 So our next panel is Steve Ratner and Van Jones on Economic Inequality, and Steve Ratner is first and foremost, in our view, a board member of New America. He is also the chairman of Willett Advisors, and was formerly the advisor to the Presidential Task Force on the auto industry in 2009. He is a contributing writer for the New York Times op-ed section. You see his columns regularly. He's also the economic analyst for MSNBC's Morning Joe, and he's the author most recently of Overhaul, an insider's account of the Obama Administration's emergency rescue of the auto industry. So Steve is going to show us some slides, and then he's going to be in conversation with Van Jones, known to all of you, as the host of CNN's Crossfire, president and co-founder of Rebuild the Dream. And last time I saw you actually was at the Democratic Convention in 2008. Van Jones, he's an author, he's written two New York Times bestsellers, and he was also the green jobs advisor to the Obama Administration. So we're going to have a lively conversation on economic inequality. Thanks very much, Ann Marie. I didn't bring any lawyer jokes with me. I'm not a distinguished member of the Senate, a great war hero, a former presidential candidate, but I did bring 30 PowerPoint slides. And so I am going to try to get through these in 20 minutes and leave time to talk with Van and anyone else here who wants to talk. So the first thing probably some of you are wondering is, given my background that Ann Marie went through, and you said I was most recently the author of Overhaul, you implied I wrote other books, which I never did. So I've only got one book. What am I doing up here? And the answer to that is this is an issue that I have cared about for a long time. And just to both establish my, so this is working, my qualifications and also give you a sense of how long ago this all began and in a way how quaint it was that back in 1995, I wrote a piece, my pointer's working. Back in 1995, I wrote a piece for the Wall Street Journal on this issue. And the one historical footnote I would add to that is that the editor, I was astonished they published it. The editor who published it was a young editor who has now gone on to some other things and his name was David Brooks. So there we are. Now since then a lot has been written on this subject. Since then a lot has been written on this subject and most recently as probably everybody here knows, a book that I think will go on in history as a seminal work in this area was written called Capital. It was published about six weeks ago. It was published by an imprint of the Harvard University Press. It was written in French and then translated into English. It's 700 pages along with footnotes. But it became an instant bestseller and it has been number one and number two on Amazon's bestseller list since it came out. This is number three on the New York Times's list last week. Probably headed higher from there, very hard to get. But the question is how many people have read it because if you read it, you would have learned some important things like this. You would have learned what the equilibrium wealth to annual income ratio is. You would have learned the inherited share of wealth and you would have learned the equilibrium share of income from wealth to total income. So I won't embarrass anyone here by asking how many bought it, how many have read it. But the point is it has made a huge impact and it has really changed the debate in today's Washington Post. Chuck Lane has an interesting column on it pretty much every day. Someone writes something interesting on this subject because of what this book has done. But it touched a nerve obviously and it got people even more focused on an issue that has been something a number of us have been thinking about for a long time. So what I want to do is use some of what Mr. Piketty and his partner Mr. Seyes as well as other economists have done over the years in this area to try to illustrate the problem, the causes, and maybe some of the solutions. So let me start with this slide which may seem familiar, maybe familiar to a lot of you. It's a pretty basic slide that Piketty and Seyes, his partner did some years ago using U.S. income tax data. And so what it shows at the bottom is the famous one percent, the red line. And to be in the one percent in 2012, you needed to have at least $370,000 of income, average income of $441,000. And you can see that if you go all the way back to 1913, and this is as I said based on income tax data, so that's essentially when the income tax started, you can see that the share that this group has is essentially back to where it was during the roaring 20s. Again, probably something many of you have seen before. I'm sorry, that's the green line. If you look at the red line down below, that is the top 0.01%. That is the 16,000 households with the highest income. And to be in that group of 16,000 in 2012, you needed to have a little over $7 million of income and $21 million of average income. And again, you can see that that group as well has gotten back to and even exceeded where it was at any point in our history. So this has been known and talked about for some time this data. But here's something that is new in this book from some of what we saw before. This is wealth. And so wealth is much harder to analyze and there have been questions about exactly how accurate the state is, but I think directionally it shows the point. And so if you look at the U.S., and I am going to turn to Europe and some other parts of the world in a minute, if you look at just the U.S., you can see that in fact wealth is much more unequal than income. The famous 1% has, as we saw a minute ago, 17.4% of the income that was in 2010, and it has about 34% of the wealth, so roughly double. What is sort of interesting to see is that while the income number has gotten back to where it was back in the rowing 20s or the Gilded Age, whatever you want to call it, wealth has not. And that's basically a function of the fact that we have, going back that 100 years, instituted a lot of progressive taxation, state taxes, income taxes and so on, which have reduced the extent of the wealth concentration from what it was back then, so an interesting little detail. Now, if you take the top 1%, I want to just focus for a minute on the top 1%, and I want you to look at the bottom bar here. And so this is a decomposition of the 1%. So this light gray area on the left is the bottom half of the 1%, so from 1% up to .5%. The black part is from .5 to .1%. The green is from .1 to .01, moving up. And the red is just that same .01%, those same 16,000 people that households that we talked about before. And so what's interesting about it is if you look at the light gray line in the middle, you can see that in fact the share of wealth of the top 1% of the people between 1% and .5%. In fact, hasn't really gone up at all since 1960, actually gotten down slightly. If you look at the next group of the black line from .5 to .1, you see essentially the same thing. It's only when you get to the .1 and above that you start to see this acceleration of concentration, and you see it most dramatically at the .01%, which is that red line. So back in 1975, that .01% had a little over 2% of the wealth. Today it has around 11% of the wealth. And so that's an interesting aspect of what is going on out there. Now let me turn a little bit internationally, and I'm going to kind of go back and forth between international comparisons and US data. So this compares the US to a bunch of both developed and developing countries around the world. And based on this particular type of data, you can see that the US has the highest share of income inequality. The 1% has the highest share of income of any major country in the world, including India and China. For those of you who are devotees of this, I want to make sure that I acknowledge there is other data that shows that China and India may be more unequal than we are by a little bit. But directionally, we are in the same zip code and certainly, for better or worse, a leader in accomplishing income inequality. Now let me take the chart that I showed you at the beginning and superimpose some other countries on it. So the red line is the US. It's the 1%, goes through 2010, gets to the 17.4% figure, and it compares it to three other countries. The UK, the blue line, as well as France and Sweden. And you can see a divergence in what's happened that while all four of these countries had fairly similar levels of income inequality 100 years ago, in recent years the US and the UK have pulled away, France and Sweden are much less so. And if you put a bunch more countries in here, which I didn't do because it would make it very hard to read, you would essentially see the same kind of trend that the English-speaking world, if you want to call it that, Canada, Australia, New Zealand, places like that have moved one way and the non-English-speaking world have had much lesser increases in income inequality. And we can talk about why it is, but it's, I think, heavily a function of tax policies, regulatory policies, and things like that. Now let's talk about wealth inequality, looking again at a few different countries. So starting on, this goes back actually 200 years this data. So how many people here are Jane Austen fans? And how many people are Downton Abbey fans? A lot of Downton Abbey fans. So if you're a Downton Abbey fan, we'll start with you guys. You can see that about the time that Downton Abbey was set, 1% of the British population controlled nearly 70% of the wealth. If you look at back at the time of Jane Austen, it was sort of in the 55 or 60% range. And oddly enough, it wasn't that different in Sweden of all places. But then you can see what happened. And this was a mix of tax policies and it was also wars and oppressions and a lot of things that destroyed a lot of wealth, as well as wealth getting broken up into more hands as generations passed. But you can see that it came down for all of these countries. But Britain came down, they all crossed the US right here in about 1960. And so today we actually have a higher share of wealth concentration than Britain, then France, then Sweden. Not back to these levels of course, but still we are now the leaders. And one of the ironies of this of course is the US, I think we all think of the US as a country that was founded on this progressive anti-establishment, people can get ahead kind of idea. And we were that way for much of our history. All through the 19th century we did not have this kind of level of wealth concentration. But today we are the country that in a way, and I'll show you some other data in a minute, has the greater concentration of wealth, the greater ability for people to accumulate wealth and to keep it. Now I think that some of what we've all seen happening with the debate about income inequality and the real outrage I guess for lack of a better word about income inequality would probably not exist, probably not exist to the same extent if all the boats were rising. If it weren't just the top that we're doing better, but people across society were doing better, you might be hearing a little bit less about why do the people at the very top have so much. But that's not what's happening. So this slide compares the U.S. to, again, a bunch of countries. If you pick more countries you'd find the same thing. And it looks at what's happened to real meaning after adjustment for inflation median incomes in these various countries. And so you can see that between 2000 and 2010 there was essentially no change in the U.S. median family income. But you can see what was happening in all these other countries, including Canada and Britain, very large changes. Now some of you may say, well, yeah, but they started from much lower base. Their incomes aren't as high as ours. So there was a lot of catching up to do whatever. That is all true. But you will see that they have started to catch up. And in fact, Canada, and this is as of 2010, so I think most of us would guess that if you had data from now you would find that Canada was actually ahead of us, but Canada has caught up to us. And so this is the amount of income after taxes. And I think of it as disposable income that the average person, per capita that the average person has in each of these countries, so $18,700 for the U.S. and Canada, and then the U.K., Germany, and Sweden, not that far behind. So we're really no longer probably the world's richest country on average and certainly people have not been doing better. And as I said, I think that goes a good ways toward explaining what's going on out there. So that's what's happened. Let me talk for a minute. I'm not going to obviously be able to go through all of this in great detail about what I think some of the causes and some of the consequences are of this. I think there are really two things that drive the majority of what's going on out there. And I don't want to oversimplify, but I want to get through this in my lot of time. And those are basically technology and globalization. I'm going to show you a slide or two on each of these to try to illustrate my points. And then I think there's a bunch of secondary causes. I'm sure there's more than what I've captured here. We can debate which ones are more important, but things like the winter take all labor markets, tax policy, declining unionization, all those play a role. So let's start with technology. And I'm just going to illustrate that with a simple slide that shows what's happened to people's incomes based on their education level going back to 1979 adjusting for inflation. So if you did not finish high school between 1979 and now, the average person in that cohort, their income would have gone down 24%. If you had high school, 11%, 10%, you can see these numbers and college you would be up. But actually, since 2000, even if you had a college degree, since 2000 your income would have gone down by about 2%. But the point is that education obviously matters. Skills matter. And I think it's a basic supply and demand of labor kind of argument plays a role in what's going on out there. The second major point I want to talk about is globalization. We can talk about free trade. I'm a free trader. We can debate free trade. But I don't think you can escape the fact that global competition has had an adverse impact on wages for many Americans. The country as a whole may well be better off. I would probably argue that it's better off. But there are individual winners and losers. And among the losers are workers who work in sectors that are globally competitive. And I put two of them at the bottom here. Manufacturing and autos, which is near and dear to my heart. And you can see that between a middle of 2009 and this spring that real wages in these sectors have gone down. 2.7% in manufacturing, 10% in autos. And I can tell you lots of auto stories about where and how and why that's happening. But I know it's happening. And so that is something that we all have to live with and recognize. Let me turn to tax policy, which I mentioned before. This is a chart that essentially takes a bunch of different countries and graphs them comparing what has happened to their top tax rates since 1960 and what has happened to the share of income that went to the top 1% since the 1960. So you can see the U.S. and the U.K. all the way around the left, which have had the largest reductions in marginal tax rates, have had the highest increase in inequality. And you can see Spain, Switzerland, Germany, which have had the smallest changes, no changes in these cases in tax policy and marginal tax rates, have had the smallest, in some cases actually less inequality, changes in incomes during the same 54 year, 52 year period. So there's clearly some relationship between taxes and income inequality. Another way to look at the same question is to compare incomes before and after the government gets in the middle of things. So basically before taxes, before social welfare programs, social security, food stamps, all these kind of programs and say, well, what's the impact of the government policy? So the light blue bars, and these are something called the Ginny coefficient for those of you who either know it or want to know it or don't, whatever. But one is the most unequal, zero is the most equal, and basically you then calculate where on a spectrum any country is. The light blue bars are, for each of these four countries, before the government gets in the middle of things, the dark blue bars are after the government gets in the middle of things. And you can see that on a pre-government basis, the U.S. is actually the least unequal of these four countries tied with Sweden and Britain and Germany are more unequal. But then you can see that post transfers, as we call it, the U.S. ends up being the most unequal because all of our policies put together do less to reduce income inequality than all the policies of these other countries put together. And another way to illustrate this is the average tax rate paid by the wealthiest 400 Americans going back to 1992. And you can see on here I've put down the various major tax changes that have occurred, the 1993 Clinton increases, the 1997 Clinton cuts, the Bush cuts, the Bush cuts. But all told, if you go back to the early 90s, these 400 people paid on average 29%. It got as low as 17% in 2007. Then back up to 20%, not really because we changed tax policy because of the recession. I'm almost surely this is the most recent date I have, but almost surely it has come back down a bit since then, although taxes have also gone up a little bit. So it's bumping along somewhere probably between 17% and 19% much lower than it was 20 years ago. So let me turn a little bit to some of the consequences of inequality. One consequence that people believe, and I'm going to show you pros and cons on a couple of these because I do think to be fair and honest, there is uncertainty about exactly what the consequences are and data that points in somewhat different directions. So this is something that Alan Krueger, former chairman of the Council of Economic Advisors did. He calls it the Great Gatsby Curve. And it essentially plots income inequality across the bottom against intergenerational mobility, against your chances of your kid moving up to the next level of income. And so as you can see, he drew a line through the middle, there appears to be a very close correlation between, in each country, between more unequal countries, less income mobility. And so the U.S. is shown here as having a very low level of income mobility, which is a fact, and it does line up with these other countries. But there was another study done recently about simply mobility within the U.S. And so going back to 1971, what is the chances of somebody who's born into one of the five 20% slices of the pie moving up to the next one? And you can see these lines are all basically flat. And what these researchers found is that while mobility in the U.S. is less than it is in Europe, oddly enough, it hasn't changed much in the last 40 years even though income inequality has gone up. So the next question I want to just talk about for a second is whether some people think more income inequality is bad for growth, some people think it's good for growth, and some people think it doesn't matter. So let me start with the IMF, which somewhat uncharacteristically, usually it sticks to things like budgets and fiscal austerity and whatnot, has weighed in on this subject. And they produced a couple of studies and a couple of charts that suggest that there is a relationship between more income inequality and less growth. So this takes countries and it puts them, the more unequal ones on the right, and these tend to be lesser developed countries in Africa and Latin America and places like that, and it plots it against what it defines as kind of sustainable growth, the periods of time that a country can go before it has some kind of economic or financial crisis, and it does the kind of regression analysis and lo and behold it finds there is a relationship between the two. And another part of the study, it calculated that income distribution does play a major role in, again, how long growth persists, along with trade openness and the quality of political institutions, some of these other things playing less of a role. But here's another study from the OECD, which basically plots a bunch of countries comparing their growth of real GDP between 1994 and 2009 against the amount of income inequality that the country has, and as you can see, there's really no pattern to this. And if you think about it, you can think of lots of examples. You can think of comparing France and Sweden, which both have low levels of income inequality. One of them is growing reasonably fast. One of them isn't. You can compare the U.S. and Sweden. One of them has a lot of income inequality. One of them doesn't. They're both growing at a reasonably fast rate. So it's not completely obvious, much as we might intuitively think so, that there is that effect, but it's a debate that goes on. So let me talk for a second. I'm just really going to tick these off about solutions. And I think, again, for those of you who have paid attention to this issue, these will probably mostly or all seem very familiar. I don't think there's a magic wand. I don't think there's a quick fix. It's not easy. It would take a lot of things, including, as Senator McCain said, a Congress was actually functioning. And so I don't have necessarily a great hope, but at least if I could wave a wand or lay out my agenda, it would include basically this group of five things and probably some others. Education and skills, obviously being at the top. Changes in tax policies, I've shown you the impact of that. Clearly spending on R&D infrastructure. I think we should be thinking more about the ugly word of redistribution and actually recognizing that we're not going to change this overnight and government does have a role to play in taking more from those of us who have been fortunate and giving it to people who've been less fortunate. And then finally, I think we have to have an open conversation about trade and how we have free trade, but also have fair trade. So this is my second to last slide. I want to end on an optimistic note, sort of an optimistic note, and show you one kind of interesting slide that we found, which is that if you basically looked at the whole world as if it were one country, instead of all these different countries one by one, and you plotted it all on a chart, here's what you would see. You would see that you've had an enormous increase in incomes in the sort of rising middle class of the developing world, and that's the sort of optimistic note that I was trying to refer to. But it really is very pervasive, and it spans a vast number of people around the world. You would also see what we talked about before, which is the decline of the middle class in the U.S. particularly, but elsewhere as well. You would see the rise of this global elite. So depending on which side of this chart you look at, you may come away from this feeling better or worse about everything I just said. So I'm going to stop there and let man take over. Well first of all, fascinating stuff. I'm shocked though by what you said near the end. Are you suggesting that income inequality may not in fact hurt economic growth, may not in fact impact economic mobility, in which case why is it a problem? Why isn't the answer just stop being jealous of successful people? That's a good question. I am saying the first thing you said. I think we all want to be whatever our predispositions are, whatever our views of fairness, egalitarianism, the American dream, whatever you want to call it are. I think we want to come at any issue, and I think this is very much in the spirit of New America. We want to come at these issues with an intellectually honest approach, look at all the data, and reach a conclusion. And what I wanted to show you, because I think the jury is out, I think the economist profession is, I don't want to say I have to lunch, is still pondering this. And I don't think it's obvious, I don't think it's obvious that inequality affects growth one way or the other. But the flip side of that is also true, which is if it doesn't affect growth that much, then one of the arguments that you hear a lot, which is, well, we really can't attack income inequality because that will reduce growth, also becomes wrong. It also then means you can, for social reasons, for fairness reasons, say I want to deal with income inequality and not have to deal with the argument of, well, that's going to reduce our growth rate. Let's talk about the mobility question. I think that's the question that middle class folks are most concerned about. Let's talk about something you didn't mention, which is the minimum wage. It just seems to me to be mathematically impossible that if you have an increase in income inequality with the middle class crashing, that wouldn't do something bad to the mobility. I mean, how is it, I mean, explain to me how it's rationally possible to have an increase in income inequality and not have an increase, at least in upward mobility. Well, I should get the two economists to come here and explain it to you because they did the study. But look, a couple of things are true. It is true that we have lower income mobility in this country than in Europe. We have had for a long time, actually, longer than any of us would even guess at. What these guys found was that, going back and looking at 40 years of families and people, that your chances of moving up or down didn't move that much. When you say the middle class is crashing, look, I'm as worried and upset about the middle class as you are, they haven't crashed. They just haven't gone up. And one of the things that I think has come out more and more as you look at this data is what I talked about, that the real beneficiaries are this little sliver all the way up at the top. And so for many of the people around the middle, their relationship to each other hasn't changed that much. And therefore, it is possible that their mobility hasn't changed that much. I'll throw a couple of questions. People want to ask, I think we've got, you have a microphone, so maybe you start signaling. A couple more questions. So today, while we're here, all across the country, the fast food workers are demonstrating, they're striking, apparently one of the biggest strikes in American history. And that's tied to this concern about the minimum wage, which I don't think you mentioned at all. Is the minimum wage just not a big deal just for something for Democrats to beat up on? Well, I probably should have mentioned it somewhere in there because it's not a huge deal, but it's an important deal. Yeah, raising the minimum wage is certainly something we should do. I mean, you know the facts that has been raised since 2009. It's now back at the levels of all terms it was in the 1960s. It's below other countries. I was at a conference recently where someone had sort of dissected what a hotel housekeeper gets paid in a bunch of different countries here. And it was really embarrassing, actually, at how we treat some of these people. So, yeah, it absolutely should be raised. The reason I didn't mention it is that it's not going to, it's going to be something very important to a group of people who are now at the bottom. It's not going to change the middle class. Right? In the minimum wage, we're talking about $10 an hour. That's $22,000 a year. The middle class median family incomes are about $50,000, $55,000. So it's not going to help those people. It's going to help the people at the bottom. Just because in the news today, I thought it would be important to at least mention. Are there questions? Let me just see where the mics are. Do you have a mic? Are there two? Okay, so you have a mic. So we're going to go this way and then this way. We'll just ping-pong. Okay. Thanks. I'm Marco Nunziato, General Electric, and as a disclosure, I am an economist. My concern is we're a bit too quick at pointing the fingers at technology. So the numbers you've shown in terms of the returns to education and skills are important. They have important implications for education. However, you've also shown us numbers on the Gini coefficient, which show that the U.S. is not particularly unequal before taxes and transfers. So before the government gets involved with their distribution policy. And that suggests to me that it's not the impact of technology on wages which creates inequality. Also, you've pointed out that inequality and the rise in the share of wealth and income of the top 1% has been seen in the U.S. in English-speaking countries, U.S., New Zealand, Canada, UK, but not in countries like Germany, France, and Sweden. And I find it hard to believe that over the last 40 years we've seen significantly different technological progress in the U.S. and New Zealand than in Germany. So how do you reconcile this? Good question. Look, on the first question, I think the answer to your first question is the fact is that, first of all, I'm actually probably a little less worried about technology than the average person who looks at this stuff. I think there's a high level of terror on the part of many people about the impact of technology, not just on wages but on jobs, and are we going to be replaced by robots and all that kind of stuff. And I'm actually in a separate discussion. I'm not as worried maybe as some others. But first, to your first point, to your first point, this has happened, yes, technology is affecting all those countries, and that's why you're seeing more inequality. That's why the Gini coefficient is reasonably similar among those four countries because they're all, I think, facing the impact of technology from one form or another. We simply have, as you know, much more flexible labor markets so wages here can move more rapidly and go down. I don't think you're going to find a case in Europe where auto workers have taken 10% pay cuts to remain competitive. They just get government subsidies or whatever, or the companies lose money. And so I think that the impact of technology is not that different on any of these countries. I think what's different is the way companies have organized themselves in terms of the government's involvement in protecting those at the bottom, helping those at the top, or whatever. So that would be, I think that's my basic answer. Great. I'm just going to point to you. You decide who you want to get the microphone to, but it's your mic's turn. And I promise I'm going to get you in, don't worry. Hi, Doug Olivant with New America Foundation. One thing you didn't discuss, I was surprised not to hear was about the cost and education policy. Your slides made it very clear that if you want your kids to be part of the next generation of the middle class, you absolutely must send them to school. It strikes me that if you're 2.3 kids that you need to send, that's going to either put a big dent in the wealth, accumulated wealth at that point to the parents. So essentially you're saving to send the kids to college and when that's done you can start saving for retirement. Or you're just imposing that cost on the 21 to 25 year old. He then, he or she graduates with a $30, $40,000 debt at that point. He's not accumulating wealth then until he pays that back in his 30s. I didn't see that on the slides. Is that something we need to talk about? Well, I only had 20 minutes. And that honestly is the answer to your question. I agree with you completely. Obviously that education is and finding ways for people to pay for education, making it affordable is all at the top. And I will also now venture way out of my comfort zone and expect there are a lot of people who know more about this than I do. But we shouldn't be talking just about how many kids get a four-year college degree, what kind of loans or subsidies or how we help them financially. But we should also be talking about what kind of education they should get. Because it isn't obvious, even for those of us who went to four-year liberal arts colleges and might have studied philosophy, which I didn't, that that is what everybody should do. We have 2,000 new jobs to chat and do good. There are a lot of interesting aspects to how that all happened. But one of the things that happened was even though they had thousands and thousands of applicants, and those jobs paid $14.5 an hour when they started. They were not middle-class jobs, they were lower middle-class jobs. Even though they had all these applicants, they found the applicants really weren't capable of doing the work. And they ended up bringing trainers in from Germany to run German-style training programs for them. So I think there's a lot to talk about in philosophy at Harvard that I think would be part of the conversation. Very good. Carol Heimowitz at Bloomberg. I wonder how much of the solution has to come from the private sector, particularly boards of directors who've been so behind the run-up in executive pay so you don't have a situation where the top executives are getting about 300 times what the bottom, there's been a balloon there. So I'll say something controversial on that. I may not make many friends. I don't think it's the private sector's responsibility. I think we're all sort of we're all set up and motivated by a set of incentives, a set of goals, a set of an assignment. We all have an assignment in life of what we're supposed to do. And people in the private sector, executives are supposed to run their companies and make money for their shareholders. I do think executive pay is out of control. Don't get me wrong. But I showed you there are 16,000 households in that top .01% with 7 million or more of income. There's 500 companies in the Fortune 500. They're certainly part of the problem. I think it's out of control. I'd love to see some stuff done about it. Not probably by the government, but by the boards, as you say. But it's more symbolic than actually going to really change the numbers that I showed you. Well, speaking of inequalities, we figure out... Hang on. Me first. You're in charge. You can have all the questions. Okay. Speaking of out of control, the only people that I saw that should be super happy were the people in the financial sector and the Wall Street folks. And I'm just curious, what's your view about the financialization of the economy? It seems to me, if you ask your normal person to go to a barbershop, you go to a bowling alley, you go to a sports bar, there's a view now that you've got some guys sitting around. They're sitting around a computer because their computer's doing a zillion trades a second. And that those are the only people who are winning out, and everybody else who's working producing stuff is falling further and further behind. Is that your... Is that a fear of you? Well, you know, asking me what I think about the financial sector is like asking a shoemaker whether people should have shoes. Made my living in it for 40 years. Look, I think... Look, first of all, I would say in full disclosure, and again, time for everything, that number is a little misleading because it's from a low 0.09 during the recession upsets, but there's no question the financial sector is doing fine. I'll say something else controversial and then I'll temper it a little bit. I think if you say to yourselves, well, how are we going to compete around the world? How are we going to... If we're going to have to cut auto workers' wages and compete, and we have to remember we are very competitive in a bunch of industries, whether it's information technology or health care or education and financial services. If you look around the world, our banks and our financial services firms are the most successful ones in the world and I don't think we want to give that up. I think in Tim Geithner's book is also out this week and it's a great book I would recommend to all of you because I think he lays out how they thought about this and I would say that in the course of saving the country and saving the financial system there were beneficiaries of that, shall we say, that we're unfortunate and I think if we could do it all over again if we could change life you might do it a little differently and I also think that going forward we need a much more vigorous regulatory apparatus and oversight apparatus to keep things under control but I don't think our capital markets the amount of the ability of companies to raise venture capital and things like that, I just don't think we want to I don't think we want to cut off our noses despite our faces honestly. Hi, my name is Sarianne Lee with the U.S. Department of Education and I'm really interested in one of the solutions he suggested which was redistribution but a challenge that we find is that even if you have an educated group that don't know about money they haven't had money introduced into their realm of thinking they don't know how to properly invest they get caught up in wicked, ironic schemes and they can't navigate themselves out of poverty or tricky student loans so how does the redistribution address people who don't know how to manage the money even if they do get it? Well, that's a really good point again a little bit out of my assignment for today but there's no question that the lack of financial literacy on the part of people is a major impediment in all this as I guess a little bit of an aside but it relates to your point change from defined benefit pension programs where the money was invested by big pension funds and you've got a pension to the 401K IRA system which was done for reasons unrelated I think it was a really bad policy decision because it basically told people you've got to now deal with your money and people don't know how to deal with their money they're not professionals, you wouldn't take out your appendix you wouldn't write your own will, you wouldn't fix your own plumbing why would you try to manage your own money so that's one piece of it that I think needs to be fixed but I do I had lunch with somebody the other day who wants to really take a lot of his wealth and make a big push for financial literacy because he agrees with you and I agree with you it's something that should be on the list Well, we only have one more minute but I cannot ignore that hand right there so please give that great leader the microphone Thank you Van, thank you Stephen by the way I did major in philosophy in college I want to drill in on one of your five solution tracks policy it's always troubled me that most American families pay more in payroll taxes than in income taxes and payroll taxes are the most aggressive forms of taxes by definition and could that not be a winning political formula to focus in on lowering payroll taxes because Americans are averse to redistribution that doesn't fly here but the message that working Americans should be able to keep more of the gains of their own work might just resonate and we could fund our social security system through progressive income taxation instead your comments please So I think to those of us in the money business all just money and you can call it what you want and I totally agree with the implication of your question that whatever solution those of us who want to do something come up with should make it as politically palatable as we can because redistribution is an ugly word and it's not a word that has a lot of great political resonance at the moment the country or at the moment the conventional wisdom is still centers around the idea of a social security trust fund and that people pay in and they get out and all that stuff even though the actuarial numbers don't really work and so it would take a big change in our thinking I'd be fine with that another thing that would really also mostly help people at the very bottom but which I think a vast number of economist types believe in is raising the earned income tax credit it's a very progressive very efficient way to help people who are close to the bottom so there's a thousand ideas out there and I'm not in the packaging business but I'm fine with that one I'm fine with pretty much anything I just think we're heading in the wrong direction well listen I think we are out of time is that right so I want to give you a big round of applause for your thinking on this stuff and it does seem like this is an idea because time has come so thanks for seeing us good move