Our next speaker is russell mulchiver. Hes the editor for over three decades of the corporate Crime Reporter, a newsletter based in washington, d. C. He explores corporate crime and he is a founder of single paid action and hes in charge of single pay action. He also founded and runs morgancountyusa. Org in western virginia. Works at the local level as well like jim henry. Morgancountyusa. Morgancountyusa. Org. Is the author of corporate crime and violence and the abuse of public trust. Its put out by an environmental group. He lives in berkeley springs, West Virginia, and hes probably interviewed more people than anyone youve ever met over the years. He once actually put out a daily newspaper five days a week and had interviews in each one. The corporate Crime Reporter, which is not in any of the law school libraries, he is trying to expand the documentation of corporate crime. Hes in touch with scholars all the time around the world. Welcome, russell mulchiver. [ applause ] law and order. Get tough on crime. Crack down on criminals. Support your local police. No more lenient plea deals. Prosecute the criminals to conviction. Three strikes and youre out. Bring back the death penalty. This type of law and order talk makes the Opposition Party uncomfortable. Why . Because the Opposition Party is funded by corporate criminals. And because law and order talk is politically incorrect. Question why would the Democratic Party funded by corporate recidivists fund a party for recidivists . The only way trump was able to capitalize on a law and order theme was to portray the opposition of corrupt money. Or to quote trump during the campaign, i know the guys at goldman sachs. They have total, total control over hillary clinton. The wall street banks own her, unquote. During the campaign, trump repeated over and over again, drain the swamp, rigged system, crooked hillary, lock her up. And you can yell and scream all you want about trump hypocrisy, but that doesnt get you into the red zone. That doesnt address the rape System America was voting against. Were talking about the failure of an organized opposition to confro confront market fundamentalism. Or laissez mfaire capitalism, translated from the french, let them do what they wish. Trump clinton, trump booker, trump harris or go down the list of democrats. One of the most premiere trump followers has a new book out called capitalism a crime story. Corporations get to be the architects of the legal system under which they operate. Instead of police, corporations get regulators. Instead of criminal prosecution, corporations get regulatory enforcement. Instead of convictions, corporations for the most part get sweetheart deals known as deferred and nonprosecution agreements. Instead of probation, corporations get monitors and corporations get to monitor the monitors. Guess who pays the monitors . The corporation. Instead of jail time for their executives, corporations get slaps on the wrist, denying set decrees with minimal funds. Four recent books shed light on this double standard in criminal justice. The divide by matt taibe, why not jail . Who will be speaking later, and too big to jail by reese garrett. He put it best when he defined justice as just us. What is the reality of corporate crime in America Today . Here is the twitter version. Corporate crime inflicts far more damage than any combined. Corporate criminals are the only class that can define the powers in which they live, and corporate crime is underprosecuted and corporate crime police are underfunded. Even corporate criminal defense lawyers, many of whom were corporate prosecutors in a previous life, will stipulate to these facts. And if you wish to confirm the facts for yourself, go back and read the last 32 years of corporate Crime Reporter which is printed 48 times a year. Week in and week out, we cover Major Corporate crimes from pollution to corruption to bribery to price fixing to death on the job to false claims and fraud. Wondering why that can of tuna fish cost you so much . Just yesterday starkist pled guilty to the conspiracy of fixing the price of canned and ready to eat tuna and now faces a 100 million criminal fine. Last year bumblebee pled guilty to the same charge and was fined 25,000. Every week we run a question and answer format interview, and many of those interviews are with former federal prosecutors turned corporate defense attorneys. Or check out the public databases of corporate crime, including phil materas good jobs first, violation trackers, spectacular database and brandon garretts prosecution registry. But dont get lost in the weeds. Focus in on this question. Why, given this crime wave, havent we seen a Political Movement against corporate crime . Answer one is what i mentioned earlier, the two Major Political parties are funded by corporate criminals. Well documented. And 15 years ago, corporate Crime Reporter put out a study showing the top 100 corporate criminals in the United States donated more than 9 million during the 2002 campaign to both parties, and its obviously gotten worse since. And the second answer is that activists and third parties are hogtied by a Political Correctness that prohibits them from taking a strong law and order stance. But there are rays of light at the ends of this corporate crime tunnel, and here are two from my home state of West Virginia. Richard ojetta is a 20year army paratropicaler who paratrooper who is running for congress. Trump won it 31, in some areas 8020. When ojetta returned from afghanistan, his service in afghanistan and iraq, he said he found kids in his West Virginia district worse off than the children in iraq and afghanistan. He ran for office, local office, and was elected to the West Virginia senate. Upon taking office, he was immediately visited by drug industry lobbyists. And this is in a state ravaged by the opioid crisis. Ojetta said he threw the drug person from his office. When asked why he did that he said he found him no different than al qaeda or the taliban, end quote. Second answer, sara chase is a reporter who writes about corruption around the world. In 2015, chase wrote a book about corruption titled thieves of state why corruption threatens global security. In thieves of state, chase argues that the violent religious extremism is actually related to government corruption, not religious idealogy. Thieves of state came out in 2015. She says she didnt expect a version of an extreme reaction to corrupt end so quickly right here in the United States. But thats what we got in 2016. She says that much of the vote for Bernie Sanders and a vote for donald trump. Sara chase is now our neighbor in paw paw, West Virginia. She moved from afghanistan to West Virginia. If you read the interview in the current issue, she tells why yo. Going around the United States, and interviewing people. She says that one of the things she learned from studying corruption overseas is that the criminal elites often use Political Correctness and identity politics to keep the public from rising up against their corrupt overlords. Quote this is what she said what distresses me so much is our polarized politics. The fault is on both sides. Why is it that we cant get environmentalists and deer hunters together . They both adore our wilderness. We have been driven apart from each other by the top of the kleptcrattic system. Theyre activating our cultural divides as much as possible to make sure that environmentalists are unable to speak with and speak in the same room with West Virginia hunters. In my research on anticorruption movements wurldwiwurlorld wide, i discovered the best tactic they use to stay in power and defeat legitimate uprisings is to activate identity divides. They do this cynically. Usually they dont care much about the sunni shia divide or guns or gay rights. But they lean hard on these issues because they know these issues rile people up and keep them divided in angry opposing camps, incapacitated to rise up against the kleptocraptic network that is abusing them all. Unquote. In West Virginia, we have a race for senator that could tip the balance of the senate. Its our corporate Republican Attorney general, Patrick Maurice against our corporate democrat senator joe manchin. With the senate in the balance, will she vote to reelect the democrat joe manchin . I will not vote for senator manchin she said. I intend this is taken off and people are getting on this bandwagon. I intend to write in no more manchins and everything he represents, which is somebody who puts a d label on their shirts, takes peoples votes for granted and behaves as the lackey to the private sector members of the kleptocrattic network thats running this state and nation. That means big pharma and big fossil fuels. Unquote. Chase in West Virginia is pointing the way to a law and order rhetoric that could lead to a populist challenge to the corporate criminal status quo and the market fundamentalism that underpins the ruling kleptocracy. May this combat market fundamentalism and the crime and violence it has unleashed. Thank you. [ applause ] thank you very much, russell. In our continual quest for liberating reality in place of controlling mythologies, our next speaker is Robert Wiseman, who when he was an undergraduate at harvard, sponsored studies showing how much control corporations had over harvard university. And i remember in a particular event there he impressed me so much i said, well, i think hes going to be a future civic leader nationally. So he has become. When he was working with us, he was working with jamie love on bringing big pharma to accountability because at that time they were charging 10,000 per person per year in africa who suffered from aids. 10,000. And because of what jamie love and Robert Wiseman and others very few others did, they broke that price, they found a manufacturer in india who said hed do the same thing for 300 a year. Its even lower now. He also was a leader in International Tobacco control movement and spent a lot of time in other countries and in the u. S. , trying to foster an International Treaty on the t subject. Hes president of Public Citizen and has written many articles, especially when he was editor of the multinational monitor. That was the only really magazine reporting on Global Corporations exclusively. And the issues which are still pertinent, including the interviews, are on the website, multinationalmonitor. Org i believe. He is also a person who is kept off a lot of tv and radio, more than some of his counterparts like Grover Nordquist and others. He continues to fight the good fight. He will bring to us another perspective on the fundamentalism and their uses to block needed regulation in congress and to try to counteract any kind of public accountability of these Global Corporate institutions. Robert wiseman. [ applause ] so when i was working on the publication that ralph talked about, multinational monitor, we talked about market fundamentalism a lot. The context in which the term was just used, was more internationally than domestically. Then reflecting upon the words in advance of this forum, you know, it struck me its actually kind of a misnomer. The market part is like a fiction. The fundamentalist part is real. But its not as if the proponents of market fundamentalism believe in markets. Thats what gregs presentation was about. Its what berts presentation was about. It will be in part what mine is about. The existence of the corporation, its corporate fundamentalism. The existence of the corporation is an affront to a pure form of free markets. Certainly concentrated Corporate Power. I wanted to talk primarily, and maybe exclusively depending on how fast i talk, about market fundamentali fundamentali fundamentalism in politics. And then maybe secondarily about an emerging issue in the law thats related. So it is the case that the core idea of markets that money is all that matters is now the central animating element of the law of Campaign Finance. Theres two main pillars of contemporary Campaign Finance law from the Supreme Court. The first is the 1976 decision, buckley v vallejo. Thats the one you may know that money equals speech. Its more or less what the case held. This operative conclusion of the case was that a restriction on the amount of money a person or group can spend on political communication during a campaign necessarily reduces the quantity of expression by restricting the number of issues discussed. And is, therefore, if you limit what anyone can spend on election youre limiting their speech and basically you shouldnt be able to do it. So thats principle number one. And that you can see where thats a market fundamentalism principle. Principle two comes from Citizens United. It reminds us of the money equals speech element. But, of course, it was not about the speech of human beings, it was about the speech of corporations. In that regard, its a divergence from market fundamentalism, as it might be abstractic abstractly snounderstood. If you read Citizens United from 2010, which you should its unfortunately very long. But it says some pretty remarkable things. So here are two excerpts ill read to you. It gets to the heart of it. Speech is an essential theyre moving. This is the best of american democracy. Speech is an essential mechanism of democracy its a means to hold officials accountsable to the people. The right of citizens to speak and use information to reach consensus is a preconditioned of enlightened selfgovernment and the means to protect it. Actually more moving and insightful from justice kennedy. The majority was to connect speech with protection from minority interest in society. So the government may commit a constitutional wrong when by law it identifies certain prefers p speakers. By taking the right to speak from some and giving it to others, the government deprives the disadvantaged person or class of the right to use speech. If you think back on our history of racial oppression or exclusion of women from voting, not to mention native americans and the role of the Supreme Court of protecting those disadvantaged majorities against the impulse. Until you recognize that the disadvantaged minority theyre talking about are not native mar americans or women, its goldman sachs, walmart, so thats the decision. Thats where the thinking takes you, to the most outlandish conclusions that have dramatic effect. If you want to understand the corruption that russell is talking about, its deep, its pervasive. Its not explained by any single factor in our politics. But the central feature of it is corporate elite spending on our elections and the impact that has. So translating those two decisions into practice, here are some of the things that have happened in the subsequent years. And i should say to be clear, it was not like a good world for Campaign Spending before Citizens United was decided. But its a dramatically worse world afterwards. So the first thing that happened was that outside spending has dramatically soared since the decision. Its going to set a record for midterms in this election cycle by far. You can talk about the absolute amounts of money, but the absolute amounts of money actually understate the importance of outside spending. Because the outside spenders dont spread their money equally among all the races going on. They focus on the close races where they can make a difference. As a result, were seeing a surge in number of races where outside spending collectively are spending more than the candidates themselves. Were going to have we have 42 races going on in this current election cycle where the outside money is more than the candidates are spending. Which means outside interests, which is proxy for corporate interests, are defining the race, more than the candidates themselves are. Who contributes to these outside groups . Well, one problem is we dont know. The corporate money is not trackable because its not disclosed and theres a whole apparatus to protect their secrecy. The money that goes to super pacs is disclosed. We know something about that. More or less in every election since Citizens United the top 100 individual donors are responsible for three quarters of the money that goes to super pacs. Top 100 people. So multinational monitor we used to write about the families that would control guatemala or whatever. Its 100 people who are dominating this election system in the United States. The outside group spend overwhelmingly on negative ads, which everybody hates but people spend on because they work, the outside groups arent constrained by any accountability so they do it more than the candidates do. The candidates still have some role in this operation, but ever more than before they have to spend all of their time fundraising. In the 2012 election for example, barack obama over the summer of 2012 did 221 fundraisers, and 101 campaign rallies. So he was spending twice as much time with super rich people asking them for money, as he was tending mass rallies. During that same period, the New York Times reported for long stretches of the summer and fall, mr. Romney was so busy with fundraisers he often did no more than one public event a day. He was just full time fundraising. Squeeze in an event every now and then to tell people why they should vote for him. So the aggregate effect of all this is a kind of deep corruption, which people accurately perceive as russell was saying. It has to do with who the candidates consort with. They spend their time with superrich people. Who theyre obligated to. What they think about doing when theyre in office, what they do when theyre in office. If they try to do too things that are too bold they will be held accountable by the corporate interests that can spend a ton of money to take them out in the next election. Now, theres a narrative in the United States that were a highly polarized country and that is, of course, entirely true on some dimensions. But its totally untrue on a whole bunch of other dimensions. Theres actually a stunning consensus around a really aggressive Progressive Agenda when it comes to minimum wage or medicare for all, fair trade deals, breaking up the big banks, supporting investments in our schools. 87 of americans went to improve and protect Social Security and medicare. Theres a huge difference between what regular people want and what the superrich people want. In one study, a class was identified of the top 1 and polled them. 58 of the top 1 favor cuts in medicare, education, and highways to reduce budget deficits, but only 27 of regular people. Actually more than half of the top 1 think the government has a role in regulating markets, but three quarters of regular people do. 23 of the top 1 think the government should provide a decent standard of living for the unemployed. Half of regular people do. This one is pretty stark. 8 of the top 1 think the government should provide everyone should priovide job to everyone who cant find a job in the private sector. Over half of the people agree. Our interests follow the 1 , not the 99 . Thats misleading, too. Most spending is not by the top 1 . About 40 of all election spending comes from the t ttop. 01 of the population. So it is incredibly concentrated. The solutions to this arent very hard to identify. Within the constraints of the Supreme Court legal framework, we can have Public Financing of elections. People make small dollar donations and have it matched by five to six to one like in new york city. That will make a big difference. It will not solve the problem so long as Citizens United exists as the law of the land and we cant control the outside spending. That decision which would have been overturned had Merrick Garland been confirmed. The solution would have to be a constitutional amendment to overturn the decision, for which theres quite a bit of support. These issues are unlike the idea of myths that we have to sort of unveil for people. This is completely transparent to everyone in america. Something like 98 of americans support significant Campaign Finance reform. The only debate among americans over Campaign Finance reform is between it should be fundamentally changed or completely rebuilt. 39 favor fundamental change, 46 favor rebuild. Im not sure which is more fundamental or complete, but its a pretty close call on that one. So the people who are there of course, the impediment to finance reform is the same impediments to any policy reform, which is the Money Politics system itself. As entrenched and embedded in the Supreme Court decisions that really reflect the corporate fundamentalists idealogy. So i probably am doing okay on my time, right . I should stop. Im going to do part two of the talk in two minutes. We have a responsibility for a second problem as it relates to market fundamentalism and the law which is protection of First Amendment rights. Public citizen brought a case, virginia pharmacy, which was the first to establish the right to First Amendment protection for public speech. In defense of ralph and Public Citizen, our idea was not to protect the right of public speakers, it was for the right of consumers. The doctrine and had we not brought the case, the doctrine would have been invented anyway. It morphed from something that was about to protecting consumers to protecting the rights of corporations to speak and to speak about anything. This is a genie out of the bottle. So whereas our case was about making Information Available corporations now use this claim of commercial speech protections to explain why they should not have to disclose information. So they have claimed, for example, that the First Amendment should be used to block laws limiting chiropractors ability to solicit patients. They say it should be used to block laws about Health Effects of cell phone use, gmo discloser, zoning limitations. There was recently a case where they succeeded with a First Amendment challenge to a rule requiring the disclosure of whether products were made with conflict minerals. In a twist of things, the Trump Administration has proposed it is going to require pharmaceutical companies to advertise if they do advertisements to include the price of the products that theyre advertising. Its not an important reform, but pharma doesnt like it. Pharma says, hey, thats a violation of our First Amendment rights. So whereasdiscloser of pharmaceutical prices, now big pharma says if you mandate we disclose our prices, that, too, would be a violation of our First Amendment rights. Im raising this because it will get much worse. Brett kavanaugh wrote an important decision on the Appeals Court relating to Net Neutrality in which he made clear that Net Neutrality regulations should be blocked. One reason was the First Amendment. You may recall Net Neutrality is the rule that isps have to permit things to flow through their channels without discrimination. Now extra charges based on who is providing the material. No right of the isp to slow things down and so on. Whats the First Amendment issue . You have to think pretty hard to invent it. Well, what judge kavanaugh said, then judge kavanaugh said, was well, if comcast wants to make netflix pay to let their programming come through and appear or if at t wants to slow it down or block it all together, that is not a business decision, thats an Editorial Division just like whether the New York Times is going to publish an oped or if cnn will let me appear, which ralph is excessively worried about. Thats corporate fundamentalist. So thats going to be a big problem for Net Neutrality. Its going to get worse than that. The Supreme Court has held that speech is embodied in data. Theres a case involving transmission of prescribing data for doctors in vermont and the Supreme Court held that was an unconstitutional infringement on the right of the data miner to collect the data and then sell it to Pharmaceutical Company advertisers. The big legal issue is, okay, if data now has First Amendment protections, and everything the economy is moving to the internet, sort of embodied in the term of the internet of things. All kinds of things we myight view as traditional regulation is now data regulation. Data regulation has to potentially overcome a First Amendment hurdle. We are finding, and are likely on our way to experiencing a world in which lots of things we thought were permissible will be viewed as speech affronting actions that are going to have to overcome the high bar of limitation on the First Amendment rights of corporations who never should have had such rights in the first place. Thats an extreme indication of where the corporate fundamentalist idealogy can take us. Its going to be a huge challenge to overcome, given the configure raise of the cou configuration of the court we have. We must mobilize people and make things happen in the streets to offset the money power, whether its in congress or the Supreme Court. [ applause ] thank you very much, rob. By this time, some people viewing this on cspan might be experiencing injustice fatigue. And one of the characteristics of resilient citizen advocates is they dont allow themselves to be subjected to injustice fatigue. Indeed, injustice mobilizes them to advance justice. What kind of doctor would she or he be if they had disease and injury fatigue when they went to the hospital . Thats part of the work. And i tried to address that in my little paperback called breaking through power, its easier than we think. As rob just pointed out, most of the problems you hear today, most of the injustices could have been prevented or remedied by 535 people. A majority of them in the u. S. Congress. Thats how much power this Little Branch of congress has compared to the other two. Its the progenitor branch of power under our constitution. And fortunately, we know or could know the names of all of them. Senators and representatives. And we could organize in the congressional districts to have as much fervor with Congress Watch dog groups as our friends who organize bird watchers group. The book shows a lot of examples where far less than 1 of people turned congress around and redirected our country in more just pathways. I want to clarify something. That when i said the Big Drug Companies want to charge 10,000 per person per year for aids medication, that was in africa. Where most of the people earn less than 1,000 a year. And the indian drug company that brought it down to 300 a year was a result of bill hadad, jamie court and rob wiseman, they were the key people. That doesnt even come close to 1 of the people changing congress. You can see knowledge, accuracy, drive, stamina, strategy, tactics and going right to theditithe Decision Making fulcrum. Sometimes its congress, sometimes its the indian Pharmaceutical Company. They got it done against the efforts of the Big Drug Companies, all kinds of taxpayer subsidies to them and the Clinton Gore Administration which wanted to defend the patent rights of these Drug Companies. By the way, those that are watching on cspan should know that there was no cspan covering congressional proceedings in the 60s and the 50s. And now there is. The market would not provide it. It wasnt something that paid the Television Industry and the radio industry to cover. So the Cable Companies for pragmatic reasons and other set offs, created cspan and support cspan. But you see if there was a market test, there would be no cspan. But theres a very important civic test that was crucial to bring the proceedings of the senate and house to the American People. Again, if youre looking for the websites of these presenters and their groups, just go to csrl. Org and you can get the contact numbers. Our next speaker is dennis kell kell kellerher. Hes the president and executive officer of a group called better markets. He was in the inside story, the Global Financial crisis, called money power and wall street and breaking the banks. Which was on pbs. As well as other profiles and documentaries. And why . Because before founding better markets about several years ago, he worked in senior positions in the u. S. Senate as well as legislative director and leadership advisor to another senator who was also secretary to the democratic caucus. And in addition to a lot of congressional testimony, he speaks frequently in the u. S. And europe on these matters of conferences, symposiums, as well as on all media platforms. He served four years of active duty in the air force, and he has a business background as well. So when he broke ground with better markets other publications took notice. Now youll see when dennis speaks, why they took notice. [ applause ] thanks, ralph. Welcome, everybody. Thank you for that introduction and thank you for inviting me and thank you for putting on an unbelievably great agenda with some really outstanding experts who bring a perspective of many years of experience and knowledge you just dont hear partly due to who controls the media and who gets heard and who doesnt get heard. Whether its robert on cnn or not. But we all know theyre filtered. There arent a lot of places where you can get the quality of these people who get together to face the fundamental issues facing the country. Better markets is often referred to as a wall street watch dog, but were also a regulator watch dog. Were a counterweight to wall street. If you think goldmans sachs, morgan stanley, et cetera, the biggest of the big, when theyre in washington trying to bend laws, policies and rules their way, were on the other side of the table fighting back to push them towards the Public Interest. Thats what better markets does. Ill preempt a little bit and say our website is bett bettermarkets. Com. A lot of information there. Today i want to talk about inequality. You cant talk about inequality today without talking about the 2008 financial crash. It was the worst financial crash since 1929. It caused the worst economy since the Great Depression of the 1930s. Better markets did the first study on the actual cost of that crash. It showed that its going to cost just the United States more than 20 trillion with a t. 20 trillion. The study, its available on our website, details those costs from coast to coast. Others have done studies like that since then, including recently the San Francisco fed, which actually confirmed that its going to cost more than 20 trillion. However, astronautically high numbers are, dollars dont tell the real story of the human cost, which were far reaching and tragic. By october of 2009, just 13 months after the collapse of lehman brothers, just ten years ago, just 13 months, the real Unemployment Rate in the United States was 17. 2 . That meant there were 27 million americans either out of work or forced to work parttime because they couldnt find fulltime work. Many of those people were heads of households. That tsunami hit more than 50 million americans. Think about that. There were also more than 16 million foreclosure filings and more than 40 of the homes in the United States were effectively underwater. They were worth less than the amount of mortgages they were paying. This and so much more is detailed in our report. So, yes, there were lots of bad long term trends regarding inequality before the crash. But they were all made worse, much worse, due to the crash. Unfortunately, many were also made worse by the policies undertaken in response to the crash. We could talk about lots of them, some of them you heard about like the t. A. R. P. Bailouts for wall street, but nothing for victimized homeowners. I want to focus on a cue institution that gets referenced a lot, the Federal Reserve board. The title of my talk is feds policies make main street pay after funding wall street parties. Theres an old saying that the job of the Federal Reserve board is to take away the punch bowl once the party really starts going. The argument is that the feds should not allow the economy to grow so much that it overheats and results in an inflationary spiral. To prevent that, its supposed to increase Interest Rates and slow down the economy, supposedly for a soft landing to benefit everybody. However, those disarmingly benign metaphors obscure who the feds policies really help and who they hurt. These unmentioned distributional impacts are critical. Because the feds actions affect the wallets, wages, wealth and economic wellbeing of every single american. And the consequences of those policies, including much greater inequality much less opportunity, and tremendous economic anxiety also had dramatic social and political implications. Just turn on your tv if you want to know what im talking about. The bottom line is that the feds policies since the 2008 financial crash have ladled out the punch in the bowl to the richest americans and wall streets biggest banks. However, now that the painfully slow economic recovery from the crash is finally starting to reach main street, the fed is changing policies which is a costly punch in the gut to every hard working american. That is illustrated by the facts that the stock market, bonuses, ceo compensation and the wealth of the top 10 are at all time highs. In fact, wall street, which caused the crash, which we also detailed in the cause of the crisis report, has profited every year since 2009. And salaries on wall street in 2017 rose to their highest levels since the 2008 financial crash. Think about this, though. The bottom 90 are still poorer today than they were in 2007. By between 17 and 34 . Think about that. So we have 52 of the nations 50 Million Public School Students qualifying for free or reduced priced lunches today. There are 44. 2 million americans today receiving food stamps. It was 28 million in 2008. And more than 40 million americans today are being crushed by 1. 5 trillion in student loan debt. The result is that 90 of americans are still in a deep hole just trying to get back to where they were before the 2008 crash. While wall street and the top 10 break records for wealth, income and bonuses. By changing policies and raising rates now, taking away the punch bowl, the fed is making it much harder, if not impossible for the 90 of americans to dig out of that hole. But they didnt get any of the punch in the bowl and they didnt get the party. Thats where the distributional impact comes in that nobody wants to talk about. Raising Interest Rates not only makes it more expensive to borrow new money, but it also increases the cost for all the other money you borrowed before and havent paid back yet. What are the concrete results on main street of the feds actions . Americans today are paying around 70 billion more than they were just two years ago in increased Interest Payments due to the fed rate increases. 70 billion. Assuming the fed continues to increase rates as its projecting to do, americans are going to pay a total of about 330 billion more from late 2016 to 2020. And then after that theyre going to be paying close to 200 billion each and every year thereafter, assuming rates dont go up. Thats 330 billion through 2020, 200 billion every subsequent years moved out the pockets of the hardworking americans into the pockets of banks, payday lenders and other financial institutions. This is the kicker. The sad fact of fed rate increases is that those americans will get no additional goods or services for that money. Its a pure transfer of wealth from main street to wall street because the fed is raising rates to slow the economy after ten years of wall street partying. Its noteworthy that enriching the already rich on wall street Corporate Executive suites and the rest of the 10 didnt cause the fed to change policies for ten years. It was only when the other 90 who havent even got back to their economic level of 2008, only when they started to do ever so slightly better that the fed decided to change policy and slow down the economy by raising rates. Thats why i say the fed ladled out the punch in the bowl to the richest while giving the other 90 a punch in the gut. So what did the fed do to give wall street and the richest the punch bowl . Well, in response to the 2008 crash, the fed took two dramatic policy actions. It dropped Interest Rates to an historical level of zero and launched an unprecedented policy of what they called quantitative easing or qe, where the fed purchased trillions of dollars of bonds. Those policies dropped the cost of borrowing to zero and ignited a dramatic increase in asset prices. Now, assets, particularly financial and real estate assets, are disproportionately owned by the already rich and are traded by wall streets biggest banks. Which were not only bailed out in 2008, but were also among the favored few who are allowed to actually borrow money at zero or near zero. The result . The wealthiest 10 saw the value of their assets skyrocket due to the feds post crash policies. For example, given that 84 of all stocks are owned by the wealthiest 10 , the 320 increase in the s p index since 2009 made the rich much richer. Wall street also gorged on fed policies which enabled them to pay themselves, get this, pay themselves 20 billion in bonuses in february of 2010. They have now returned to precrash bonus levels. In 2017, they paid themselves more than 31 billion. Now february 2010 when wall street was paying themselves 20 billion should ring a bell, because i just mentioned in february of 2010 was the same month the real Unemployment Rate on main street caused by the crash caused by wall street, the Unemployment Rate went to 17 . Throwing 27 million americans out of work. The feds policies were of no help to those americans who were losing their jobs, homes, healthcare, retirements, savings, and so much more. Simply put, fed policies funded a wall street party for ten years, while the American Dream was being crushed on main street. As one observer noted, the fed policies were designed to enrich banks. It worked remarkably and tragically well. In contrast, its taken almost ten years for the incredibly slow and uneven recovery from the 2008 crash to finally start to reach the nonrich. Evidenced by the lowest top line Unemployment Rate of 3. 7 since 1969. However, real after inflation wages and productivity remain largely stagnant. Meaning more americans are working and often working harder and longer but they simply arent getting ahead. In fact, the fed itself did a study that showed almost 50 of all americans couldnt come up with 400 for an emergency, for an emergency. On top of that, americans have more debt now than ever before. 13. 3 trillion, with a t, trillion dollars. It cant be denied that main street continues to live paycheck to paycheck getting by on modest wages, borrowing to make ends meet, stretched to the limit and worried about the future. Nevert nevertheless, the fed has interpreted this minimal main street recovery as a reason to reverse their post crash policies. I love this. The fed says that theyre going to normalize Interest Rates. Normalize is a fancy of way of saying raising them on everybody else. And at the same time, they going to unwind their qe bond purchases. Think about what that really means. The fed is raising rates because the Unemployment Rate is going down and its worried that employers, god forbid, might at some point raise wages to workers they need. That, the fed fears, might cause prices to increase as those wage costs might be passed along in rising prices. I mean, they worry about a lot that hasnt happened. With inequality ballooning due to the postcrash policies with the bottom 90 who are still poorer than they were ten years ago, these policy changes are going to make everything worse for the 90 of struggling americans. Thats because wage growth, both real and nominal is sluggish by historic standards and on one measure real raises for typical workers have actually fallen recently. Moreover, conventional wisdom and the feds own views and projections over the last ten years about employment, unemployment, wages and growth, have been consistently wrong. Wrong. Over and over again. And thats why some noted scholars have postulated that underemployment today seems to influence wage pressures more than the Unemployment Rate does. But the feds not changing attention to that. Lets look at how much thats going to cost americans. Since the fed began raising rates, the average credit card rate has jumped from 15. 1 at the end of the 2016, to 16. 9 today. The average home equity line of credit has jumped from 4. 7 5 6 . And mortgaged are expected to reset up to 5. 25 or more. Cost of funds have been lets remember, zero. Not your cost, the big banks, ze zero. Those rates before the increases were 15. 1 . They were already incredibly high, extracting massive amounts out of main street pockets. Now those very same institutions are raising the rates they charge, but note, theyre super slow in raising the rate that they pay on your deposits. So theyre taking more of your money coming and going. Its no wonder that nonreal estate personal debt has hit an historic high. Credit card balances are at all time high with average balances of 6,348. Americans paid more than 100 billion in credit card interest and fees just last year. And as rates go up, payments are harder to make, which means more people are carrying larger balances. More people are missing payments more often. More are paying not just higher rates, but higher fees. And the First Quarter of 2018 consumers held about 2 trillion in Interest Rate sensitive debt. The fed has raised rates. 25 five times. Remarkably thats exactly how much your credit cards have gone up. If you assume all the Interest Rate sensitive debt replaces at roughly the same amount, thats an additional 35 billion more a year. Again, for no goods and services. So the couch you got with your credit card for 500 thats sitting in your living room youre paying for, youre paying more for the couch. You dont have a more or better couch. Its the same couch. Its just more money coming out of your pocket. Going into the pocket of the credit card companies. And the fed is forecasted to rate rates 1 in the next year, and. 50 in 2020. Its goeging to increase. The same thing for student loans. Those rates have also increased. From the start of the 2016 2017 year to the start of the 2017 2008 year, rates have increased from 3. 76 to 4. 26 a year. And for this Academic Year theyre expected to go up to over 5 . Given that students borrow money for four years, thats an additional 5. 4 billion. And rates are forecast to increase again by the start of the 2021 Academic Year, its going to cost students an additional 16. 7 billion in extra interest for their degree. Interest. Same thing on fixed rate mortgages. The Interest Rate increase hits the Mortgage Market high too. Theres been 3. 5 trillion in one to four sized family homes. There will be a similar amount originated through the end of 2020. Those loans will carry higher Interest Rates. Mortgage rates have increased from 3. 45 in mid august of 2016 to 4. 53 in mid august of 2018. And they are expected to go up again. So since august of 2016, the cost to consumers just of their rates going up on mortgages, 25 billion. When you add it up for all of 2016 to 2020, its 152 billion. And with rates going up thereafter, consumers who get new mortgages after august of 2016 will be paying additional interest of more than 90 billion a year. The feds is raising interest rat rates. That means on an average mortgage, the rate is going to go up and theyre going average family is going to pay almost 1,500 more aia year jus on their mortgage. With rates approaching levels not seen in eight years, closing in on about 5 , that rate is going to actually increase by about 2,000 a year. Same thing on corporate debt. You know, when rates go to zero, if youre a corporation, you want to start borrowing like crazy. So the corporations borrowed like crazy. Corporate debt is at all time highs. Sooner or later somebody is going to pay for that. Thats going to be consumers. Consumers are also going to be paying the Interest Rates on corporate debt. And adding insult to injury, with the recent increases in federal spending and the 2 trillion tax cut, that mostly went to the rich, the governments annual deficits are going on trillion dollars. Who is going to pay for that . Not the rich who got the tax cut. Main street working families are going to get slammed twice. First, the rich get the tax cut, not them. Second, they get to pay the taxes to pay the higher cost of the deficit to pay for the taxes of the rich. So let me conclude, the combined cost of revolving debt in new mortgage originations to American Consumers are already 70 billion a year. Under current forecasts, thats going to add an additional 330 billion through the end of the 2020 and will then increase consumers costs 200 billion a year every year thereafter. The feds policies since 2008 have made inequality and economic insecurity much worse, which contributed tod the socia and political upheavals that have rocked the countries. After ten years, this is just starting to improve for tens of millions of americans who are beginning to recover lost jobs, homes, savings. This is no time to start taking tens and hundreds of billions of dollars out of the pockets of main street and making inequality much worse. If the fed would not take away the punch bowl away from wall street and the wealthy, allowing them to recover virtually immediately after the crash, it shouldnt be taking away what little recovery main street is now experiencing. Thank you. [ applause ] listening to dennis reminds me of the point i made on yard sticks. If you control the yard sticks for Economic Performance you control the agenda, you control whats discussed in elections and whats reported on on npr, pbs and the networks. Dennis provided us with other yard sticks, which paint quite a different picture than the daily are drum beat punctuated by trump, npr, pbs and the news media, that were in a booming economy. We are in a booming economy for the 1 at the top. Also, notice, visualize the gluttonous profits and bonuses of wall street. The grand canyon of corporate greed. And in new york city, one out of every ten students is homeless. The Worlds Center of fi philanthropy and the New York Times reports 110,000 students are homeless. They either live in shelters or they run around trying to find a bed or a caugot with a neighbor relative. Thats a larger number than the population of albany, new york, the state capital. This is what greed and power are all about. People making 10,000, 20,000 an hour on wall street. And there are 110,000 students who are homeless. I recall, also dennis youve given me a lot of memories. When i was at law school in harvard, we had a course called credit creditors rights. It wasnt called debtors remedies. Do you see the bias . Do you see what they graduated out of law school . People saying i just want to represent creditors. They dont even have an understanding of debtors remedies, the history of debt, the crushing destabilization beyond the injustice of it. Of a debt ridden economy. Our next speakers, theyre going to be in supplementary tandem. Tom mcgarrity and reena steinzor. There are few people in this country than know more about government regulation of business. Tom mcgarrity is a leading scholar in the fields of Administrative Law and environmental law. Hes a full professor of law at the university of texas. And hes written six really good books by good publishers, which in their totality have sold less than one book on morris the cat. But then the worst is first and the best is last in a decaying culture. And these are really great books. Clear. Documented. One was the preemption war when federal bureaucracies trump local juries. Yale university press. Second, bending science, how special interest corrupts Public Health research. Harvard university press. Workers at risk, praeger. The law of Environmental Protection and reinventing rationali rationali rationality. The one i think was so necessarily a popular best seller is called freedom to harm. Freedom to harm. And you can imagine whose freedom it is and who is being harmed. And hes going to speak on regulatory activities and reena, whom im introduce, will supplement it so theyre not going to overlap. And both of them are in a group that deals with professors of progressive reform. In fact, reena was one of the founders of that. And her title is the assault on regulation and the case for it. Just so were clear here, when you get rid of beneficial government regulation, youre not getting rid of regulation. Youre just shifting regulation by government to regulation by corporations. The corporations regulate us. And the inverted example of that is the Drug Companies. They do not have prices for drugs regulated. One of the few countries in the world. The sky is the limit. Some drugs are going for 100,000 a year per patient. And because they dont have government regulation for reasonable price provisions for pharmaceuticals, its the Drug Companies who are regulating us and we have the highest drug prices in the world. By Drug Companies that have been given tax credits in the billions from the u. S. Treasury, compliments of taxpayers. Theyve been given billions of dollars of Free Research from the National Institutes of health. Free clinically tested drugs, such as azt, et cetera. And Drug Companies in their quest for even greater profits have outsourced over half of the drug production to china and india under inadequate fda regulation coming back into this country. One drug, a blood thinner, has killed at least 130 americans on the operating table coming in from china. So it isnt a matter of regulation, no regulation, it is a matter of you want to be regulated by government, that is a little bit more open, and displaceable and challengeable, accountable, so on, it is supposed to be to congress, or do you want to be regulated by giant corporations . Welcome to professor mcgarretty. Thank you for inviting me to be here. It is really an honor and a privilege. I do want to correct one thing in my bio. I am not the immediate past president of the center for progressive reform. Ryan stinger is. I was the president before her. And we did, together with sid shapiro at wake forest university, put together this organization, which im very proud of, right now. So i want to talk about market fundamentalism. Youve seen some definitions out there. My definition would include kind of five basic tenets of market fundamentalism, insuring economic liberty, that is this dualist beic idea that the only alternate beive to Economic Freedom is government, that is controlling us all. Distrust of government, of course, follows as a corollary. Protecting private property, a very strong tenet. Enforcing private contracts. Whatever they say, however unequal the Bargaining Power. And privatizing public goods. Which we talked a little bit about, but it needs more discussion. Now, in the context of government regulation, like Environmental Protection agency, Occupational Safety and health administration, im going to talk mostly about health and safety regulation. Weve had a lot of talk already about financial regulation. In the context of that sort of regulation, the market fundamentalism really comes down to a presumption against regulation. The jim buchanans of the world, public choice folks, have a hard presumption against regulation. The Chicago School i think as was mentioned earlier on have a less hard, one cant say a soft presumption, but lets just say a slightly less hard presumption against regulation. But thats really the heart of it all. And interestingly, historically, probably the most influential dwoekts of this presumption against advocate of this presumption against regulation was steve briar when he wrote a report for the American Bar Association way back in the late 1970s. The fundamental problem with this presumption against regulation is that that is not what the statutes say. They say pretty much the opposite. If there is a presumption at all in the statutes, these were enacted in response to crises, and in response to people demanding action because Economic Freedom was causing so much harm. So we have the statutes of the 1960s that ralph played a great role in getting enacted, those didnt start with the proposition of oh, we have a market failure here and we just need to fix this market failure. It was that corporations are ruining lives of people. They are killing people. Particularly in the workplace. And through environmental degradation. And we need to fix that, right . So the presumption really was more of a precautionary presumption in favor of regulation. Thats whats in our statutes. And because of that, we have had in the int tim shall didnt rim period of time, five assaults on these protects. The first assault came with the election, wem, slightly before, about 1978, as the Carter Administration was struggling with stagnation, we had stagflation, we had the first assault in the reagan administration, where we cut back into regulation, put into effect executive orders that were quite con straining on the regulatory agencies, some of which had just gotten started really. The second assault came during the gingrich congress, the 104th congress of 1996 and 1997, there, we came within one vote in the senate of enacting a massive omni bus reform that would have put all agencies under the thumb, really, of the regalartees. But that didnt happen. So in a real sense, that assault failed. The third assault came during the first six years of the bush administration. That one was a good deal more, had a great deal more success, but stumbled in the courts. As we had courts that were willing to look at the laws and interpret them to say what they clearly werent meant to say. Then came the financial meltdown. That wasnt the only crisis. There was a confluence of crises in 2008, 2009, while we were going through the 2008 elections. We had a food safety crisis. We had miners, if you recall, several horrible mining accidents. There were a number of crises there. And we had this incredible opportunity. This was the opportunity to do the new deal over again, like we did after the Great Depression. And really sadly, we blew it. It didnt happen. We decided to bail out the banks, first of all, and weve had plenty on that. So i dont need to elaborate on that. But we pulled back on the agencies. We put a fellow in charge of the office of information and Regulatory Affairs who really was trying to con strain these agencies when we had good people at the tops of these agencies wanting to do things, but having them pulled back which at one point in the white house, president obama told the epa administrator jackson, look, dont amend the ambient air Quality Standard for ozone like we said we were going to do. We got an election coming up. And what had happened in the interim of course was the 2010 election. And what happened during that 2010 election was that because we had done nothing really visibly at that point about wall street, and didnt just focus in like a laser on wall street, instead we died, the first thing is going to be not even Global Warming, we put that aside, we are going to do health care and we are going to do obama care, which needed doing, but whether it should have been the first thing we should have done, was focused on a laser on wall street, and show how regulation, or the lack of regulation, amending the regulations during the clinton administration, to let the banks free, had caused this problem, and we we needed to get back in the business of constraining banks. There was a golden opportunity there. And instead, we just bailed them out. And went on to the next thing. So Corporate America, and particularly, the think tanks, were able to refocus the national attention, and the problem suddenly wasnt wall street anymore, it was government again. And we had the tea party came in, arenaa will talk more about the tea party, and that whole movement. And finally, we now have the fifth assault. During the Trump Administration. Well i mentioned, i forgot the fourth assault. The fourth assault was that tea party, 2010. But it was very disorganized and it didnt really accomplish much in the way of deregulation. And in fact, thats when the Obama Administration finally kicked in and started doing some things. All of which now are the targets of the fifth assault, during the Trump Administration. Their very first order of business, in all of these agencies, the people that president obama put in charge, was the first thing to do, whatever it was, dont care what the benefit is, dont care what the cost is, get rid of whatever obama did. And that is in all of the agencies, thats got to be your first order of business. After that, now, we are going, we are ordering the agencies to look back and see all of the past regulations, see how many of those now, going all the way back to ralph nader, and the late 1960s we can repeal, revise, revoke. In the meantime, of course, the agencies arent promulgating any new regulations, any new protection, even though we certainly have seen the need for some additional protections. We have an executive order that says for every one regulation you put out, youve got to repeal two of them. I dont know how that works. It is a strange thing. But it really hasnt proved much of a limitation on the major agencies out there that are at least protecting health, safety and the environment, because they werent promulgating regulations anyway. So it didnt really repealing two for one didnt really matter. So i wanted to speak a little bit about the fallacies of market fundamentalism. Some of which are quite familiar. So i wont spend much time on. But a couple i want to talk about. And the first of course markets of course fail. And an ample demonstration of that all morning and in the afternoon. Privatization also fails and that doesnt work so well either, and i love what bob cutner said, we need to pull back some of that that we privatized, we need to reanalyze that and limit the scope of markets. A point i want to make that hasnt been made is that markets are imbedded in the legal system and in society. Theyre not apart from. Theyre not separate from. No, theyre very much a part of our society. Individual preferences expressed in the marketplace are not exogenous to social and political contexts. Other institutions play a large role in shaping those preferences, including families, schools, churches, the entertainment industry, mass media, advertising, in a very big way, and the marketplace itself shapes preferences. The Public Sector shapes preferences, and those are reflected in the marketplace. And the private sector, through lobbyists, legal maneuvering, shapes the legislation and discretionary exercises of public power. Powerful economic actors in the marketplace can limit human freedom, individual rights, just as effectively as government can, if not moreso. Thats something i think people understand deep down inside, but every time they hear from fox news, or the heritage foundation, the government, they forget that, or somehow it gets lost. The legal system can protect individual rights and preserve freedom from arbitrary exercises of government of power, while at the same time, great lakesi marketplace to protect consumers from swindler, workers from irresponsible employers, minorities from bigots, the environment from polluters, Vulnerable People from the consequences of unfettered marketplace power. Political action that changes the rules has a role to play in bringing about a just society because political actions shape the rules that brought about the injustices. A couple of other points i would make about the fallacies. One is that freedom and efficiency are not meta values. They dont trump other values. They are values, they are important, but there are other values like altruism, fairness, decency, mutuality, loyalty, tolerance, equality of opportunity, empathy, concern for vulnerable populations and species, and respect for future generations. These are all values. It is not, theyre not subordinated to Economic Freedom, or efficiency. Market fundamentalism is morally obtuse, i think. Its fundamental defining virtue is avarice. And you go look at, well, what, you hear the seven virtues, i googled that, the seven, theyre of christian ty, and the karj church and various other places the Catholic Church and various other place, the origin as i looked in various other places is prudentius in the 400s a. D. , but chas ty, tem perhaps, diligence, patience, kindness and humility. Avarice it turns out is one of the seven deadly vices. But that is the defining virtue of market fundamentalism. As i mentioned, market fundamentalism is as the statutes are written today, and thats the one thing they havent been able to do is undo these statutes or change these fundamental protective statutes. And market fundamentalism remains inconsistent with those statutes. And finally, it is profoundly undemocratic. And weve talked about that a bit. But limited government by definition means that elected legislators cant expand government to address social problems. By promising to reduce the role of politics in public life and expand the role of selfregulating supposedly rational markets, market fundamentalists offer a seductive path that leads from democracy to oligarchy or even authoritarianism. Karl pulaney pointed that out years ago. Nancy mclean in democracy and change, has pointed it out more recently. So what we need to do is uproot this market fundamentalism, do what we can to do that, we need to disim bed it, and that is going to take an idea infrastructure. Thats one of the reasons that reena and sid and i put together the center for progressive reform, theres good ideas out there, there is good sclip out scholarship out there, but we need to get it off the shelves and into the public, and into the people who are in power. We need compelling narratives. I think we need to shift the market fundamentalists focus on individual responsibility to a focus on corporate accountability. One way to do it. At a broader level, we need to weave the narrative around shared values of economic and physical security for all americans that is easily as compelling, i think, as the market fundamentalists narrative, that Economic Freedom is the essence of maintaining individual freedom. Finally, i want to end on a depressing note. And that is James Buchanans dream was to write a constitution that limited the power of the majority to regulate the minority, the people in economic power. He accomplished that in helping write the constitution for chile during the pinochet regime. Of course, it didnt happen in the United States. But it may not need to. As the Republican Party well knows, what is important, such an important thing, is who controls the courts. As President Trump fills the courts with activists, market fundamentalists, like neil gorsuch, and brett kavanaugh, lawyers for regulated Companies May find it easier to persuade reviewing courts that agency actions, protective agency actions, in some future administration, because it is not going to happen in this one, but protective actions are inconsistent with the authorizing statutes. Or that they are arbitrary and capriciousness, which the courts are empowered to do. At the same time, lawyers for Public Interest groups will find it more difficult to persuade courts to force agencies to fulfill their statutory responsibilities. Worse, the federal courts are likely to employ expansive definitions of property rights, and, as we heard a moment ago, corporate free speech rights, that market fundamentalists had been advocating for a long time, this expanse ive notion. Courts dominated by market fundamentalists, in their hands, the constitution may be the ultimate trump card over democratic exercises of legislative power. One line of attack that we might use is simply to challenge the legitimacy of decisions in the Supreme Court, supported by five justices, four of whom, thomas, alito, gorsuch and kavanaugh, were confirmed by senators who represent a minority of the popular vote. And actually were opposed by senators who represented a majority of the popular vote. The political situation, and this is in conclusion, the political situation for progressives today is far worse than it was in 1996, when i suggested in an article in the chicago law review that it would take one or more crises, brought on by economic or physical disasters, to inspire voters to elect a sufficient number of progressive candidates to rebuild debilitated governmental institutions. That was 1996. We had that. And it didnt happen. The tea party has taken over the Republican Party. Market fundamentalism has put us on the road to oligarchy or autocracy. There are ways to get off this road but none of them seem plausible in the current political environment where too many voters are swayed by trumpian appeals to fear and bigotry. It will probably take another confluence of crises to demonstrate once again that market fundamentalism is a deeply flawed ideology that causes far more harm than the modest benefits that it provides to society. As the Trump Administrations demolition crew succeeds in its efforts to deconstruct the administrative state, that was Steve Bannons words, we should be preparing to use those crises that are inevitable, that are going to follow, as teaching moments to persuade the American Public that excessive Economic Freedom is freedom to harm. Thank you. Thank you very much, tom. Thank you very much. I want to point out that the second assault on regulation, which was the socalled Regulatory Reform drive, the leader against that who won the battle is joan claybrook. Wheres joan . She led the fight in the congress, representing citizen groups, Public Citizens, got the labor unions more aggressive against it, and it was defeated. That would have been a real disaster. A very clever procedural be obstruction, socalled reform. In addition to hits substantive diminishment of Consumer Health and safety rights. Tom, you might be interested, if you dont know already, in the work of edgar kahn who is, as you know, a professor at ugc law school, but he was the dean of Antioch Law School years ago, he developed these three economy, the market economy, the public goods economy, and then the core household economy, the trillions of dollars that people in households, raising children, et cetera, taking care of people, in terms of the values that you listed and have been subordinated by the value of avarice. Or greed. Our next speaker again on the same subject, the assault on regulation, is renus steinsor, she is a professor at the university of Maryland School of law, and has taught Administrative Law, food safety law and advanced courses on the regulatory system, as well as legal analysis and writing contracts. She is the author of why not jail for corporate crooks . Why not jail. She also wrote corporate disasters, malfeasance and in action. She is a founder and former president and member scholar of the center for progressive reform, in which professor garretty played a prominent role as well. From 1987, to 1993, she practiced law at spiegle mcdermott, a washington, d. C. Law firm, representing city, county, states and public agencies in the environment and energy communication, transportation fields. So she didnt work at a Corporate Law firm. Professor . I also appreciate being invited. I have to tell you that nine times out of ten, i find myself at some conservative meeting where there are one or two people who are representing the whackos, as President Trump would say, and i always introduce myself by saying that im going to be the skunk at the picnic, and they better duck before i spray them. But today, i am going to actually try and be upbeat and peppy. At least in the beginning. Half a century ago, as tom was discussing, Congress Passed a torrent, a torrent of legislation to protect Public Health, worker and consumer safety, and the environment. Of course, ralph was there, as were the disaffected young people in the wake of vietnam, the vietnam war, and watergate. And all those laws which were in their own way notable, as notable in some ways as the great society, and the new deal, they never had a name. The period never had a name. Why . Because there wasnt a single president who announced them as an agenda. Instead, they were passed by congress and then handed off to the executive branch, and there were so many parents and foster parents and stepparents in the room, that they never had a name, and i am going to call them the precautionary era. In my mind, we dont spend enough time conceiving for people that that happened, and that for the most part, these laws are still on the books, the infrastructure is there, they havent been gutted in any significant respect. And theyve gone perhaps dormant now, because we are not updating them. Were not writing regulations. And were most important of all not enforcing them. But there they stay. And theres something to be proud of. They are there for a president to use when more Progressive Forces take back the white house. So, its true that corporations have fought these laws tooth and nail. In the beginning, i dont think they ran to congress and spoke out against them. They were instead playing an inside game. And they started very early to go to the white house. There were various councils established, of businessmen, to make sure that the Agency Leadership didnt get out of control. That was later institutionalized in the office of information and Regulatory Affairs, which ironically now plays a pretty small role from what i can tell, because the agency heads themselves, and this is really one of the first times weve seen this so across the board, the agency heads themselves dont believe in the missions of the agencies. But industry sort of tried to do subverted sabotage. And i will talk about those tactics in a minute. But it is worth saying that things are much better than they have been. We have much cleaner air and water. We have, for the most part, they may be overpriced, but Prescription Drug system that works largely, even though it depends on foreign imports, which come from unregulated countries. We have a start on making lending fair through the cfpb, even though it is now dormant. So things are better than they were before all these things passed. And thats the end of my peppy talk. So i will sit down. No. But as rob said, as other people discussed, today, american corporations spend 2. 6 billion a year on lobbying expenditures. Thats about 4. 6 million for every member of congress. With that amount of money, you could spend a phalanx of goodlooking young lobbyists of either sex to sit in the lobby of an office of a member of congress and literally follow the person around, every time he or she is in washington, which is less and less often in these days. There are ten to one spending on Climate Change legislation, which because now, i will say it now, is by far the most urgent problem that we face. Its, for all the human pain and suffering that i acknowledge that comes from financial problems, Climate Change, is going to do us in at the rate were going, and i spent a lot of time apologizing to my children who are now in their 20s, because they are going to reap the whirlwind of this, and if that wasnt clear before, it should be clear after this most recent report from the ipcc. So ten to one spending on that. What are the tactics that are used . Because after my peppy talk, and now my depressing talk, i am going to be controversial. So i want to rush through the depressing part, since weve had so much of that today. The subtle underground sabotage of these agencies, which has persisted for the last 20 years, and it disappoints me to say, because he probably was the best president in my lifetime, i wasnt alive for franklin roosevelt, and i cant forgive Lyndon Johnson for vietnam. I just cant bring myself to do it. I try. We had barack obama who ignored government. He did not defend his government. He did not articulate to people why the government was playing a very Important Role in their lives. And this was in retrospect, as we take an objective look at his legacy, really was the most disappointing in some ways, things he did. He did not educate people about why they needed protection, and why you all these laws were so important. And what ended up happening was, the first tactic was very successful, thats the, lets get the government down to the size where i can drag them in the bathroom, drag it in the bathroom, and drown it in the bathtub, on the agencies, most of them are operating at the same level of funding as they had in the mid 1980s before so many laws were passed and the population was several tens of millions smaller than it is today, starve them. Second, bash bureaucrats. I spend a lot of time, of course, as tom does too, around young people. Every year i teach Administrative Law, and i ask my class how many of you would like to work for the government . And then i have to really lean over and hear to see the two or three hands that go up. This is a terrible problem. And why is that . Because they watch bureaucrats being denigrated, attacked, demeaned, having their pay cut, their pay cuts, cut, all designed to make government seem as if it is the enemy, not the protection for the American People. And weve gotten to the point now where congressmen literally sit, and if you havent seen this, i refer you to chafitz, if thats how you can pronounce his name, i can think of other names but i wont get into them because we are being filmed, yelling at Gina Mccarthy, the administrator of epa, literally shouting at the top of his lungs at her, not letting her finish a sentence, the topic ironically was the water supply in flint, which is a terrible tragedy, but if i remember correctly, it was a republican governor who was in charge of the state at that point, and municipal officials who were ultimately prosecuted criminally for doing, for poisoning those children, which did happen, but Gina Mccarthy could have done more, to be sure, but does not deserve to be screamed at, as if, well, i will move on. The third tactic is crosscutting statutes that engender paralysis by analysis. And weve seen this across the board. My friend in the Financial Sector have been running around, waving their arms about the Court Decision that requires financial agencies under doddfrank to do costbenefit analysis of regulations, and we sort of smirk to our ourselves a little bit, because we have been living in that world for 20 or 30 years, and all the stuff that goes on with cost benefit analysis, at its best, it is churning out hundreds of thousands of pages of paper per rule that dont be make much sense and dont make much difference, because the rules are killed for political reason, and at its worst, it is impressing in the whole idea structure that you have to monetize life. The going rate now is about 10 million. But it is discounted. So if you get exposed to a chemical today, you dont get cancer for 20 years, our question is, how much you have to invest today to end up with the 10 million in 20 years, think to yourself, what is going to happen with Climate Change, the need to protect future generations is going to be discounted to zero, before you have even taken out your Texas Instruments calculator, that if you had a gun to my head, i couldnt use. So thats where we are. And of course, the election of donald trump, tom covered that, so im not going to backtrack, other than to say that when trump was first elected, he mounted a blitzkrieg, i actually think, i try to imagine, put myself in the place of all of the lobbyists on k street, and i think they were probably sitting in their conference rooms, the day after the election, pinching themselves, they didnt know what to do. They didnt have an agenda for this whole thing. But they rapidly recovered, jumped to their feet, and started organizing a campaign that three months after congress convened, three or four months, it was certainly by may, 14 rules had been killed with barely a word of debate on the floor under the congressional review be act. Now, things have slowed down since then. There have been a lot of sloppy efforts to revoke rules that have failed in the courts because we still do have some good judges. But it is an example of how absolutely determined all these folks were. So now, let me get a little controversial. I think, as i listen to us today, that were very corporation focused. And i want to be the first to admit that in close to 45 years in washington, that is all ive thought about, too. Corporations. They suck. Oh, excuse me. Theyre bad. Theyre disgusting. And theyre the cause of all of our problems. And i understand why we all feel that way. But i dont think it is the solution to figuring out what is going on with the American People today. It is not the only solution. Think about the kinds of things that happen, that corporations cant possibly support. Theyre not in favor of failing to raise the debt ceiling. Theyre not in favor of shutting down the government. Theyre be probably not even that enthusiastic about sabotaging the Affordable Care act, big corporations are not, because without that kind of coverage, they have restless employees, small businesses, undoubtedly in favor of that, not so clear that big ones are. And attacking the Civil Service is amusing perhaps, but when they want to get a permit through, or they want to get a license done, theyre not in favor of dealing with anyone who cant find another job absolutely at all. Theyre not in favor of that. They want the government, on some level, for those things, to work. Not saying theyre not antiregulation. Just saying that some of things that are happening that are the most damaging are not what they want. So Something Else must be going on. And if we take a careful look at this, what we find are that the biggest chunks of voters in the Republican Party today are the tea party, thats true, although its a wing that is amorphous. It is not as well organized as it may think it is. Theres certainly the Freedom Caucus in the house. There are races where there are selfidentified Tea Party People running. And what they believe is that it really isnt necessary to help Vulnerable People. Most Tea Party Members are white. Most of them are in their late 50s, early 60s. They are relatively affluent. And they have no sympathy for people of color, immigrants, the disabled, and other vulnerable groups. No sympathy at all. And they say that. I mean they announce that. They believe that they deserve medicare, but they dont think that anyone else deserves a hand from the government, because they didnt quoteunquote earn it. And one of the most seditious things is this conveys the children of everyone who is not a child of a Tea Party Member to having no equal possibility, because the tea party also believes in very small government, including at the be local level, so there is no hope of education, there is no hope of even head start, something as basic as that. The second major block that is part of the Republican Party and is in fact much better organized than the tea party, and that is ignored for the most part by all of us, is white evangelicals. They voted 81 for President Trump. They represent 30 of the membership of the Republican Party today. Why do i worry about them . Because theyre not just concerned about abortion and cultural issues like that. Their ideas of what should be happening in the country have moved far beyond that. Because they have supported, and been so enthusiastic about the Republican Party, for so long, there is even a group of them who are actually the favorites of donald trump. They are called the prosperity gospel. And what they say is, if you are a devout christian, and you worship in the way that the Evangelical Church tells you, you will be rich, because god will reward you on this earth. And he has a point in one of these pastors who is one of the very few women visible in this movement to be the head of his advisory council. Be members of the white evangelical community and i say that very clearly, because im not talking about africanamerican or hispanic evangelicals who are a very different group. Members of this movement believe in small government, they believe that if people need a hand, or need protection, the church will provide it, and most importantly, they believe we dont have to do a single thing about Climate Change, because they dont believe it is happening. But even if it is, even if they can see that the hurricanes are getting worse, they write that off as a sign that the end of days are imminent. And im not being flippant or sarcastic at all. I have spent a lot of time reading about all of this. And i can cite chapter and verse, if anybody is interested. The final group, which i think is very important for us to Pay Attention to, is socalled sovereign citizens. This is the group that took over the wildlife refuge and over social media organized hundreds of their followers to bring their guns to this facility, and proceeded to occupy it for 41 days. Now, why are they important . First of all, the cops could do nothing because they did not want to repeat waco. I do want to mention that the people that bombed oklahoma city, in oklahoma city, the murrah building, one of them was a selfidentified sovereign citizen. So this level of violence from a relatively small group of people, when the police seemed to be so nervous about interfering with them, is a threat in the west, which is red country, but the message that it sends is, that if you are an employee of the department of interior, which is, who are responsible for 47 of the land in the west, where we have all sorts of things going on, national parks, wildlife refuges, a whole series of things, you cannot be comfortable that you will not find yourself confronting people who believe that you cannot interfere on any basis with their right to be armed and their right to do as they please. Now, all of this is to say that i think we need to broaden our perspective, understand more, in a more sophisticated way, who the bodies are that are voting for far right candidates, especially because we have this constitutional problem that tom mentioned, he pointed out, very good point, that most of the people on the Supreme Court were going to to, or the conservative wing now, was confirmed by senators who did not represent most of the country. And that is our problem. Dare we open up the constitution . No. This is why weve had a spate of books talking about whether american democracy can survive. And unless we pull the camera back, and look at the ideologies that have come up, or have been pushed down, because certainly the Koch Brothers among other, the skay foundation, they have all funded these groups in the past, unless we develop a more sweeping perspective on what our problem is, we wont be equipped to deal with it. So thank you very much. Thank you very much, professor steinzor. We are talking again about the voters and about congress as a fulcrum for change. Our next speaker is damon silvers, who is the director of policy for the aflcio, the Largest Labor federation in the country, by far, and hes had a lot of experience with advisory committees to the treasury, and working on the congressional oversight panel, the collapse of wall street in 2008 and 09, which is why his topic is within his purview, although he could talk about the need for raising the minimum wage, and Labor Union Laws that need to be reformed, like tafthartley. But today, he is going to speak on the subject of the Securities Exchange commission, and the inadequacy of financial regulation. Damon . Thank you, ralph. And good afternoon. It is a pleasure to be here. It is apropo that his introduction, ralph mentioned the minimum wage. One. Reasons i wanted to be sure to be here, because a few years ago, i heard from ralph nader, who was very insistent to me, that what we had to do, as a Labor Movement, was demand a much higher minimum wage. And i confess that this was before anybody had ever heard of a fight for 15. And so i sort of took it as a lesson from that experience, my memory of that experience, that it is a good idea to hang around ralph a little bit, he sometimes has good ideas. So im going to take the opportunity that has been offered me to speak about the question of market fundamentalism through the lens in part of securities regulation and in part of history. And im going to try to, in the course of doing so, to make an argument, for a very specific way of understanding the threat that market fundamentalism offers, poses, to the future of prosperity of the United States and the globe. Since a number of people who have spoken before me have talked about sort of larger political dynamics, i just want to point something out to begin with, about market fundamentalism that i think is important to remember. Because a number of people have pointed out, or have asked, including some of the prior speakers, how is it, how is it that you see, in the course of modern history, so often, market fundamentalists or libertarians, people who seem to believe that there should be a minimalist state, how is it that they end up being associated with political constructs like the pinochet in chile that is not that, and they torture and murders its opponents like an absolute monarch ny is not a minimalist state, it doesnt appear to be libertarian, so why do they seem to have libertarian advisers . And there is a reason for this. This is the paradox of libertarianism. And i think it is worth saying at this particular moment. Because it is explains a lot of things that otherwise go on, in washington, that you have to put down to simple bribery, but which are not, which are actually the product of ideas. So lets go, lets go through this paradox for just a second. And then i am going to turn to my main subject. So libertarian ideas, or market fundamentalist ideas generally have underneath them an older idea, an older idea of natural rights. The idea that, and in particular, the idea of natural property rights, that there is something called the ownership of property which precedes politics, and many people think this way, see it as somehow tied to religion. It is an absolute claim. And then their libertarianism comes from their belief that if you own property, you are entitled to do anything you wish with it, regardless of what the impact on others is. Now, if you believe that, you start out as a libertarian. You start out as being someone convinced of each of our ability to sort of do whatever we wish with our own property, subject to very minimal limits of the kind that john might have laid down. You know, enforce contracts, no violence, that sort of thing. The problem with that regime, as has been shown over and over again in human history, is that it produces very quickly accumulations of wealth and power in private hands that are really inconsistent with any ordinary understanding of freedom. That very quickly, those who have lots of property, end up with all the power, and all the freedom, and those who have little property, end up with no power and no freedom. In that regime, if you have a democracy, which is of course a value that we all embrace, the democracy will be used to seek to right those power imbalances. People will vote to elect, eventually, sometimes they will be fooled for a while, but eventually, they will vote to elect people who will seek to right that power imbalance. There have been a number of favorable references in this meeting today, to the new deal, to the roosevelt administration, to the great society, to the Affordable Care act, these are all examples of what im talking about. And those exercises involve essentially constraining natural property rights. Now, if you really believe that there is some absolute right to property, independent of democracy, independent of what my Property Ownership might do to you, if you really believe that, then a democratic government that seeks to right imbalances in private power is stepping on my fundamental rights. And if thats what you believe, then you believe in your entitlement to use violence to stop the democratic government from doing so. And if you follow what im saying, youve gotten yourself to the president ial palace in santiago, chile, in 1973. And to the use of tanks and airplanes to murder democraticcally elected officials in the name of property rights. I think we should all understand that thats the game. Not everyone on that side of the game is prepared to go that far, but thats the game. To bring it a little closer to home, than is the beginning of my discourse, we in the United States have lived through a number of different regimes in relation to market fundamentalism, a number of different order, political orders. And it is really quite remarkable that for reasons having nothing to do with this, were gathered in a building that is the physical embodiment of the first order. This is the garn carnegie institution, for those watching on tv we are in the carnegie institution, which is a lovely Humane Organization which does many good works here in washington. But it was not always thus. This building was paid for by the vast wealth accumulated by Andrew Carnegie who was essentially the monopoly owner of the u. S. Steel industry in the late 19th century, at a time when market fundamentalism was at a high water mark. This is the era, as we are talking about the Supreme Court, this is the era of the lockner court. This is the era in which the constitution of the United States was interpreted to say that the democratcally elected government of the United States could not regulate the economy, even to the modest effort of prohibiting child labor. This building was paid for by money earned in substantial part through the use of state power, to ensure that Andrew Carnegie would not have to pay a living wage. And what do i mean by state power . I mean the deployment of the United States army in the steel towns outside of pittsburgh, to fire artillery shells at people who wanted a higher wage. Now, that is the living embodiment and im talking about the homestead strike by the way for people who want a footnote, that is the living embodiment of where market fundamentalism ends up in american history. That era was replaced by another era in american history. The era in which this building became the home of a lot of very humane enlightened efforts to improve science and Foreign Policy and so forth, that era was the air in which market fundamentalism was challenged fundamentally at every level. Pitcally, socially and intellectually and legally. In the new deal era, the fundamental critique, the fundamental thing that was said in this country, by both ordinary people, and intellectuals, and lawyers, was that there is no such thing as a market separate and independent from society. Markets are the product of political social decisions. There are rules to markets, markets come into being through the creation of those rules. This is the fundamental insight of the law of the legal School Called legal realism. And it is the fundamental idea that underlay the creation of our system of regulating our Financial Markets, and our securities laws. Before the new deal, there was kind of this assumption that you could do whatever you wanted in the securities laws. And that in some sense, people, and they were always men, like Andrew Carnegie, could use the Securities Markets to raise money from the public, for whatever purposes they wanted, they could tell people, they could tell people the truth, or lies, let the buyer beware. The new deal, and the concept of legal realism, and law, and the fundamental idea that we regulate markets, created a different system in this country. A system which has been under sustained attack during most of our lifetimes, but which is the underlying system of government, of modern government in the United States. Now, i think it is worth noting that that system, that system that market fundamentalism and said we have to make intentional choices as a Democratic Society how we will structure and govern our markets, and let me just say and be clear. Im not talking about a command economy. Im talking about the fact that there is no such thing as a market apart from these types of decisions. Im saying that this was a this is why they called it legal realism. Its a recognition of reality. Its not a question of should we interfere with the market because thats not how the world works. Its the Public Policy and its how do we build Public Markets and the notion that there is something over here called the government and something over here called the market and theyre separate and government may want to interfere with the market, but thats not a good idea and its still alive from start to finish. Its like saying, well, how do we feel about gravity . Do you think gravity is a good idea . Should we have gravity or not . Right . Talking about the question, should we have government interfere with markets is like talking about should we have gravity . Governments always interfere with markets. Markets dont exist without government and in certain respects, vice versa. And by the way, anyone who disagrees with that, ask them how you feel whether the scale was any good and literally a Vegetable Market and whether you didnt know whether you took your credit card payment what would happen next and whether theyd steal your credit card number or not and when you handed somebody a 10 bill and asked them for, you know, a couple of pounds of apples whether they would give you the apples back and take your 10 bill and walk away. You dont think about those things when you go to a market because they have the government and thats the only reason you dont think about those things and now, so you can just imagine for a moment, no government and no market. They are completely intertwined. When we are here as the guest of Public Citizen. Public citizen came into being during the crisis and during the first kind of political crisis of the new deal order, and the return and the beginnings of the return of market fundamentalism. It should be clear in the United States of the 1950s and the 1960s market fundamentalism was an extremist idea and the it was an idea that you would hear the society, perhaps, and it was an idea you would hear at a very, very conservative academic setting and it was not a mainstream idea and Neither Political Party embraced it and you could not find a caucus in congress that supported it. Market fundamentalism returned into american politics in the late 1960s and 1970s. People talk about the lewispowell memo and there was a conscious political effort to resurrect radical rightwing economic ideas during this period, in part and in response to the fact that new dealoriented ideas appear to have taken over both Political Parties during that period. But the new deal order that took order and the new deal order that appeared to have taken all of the oxygen out of the room was want the fully progressive new deal order of the new deal order itself, but it was a deal that had evolved over time and had alliances over big business, big government, big labor and it was quite susceptible. That order was quite susceptible to critiques that it wasnt serving the Public Interest. What was going on at that time were debates about could we improve that order . Meanwhile, there were a group of people with a lot of money, the Koch Brothers among them, by the way, that long ago conspireing to destroy it. I once heard andrew young say about this period that as economic adviser to Martin Luther king, the man andrew young was the man responsible for trying to persuade southern Business Leaders that they should not support violent resistance to integration, that thats not good for business, and so he would go around talking to Business Leaders and he said years later that what he and dr. King were trying to do was to open the door for africanamericans to the new deal order. But what they did not realize when they were trying to get that door open was that meanwhile, someone else was taking the house apart so when they got through the door there was nothing there. He was reflecting on that when he was talking about the financi financial crisis of 2008 and the africanamerican home ownership, and the false promise of financialization of the africanamerican community. Now the return of market fundamentalism occurred both Political Parties and was so successful and integrated so neatly than what was happening in the world in the 1970s and 1980s that by the 1990s, the kind of fantasy notions of Public Policy, economics and finance that i was just describing. The notion that there was something called the market independent of public life. The notion that markets are the best way of allocating resources in every circumstance, these notions had become as totally widespread as the new deal ideas had been in the 1960s and 1970s, but the events of 2008 2007 and 2008, the financial crisis and the subsequent economic crisis revealed that truly, the emperor, in this case, the emperor of market fundamentalism had no clothes. That it simply wasnt true. Markets were not efficient and the markets were not independent of government. The most, quote, marketfriendly institutions and the United States had major financials institutions were actually completely dependent on government for the various survival. What does history teach us . Is not that is not that there is something called a market and whether its a Financial Market or a labor market and the task of policymakers is to clean up the mess associated with the edges of it. Thats the wrong lesson. Too many progressives in the United States over the last 30 years have fundamentally had that paradigm of policy making in mind. Markets are efficient, but they create inequality and lets clean it up on the back end and as musicians say, lets fix it in the mix. Lets make a mess and lets fix it over here. Thats not the right way to think about this problem. The task that confronts policymakers and ill speak about this in the context of securities regulation and the tax that confronts policymakers is how to shape markets and to what end . It is not how to clean up externalities in the back end and it is how to shape markets and to what end. The progressive paradigm of redistribution and regulation is simply not enough, and its particularly not enough when we face the challenges that we face both on the national and global level. When we think about challenges like the rising degree of economic inequality in the country, the fact that 10 of the population seems to capture all of the Wealth Creation. The challenge of Climate Change. The challenge of maintaining a broadbased, middle Class Society in a world in which there are many other powers and many of them are growing, that it is simply not enough. We need to think about how to shape markets with a strategy for longterm Wealth Creation for all americans and for that matter, for all of the worlds population. Now nowhere is this more important than in securities regulation because securities regulation is about the regulation of Capital Markets that allocate the resources of the of the United States and of the global economy. Thats what Capital Markets do. They allocate resources and they allocate resources on a huge scale. Now today we have we have, in my view, a weakened system of securities regulation in particular. Our Bank Regulatory system is somewhat strengthened as a result of the post2008 system and the doddfrank act and the actions of wise regulators following dodd frank, but now that is being weakened by the Trump Administration, but on the securities side, major problems in securities regulation have gone unaddressed now for decades and they have created two types of fundamental problems that go toward this question of shaping markets and they have consequences not just for the Securities Markets and for the fairness with which investors are treated in those market, but they have consequences for the health of our economy and for the health of our society because so much is being allocated through those markets and because we consistently try to allocate through those markets to make decisions through the Securities Markets as a society that we should never make, and ill just give one example. For 30 years, we have tried unsuccessfully to get Infrastructure Investment made through the Securities Markets. The consequence of that 30year decision is that weve fallen from the worlds premiere nation in terms of the strength, sophistication and infrastructure to somewhere in the second rank. When we did it the right way by spending public dollars on public good, right . We led the world and the moment we decided that private Securities Markets was the way to fund our roads and our bridges and our telecoms and aspects of our Telecom System and the aspects of our electrical grid that prog reere had previously done so through the public provision. Our world leadership and all of these things collapsed. Now, there are aspects of Asset Allocation in our economy that should never be allocated to the Securities Markets, but those that are and we are making two very fundamental mistakes and we are allowing private actors to essentially bleed our Capital Stock to their benefit as a result of these two decisions and theyre somewhat technical in the way theyre defined, but they are not technical in their outcome. So the first problem, the first problem is the set of issues that the author Michael Lewis has addressed on a number of occasions with the Securities Trading markets. We have allowed through technology privileged actors who have more money, more mathematicians to game the daily workings of our Securities Markets. They do so through trading pools that are opaque called dark pools. They do so by literally putting their computers in front of yours and mine through something called colocation which is literally taking a computer and paying the exchange to put it closer to the exchanges computer than you or my brokers computer is. These processes taken as a whole has fundamentally tilted the markets all, but the most formidable institutions and a fundamentally undone the promise of the 1933 and 1934 securities laws that we would have a level Playing Field for all investors. Nobody believes we have a level Playing Field for all investors in todays Securities Markets, and the sec has allowed this to happen since the adoption of something reg mms in the early 2000s, and it should have been fixed a long time ago and the consequence is to make our markets into a rigged casino rather than a source of investment. The second problem is the problem of private equity and hedge funds. The problem of private equity and hedge funds is that we have changed the regulatory system since the 1980s to incentivize leveraged investing. Leveraged investing is well known by anybody with a firstyear course of finance. You can always jack up your apparent returns by taking your investment and borrowing against it, but when you do, you jack up the risk. Youre not really creating value by doing that. You are simply adding both risk and reward at the same time. The problem is its asymmetrical meaning that the Equity Investor gets the upside, but not the down side when the risk finally materializes. Who gets the down side . All of us. The people who work for the companies that get leveraged up. All of us who live and depend on the overall economy and financial system. Something like this occurred in the large scale in the housing markets. The challenge for securities regulation today and it has been an open challenge at least since 2006 and more and in reality, since the late 80s when the leveraged buyouts became visible is three things and here im going to close because ralph is getting the cane out. Its three things. But i hope youll follow as i come to the three things and the whole thing is about happeneding that markets are not fundamental. They are created. We had Securities Markets that were designed to create Real Investment in the new deal era and we substituted the ones that were designed to encourage speculation and insider gains. So there are three things. One is the level Playing Field in the trading markets themselves. The second is Sustainable Finance for actual investment in real companies, not, quote, capital formation. Capital formation just means gathering up money for whatever purpose youre going to use that money for. Actual investment and part of that story is what i just said about leverage and part of it was its work on the use of leverage to extract money at the back end and the use of power to pull the money out on the other side through stock dividends and. And the final point growing in accordance every day is to get actual transparency around the key problems facing our public corporations and our economy that are very large scale, but where all of the data is secret. What im talking about is Climate Change, political spending, Human Capital and Systemic Risk which comes back to 2008. These issues are opaque in our Securities Markets and yet they are dominant and they will become more dominant. Not dominant in terms of social justice and dominant in terms of corporate performance, and markets, even sophisticated markets are designed for purposes and in an age of globalization and in the age of emerging market powers and strategic actors like china and russia, to pretend that market design is neutral and to pretend that someone is called a market separate and aside from politics ask its all about letting it find its own level. That is to choose as a society and perhaps as a planet to be on the menu rather than to be at the table. Thank you so much. [ applause ] thank you, damon. He gave the example of chile and the extension of natural rights and property in our country was slavery. They turned human beings into property, so thats what happens when you dont have boundaries to the commercial instinct which every major religion has warned us not to give too much power to, the merchant class knows no boundaries all of the way to slavery as property. Because were running late and well switch lori wallick to be next and lori speaks very fast and unfortunately, we are quite a bit late, but shes the director of Public Citizens global trade watch. Youve probably seen her and heard her on television and radio. For over a quarter century, shes been up on capitol hill battling over nafta and she was named to be politicos 50 list of thinkers, doers and visionaries changing american politics in 2016 for her leadership in the Transpacific Partnership debate and shes had experience with the trade issues in other countries and testified in foreign parliaments and resorted to the courts and other agencies. Shell explain why its not free trade. Lori . [ applause ] ralph is tall. I am not. Thank you, ralph, for organizing this and for inviting me, and i will be short. Not only in stature, but how much time i take, but i will start by saying that the story of the hijack of socalled trade agreements could be exhibit number one of the market fundamentalism theme that todays conference is exploring. Todays socalled trade agreements have very little to do with trade as damon and our friends in the Labor Movement and our friends in the Environmental Movement and our friends in the Family Fun Movement and our friends in the Consumer Movement and basically everyone who is in everything, but moving things can tell you and all of us that have fought for and carry about is what these agreements are now largely about and the fundamental myth behind this is one that has been propagated with the very clever branding campaign by largely u. S. Companies, but in conjunction with the Companies Based in europe and based in japan and other parts of the world and just step back a little bit. The u. S. Constitution, the framers were very worried about the notion of trade being hijacked by foreign interests. As it turns out, that was not necessarily the focus because domestic interests have done a hell of a job in causing antiPublic Interest havoc that the founders were concerned about in framing article 1 of the constitution which intentionally if you go back and actually read some of the history of the writing was set up intentionally so that congress, the body of the house because these arent treaties and the house that have to stand election every two years have to vote and congress has exclusive authority overseeing the terms of trade and the idea was to keep the king, and the president , and you know, with favor with foreign interests would get bought off and so jump to the future, and you have a set of factors in the 1970s part of which includes Richard Nixon, a font of things undemocratic coming up with the mechanism to basically delegate congress checks and balances into a mechanism that literally created hundreds of official u. S. Trade advisers who have a privileged seat at the table in writing these policies, into which 20 lawsuits by Public Citizen to environmentalists and one consumer group. So we have seen trade agreements basically used with delivery mechanism for the most crass notion of market fundamentalism and so is the brand free trade, something that all smart people must be for. Trade, its a good thing. The result that we have gotten is something that is equivalent to a slow motion cue dethat, and the policies that put people on the planet first that emerge when people have the rights to make the decisions to govern their own affairs. So we have socalled trade agreements, myth number one that our free trade, yet all of our modern trade agreements have classic rentseeking protectionism at their heart. They all have chapters that explicitly require the signatory governments to provide monopoly rentseeking instruments to pharmaceutical and seed firms with 20year and now with the latest round of a 20year plus exclusivities through requiring governments to give patents and patents on life forms and patents on seeds so that we have a scenario where the World Trade Organization became the ven where you indians ghanian era constitution ban on patenting life forms and seeds get challenge said as a trade barrier and the constitutional provisional aimed at ensuring very impoverished people in the country have access to food and mediciny about comes characterized through the switcheroo of market fundamentalism, and becoming a trade barrier, except wouldnt a monopoly patent license given by government to one special interest to seek rents be the trade barrier and not providing that to the special interests, and you had to change those terms in this constitution. It goes all of the way to the level of constitution. The trade agreements are packed with these provisions that have nothing to do with trade. So having listened to damon, some of the biggest financial deregulatory moves having been made during the clinton era were actually also put in place in agreement at the wto called the Financial Services agreement. Imagine peoples shock as going through the schedule of our socalled trade commitments we find a reference to the glass steagall. Trade is the fire wall that were put in place to avoid financial crises unrelated to trade and has nothing to do with physical things crossing borders and removing on them. There is an encyclopedia of these sorts of extreme market fundamentalist ideas which are market fundamentalist given the ip rights and its the brand. It is a brand. So where we are in this fight is after the transformation of the trade agreements that occurred in the early 90s where there was a creepin market fundamentalism in agreements like the u. S. Canada agreement which ralph was one the first people in the u. S. To realize was not about trade. He got with the citizens movements in canada to warn all of this nontrade garbage had been stuffed into the agreement. Since then, weve seen on. I dont know if you call it the high watermark or the low watermark of the traps formation that started with nafta, the north American Free trade agreement that went into effect, in 1994 and the trade of 1995, cutting border taxes and quotas and limit as to how much stuff we could sell and became the delivery mechanisms for what people frequently describe as the neoliberal agenda and its not market fundamentalism and the neoliberal agenda and theyre good at branding if nothing else includes the rentspeaking protections on intellectual property, and things that the Cato Institute figured they should never be in a trade agreement. We have something that modeled it. Unfortuna unfortunately other countries took on this model. In europe they call it economic agreements, and we have heard of trade and sftment partnership agreements. There was the one, tpp, that could not get a majority in congress a year after it was signed and was a molder in court that donald trump ceremoniously buried while declaring he had killed it, which it was not and there was the trade and investment and all of these are species of the same critter that nafta hatched, and the outcomes of it over 25 years and the devastating impact on peoples lives and the repeated sneak attack and different cherished policies and concepts has started around the world to awaken people to the fact that at least this piece of the socalled market fundamentalism and misbranding is flat against syrian interest and theyve done enormous amounts of work with the Environmental Movement to teach people country by country to teach outcomes with the future and the planets wellbeing are actually misbranded trade instruments which gets us to the strange moment at which we have arrived and that is that around the world there is growing pushback against this agenda. So we have seen this play out in numerous countries extracting themselves from agreements that have the infamous investor state dispute Settlement System at their hearts. Those are the rules that give foreign protkzs any rights that, tend against domestic laws and thing like has compensation that undermined the that you had to learn and its policy and not discriminatory. Heres an only ipgdz wage, the raising of minimum wage. We cant raise the wage, we have a contract with a foreign investor and the application of Environmental Impact statements reminding projects as it was with every mining project. Here also, no, u. S. Company cant have that done. Youre a nafta investor. You can get compensation and in these tribunals where decisions are made by three private sector attorneys who rotate between being a judge and Suing Companies in a way that is a dire conflict of interest over any countrys judicial system. These three private attorneys, one of which is picked by the company suing the company and under the system the companies cant sue the government, and its just one way, right . And there were unlimited damages. To the companies paid by taxpayers for any violation of what the investor claims is an inhibition of the privileges and rights that got a trade agreement. So this regime has resulted in billions being stolen from taxpayers, and given to corporations that would not have been subject to any compensation in any Domestic Court and in the case of nafta, almost 400 million has been paid out on water, timber, toxic policies and zoning policies and south africa led the way and started by withdrawing by its investor state agreements five years ago. And indonesia has joined and several of the country have joined and this does not seem like a good idea so around the world the ists pullback has started, as well some very, big, bad agreements and not the least of the Expansion Organization to earn those investor rules and get even more everreaching with an expansion that was launchedal and a decade plus of citizen activism nearly s. T. A. R. T. The in the developing world to that agenda and weve come to the situation where the largest, latest version of the nafta style, market fundamentalest and neoliberal job killing and environment crushing, wage smashing and the trancepacific Partnership Found it without a majority in Congress Despite being pushed by u. S. President s. The entire u. S. Corporate lobby and the Majority Holding Republican Leadership because the lived experience of these agreements as well as a lot of work to educate people has made these agreements mriticipolitic toxic. Unfortunately, an undue agenda by the contributions of its sponsors and mainly the republicans at the congressional level, but president s at the democratic of the democratic and republican parties has resulted in a situation where people across the country are furious about these agreements, but the president ial level democrat of the republican brand looked just the same in favor of these agreements and that was a grievous opening for donald trump to exploit and ride right into the white house. It is the case that he has been against nafta since before nafta. There was a brand of conservatives critique and hes long headed above the critique and mexico did not stick it to u. S. Workers with nafta mp nafta was made in america. It was a brain child of ronald reagan. It was negotiated by george bush, the father and signed. It was implemented by bill clinton after beating the stuffing out of the unions and his political base. It is a made in america capacity that was for workers in the u. S. And mexico. That agreement and all those that came after and the painful to immret tpp right through there last october of the election. It helped it was worth going for the crazy because because he didnt want to expose it to your kids and everybody and i only only say i spend quality time in focus groups with obama and obamatrump voters who really dislike the guy, who are not the deplorables and who actually voted for him over these classic, populist economics and trade issues, and of course, a man, being a walking, tweeting corporation himself has no notion of how one ought to fix it. However, and his notion, obviously of mexico being the problem is so wrong headed as though that would be the approach that would get the fix, interestingly, he chose as his trade representative a robert lighthighser, a very conservative republican and someone who came back from the nafta fighter in the wto who with integrity stood back and then fighting against his entire party and said why would this be in our interest . I disagree with ralph nader about laws and shouldnt we head that dommeestically . Each country shall ensure conformity of all domestic laws, and administrative procedures to the attached 800 pages and then you cant change the comma unless the signatories agree which is the clause of the wto. So the fact that Robert Lighthouser is now ustr which is the head and where i am going to close, we have seen the outcomes agreement which was released on september 30th is not the transformational replacements of the corporate rigged model that we have all demanded. Theres plenty of the old framework thats still in there, but it is fundamental different and in ways that progressives have long demanded from every past free trade agreements. Now, there is also, as well as progress, new bad stuff and theres a lot of unfinished business, however, if what our improved labor standards were made subject to swift and certain enforcement which they are not in the text that was released and its something that can be fixed, if certain other pernicious provisions removed and some of the change was made, the resulting agreement could stop some of the ongoing serious damage. Nafta does still, every week of more jobs that are good jobs being turned to sweat shop jobs being outsourced from mexico, a mexico with independent unions and jobs that paid workers more per hour than the mexican worker gets per day. Are walked into a system where companies relocate to pay workers less and they come become to sell the products here because the mexican workers havent made enough to afford what they make. Were talking 1. 50 wages and wages in mexico are lower today in real terms than they were before nafta. Theyre the level of coastal china. So if a revisited nafta which does not get the new name, and no one should close whatever new brand, and it is nafta 2. 0, but if those gaps are bridged it could help stop the ongoing damage and the most important thick and where i will close is extracted from nafta is almost all of the investor state dispute Settlement System and that is something for which people who are fighting against market fundamentalism should celebrate. Whatever happens with the final, with the final of the deal and i, myself hope that it could be to the point where its worth implementing without stopping the ongoing damage to peoples lives and thats in the u. S. , mexico and canada under nafta now with the attacks and with more jobs from good jobs to bad jobs and with more people in mexico paid so little they cant afford the basic necessities working very hard at modern plants just like their counterpart in the u. S. That amoral situation must be countered. So maybe we will get there. The fight will be in 2019 in congress, but what we know today is that the isds system has largely been whacked and we should celebrate that and we should build from that, because we still have a long fight to get the progressive model of treatment and even if what ends up as nafta 2. 0 and the final deal supporting. We have a long way to go to get the progressive model and the market fundamentalism of the old model and puts people in the planet first. Thank you. [ applause ] this is what happens when lori reads the fine print of the agreements which no one in congress ever did of nafta and the wto. Helpeds and hundreds of pages showing the true impact is to subordinate labor and Environment Consumer and democratic procedures and the imperative trade and thats the agenda. The focus is always on tariffs and quotas. Thats very much of a distraction compared to the real damage that these pulled down trade agreements do on countries that have Higher Standards pulling down the countries that have lower standards and thats the agenda of Global Corporations. By the way, you want to get more information on this global trade watch. Orc rg. It is very helpful because this turnaround that lori talked about started with people back home protesting in the communities and the whole industries shipped to china and mexico. They all started with the focus on congress and the turnaround in congress is what blocked the Transpacific Partnership until the 2016 election and trump withdrew from it. Our next speaker is joel rogers. You can spent half a day talking about this academic professor ph. D in the university of wisconsin now heading the center on wisconsin strategy, a National Think and due tank to promote highrisk solutions all over the country and he has applied two statements that i always speak about. Mark di cicero described it as in power, democratic participation in power and the 14th century ming dynasty philosopher who said to know and not to do is not to know, and hes supplied that in his handson work with groups all over the country, and emerge as one of the main challengers, if not the challenger to alec and the notorious partnership between corporate lobbyists and corporate state legislatures funded by the Koch Brothers and hes also threatened a huge amount of material and books and artic eshl article, and without further ado, joel rogers. [ applause ] so, hi, everybody. Its getting late in the day and were running behind. Im going to try to be relatively brief in the interest of getting some discussion if theres still time left after the next few speakers and im very pleased and aided in my brevity to follow Tom Mcgarrity and damon earlier as well as lori, of course, because well, youll see why, i first met ralph, i think in the early 90s and clinton was already in. Nafta was on the way to getting sinned and it was ralph who first pressed me, the powell memorandum which i, much to my shame, had never read before the powell memorandum from gene sidmor at the chamber of Commerce Committee and powell, of course, is running the Virginia Chamber at that point and the prominent member of virginia and this is well before he went on the court under Richard Nixon and powell called for a fullspirited and fullthroated and very disciplined almost with military dedication and real civic grit from the elites, a fullscale attack on the often indefense of the free market capitalism and in 19 that was what, 1969, i guess, and that was when i was entering school and basically, i think that most of my adult period as marking the period of longterm decline of american democracy. When i reach maturity in 1973 and i was born in 72 and i was 21 in 73 and its been more or less downhill ever since. You can blame me or you can blame the success of business mobilization. I think the success and how i want to overstate how the influence of the powell memorandum, and it does very clearly lay out are the elements needed of any functioning progressive or reactionary move and any social movement that actually wants to govern and do so with sizeable majorities for some period of time and its worth recalling what the elements are and theyre laid out pretty clearly in powell and one is they need very Clear Channels of communication of whatever it is that theyre putting out there and they need to be open to and they need to be in the mass public and in the new base and the leadership of your own secondary leadership and you need to make secondly, extremely vigorous, sustained efforts to recruit, train, meantor, place the reward, encourage, discipline, blah, blah, blah, because any social movement if its going to have any lifetime has to begin to replace itself more or less from the beginning and the young people have to be brought in, and then, of course, you need the four rs. You need a message, a relatively straightforward message that that can be understood with an accompanying program, the steps in the program need to be within reach and cumulatively getting you some sort of momentum over time so that each further step becomes easier to take because youve got the progress of the first step taken. So message, you need a lot of messengers and a ton of people in the base that you eventually want to get to. In our case, the American Public and the world public and these messages have to look like and talk like, and be immediately recognizable by other people, and as averse, and why, because we are still, you know, we are very slow still and revolutionary advanced as animals and in is what i learned in high school before the fight or flight, food, and you can could what we used in high school and theyre very basic, and theyre animal creatures and the big reptile brain, and this is still governing a lot of our conscious behavior and we do have this frontal cortex and we made a tremendous advance over the last 200,000 years or so that home oosapiens have dominad and we are fairly primitive creatures, i digress, and we respond to any fema type that doesnt like identical to your own and some curiosity and distance and so on, and people liked themselves first and they can be trained a little bit and they can, over time through the through discovery come to appreciate others and in general, your mess efrj you are and you want to look like and smell like most of the population you want to get to, messengers and you need some models and you need examples of stuff that youve done maybe not quite at the Program Scale that you want to get to nationally, but thats been done and it can be replicated elsewhere for the right, and have the right filled in, and its something with any Progressive Movement may need, as well and then you need some money and you dont need a huge amount of money because you were advantaged by the fact as rob was pointing out that the public is basically on our side and the public is not in any way organized or certainly in control of our government and we do not have a lot of work to do to persuade people to take the income cap off of Social Security or enable medicare to use his buying power to bargain prices down and it doesnt take a lot of energy on our part to be nice to pay people and something closer to a living, real wage or an entrylevel wage and it doesnt take a lot of time to persuade people to have a superabundant supply of goods in america including a Public Education and public parks and areas of Public Recreation and decent, clean, Drinking Water and clean air and a variety of other things and many of the people in this room have been struggling for it in one way or another and the public would like to have high quality public goods and transit and other things. I dont think the public is really our problem. The problem is with a variety of leads who bought into has either been brought off bribery or bought into in ideology with this market fundamentalism and a variety of other ideas. Let me speak to the market fundamentalism thing if i could for a second and talk about what i think it would fight against it in a serious way. The reason why i wanted to give a shout out to tom and damon at the outset is that i think the hes leaving already, just before i praised you. Run away. What . All right. Lets do you first. In terms of the politics, i think damon has it exactly right. Well get to the theory here in a second, but at the level of political argument and the idea that it should be given to the market and should it be given to the market and how much government and intervention and regulation of the market is, i think, very exactly as damon said and the absolutely wrong discussion to be having and that is a discussion that has completely preoccupied still our politics. So getting to our positive program, one thing we should do is just massive education in the elements of what the legal understanding the dependence of markets and the constitution of markets by public authority. Every politician should be able to redo bob reichs routine and theyre just bubbles of rules and they cannot make those rules themselves and the question posed absolutely correctly is the question for Public Policies and what sorts of markets, to what end do we want to devise . What are the rules that we want to get . But we should really defeat the idea of markets as these initial subjects of Immaculate Conception and you can go now. Its okay. And the remark about indoginous preferences. Lets start with adam smith and the idea that the selfregulating markets could actually deliver the wealth of nations and could actually get you a social optimum in which no one could be better off from the standpoint of efficiency and not equity and not religion and morality and not just economic efficiency known to be made better off without someone being made worse off and thats been the back and forth, and its going on for at least for 250 years now, and it seemed that smith and the Classical Liberals had sort of won. Smith, of course, were a much different thinker than milton friedman, and smith had a much more a much deeper view of human nature than by his alleged accolades and he understood the great limits of market and the argument has been refined over the years with successive revolutions and economics, et cetera, and we do know that markets can produce that sort of efficient equilibrium outcome under stringent krngs though. First, you have to have markets in everything. Markets need to be complete. Second, markets have to have a complete information. Everyone needs to know everything about everyone else and everything there is to be known at that point in time and, third, markets need to be independent. There can be no public goods and no externalities and no increasing returns anywhere because the whole point of the appeal of markets was that no one is able to impose any cost on anybody else. And all those things that interfere with that either directly or through the tax or other provisions needed for those public goods. And that was an extremely appealing ideal and i think very, very important in the development of political thought and particularly in the u. S. And spread all over the world because it enabled you to think, at least, about the tasks of government as not dealing with the substance of actually running the economy. You could leave that increasingly to the market and out of that came the Classical Liberal view of a natural right to private property, of course, and selfregulating markets to take care of the economy once you respected that natural right and a commitment to limited government because you did not need much work in government and the freedom stuff and the civil rights and Civil Liberties and supplies and that was an extremely attractive combidea at was importantly liberating from the previous constraints, but over time people understood that the functioning market was not, in fact, anything more than an ideal and then that led to various let the market do its work and well clean up afterward. Lets make some rules and lets do some regulation and in the cases of increasing returns and natural monopolies and et cetera, lets do regulation, and yada, yada, yada. Lets call that the broadly social democratic accommodation to market capitalism. The Famous Program and the social Democratic Party renouncing aspirations to socialism and they said we are a pro capitalist and the more benign capitalist party, the markets were never possible, state action were necessary and that was a sort of the boundary for much of the new deal and that period and then there was a counterattack made and here is where buchanon and the whole public Choice Movement has really struck something of a heart into liberal conscience and incompetence in taking action and regulating market and the essential point of public choice, of course, is a complicated view, but the essential point is very simple to understand that theres no particular reason to believe that the people operating the government are going to have any better motivations or better capacities than the people around these markets that their regulation tries to constrain or richard post, the famous judge now retired and defending poor people observed. We understand that markets can do that the government can do things much better than markets and we have no reason youll stop just there and you can overreach in different ways, and i think in the same way that liberals and progressives should recognize that the markets do have that innate, you know, bloodletting and a large part of the dynamism and is insatiable and does not respect boundaries unless its contained and we have to respect the fact that the state, per se will not respect boundaries and im going over to persuade people. In the back and forth, adam smith and class one wins, the discovery of market imperfections and monopolies and a variety of externalities above all, and social democracy wins and public choice comes in and the next round of public choice, but the fourth round which i dont think most journalists who are not here or college professors, unfortunately, or certainly College Students or not here or college professors, unfortunately or certainly College Students or certainly our political leaders quite understand is the strength of what tom garrett was pointing to. The last 30 or 40 years we recognized it is not just that markets have imperfections which are subject to some correction but pervasive failures. There is absolutely no reason to believe that an actually functioning market each under relatively ideal competitive conditions is going to give anything more in terms of an efficient outcome than some other set of institutions will. The reason is that conscious part of it is the thing that tom noted. All preferences are endogenous. Markets rely on exxongenous preferences. First of all, all preferences are endogenous. People are looking in the market looking around and of course their view is shaped in different ways than the ways that tom inventories not just by advertising but by the behavior of other people. But the other thing is that all markets are incomplete. They are incomplete because we know now about transactions we want to do in the future but that we cannot make or secure right now. And so there is a built in incompleteness in any market as well. And then markets of course suffer from more familiar failures, and asymmetries in Information Available to different people, et cetera. And the combination of endogenous preferences widespread insymmetries and imperfection, inhabit virtually all of our economic action rauld all leads to a point which is very different than the old social democratic view of markets as, you know, being this ideal but running off the rails occasionally but subject to correction. It is a world which is so far from with a they imagined that it sort of of defeats the initial claim about market efficiency. It is a world in which once you take those things into account this is why a variety of other people have gotten nobel prize inside the last 30 years for pointing this out, it is a world in which supply and demand may not meet at all, even at equilibrium, and which prices may not reflect opportunity cost at all in which inequality in Bargaining Power is literally pervasive and power is pervasive, et cetera, et cetera, et cetera. I dont think thats widely recognized by our politicians either. All we have to do as humans as these very imperfect sapiens, you know, with our limbic system and our big frontal brains and cortex is to have revelation among other selves about the recognition that damon was talking about. What do we went to do . If we are like our ancestors there is only one question, how do we build a society fit to live in. Thats the question, call that the question of justice, if you will. Then to what degree do we want to have markets as part of that or other sorts of institutions for producing and he can changing value. Thats the basic question. But smith and market fundism is a fantastic distraction. I dont want to blame smith anymore. Market fundism is a complete distraction from that because it has no foundations its intellectually incoherent. Its been debunked with great north, and we shouldnt worry about it. But we should worry about ourselves, because we are, even as we have most of the public agreeing agreeing with us on an awful lot of what we all hold dear, and each if we are we have, you know, the intellectual arguments on our side, as just briefly reviewed for you, we are ourselves incredibly disorganized. So i would suggest that we go back to something of what the powell memorandum was talking about and update it and think about what are the Communication Channels we need . What are the mechanisms of recruiting, training, et cetera . Which targeted people we need to do . And how can we recruit and train a ton of mess i thinkers . They are coming over the transom right now. I dont know how much we need to worry about recruitment but we certainly need to know about their training. And then where on the earth are we going to find the money . I dont think it is a lot of money but its certainly more than and its certainly probably less than the collective budgets of all the people in this room. But, still, a certain pot of money which would be embarking upon, you know, our equivalent of the mow pelloran sort of project. If we are going the really get this country making Intelligent Decisions about itself as a democracy or wouldbe democracy or whatever this is a long term play, i think. Most of the people are on our side but the institutions certainly are not there. We should be lifting up those models, training those kids. We should be doing all sorts of lectures, i hope more well attended than this one, seminars, whatever, whatever, in terms of popular education. And then we should try to eventually get that to the point that we can be having these discussions with elected officials. It might actually start with some of them right now because they assert at least that they are on our side. What is our basic message . I think in terms of program, you know, rob gave an initial inventory for it. I would have put more emphasis on the Global Warming thing but we can work out what the demands are. It essentially boils down to a ton of highquality public goods. Here tom, i hope i am not offendsing folks at cpr. I am including regulation and law among those public goods, not just the assumption of Public Education and clean air, et cetera. A bunch of quality public goods reasonably paid for, and you know, with the general ends of encouraging and enlivening and rejuvenating, et cetera the conditions of human flourishing. On the etiological end, on the stuff that ralph asked us all to think about a little bit we havent talked much here about fighting back. We inventoried all the fail oars but i am talking about the fighting back stuff. On the fighting back, on the etiology, i would think that two basic points ought to be hammered home again and again and again, and would i dont know how to get this organized but i would sergeant we all try to show collective wisdom in at least making these points which i think all of you would agree with. One is, there is no reason to believe that markets are in fact efficient. The story i just went through. And second, markets did not exist independent of the state, they all depend on state power, and what we want from state power is a ton of public goods, partially but certainly not exclusively anywhere near exclusively securing the conditions of the market operation themselves. So in terms of pushing back on politicians, i would say markets are inefficient. The idea of separating markets from keep it simpler still. Markets cannot be separated from the state power, boom, and then we need a ton of public goods. Oh, and public goods are good. Not just for equity reasons, but for improving the productivity of the overall society. Those are my two cents. [ applause ] thank you joe rogers. You know, listening to joe reminds me, when we flipped the dial on all those radio stations do you ever hear anything like joe on all those hundreds and hundreds of radio stations . You flip, fm, am never mind tv. 600 cable stations. Licensed by local government, and cable stations and so on. And these corporations have exappropriate rated our comments, expropreiated the public air waves, we are the landlords. They are the tptsz. They pay us no represent thanks to the congress and the federal Communications Commission and decides who says what and who doesnt 24 hours a day, how about that for a surrender. Thats what happens we we grow up corporate. Dont educate children to grow up civic. Civic. Have to subcoordinate corporate values of commercialism if we are going to have any kind of functioning democracy and system of justice. It is always good to go back and say, biggest wealth in this country is owned by people. They own the pensions, trillions of dollars, mutual funds. They own the public lands. They own the public air waves. They own trillions of dollars of research and development, which built all these companies who put ads in newspapers bragging that they did it themselves, like silicon valley. And the people control nothing. So if you start with they already own it, thats a big asset, right . You dont have to argue for it. We already own the commons. And it all comes back to kochlk congress. Congress. Congress. Congress. Congress. Congress. 535 people. We outnumber them. We have the sovereign power under we the people in the constitution. They dont say we the Congress Starting the preamble. And its always start Congress Watchdog groups. They can start with ten in every congressional district, 20, 50. You get to 1,000, you get to opening up offices. You support redirections that are supported by majority of the people, as joel and others have said. Majority polls, again and again. On full medicare, and living wage, and cracking down on corporate abuses, and a fair tax system, and debloetding the military budget. Hasnt been much talk about the distortion grotesquely of the public budgets for military empire and destruction that is increasing our own security and devastating so many innocent people around the world. But now we come to something very interesting, a new mutation in terms of capital accumulation by corporations which belong to shareholders, mutual funds, Pension Funds, and which have originally come from consumers, spending dollars. Apple Just Announced a knew months ago they were going to spend 100 billion for stock buy backs. They dont have anything better to do with that money . How about dividends . More dividends. How about better working training . How about r and d . How about public investments . How about putting money cleaning up all the recycling of all this electronic production . What do they do with used Apple Computers . They are terribly toxic . And they are taken apart by workers who are getting sick and die because of the toxic, and then its dumped and it gets into the water, or its burned and gets in the air. For 3 billion a year, apple could revolutionize that in terms of recycling. 3 billion out of 100 billion. And thats just part of what they are doing with the shareholders money without any approval by the shareholders, without any requests for advice. Two men, tim cook and his buddy at the top, make that decision. I dont want to talk about concentration of power in government . Compare it to big corporations. William lazanek is the pioneer in exposing the devastating effects of dictatorial stock buybacks. He had the original article in the Harvard Business review which shook up the business establishment. As he took it apart bipiepiece piece. He could have chose could have taught anywhere, and did at some other universities but he is a professor of economics at the university of massachusetts lowel. A deindustrialized town. Cofounder and president of the academic Industry Research network. His recent research has been funded by the institute for new economic thinking, ford foundation, and european commission. His most recent papers include, quote, stock buybacks from retained and reinvest to downsize and distribute, end quote. Innovative enterprise or sweat shop economics . Thats the question. And other many, many good articles. But what hes going to show is how the ceos and the officers authorized by a rubber stamp board of director who are appointed by the ceos and officers and wined and dined and given incredible per diems and benefits just for showing up a few times a year have developed the most intricate way of conflicting interests against their own company. They are damaging their own company, reducing investment, reducing investment, reducing better treatment of workers, pension fund stability, et cetera. Its the ultimate example of supreme Corporate Executive agreed. You will get an elaboration of this right after that by steve clifford, who wrote the seminole book, the ceo pay machine, which he knows a lot about, because he was on a lot of compensation committees of corporations. So we have very important material coming up. Lets start with william lazanek. [ applause ] hello. Its great to be here. And one slight correction. Im now professor emayor us the at umass lowel. I went there in 1993 from emeritis at umass lowel. I went there to build a program in Economic Social Development which was successful. Then, however, there was a change in regime. A politician came in. His name was marty meehan. And he destroyed our program. But he didnt destroy the intellectual capability because i had some really Good Students in that program. It was a masters program. They are still working with me. They are why i have an organization now. It is a 501c 3 organization which i started in 2010 because i said if the university doesnt want me to do this research and to have a critical view of whats going on in the economy, well, well do it another way. And fortunately, the ins soot for new economic thinking came along and has generously funded our research over the years. We wouldnt be able to exist without their funding. And i recently last may retired. My three daughters held an Unretirement Party for me because they knew it was so that i could spend all of my time researching and writing and keeping up with all the great researchers i have working with me to get the research out on a variety of issues that i am going to talk about. Now, what i am going to talk about today is going to deal with five issues. But the four issues i am going to deal with fairly quickly because i want to get to the question of market fundamentalism, which is fundamental. So i am going to talk about what buy backs are, what they are very briefly. How big they are. I am going to talk about why they are a problem. Who benefits from them. And ralph has already said a few things about that. And why they are permitted. And then i will get to really the crux of it, is how they are legitimatized. Why you can have this phenomenon going on which really nobody can defend. Tim cook, when he was asked about these buybacks last may in an interview he said, well, you know, uh, some people are going to pay Capital Gains taxes on the money they make from the buybacks, which was his only answer, after getting all those tax breaks, including apple from the republican tax cuts. So it is kind of either a cynical or idiotic or ludicrous argument. I called ate quarter baked argument and that got into the headline of an article in Business Insider and it probably wasnt even a hundredth baked. There was no argument. It is no argument. Let me get into the first question. Buybacks that we are talking about, open market repurchases where a Company Tells its broker to go into the mark and buy back its stock and create a demand for its stock. Thats the vast generate of buybacks being done, being murder and recorded by the companies as stock repurchases. And they are generally done the purpose, not in every case but usually just to boost stock prices. They are generally done when stock prices are high, so the company isnt getting a bargain when doing the buy backs, buying back stock and reissuing stock at higher prices, thats not the way it works. If this company was to do that they would be signaling that the stock is overvalued. It is actually a competitive process where companies are getting in there and trying to keep up and boost the stock price. What it is is a manipulation of the market. I will come back to that on issue number four, why are they permitted. It basically says you can permit the market being manipulated and in the process, the subtitle i gave to my talk, free market ideologists, license to loot, thats what the sec has basically given Companies Since 198 the. I will come back to that. They are big. Just to take some of the more recent dad from to 2013, 2017 for a 492 s p 500 Companies Listed over those five years they were at 6. 2 trillion. Thats average about 1. 1 billion per year per company in buybacks. And thats not instead of dividends. Thats over on top of dividends. Dividends were about 2 trillion, 800 million per company per year of those 492 major companies. That was 56 of their net income, as measured and in buybacks 42 in dividends. So they are not actually stinting on dividends. They are paying a pretty reasonable amount of profits out as dividends. Okay. So they are big. Why are they a problem . They are a problem because retained is earnings, the money that a Company Makes that are profits are part of the foundation of reinvestment in the economy. It is not the stock market thats reinvesting in the economy. The stock market is not an institution. It has been an institution for putting money into the economy. It is a way of getting money out of the economy. The reason you have the managerial corporation beginning of the 20th century is because of the need for separation and control. It wasnt because a lot of people put money into companies and Companies Got so big that you had to have a lot of capital. They could use the bond market to leverage them. The reason you had a separation of ownership and control is if you wanted to build a company you had to have people in power hopefully you do and hopefully you did. It is not always the case but you needed to have people who understood how to manage those complex organizations. Thats what we call the managerial revolution. I worked close we with the business historian alfred chandler. You should read his 1997 book in particular. That was complete by 1920. We had employees in the 1920s in charge of major companies. And shareholders are just buying and selling shares at that time. I will come back to that. It is a problem because you are taking the money that needs to be invested in the k. It is not physical capital. What differentiates one company from another is not the plant and equipment they put in place. Anybody can buy the plant and equipment. If you develop unique physical capability, unique machines or whether you are doing that with people, you are doing that with engineering you are doing that by investing in the productive capabilities of people. I call it investment in capabilities. What differentiates companies and allows them to grow is when they invest in the production capabilities of people. Sometimes those are simple. Productive capabilities that are just doing administrative work, opening the doors, closing the doors, turning on the lights, but if someone isnt there to do it a lot of things can grind to a halt. A lot of it is very complex productive capabilities. Thats why you need to have this money reinvested. And of course it doesnt mean that it is going to beery invested well. You need to have good management. You need to have and understand good management. One argument i would make more generally is that Top Executive who are thinking about how they can give away money to people who dont matter to boost their stock price are not really thinking about how to run their companies now, and they are certainly not thinking about how they can create the competitive products of the future. Thats a big problem. It is a problem of distribution. Because in fact when we see rising wages, rising standards of living it is because companies are profitable, the profits arent bad. Its what they do with the profits thats an issue. We are not sharing the gains with their employees. Now they are not giving out the money to employees just because they like to give out the money to employees. It is part of a productivity pay dynamic. Employees are incentivizes when they return to work, there is little turnover. I call it collective and cumulative learning. It is goingan and it makes our economy prosperous. And thats undermined when you start doing buybacks. Now, there is a more general perspective that comes out of this. And its just one example of it which is being raised in this context of this discussion of market fundamentalism. And i will come back to it but i will just mention it here is that if we want to understand markets we have to understand that organizations create markets. Markets are outcome. This is very much in keeping with the work of carl palanty. It is basically while markets develop historically, i have looked at Different Countries different places different types, labor markets, finance markets, and product markets are there because you have Successful Organization of it is not just states and government. Its companies. These companies are basic the businesses are basic units. Some of them of course are bigger than whole states when they really grow big. Amazon now employs probably close to 600,000 people worldwide. Thats up from about 88,000 in 2012. So when these Companies Grow they become very big. And how they grow and how they distribute is gains is very consequential. Thats why it is a problem, because you are actually eating the seed corn. You are not supporting the organization. You are doing just the opposite. And thats i use these terms which ralph mentioned as a subtitle of an article of brookings put out in 2015. You are going to retain and reinvest to downsize and distribute. I think thats a good description of the change that occurs and buybacks are emblematic of that. Why do they do them . Well, Steven Clifford is going to talk more about this, but if you look at executive pay, the bulk of it is stock based, particularly in the companies that do lots of buybacks. So we have measures lets say for 2015, the 500 highest paid executives in the United States averaged over 3 3 million. 2016, its about 27 million. About 80 of that is stock based pay. Stock options, stock awards. And by the way, almost every number you read in the media about what executives get paid is a phony number. Its based on grant date prices of options and awards, not on what they actually get. And we know what they actually get. But thats a whole longer discussion about how the sec privilege whats called estimated fair value measures of stock worth. But its actually related to this because it is based on bad economics. Really, nonsensical economics called black shoals mertons option pricing models first put forth in 1983 to try to estimate a price for gambling on an option you did on the actual market ten days out where no one knows what the outcome is going to be. And it basically assume as long normal distribution of stock prices which is not what you get when you get a stock price boost that i allows you to get realized gains. S that part of name of the game. There are other things related to it. In the Pharmaceutical Company you do the price gouge and the buybacks and the executives get the pay. It is not just the activists. The Hedge Fund Activists have been enabled by a proxy Voting System which is corrupt because it basically gives pension fund manager, Fund Managers not just the right to vote shares but the obligation to vote shares. Now a hedge fund activist, as going with nelson pelts at ge, proctor and gamble, dupont can get less than 1 of the shares in some cases and determine who is on the board even without a proxy fight by lobbying the proxy services iss and glass lewis and getting enough align men with Pension Funds, et cetera. Thats a whole other discussion. I dont think Pension Funds gain from buybacks they would gain from more dividends. But thats another discussion. Now there are these very powerful individuals. Sometimes they lose money, like William Ackman with valiant. But a lot of times they make tons of money. Paul singer, carl icahn, you know a lot of these names. Okay, why are they permitted . We start getting into the market fundamentalism issues. I am here with ken jacobson. We are finishing a paper, we have been working on it the past three or four years on the adoption of rule 10b 18 in november 1982 by the Security Exchange commission which basically is the license to loot. It enables companies, encourages companies, in fact, to do buybacks. It says you can do up to 25 on any of dave your average Trading Volume over the previous four weeks. Its safe harbor so even if you go over that amount you wont necessarily get charged with manipulation of the market. In fact, the sec does not collect data on this because the chair of the sec at the time thought it would be too burdensome on companies will self regulate and dont worry about it. By 1984 this is not something new. Thats when stock buybacks started. They have escalated, gotten greater but it is not something that just happened in the last few years. The reason 10b 18 was adopted was simply romd reagan got elected on a platform of deregulation. And he then chose chad, who was the first guy from wall street to come to be the head of the sec since joseph kennedy, you know, at the outset the sec in 34, 35. And he had been the head of the first person on wall street to come out for reagan in 1980 in the campaign and had been the head of the campaign. This was his award. He immediately brought in chicago economists and adopted this rule under the radar, without public comment. 10b 18, which i have just mentioned. Thats why i was permitted. It was the implementation of free market ideology. Now the last question, what is that ideology that legitimizes this . When rule 10b 18 was adopted in 1982, if you had gone to someplace i was around there at the time, i was at harvard university. I wasnt hearing share holder value from anybody. In 1984 i became a Research Fellow at Harvard Business school right across the river. Its not really the same universe on both sides of the river. But no one was talking about share holer val er sharehold value. With the urging and the president of harvard president and the dean of Harvard Business school they recruited Michael Jensen to be a professor there. Then it was on the agenda. There was all the stuff about the rjr nabisco stuff, the deal decade. Thats all building up. There was a good article written in the wall street journal that mentioned of shareholder value started in 1985. But then it takes off and becomes a dominant ideology. It comes out of neoclassical economics. It basically is an argument that of all the participants in the corporation only shareholders take risk. Everybody else gets a guaranteed return. Why . Because it is all determined by the market. But thats false. We as taxpayers when we pay money that goes into infrastructure and knowledge that Companies Use if we dont get a decent tax rate or the companies dont make money we dont get our tax revenues as households back through the government. If they then use the political process as we know they have in the name of shareholder value to say we need more money to invest, then we get screwed by this ideology. Then the other people who are messed up by shareholder value ideology and left out are warni workers. If we had companies that hired workers and paid them the going wage today and didnt care whether they turned up tomorrow or their incentives or developing the product of the out future or cooperating with the company over months and years and decades all over all levels of the corporation we would not have a productive economy. We would not have productive enterprise or a productive economy. As a worker we know we take risk. People like me, i got tenure and at least couldnt have gotten fired even they would have liked to do that at umass law but they couldnt so i wind up with a nice mention. Thats unusual. Coming into the 1980s, people who worked for large corporations had a long career with companies. Companies did not fire people. That all changed with shareholder value ideology and the risk that workers were bearing was born out. Amazon which says they are paying 15 minimum wage thats just over 31,000 a year. Thats still for one of the most Successful Companies in the world opened by the richest man in the world now, thats not much of a wage. So it is an ideology of who takes risks, but it is wrong. Do shareholders take risk . No, public shareholders do not take much risk. They only buy shares because it is a liquid stock market and you can sell them any time you want. You have limited liability and you dont need to know anything about the companies. The Pension Funds are holding the shares. Now, the part of this which then goes somewhat deeper and because i only have a couple minutes you can read some of the papers, including, if you can find them on the website of the institute for new economic thinking, most of these papers, is that the theory, the economic theory underlying shareholder value has a theory of the firm which is fought to millions of people every year by tens of thousands of ph. D. Economists and it has been done this way since paul samuelssonity wrote his 1948 economics textbook which says i cant explain this all but you can all read my papers that the most inefficient, the most unproductive firm is the foundation of the most efficient economy. Its called perfect competition. The way you get perfect competition is by having a small unproductive i recall if. U shaped cost curve and it goes up at a very, very low level of output. Once you have that the market is relied upon to allocate resources and i would say the market is omnipotent and the firm is impotent. If wife imp tent firms we dont have a productive economy. We need to have firms that invest in productivity. Paul samuelsson had no conaccepting of this. Neither did someone who is not that different than paul samuelsson. I grew up in an era where they were. Freeman had an article in the New York Times which is seen as the clarion call for maximizing shareholder value called the only social responsibility of a company is to increase its profit. I want to tell you something about this. This is actually related to something that ralph nader wrote about, which you know, unsafe at any speed, General Motors. That article i only learned about this relatively recently. The article is cited everywhere, you know, you can read the text but you didnt necessarily see the original as it appeared in the New York Times. A guy named michael owe listenic sent it the me. The original shows a picture of james roach, the chairman of General Motors, at the Shareholders Meeting in may of 1970. The article appeared in september of 1970. And then there is some editorializing from the New York Times. It says, a millton friedman doctrine. It has the title, the only social responsibility, et cetera. Then it says in this article millton freeman, says that the author, milton friedman. I will read this out. Calls such drives for social responsibility in business as unadulterated socialism. Adding businessmen who talk this way are unwitting punts of the intellectual forces that have been undermining the basis of a free society. Okay. Thats his argument. And then creates the profits. The context is important. That article appeared, there is absolutely no doubt about it. Because of a shareholder proposal in may of 1970 to put three Public Interest people on the board of directors of General Motors because they wanted more fuel efficient cars and safer cars. Okay. And this was what they were arguing for. Now we go ahead and look at the subsequent history of the automobile history. What didnt General Motors do . As the japanese came up with more fuel efficient cars, it did not come up with more fuel efficient cars. As the swedes and others came up with safer cars it did not come up with safer cars. It did try to learn from the japanese, but then it killed saturn, where it would have cost it 5 billion to go from a small sized car to a midsize car but it didnt want to cannibalize its business model. The unions were involved in this, too, and the rest of General Motors. From 1986 to 2002, when they were supposedly competing against the japanese, the General Motors did 20 billion in buybacks. It was a lot. And i guess they had no other use for the money. Okay . I did a calculation when General Motors went bankruptcy that if they had gotten the 2. 5 aftertax rate of return on those 20 billion give when they had spent the money they would have had 35 billion in 2009 when we the taxpayer put in 49 billion to bail them out. The unions put in a huge amount as well. 20,000 layoffs, all kinds of wage cuts, et cetera. A billion dollar loss on their pensions, 11 billion loss on the pensions. We then actually lost money, about 11 billion, when General Motors sold the shares that it had when general went back on the market in 2010, sold the shares in 2013. And we lost the money. Then in 2015, a guy named harry j. Wilson came in, had a a secret meeting with the head of General Motors, mary barra that they wanted 8 billion stock buyback and a seat on the board. He was representing a bunch of head funds if. He was on the task force to bail out the auto officer. In his book ratner called overhaul running the bailout he said he was required because he was a republican and that looked good. But he got them he insisted that it be an equity not in debt. We the taxpayers then would not be made whole if it had been debt. We lost the money when it was equity. The hedge funds who put no money into the bailout came in demanding this country. General motors since 2015, between then and 201710 billion on buybacks, 68 of their shares and dividends. Last thing i will say. Millton friedman. When you look at him and understand where he was coming from. There is two i think so this. Even before this connection with General Motors, you didnt know the first thing about a Business Organization, first thing about a corporation. He was a fraud. Paul samuelsson was a fraud. They are all fraud. They dont understand Business Organization. They dont understand as a result the organization between the business and the market. When you look at the context, what was he telling you . It wasnt just dont deal with social responsibility. He was saying dont be innovative. And dont put people on your who want to be innovative. Last thing i will say, there is a movement to put workers on boards. Tammy baldwin in large part is encouraged by the research we have done on buybacks has a reward works act which was put forward in march of this year calling for rescinding rule 10b 18. A third of all corporations Board Members be representing workers. Elizabeth warren has a countercapitalism act introduced in august for companies with 1 billion or more. 40 of their workers be Board Members. And the last thing i will say is, it is likely to, you know, obviously thats not going to happen any time soon, but if it does, we want those worker representatives, and maybe even taxpayer representatives, to be educated in how a Business Organization operates and performs. Or i wouldnt have great confidence that they would go in and do the right thing as they were trying to do back in 1970 when this group of people inspired by ralph naders work, clearly, were trying to get General Motors to build safer and more fuel efficient cars. Thanks. [ applause ]. Thank you professor. In the late 60s and early 70s all these speakers would be in great demand at college campuses. The auditoriums would be jammed. And now there doesnt seem to be any demand in the cell phone culture on campus. Unfortunately, thats where a lot of social movements got their momentum, if not their gestation, was on campuses. So anybody listening or watching, keep in mind, these people can make very very wise presentations to Young Students who need it pretty badly. By the way, paul samuelsson, i took his 1948 textbook along with millions of other students at that time. In the early 80s he wrote me a letter and said i am revising again my economics textbook. And i am going to have a little space for Consumer Rights protections. He wanted to send me some information. Like that was an addendum, right . It was adam smith who said the purpose of all production is consumption. And it was like an addendum. Thats the kind of identify logical orientation for millions of students with these fat use supply demand curves, et cetera. Our next speaker is steve clifford, who has written this book as i mentioned, the ceo pay machine. And hes been on corporate compensation committees. He was head of king broadcasting in seattle, one of the more progressive Television Companies when he was there. And hes going to talk on the subject that the lack of a free market for executive compensation. This is where the ideology really becomes absurd of a free market in selecting corporate bosses. [ applause ] well, thank you ralph. I would like to thank all the speakers that went before me. Because i really think they were great, great warmup acts. [ laughter ] so, i served on probably a dozen corporate boards. And some of them asked me to chair the compensation committee. Now, that is not much of an honor. In Corporate America its wellknown in a the second dumbest director chairs audit because they want to save the dumbest to chair compensation. I quickly learned these were not fortune 500 companies but they used the same compensation system. The same ceo pay system, and the same consultants that the fortune 500 or s p 500 did. Incidentally when i from now on when i mention ceo i will be talk ceos of the s p 500. So it will be only them. And those ceos make a lot of money, depending on how you define it, somewhere between 18 and 26 million a year they average. But you know, athletes and movie stars also make a lot of money. So why am i picking on ceos . Well, athletes and movie stars make their money in a supply demand auction market. Sports teams, movie studios about it for their services. And they do this because their service their skills are portable. Lebron james is going to improve any nba team he goes to. Meryl streep is going to improve any movie shes in. Thats not the case with ceos. Most ceos would not improve another company. Because their competence rests largely on a very detailed knowledge of a single company. Its its personnel. Its culture. Its finances. Its distribution system. Its supply chain, et cetera, et cetera, et cetera. This knowledge is absolutely critical for managing that one company. But its of almost no use outside that company. Corporate directors understand this. And thats why 75 of all ceos are internal promotions. Companies dont bid for other companies ceos. Less than 2 of all ceos were previously a ceo of another publicly traded corporation. Ceos jumping from one company to another in the s p 500, happens about once a year. When they jump, they usually fail. They usually fail because they dont understand the new company they are going to. Outside ceo hires are twice as likely as inside hires to be fired. So a company doesnt when it is thinking how will it set a ceos pay doesnt really have a market. There is no market n. Place of this in place of a market, what they have done is they have adopted a system developed by compensation consultants that turns out to be a very, very rigged system that is guaranteed to escalate ceo pay. Some of the independent look at the independent parts. And some have a little surface logic to them. When you put them all together, you will see that it is simply a guarantee for runaway ceo pay. So the first step in this kind of rub goldberg machine that the consultants design is something called a peer group. Thats idea that the pay of your ceo should be based on what other ceos of Comparable Companies make. So the first step in this process is the company has to decide on what its peer group is. Now, i know you will be shocked, shocked to learn that virtually every company stacks its peer groups can companies that have very, very highly paid ceos. So this is the first step. Your pay is going to be set by the highest paid ceos that they can find. Second step is the company has to decide where in this peer group the company belongs, and you as ceo belongs. Because the idea here is that, well a superior company should pay a little more. High performing company should pay a little more. Well, every Company Believes it is a superior and high performing company. All all ceos live in lake whoa begone. On average, every ceo is targeted at the 75th percentile. Lets say you started out with high paid ceos in your peer group. 20 million is the average pay. Then the Company Targets you at the 75th percentile. You are now up at 30 million. But the underlying key is pay for performance. You are going to have how is that implemented . You are given a whole bunch of largely financial metrics for bonus metrics. And if you hit those metrics, you could make two, three, four times your target. I talk about the highest paid people in my book for each year from 2011, 2014. One of them had a target of of the million. He made 102 million. Another had a target of 20 million. He made 145 million. So now, heres the beauty of this system. Those humongous numbers go back into the peer groups of all the people that were in his peer group. They, next year, get a raise. Why did they get a raise. They got a raise because one of their peers made 145 million. They get raises next year, they go back into his peer group again. He gets a raise because he got a raise before is the way the mathematics works. So what you have got is this what i call ceo leapfrog. And every year, there are rounds and rounds of it. And that is what has caused ceo pay to increase 10,000 since this game was started in the mid 80s. Now, this this game makes starting from starting with the peer group, you can see that it is completely illogical. It makes no sense. Consider the peer group for one of the people i wrote about who is the ceo of United Health group who made over 100 million. He had worked only for United Health group and an accounting firm. That was it. Two firms his entire career. His peer group, american express, aem. About of america, cisco, citi group, cocacola, dow chemical, general electric, and i am only a quarter through the alphabet. Now he had absolutely no experience that would make any one of these Companies Ever considering hiring him. So whatever they paid their ceo is completelyi irrelevant to what this guy should make. Yet it was the this peer group that started off as the basis for his pay, which ended up at 100 million. Now, interestingly enough, the adoption of this whole system, and the adoption of peer groups and targeting was not based on any coherent theory or any compelling philosophy or evidence that it was somehow more effective or led to better results. It was never blessed by any Academic Studies for industry conferences. It quickly became ubiquitous because it made the ceo a whole lot more money. And it gave the boards cover they could made hyped the consultants and say we hired independent unbiased spertsds, looked at objective data, and thats what we based our number on. So as i say, the ceo the ceo bonus system the bonuses and the multiples of target that you could hit by hitting those bonuses the ceo is very, very well placed to negotiate on those bonus targets. It could be a bonus for earnings per share, a bonus for ebitda. They have all sorts of different financial. You read the proxy and you will see all sorts of different Financial Measures in there. Now, the ceo kproecontrols the companys whole Information System and its Financial Planning system. He knows a whole lot more than the board does about whether a certain earnings per share or certain ebitda is going to be a tough goal or an easy goal. And so thats why in about 80 of the time in my experience there is no published data on this but about 80 ceos often beat their target, often doubling it and tripling it. Ceo pace one of the very few cost has the board directly controls. It is one of the really important costs that they set themselves. Now, why dont they control costs and just say, well, it doesnt look like anybody is out to hire this guy, so we will give him the same 3 we give everybody else . Nobody is after him. And they dont do it that way because it is simply not in their selfcontrol to control ceo pay. Simply not in their self interest to control ceo pay. Thats why ceo pay in this country has risen from 26 to 1. Thats the average the ceo pay to the average worker pay. It has risen from 26 to 1 in 1978 to 312 to 1 today. Thats using the lower ceo numbers not the real numbers that professor lazanek is talking about. It would be up around 500 if you used those numbers, but they are very hard to get. Thats not the consequence of a modern globalized society. In japan today, that number is 16 to 1. Denmark, its 48 to 1. In the most respected institution in the United States, the u. S. Military, its less than 5 to 1. So you dont need a 312 to 1 ratio to perform well. As i say, it is not in the boards interest to control ceo pay. First, ceos have often asked them on the board. Hes their friend. Hes the captain of the team. They are not paying out of their own pocket. You know, they are just paying with shareholder money. It is not costing them anything else. Matter offa fact there is kind of an incentive to pay him a lot and and consume for using the male pronoun but of the 5 of these people are men and given what i have to say about them, i hope the women will forgive me. Board compensation and ceo compensation are recommended by the same consultants. They are highly correlated. The average board member is make being 300,000 a year for, you know, attending eight, 12 meetings. Its a pretty nice perk. Also, if you are known that you have been difficult on ceo pay you are not likely to be asked to be on any other boards. Also, you can never be held liable no matter how much you pay your ceo because the business judgment rule products you. And also there is safety in numbers. You can say look, does. This is considered a best practice. And even if you consider it insane how much youre paying your ceo, you can rationalize, its not my fault, its all those other boards that were irresponsible and they paid their ceos too much, and now im stuck with it and ive got nothing to do. Now, directors would deny that theyre shills for the ceo. They would say, we have to pay him that much more motivation, and we do pay for performance. Well, ceos are intrinsically motivated. Theyre very highly motivated people. You dont get to be a ceo if youre not motivated. The pay system can only channel this motivation, and when you have bonuses, big bonuses, for achieving certain things, it will cause the ceo to concentrate very sharply on what will earn him a bonus. Surprise, surprise. Thats what the systems supposed to do. Thats why you do it. However, it has its downside because at the same time theyre focusing on what will earn them bonus and rigging the numbers to make certain earnings per share target, it makes them quite a bit less curious, less creative, less innovative. They become much less motivated by the pleasure of a job well done, and these are the very things that make people perform at their best. Study after study has shown that financial incentives for anything above simple repetitive tasks actually hinder performance. Now, they also say, well, we pay for performance. This is simply not true. There is its been studied time after time, and i think the best study either pay and performance, no matter how you define either are uncorrelated or somewhat negatively correlated the more you pay the ceo, the worse for the shareholder. Now, this has a lot of this has outsize ceo pay has a lot of cost to the Company Beyond the 40 or 70 million they waste on paying the ceo. A big problem is morale. When the ceos making more before lunch than you make in a year, its hard to listen to him say, were all in this together and theres no i in team, et cetera, and again, thats been shown by a lot of studies. The bigger part is how it focuses on very, very shortterm measures. The average ceo serves only 4. 7 years, as bill said, receives 80 of his pay in equity and cashes out very quickly. And i think that ceos, theyre going to cash out quickly and the stock price itself is often now a bonusable measure, so if you get your stock price to, say, 92 by the end of the year, you get an extra bonus. Ceos have a very compelling reason to keep their share price high. So, they do just what bill has said. They take half their earnings, buy back their stock, dont reinvest, and as he said, theyre eating the seed corn. In fact, since 1980, r d as a percent of revenue and profits has been cut by about twothirds in Corporate America. However, the worst consequence of excess ceo pay is what it does to income equality in this country. It is one of the prime drivers of the rise in income inequality, the very steep rise weve seen since 1980. You can have all sorts of economists who will come up with all sorts of reasons, globalization, unions, shareholder value, et cetera, for the rise of inequality, and theyre all probably true and all and more probably true, but the proximate cause is very simple. A small amount of people made a huge amount of money and those small number of people are in the 0. 1 . The 0. 1 , their share of the income has quadrupled since 1980. And they have captured this is youre talking about, you know, 150,000 households here. They have captured 40 of all net economic gains. These people are not athletes or movie stars. 70 of them are business executives, so the people that are driving inequality are business executives, many of whom compensation is highly or certainly most of whom compensation is partially influenced by what ceos make. And finally, or penultimately, this rise in income inequality has impeded Economic Growth very severely. I dont have time to make that bit. But the system is corrupt and corrupting. It harms companies, employees, the economy. It basically enriches the 0. 1 and swindles everybody else. Other than that, its, you know, got some good things. In closing, i got to make one id like to address, quickly, the larger political issue. I used to write a humor column in the humor blog at huffington post, and in 2011, i proposed a very, very simple solution to really all of our political problems, and that was simply to prohibit straight white males from voting, and i think thats i was a little bit ahead of my time, but i think thats a cause we can all get behind now. Thank you very much, steve clifford. Yeah, his point on curiosity, theres less curiosity with these highly paid bosses and the damage theyre doing to the economy,s the lead article in the Harvard Business review today is an article that says, why curiosity is important for corporate officials. This is where were at, instead of being, you know, right into their whole being of curiosity. They have to be urged to be curious by the Harvard Business review. The reason why were rushed is because the buildings going to shut down at 5 30, and im the last speaker, and i have to abbreviate it in order to meet that exodus demand and im talking about institutionalizing lawlessness, systemically subverting markets, and the articles ive written on this are in the harvard law record website, go to hlrecord. Org, and youll get the three articles. Youll also learn about pete davis report as a third year law student last year on changing Harvard Law Schools priorities from producing overwhelmingly Corporate Lawyers to start producing lawyers who represent the rest of the people. As befits the model of Harvard Law School, which is not properly observed, which is to develop leaders in justice in our country. The first thing i want to say is law is always in a collision with raw power. I mean, the whole purpose of law is to restrain direct and reshape power so that it observes important values in a society that we often summarize as justice. And Corporate Power in the last 30, 40 years so much of this started with ronald reagan, this drop from the 60s and 70s in attentiveness to the necessities of people. Corporate power is running rough shod over the rule of law, and where it isnt running rough shod over the rule of law, and violating it with systemic lawlessness, it is enacting the laws that exempt them from behaving properly. These are not just loopholes, theyre all kinds of laws, health and safety laws where the corporate lobby has gone up to congress and cut out the criminal penalty so even if they willfully, knowingly violate auto Safety Standards that kill people, they cant be prosecuted criminally, because they got the criminal law provision that we were fighting for in 1966 cut out of the legislation. In congress before it was sent to Lyndon Johnson for signing, so they are still behaving criminalgeneralicly but not technically criminal because they reshaped the law to give them immunity and impunity. Just very, very briefly, i wrote this book, this article called harvard lawlessness school and you. This is the Harvard Law School students. There should be a split in the curriculum where the Traditional Law school curriculum, they talk about statutes and judicial decisions and how things are supposed to be with a little criticism once in a while of the judges or the statutes to sharpen their acuity, but they almost never study mass