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  • BILL MOYERS: Welcome. The

  • new Gilded Age is roaring down on us, an uncaged tiger on a rampage. Walk out to the street

  • in front of our office and turn right and you can see the symbol of it: a fancy new

  • skyscraper going up two blocks away. When finished, this high rise among high rises

  • will tower a thousand feet, the tallest residential building in the city.

  • The New York Timeshas dubbed it "the global billionaires club," and for good reason.

  • At least of two of the apartments are under contract for more than $90 million each. Others,

  • more modest, range in price from $45 million to more than 50 million.

  • Simultaneously, the powers-that-be have just awarded Donald Trump -- yes, that Donald Trump

  • -- the right to run a golf course in the Bronx which taxpayers are spending at least $97

  • million to build. Whatamounts to a public subsidy,” says the indignant city comptroller,

  • "for a luxury golf course." Good grief. A handout to the plutocrat's plutocrat.

  • This, in a city where economic inequality rivals that of a third-world country. Of America's

  • 25 largest cities, New York is now the most unequal. The median income for the bottom

  • 20% last year was less than $9,000, while the top one percent of New Yorkers has an

  • average annual income of $2.2 million.

  • Across America, this divide between the superrich and everyone else has become a yawning chasm

  • and studies indicate it may stifle jobs and growth for years to come. At no time in modern

  • history has the top one hundredth of one percent owned more of our wealth or paid so low a

  • tax rate. But in neither of the two presidential debates so far has the vastness of this astounding

  • inequality gap been discussed. Not by Mitt Romney, who is the embodiment of the predatory

  • world of financial capitalism. And not even by Barack Obama, whose party once fought for

  • working men and women against the economic royalists.

  • So just in time, if not too late, comes this definitive examination of inequality: “Plutocrats:

  • The Rise of the New Global Super-Rich and the Fall of Everyone Else.” Its author is

  • Chrystia Freeland, whose journalism is steeped in years of covering robber barons from Russia

  • to Mexico and India. Once deputy editor ofThe Globe and Mailin Canada and a correspondent

  • forThe Financial TimesandThe Economist,” she is now the editor ofThomson Reuters

  • Digital.”

  • We're joined by the perceptive and merciless Matt Taibbi, who has made the magazineRolling

  • Stone” a go-to source for understanding the financial scandals that roil America.

  • Who can forget his 2009 article on "The Great American Bubble Machine," which described

  • investment bank Goldman Sachs as quote, "a great vampire squid wrapped around the face

  • of humanity, relentlessly jamming its blood funnel into anything that smells like money”?

  • Welcome to you both.

  • MATT TAIBBI: Thank you.

  • BILL MOYERS: Income inequality has soared to the highest

  • level since the Great Depression, with the top one percent taking 93 percent of the income

  • earned in the first year after the recovery, the first full year after the recovery. Why

  • are the two candidates not talking about inequality growing at breakneck speed?

  • CHRYSTIA FREELAND: You know, I think because it is still a taboo

  • in American political life and in American cultural life. One of the economists I talk

  • to he works for the World Bank. And he said to me, you know, and he's a specialist in

  • income inequality.

  • And he said, "When you go to think tanks you say you'd like to do a study about poverty,

  • they say, 'That's fine. That's great. We're happy to fund it,' because writing about poverty

  • makes everybody feel good and feel that they're being charitable and beneficent. But if you

  • say, 'Actually, I want to study income inequality,' and even most dangerously, 'I want to study

  • what's happening at the very top of the distribution," what Branko Milanovi

  • said to me is the think tanks immediately pull away because they say, "Our donors won't

  • like it."

  • And that actually challenges the whole economic setup of the United States and of western

  • capitalism. It’s very, very threatening. And I think that that’s why you've had the

  • billionaire class. You know, the minute Barack Obama, I would actually say rather gently

  • suggested that the millionaires and the billionaires should pay a little bit more, you had immediate

  • cries of class warfare from the plutocrats. And very emotional. You know, there was an

  • activist investor who sent an e-mail to his friends. The subject line is, "battered wives."

  • And in the e-mail he compares himself and his fellow multi-millionaires to battered

  • wives who are being beaten by the president. He actually uses those words.

  • MATT TAIBBI: And I thought it was really interesting in

  • your book how you pointed out that Bill Clinton, himself, responded to Obama's criticism by

  • saying, "You know, I would have done it a little bit differently. I think, you know,

  • you can't attack these people for their success." And I think that's very relevant because if

  • you go back in time, it wasn't always this way.

  • But I think the shift really began with Clinton and the New Democrats. I think after, you

  • know, Walter Mondale lost in 1984, the Democrats decided, "You know, we're never going to lose

  • the funding battle again." And they began this sort of imperceptible shift, where they

  • continued to campaign on social issues the same way they had before.

  • They retained their liberalism in that sense. But economically, they began to side more

  • and more with Wall Street and more and more with the very rich. And they've, I think we've

  • now reached the point where neither party really represents the very poor in the way

  • that the Democrats maybe used to. And so, that there's, that's why, you know, you don't

  • see it in the debates, because neither party is really an advocate for that kind of left

  • behind class anymore.

  • CHRYSTIA FREELAND: It is the people at the bottom, as Matt says.

  • But it's also the people in the middle.

  • MATT TAIBBI: Right.

  • CHRYSTIA FREELAND: You know, the middle class is being--

  • MATT TAIBBI: Decimated, yeah.

  • CHRYSTIA FREELAND: --hammered. Those jobs are hollowed out. And

  • where are the people pulling back and saying, "Okay, technology revolution, we love it."

  • Globalization, I love that too. And I think it's great people are being raised up in India

  • and China and now Africa. But let's think about how our society and our politics need

  • to change to accommodate this. And no one is doing that. And meanwhile, the guys at

  • the top, who are making, who are doing so, so well actually are saying, "We need to slant

  • the political system even more in our own favor."

  • BILL MOYERS: Why are we so passive about this?

  • MATT TAIBBI: Well, I think the, first of all the poor in

  • this country have been incredibly demoralized whether it's the relentless attention of,

  • you know, bill collectors. Or if you go to poor neighborhoods, you know, I was out in

  • Queens last night interviewing a kid who's been stopped and frisked 70 times already.

  • He's 22 years old. You have this constant interference by the police if you live in

  • a bad neighborhood. There're all these obstacles to getting up

  • and rising up and having your own voice. And also I think in the media we get these relentless

  • messages that being poor is actually your own fault and that people who are rich deserve

  • to be rich. And a lot of Americans are disillusioned about their situation. They believe, they

  • actually do believe on some level that if they're poor, they deserve to be that way.

  • I think they're, and so they're reluctant to go out and revolt the way maybe Europeans

  • in the last century, early in the last century would have.

  • BILL MOYERS: Left unanswered, left unanswered where does

  • this vast inequality take America?

  • CHRYSTIA FREELAND: Well, I think to a very bad place. And I see

  • two real and present dangers. One is that you see an increase of the political capture.

  • BILL MOYERS: Of what?

  • CHRYSTIA FREELAND: Of the political capture. So of the people

  • at the very, very top, capturing the political system. And most crucially, I think something

  • that an economist, a guy called Willem Buiter, who's the chief economist at Citigroup, he

  • calls it cognitive capture. Where he says, look, it's not like this vast conspiracy.

  • It's not as if, you know, everyone is on the payroll of the plutocrats.

  • And this guy, okay, he is now the chief economist of Citigroup. He wrote this when he was an

  • academic economist. But so it's, he's hardly, you know, some kind of Marxist on the barricades.

  • His argument was that part of the reason the financial crisis happened is the entire intellectual

  • establishment, not just people inside investment banks, but regulators, academic economists,

  • financial journalists, had all been captured by the financial sector's vision of how the

  • economy should work. And in particular, light touch regulation.

  • And I think there is a broader cognitive capture of, you know, you might call it the intellectual

  • class, the public intellectuals, around maybe the inevitability of plutocracy. You know,

  • as Matt was saying, this notion that if you're poor, it's your own fault. You're part of

  • this dependent 47 percent. Unions are very bad. All of that sort of stuff.

  • So I think that that cognitive capture increases. And I think what you see increasingly is,

  • you know, elites like to think of themselves as acting in the collective interest, even

  • as they act in their personal vested interest. And so what I think you'll end up seeing is

  • social mobility, which is already decreasing in the United States, being increasingly squeezed.

  • You see particularly powerful sectors, finance, oil. I would say the technology sector is

  • going to be next in line, getting lots of government subsidies.

  • And meanwhile, I think you see much less money spent on the things that the middle class

  • and the poor need. That's why have this, you know, full bore attack on entitlements, right?

  • Why is the plutocracy so enthusiastic about cutting entitlement spending? Because they

  • don't need it. But they're very worried about their tax dollars funding it.

  • MATT TAIBBI: Right. Where was that outrage when the $5

  • trillion or $6 trillion in bailouts was coming their way?

  • CHRYSTIA FREELAND: Right. So I really worry about that. And then

  • the other thing that I worry about is you do start actually stifling economic growth.

  • So, you know, if you want my dystopia scenario for the United States, it is that America's

  • moving into a more Latin American structure of the economy.

  • BILL MOYERS: People at the top, rich. And a lot of people

  • CHRYSTIA FREELAND: A few incredibly rich, you know, having just

  • great lives. And then people at the bottom really struggling.

  • MATT TAIBBI: We both lived that. We saw that in Russia

  • and it happened in the mid-'90s. And

  • BILL MOYERS: Yeah, you both cut your teeth in journalism

  • covering Russia. What do you take away from that that is relevant to what's happening

  • in this country?

  • MATT TAIBBI: You know, I, that experience completely shaped

  • the way I look at the present situation in the, in America. In the mid-'90s, suddenly

  • when Russia became a "capitalist society" you suddenly has this instant division of

  • the entire society into this very, very tiny group of people at the top who had more money

  • than anybody in the world. And then there was everybody else who had nothing. And

  • BILL MOYERS: And they got it through privatization, the

  • government sold off the resources of--

  • CHRYSTIA FREELAND: "Sold" in quotation marks--

  • BILL MOYERS: Yeah. So--

  • MATT TAIBBI: But that was, that's the key part that I think

  • people don't understand, is that what happened in Russian was really a merger of state and

  • private power that empowered this one tiny little class. There was this moment in Russia's

  • history called loans-for-shares. The loans-for-shares privatizations, where a few people, a lot

  • of them were ex-KGB types, were essentially handed the jewels of Russian industry by the

  • people in the Yeltsin government. There were companies that were put in charge of their

  • own auctions. So they--

  • CHRYSTIA FREELAND: They were all in charge of their own auctions.

  • MATT TAIBBI: They were all in charge of their own auctions.

  • So they, you would have an auction for an oil company and a bank would be put in charge

  • of that auction. And the bank magically, you know, would win the auction for the oil company,

  • which was worth, you know, billions or even hundreds of billions of dollars. And that's

  • how they instantly created this super wealthy class of people. And everybody else had nothing.

  • This one story, for me this image that I'll never forget. I went to a coal mine up in

  • the Russian arctic north where workers hadn't been paid their salaries for nine, ten months

  • at a time. And when I went to the mine, the mine owners, the first thing they wanted to

  • do was to take me to their bright shiny new lounge that they had built for themselves

  • and show off their brand new slate pool table that they had built with the money that they

  • weren't paying to their workers.

  • And that, to me, perfectly expressed the divide in modern Russian society. You had these people

  • who were living off nothing on the one hand. And then you had these super wealthy people

  • who had been enabled who had just kept the money for themselves. And that's I think,

  • you know, it's a caricature of what we're experiencing here in America. But I think

  • that's where the world is drifting toward now.

  • BILL MOYERS: You write about some of these super rich,

  • not only with insight, but with empathy. That is, you've gotten to talk to a lot of them.

  • You have moved among them as a financial journalist, been to Davos and other places like that.

  • And I'm wondering, how did you crack what is clearly a tight knit world?

  • CHRYSTIA FREELAND: Well, I guess the way journalists do it, just

  • by talking to people, writing about them. I think you write stories that show people

  • that actually you're interested in what they're doing. And what I would also say is, you know,

  • I believe in capitalism. And I also actually believe in globalization and the technology

  • revolution. If you gave me the option of turning the clock back to the 1950s, I wouldn't do

  • it. Partly because I'm a woman and things were not that great for us then.

  • BILL MOYERS: Well.

  • CHRYSTIA FREELAND: And, you know, it's important, you know, I

  • think a mistake that the left can make in criticizing income inequality is to behave

  • as if this is entirely a political confection. It's entirely about political capture. There

  • are no genuine, legitimate and actually benign economic forces driving it. Because I think

  • there are. I think the winner take all economic dynamic is something that is existing separate

  • from the politics. The politics in the United States are exacerbating that division rather

  • than mitigating it.

  • But I do think that when you pull back and look at the global picture, which is something

  • that was important for me to do in the book, it becomes a little bit harder to say, "this

  • particular American tax break," or even, "this particular American financial reform is the

  • only thing driving income inequality," because the really remarkable thing is the extent

  • to which this is a global phenomenon.

  • It's happening across the western industrialized world. I'm Canadian. So I'm practically born

  • a socialist in the view of many Americans. But even in Canada, income inequality is increasing.

  • It's even, you know, for a while in the economic literature the one outlier was France. And

  • so, insofar as economists make jokes they would say, "oh, the French. They have to be

  • exceptional even in this area." But now you're seeing it increase in France too. And you're

  • seeing it increase in the emerging market economies. So I think we do have to accept

  • that there are some economic drivers.

  • Now those economic drivers are partly put in place by the politics. It was politics

  • that allowed globalization to happen. And in the United States really crucially, and

  • I think you can't emphasize this too much. Look at what happened with the tax code. I

  • mean, in the 1950s, this era when America felt itself to be a very conservative society,

  • and it was, the top marginal tax rate was above 90 percent.

  • BILL MOYERS: Yeah, 91 percent, I believe.

  • CHRYSTIA FREELAND: Right, just think about that. Imagine if Barack

  • Obama had said in the debate this week, "You know what Governor Romney? I think America

  • in the '50s was a wonderful place. That was the age of the greatest generation. They,

  • too, faced a real budget deficit they had to pay off. And the people at the very top

  • were willing to pay a 90 percent top marginal tax rate. Would you be willing to do that,

  • Governor?" I mean, imagine if he had said that.

  • BILL MOYERS: You cover some of the same crowd that Chrystia's

  • writing about, but you do so with a, with complete irreverence. Do you still gain access

  • to them? Or have all the doors been slammed in your face?

  • MATT TAIBBI: Well, the very, very top people won't talk

  • to me. You know, I don't have access to the same people that Chrystia maybe talks to.

  • But I do talk to a lot of people who work on Wall Street. In fact I got started down

  • the road of this whole topic, you know, after I wrote a couple of articles. And then suddenly

  • on this there was this outpouring of people from Wall Street who suddenly wanted to talk

  • to me because they were upset about the direction that the financial services industry was taking.