the money for themselves. Thats, i think, you know, its a caricature of what were experiencing here in america but i think thats where the world is drifting toward now. You write about some of these super rich, not only with insight, but with empathy. That is youve got to talk to a lot of them. You have moved among them as a financial journalist, been to davos and other places like that. And im wondering, how did you crack what is clearly a tightlipped world . Well, i guess the way journalists do it. Just by talking to people, writing about them. I think you write stories that show people that actually youre interested in what theyre doing. And what i would also say is, you know, i believe in capitalism. And i also actually believe in globalization and Technology Ref lulgs. If you gave me the option of turning the clock back to the 1950s i wouldnt do it. Partly because im a woman and things were not that great for us then. You know, its important, i think a mistake that the left can make, in criticizing income inequality is to behave as if this is entirely a political confection, its entirely about political capture, there are no genuine, legitimate and actually benign economic forces driving it. Because i think there are. I think the winner take all economic dynamic is something that is existing separate from the politics. The politics in the United States are exacerbating that division. Rather than mitigating it. But i do think when you pull back and look at the global picture that was something important for me to do in the book it becomes a little bit harder to say this particular american tax break, or even this American Financial reform is the only thing driving income inequality. Because the really remarkable thing is the extent to which this is a global phenomenon. Its happening across the western industrialized world. Im canadian. So im practically born a socialist in the view of many americans. But even in canada, income inequality is increasing. Its even, you know, for awhile in economic literature the one outlyer was france, so far as economists make jokes, they would say oh, the french they have to be exceptional even in this area. Now youre seeing it increase in france, too. And youre seeing it increase in emerging market economies. So i think we do have to accept that there are some economic drivers. Those economic drivers are partly put in place by the politics. It was politics that allowed globalization to happen. And in the United States really crucially, and i think you cant emphasize this too much, look at what happened with the tax code. In the 1950s, this era when america felt itself to be a very conservative society, and it was. The top marginal tax rate was above 90 . 91 . I believe. Just think about that. Imagine if barack obama had said, in the debate, this week, you know what governor romney, i think america in the fiftys was a wonderful place. They, too, faced a real budget deficit they had to pay off and the people at the very top were willing to pay a 90 top marginal tax rate. Would you be willing to do that governor . Imagine if he had said that. You cover some of the same crowd chrystia is writing about but you do with complete irremember advance. Do you still gain access to them . Or have all the doors been slammed in your face . Well, the very, very top people wont talk to me. You know, i dont have access to the same people that chrystia may be talking to. But i do talk to a lot of people who work on wall street. In fact, i got started down the road of this whole topic, you know, after i wrote a couple of articles and suddenly there was this outpouring of people from wall street who suddenly wanted to talk to me because they were upset about the direction that the Financial Services industry was taking. So im hearing a lot from people sort of from the middle on down. And on wall street, and what theyre really upset about is corruption, is this this merging of state and private power where the losers dont lose anymore. I think the people who get really upset are small hedge funds, small banks, and they see companies like, you know, citigroup and Goldman Sachs and Jpmorgan Chase make mistake after mistake, and they get rewarded for it, but with bailouts, and even greater market shares than they had before. And so you know, my analysis is informed by those people, and i think, you know, i think chrystia and i agree about a lot of things about particularly about the growing divide, and how extreme its become. My analysis, which might be a little bit angrier, just because, you know, from the point of view that im particularly looking at is the corruption, and the use of force and state power to people the divide where it is and increase it. You both had pointed out that we tend to talk as if wall street and the plutocracy were a monolith. But its not. Do you think there is a civil war within the 1 . There is absolutely a schism developing in this community. Think about it just on one level on the level of banking. All right . You have these too big to fail banks. Everybody in the world knows that nobody is going to allow the very biggest commercial banks to go out of business. It will never. 2008 proved it. That if they ever get in trouble the government will come in and rescue them. What does that mean for those banks . It means it allows them to borrow money more cheaply. Anybody who lends them money knows theyre always going to get paid off. In the worst Case Scenario theyre going to get paid off. This gives them an inherent financial advantage over the small, regional commercial bank. Which does not have that implied government guarantee. So those people are furious. Theyre furious that they have to compete against these gigantic monoliths that have the implicit backing of the u. S. Government. Then theres the other problem of corruption. I hear all the time from hedge funds, you know, these smaller guys who believe that some of the big investment banks are selling them out to even bigger hedge funds that are giving away information about their positions to even bigger clients so that somebody else can trade against them. Or maybe the banks themselves are front running their positions. And trading against their own clients. Theres this schism developing between the smaller guy, the medium sized financial player, and the very, very big too big to fail companies that are perceived as getting a break, getting and getting the backing of the government, and also are perceived as getting away with stuff that they wouldnt get away with. I agree with matt and i think what youre really seeing, actually, in terms of the battle of the millionaires versus the billionaires. Because its winner take all dynamic. Is not just between, you know, the 10 and the 90 . Or the 1 and the 99 . Whats quite interesting, and leads me to really believe that theres some deep economic forces involved, is its happening just as much within the top 1 . We saw it in the recovery. We cited those statistics, bill, about 93 of the recovery going to the top 1 . 37 of the recovery went to the top 0. 01 . So even in there, theres, you know, even more of a gap, and the people can be very, very aggrieved precisely because, you know, they see whats going on. They see that unfairness, and it makes them really, really mad. You know one of the things that i found as i was writing my book and talking to plutocrats, as matt says, these are very, very smart people. And many of them, not all they work very hard. This is not downton abbey. This is not a landed gentry. These are people who even and even if theyre sort of mitt romney or bill gates who grew up very affluent, their actual business, they did build it themselves. They built in a society that was very supportive of that but they built it. Theyre hardworking. They have to be thoughtful about the world because theyre making investments. What i found was very interesting was they were very keen to divide the world into the good plutocrats and the bad plutocrats. And what was very funny was everyone was happy to make that division. But, everyone felt that they themselves in their particular type of business belonged to good plutocrats, and somebody else belonged to bad ones. So you talk to the Silicon Valley guys. They love talking about this, especially after the financial crisis. Because their view was, of course, income inequality is a problem. Of course there has been state capture. By those bad guys in new york. We, however, are the innovators, we created value ourselves. We are completely pure and good, and these issues really have nothing to do with us. Do you think they think theyre really defending honest capitalism . Oh, absolutely. You know, the one thing thats consistent in my exposure to the Financial Services industry is that the people who work within it, and particularly the people at the very, very top, sincerely believe that they have not done anything wrong. Thand, you know, when you bring up things like the mass sale of fraudulent Mortgage Backed securities, its just like you say, its always somebody else who made that mistake. You know, we didnt know at the time that we were selling billions and billions of dollars of junk and we were dumping this on Pension Funds and Foreign Trade unions. It was always somebody else who was doing that. And they also have built up this very, very powerful insulating psychological justification for their lifestyle. Theyve adopted the sort of point of view where they genuinely believe that they are the Wealth Creators and that they should get every advantage and break, whereas everybody else is a parasite, and theyre living off of them. So when you bring up to them, for instance, how is it that nobody, despite this mass epidemic of fraud that appears to have happened before the 2008 crash, how come nobody of consequence has gone to jail after that . They always, you know, they always argue against more regulation, and more enforcement because they say we need room, we need air to breathe, room to create jobs, and this is just counterproductive to put people in jail. Initially, though, this very sincere, absolutely, absolutely sincere selfjustification, i think is one of the most Dangerous Things thats happening. Because in our society, and i would say this is particularly powerful in america, really since the reagan era, there has been this vision of the successful business person as really a leader for the whole society. And there has been a view that the business person, what he thinks, and by the way, all of my plutocrats are men. But you know, what he thinks about how society should be ordered, we should all listen to, because he, after all, is the hero of our time. Is the hero of our capitalist narrative. And i think its so important for us to really understand that what is good for an individual business, particularly in this age of very high income inequality, and the ways of thinking, the ideas that no doubt absolutely the right ones for this particular business, may very well not be good for society as a whole. Both of you write in different ways that with irony that they threaten the system that created them. Well, this is another thing, another image from russia that always stuck in my mind. And i studied in russia when it was still communist. I remember going through the countryside and you had all these villages and people walked around in the villages, and then suddenly in the mid to late 90s in russia you drove through the russian countryside and suddenly there were big, brick houses that had these huge walls on the outside. These big, brick walls with guards on the outside. It was the rich had court of built this wall that insulated them from the rest of society. There was one society on one side of those walls and one society on the other side of it. And i think thats where were headed now. We have this kind of community of rich people who sort of live, hop from place to place, and they never have any sort of intercourse with the rest of the world. Disconnected. Theyre completely disconnected. So theyve built this kind of nation where inside it, its all, you know, nice and everything works logically, and it makes sense to them. But they never really see what goes on on the outside. Do they feel entitled . Yes, absolutely. And for what reason . Because they are treated so well. So my favorite story about this was i was at Heathrow Airport about to go to a fancy conference, and i ran into someone else going to a fancy conference. A Silicon Valley. I didnt have a car. He had a car and offered to share a ride to the rentacar. The technology guy said to me, when you live our life you are surrounded by such power and such entitlement you lose touch with reality. And his very personal example was, he said i was recently staying at this lovely Four Seasons Hotel and i was beside the pool, i was eating a melon. And my skin fell to the ground. And he said before i could someone anyone, someone rushed up to me, with three spoons of different sides on a linen napkin, so that god forbid, you know, i shouldnt have the wrong size spoon. And what he said was, you know, what was amazing to me, hes talking about himself, is when i reentered my real life that i was kind of a jerk. Because i real i expected to live a life where i was constantly being presented with three spoons of different sizes. And i just couldnt deal with the frustrations of everyday life. What makes this a totally ironic story is here hes telling this kind of selfaware story about the plutocracy. But when we had been in the airport waiting for the car, he was on the phone, screaming at someone about where is my car, et cetera, et cetera. So this is morning in heathrow, middle of the night in san francisco, and hes yelling at someone there, because he hasnt organized his car and he had to wait for five minutes. And then he tells me this story about how entitlement can make you not an ideal person. That kind of says it all, right . The Political Behavior is another thing and theres no doubt in either of your minds, is there, that they tilt the rules in their favor through their influence and power over the politicians . No. Absolutely. I mean our own government relaxed the regulations, upended the rules, leveled the laws, to make way for them. They have the power and influence over the government to and theyve been continually deregulating the atmosphere to legalize whatever it is that they want to do. Whether its mergers of insurance companies, investment banks and commercial banks. Derivatives, the commodities futures modernization act of 2000. They lobbied to create a completely deregulated atmosphere with that and we saw what happened in 2008 with the collapse of apps like aig. Theyve been incredibly successful in creating their own landscape where they get to do business the way they want to do business. And what i think is crucial is this is not framed as i want government to do this, so i can get rich. And my company can prosper. This is framed as, we need to do these things for the greater good. And this is where i think another big problem in America Today is a disempowering and a devaluing of the role of government, and of its authority as an independent, respected arbitrating body in the center of the ring. And one of the great contrasts for me in the past decade has been looking at what happened in Bank Regulation in the United States, and looking at what happens in canada. Matt has just spoken about bank mergers. With mind sight one of the great grave decisions taken by the canadian government was to not allow the canadian banks to merge. They wanted to. Huge lobbying effort and they made the same arguments about oh, if we cant merge well never operate on a global scale, canada will be left behind. Well be a prudential backwater and the government just said no. And that decision, i think, flows directly into the canadian governments ability to regulate the financial sector, leverage at u. S. Levels was not allowed. And the consequence was canada didnt have a financial crisis. Its the only g7 country that didnt have to bail out its banks. So government can actually not if its captured. Not if its captured. And it is captured. Now were completely captured with the banking example now we have these banks that are literally too big to fail in america because we didnt do the same thing. But government can act. I think its important not to have a council of despair. That you can have a sophisticated, industrialized western economy. People can live, you know, civilized lives. They can have bankers, theyre bankers, maybe theyre not going to earn 25 million. But they can earn 5 million and 6 million, they can be perfectly affluent and government can actually stand up to its banks and stand up to other secretaries of industry and say you know what, im sure that would be great for you guys. My judgment is, its wrong for the country, and youre not going to do it. They resent any credit civil, despite all the advantages and entitlements they have. They also exhibit disdain as mitt romney made clear in that infamous or famous 47 video. When he talked about other people being dependent on government. Ive heard that attitude more than once. And not just from mitt romney. I think its, again, its consistent with this mindset, theres an intellectual atmosphere that these people have to work within in order to justify a lot of what they do. Because you have to be completely disconnected from the real world in order to do things like sell fraudulent mortgages to a state pension fund. If youre actually thinking about that, youre taking somebodys life savings away when you do that. But you cant think about that. Matt, you quoted the billionaire charlie myunger of Berkshire Hathaway who said anyone who wants to complain about the wall street bailout should realize they were, quote, absolutely required to save your civilization. What did he mean by that . Well, again, this group of people believe that all of civilization depends on their health and their wellbeing, so when they were threatened, in 2008, when they were all about to collapse, it made absolutely sense to them that they should that the government should immediately intervene and give them as much money as they needed not only to get back on their feet but to restore their lifestyles, to the level that they had been accustomed to. So im going to hear step in as a voice in favor of the bailout. I think myunger was right, i do actually saving civilization . I think it was. I think that the bailouts were absolutely essential. I think that had there not been a bailout, which by the way, lets remember, voices on the right as well as the left were objecting to the bailout at the time. I think had there not been a bailout you would have had a much more severe crisis. You would have had a full financial collapse, and much, much deeper economic recession. Now i think where you can and should criticize is first of all, why was the crisis allowed to happen in the first place . And the regulatory failure beforehand. I think second of all, you know, where were the Strings Attached . And actually, charlie myungers great Business Partner Warren Buffett drove a much harder bargain with Goldman Sachs than the u. S. Treasury did. You know, 2008 is not so long ago. And already the antiregulation chorus is so strong, you know, i think the reregulation was not done well at all. But the fact that people are already making a very, you know, powerful and proud argument against government regulation, bankers are making this argument. I mean how dare they . How dare they have the gall to actually argue that too much regulation of American Financial services is what is killing the economy. Right, right. Just to be clear, i actually agree that the bailouts were necessary. What i completely disagree with was the way they were done. They just simply threw a whole bunch of money at this community and didnt have any conditions at all. They didnt sweep in and change any rules. You know, after the s l decree sis for instance. There were massive criminal investigations. We put 1,000 people in jail. There were no such investigations this time around. So this was just making everybody well again and restoring everybody to the status quo, which i think was a major mistake because it produced producely the result were talking about now. It allowed everybody to think that the previous status quo was okay. Let me talk about the ceo class. Because it seems almost every day now theres a new story of some ceo, some boss of a big company whos attempting to tell voters, to vote as they say. What do you make of that . If you really see yourself as a job creator, someone who is not just pursuing their business interests, and getting richer, but someone who is creating jobs, doing great things for america and for your workers, and you also sincerely believe that barack obama is a bad guy, then you feel you have to help your workers to understand this. You know, you have to let them know that you, the job creator, believe that this job creation, of which they are the fortunate beneficiary, you know, that engine is going to slow down, its going to grind to a halt. Do you see this as different from what unions do in urging their voters to go out and vote for the candidates of their choice . Do you see it differently . I think its a little different, just because theyre theres an implied thre threat, its very, very vague. But if the ceo of your company suggests to you that you have to vote for mitt romney, or you have to give money to the romney campaign, i think the tendency to not break ranks is going to be a little bit stronger than maybe it would be in a union. But i think it grows that as companies and corporations are not democracies. Theyre authoritarian structures and the people who work in those companies they start to adopt those attitudes after awhile. Especially the people at the very top. I think theyve begun to actually believe that their authority extends beyond that, and i people, its a little bit different when your boss tells you to do something than when, you know, your Union Brothers tell you. Matt, you have written a lot about tax code, and the plutocrats. Exactly how do they work the tax system . The plainest example is mitt romney. If you look at his tax returns, he paid, you know, rates of 14 , 13 . Thats 20e9ally normal in this world if you work in a private equity fund. Your income hes not an exception, hes an embodiment. In the Financial Services sector for sure the very, very rich, mostly receive income as Capital Gains or if theyre private equity people as carried interest. And both of those the max rate is 15 . So people who make 20 million, 30 million, 50 million a year like mitt romney and like, you know, steve shartman or whoever it is they pay half the tax rate of a nurse or a doctor or a fireman or a teacher. And its considered totally normal in that world. So they really do consider tax reform a threat . Absolutely. I mean, every time that theres been any discussion about rolling back the carried interest tax break in particular, theres suddenly been this intense hurricane of lobbying, and it never seems to get rolled back. Barack obama promised to repeal that tax break, and didnt do it. Give us a working definition in the vernacular of carried interest. So basically what this means is that if youre in a if you work in a private equity firm, the money that you earn so you invest a little bit of your own money. And the gains that you make on that investment would be treated under any definition as a capital gain taxed at 15 . But you also earn money, because you are investing on behalf of all of your investors. That money that you earn, its called carried interest. And it is treated as a capital gain in the same way that the gains to the investors are treated. The economic arguments in favor of the carried interest tax break are so weak. I mean, even Mike Bloomberg, who is, you know, very disinterested. Far from being a socialist, he has come out and said he doesnt support it. And it says something to you about the power of very wellheeled, very focused lobby groups that, you know, barack obama is president , he is opposed to this. He says hes opposed to it. Even Mike Bloomberg is opposed to it. So theres a body of wall street opinion who thinks it should go away. Its still there. When there was an effort, when the Obama White House and others made an effort to revoke carried interest, the fight was led by people like democrat senator Chuck Schumer representing wall street. New yorkers. New yorkers, of course. Thats their constituency, they would say if they were sitting here. But the Democratic Party didnt come to the aid and relief of working people at that time. Well, right. Because, again, but its because you have a small, very, very concentrated lobby that is very, very noisy, and is very, very specific in what it wants and what it needs. And then theres the rest of us who how many people are really thinking about the carried interest tax break . The advocacy against the carried interest tax break is disbursed, its sort of random. Its not focused. Whereas the advocacy for it is incredibly organized, its disciplined, and it has a ton of money. And it is bipartisan. Whos looking out for the rest of us . Well, there definitely are good people in washington. You know, i meet and talk to a lot of them. There are a lot of honest politicians. And who are trying to do the right thing. But, the my experience, the money issue is so overwhelming to people in congress, that raising money for their campaigns . Raising money for their campaigns. Its so central to their daily lives, really, and especially in the house, where you have to essentially start raising money the instant you get elected. Because the election Reelection Campaign is only a couple years away, that theres its just too overwhelming for most legislators to get past that issue. Despite how the plutocrats have reacted to barack obama, he does not seem to be lack fdr taking on the economic loyalists or like theodore roosevelt, fighting the guys he says are taking the country down. How do you explain obamas attitude toward these plutocrats . Barack obama in many ways is one of them. He is educated the way a plutocrat is educated. He had an opportunity to join the plutocracy. He could very easily right now be a top corporate lawyer and they know that. He thinks the way they do. Hes a technocrat in the accepted matter of the plutocracy. And i think they like that. I think thats why he has such a strong reception in 2008. I think thats one element. Another element, though, and i think this is something that sort of bothers them is, he isnt over awed by them. And that kind of bugs them, too. Because they do think theyre pretty great. To answer your question about why is he why doesnt he take the sort of attitude of an fdr or Teddy Roosevelt . I just think barack obama has surrounded himself with people like larry summers, like bob rubber and hes accepted a lot of justification and arguments that come from wall street and the business community. So i dont think he feels genuine classbased rage towards this community. I just dont think thats in him. I think if you listen to Rush Limbaugh and sean hannity and the likes, they really believe that somewhere under there, there is this theres this raging socialist, and lennon ready to break out and put them all up against the wall in a firing squad. That guy just isnt there. He really is more one of them than they think. You dont think hes fighting class warfare in the right sense here . Definitely not. No. I think hes very emotionally and culturally much closer to those people than he is to the rest of us. No, but he is moving he is, and i dont think he says this as directly as perhaps, you know, some of his supporters would like, he is challenging this notion of the successful businessman as the hero and the driver of the american narrative. And that actually is a big if you think it through to its logical conclusion, that is a big challenge. And i think that accounts for this hurt, this seemingly completely disproportionate emotional reaction. Hes made a rhetorical mistake in the way hes occasionally described this community. Thats whats inspiring this whole reaction against him, this feeling that we are like battered wives, because theyve occasionally been described as rich. So its easy to laugh about this, and we should. But this hurt feelings, the fact that this is really playing out in the emotional space, as well as in the Balance Sheet space, i think is really an important point. I think its hard for us civilians to get it because it seems to absurd. You know. Really . That would hurt your feelings . Are you so thinskinned . But it is real. And i think that its real for a reason. Which is i think that barack obama, the Democratic Party, but also the political discourse more generally is posing an existential threat, certainly an existential question to the plutocr plutocrats, which makes them very, very anxious. I havent heard that, chrystia. Barack obama said in the debate this week that he sounded like for Free Enterprise. And im for Free Enterprise too. But what he has didnt sound very tough on them. But theres an underlying point that he does make, i think he should make it more explicitly, which is to say that american capitalism is not working the way it was in the 50s. That we are not living in a time when a rising tide is lifting all boats that we are seeing the people at the very top take off. Their economic fort rns actually disconnect from those stratospherically. And from everybody else. And theyre not dependent. You know, that all of henry ford model where you needed the model class to be well paid to buy henry fords stuff, that that has broken down and we could argue a lot and we should about the reasons but the facts are that it has. And so say that, to actually state that, is profoundly threatening. Because, it starts to break down this equation of my wealth equals my virtue. The size of my bank account it isnt just good for me. It is a manifestation of my civic contribution. And that in some ways is mitt romneys campaign. Hes saying, im a successful businessman so i will make a good president. And barack obama, hes actually saying, you know what . I dont think that that equation works and is automatic. And actually, in saying that, the plutocrats are not wrong to detect there a very powerful ideological challenge. If the plutocrats keep on winning, if they manage to avoid tax reform, if they keep low regulation, if they get a president who is sympathetic to them, or even enables them, whats ahead for us . Well, i mean, i fear that whats ahead is just the continuous worsening of the situation. You know, what weve seen in our lifetime, even since weve come back from russia, is this des nation of the middle class in america. If we continue on this path what well end up with is, you know, is russia or some other third world country where, again, you have this handful of people who are who are protected. And who have expanding wealth, and then theres just this sort of massive population of everybody else, and thats what i worry about. I would like to really issue a clarion call to progressives. Because i think this sort of the progressive public intellectuals are to blame, as well. I think a big reason people arent protesting is no one is offering sufficiently compelling alternatives and solutions. And when you think back to the history of the industrial revolution, the progressive era, the new deal, these were brandnew ideas. And brandnew institutions designed to cope with changed economic circumstances. What i think is the challenge for everyone who was worried about this, and i think all of us should be worried about it. We should be terrified, but i think we need to start taking the next step, and we need to realize the 1950s are not coming back. What angers me sometimes about these debates is people talking about manufacturing jobs coming back. That is just not going to happen. Right. So lets really face the fact of how this economy works and really come up with what needs to be the political and social response. And frankly i see the right not interested in addressing this issue at all and i see the left not offering enough new thinking. And people know that and thats why people arent on the barricades. Theres no manifesto to be waving. One caveat i would like to throw in there is that any time you propose anything that has any kind of government, you know, component to it theres this automatic criticism that its communist and socialist. When you come up with a solution, the boundaries are lets come up with a solution that doesnt have, the that cant be criticized as being communist or socialist. And that is incredibly difficult for people to work around. Okay. But lets at least see the new ideas. Sure. My argument is, we are living through equally profound economic transformations and were just trying to rehash and retinker with the 20th century institutions. I dont think its enough. Matt taibbi, chrystia freeland, thank you very much for being with me. Thank you. Pleasure, bill. Heres our significant revelation of which you may not be aware. The plutocrats know it and they love it. And the rest of us should be forewarned. When the Supreme Court made its infamous Citizens United decision, liberating plutocrats to buy elections fair and square the justices may have effectively overturned rules that kept bosses from ordering employees to do political work on company time. Election law expert Trevor Potter told us that now, corporations argue that it is a constitutionally protected use of Corporate Resources to order employees to do political work or attend campaign events, even if the employee opposes the candidate or is threatened with being fired for failure to do what the corporation asks. Reporter in New York Times magazine came across a recording of governor mitt romney in a Conference Call in june with some business executives. The government told him there is, quote, nothing illegal about you talking to your employees about what you believe is best for the business. Because i think that will figure into their election decision. Their voting decision. And, of course, doing that with your family and your kids, as well. And heres governor romney two months later, campaigning at an ohio coal mine. This is a time for truth. I listened to an ad on the way here. Ill tell you, you got a great boss. He runs a great operation here. And he there he is. Look at all those miners around him, steadfastly standing in support, right . They work for a Company Called murray energy. And attendance at the rally, without pay, was mandatory. Murray energy is notorious for violating safety regulations. Sometimes resulting in injuries and deaths and the company has paid millions in fines. The ceo, bob murray, is a wellknown Climate Change denier and cut throat businessman. He insists that his employees contribute to his favorite antiregulatory candidate, or else. In one letter, uncovered by the new republic magazine, murray wrote, quote, we have been insulted by every salaried employee who does not support our efforts. So much for Voting Rights and the secret ballot at murray energy. He also discovered that the coke brothers, david and charles, who have pledged to spend multimillions of dollars to defeat president obama, have sent a voter Information Packet to the employees of georgia pacific, one of their subsidiaries. It includes a list of recommended candidates, proromney and antiobama editorials written by the cokes, and a cover letter from the company cress. If we elect the wrong people, he writes, many of more than our 50,000 u. S. Employees may suffer the consequences including higher gasoline prices, runaway inflation and other ills. Other ills . Like losing your job . This is snow balling. Time share King David Siegel of west gate resort reportedly has threatened to fire employees if brk brk is reelected. And arthur allen who runs asg soft Ware Solutions emailed his employees if we fail as a nation to make the right choice on november 6th, and we lose our independence as a company, i dont want to hear any complaints regarding the fallout that will most likely come. Back in the first gilded age in the 19th century, bosses in Company Towns lined up their workers and marched them to vote as a bloc. As we said, the beginning of this broadcast, the gilded age is back with a vengeance. Welcome to the plutocracy, the remains of the old usa. Thats it for this week. On our website, billmoyers. Com at your request were starting a book club. Our first is Chrystia Freelands plutocrats. Read the book. Ask questions. Share your thoughts. Then lets have a lively conversation. Thats at billmoyers. Com. Ill see you there. And ill see you here, next time. Dont wait a week to get more moyers. Visit billmoyers. Com for exclusive blogs, essays, and video features. This episode of moyers co. Is available on dvd for 19. 95. To order, call 18003361917. Or write to the address on your screen. Funding is provided by Carnegie Corporation of new york, celebrating 100 years of philanthropy and committed to doing real and permanent good in the world. The kohlberg foundation. Independent Production Firm with support from the partridge foundation, a john and pauley guff charitable fund. The clement foundation. Park foundation, dedicated to heightening Public Awareness of critical issues. 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