Bill Moyers- The Plutocracy Will Go to Extremes to Keep the 1% in Control.cwk (WP)

7/31/2019 Bill Moyers- The Plutocracy Will Go to Extremes to Keep the 1% in Control.cwk (WP)

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BillMoyers.com /ByBill Moyers,Matt

Taibbi, Chrystia Freeland185 COMMENTS

Bill Moyers: ThePlutocracy Will Goto Extremes to Keepthe 1% in Control

Moyers, Matt Taibbi andChrystia Freeland explain howthe plutocrats have willfullyconfused their self-interest with

Americas interest.October 19, 2012 |

(Video available on BillMoyers.com)


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From BillMoyers.com:The One Percent is not only

increasing their share of wealth theyre using it to spread millionsamong political candidates who servetheir interests. Example: GoldmanSachs, which gave more money than

any other major American corporationto Barack Obama in 2008, is switchingalliances this year; their employeeshave given $900,000 both to MittRomneys campaign and to the pro-

Romney super PAC Restore OurFuture. Why?Because, says the Wall Street


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BILL MOYERS: The new Gilded Ageis roaring down on us, an uncaged

tiger on a rampage. Walk out to thestreet in front of our office and turnright and you can see the symbol of it:a fancy new skyscraper going up twoblocks away. When finished, this high

rise among high rises will tower athousand feet, the tallest residentialbuilding in the city.The New York Times has dubbed it"the global billionaires club," and for

good reason. At least of two of theapartments are under contract formore than $90 million each. Others,more modest, range in price from $45million to more than 50 million.

Simultaneously, the powers-that-behave just awarded Donald Trump --yes, that Donald Trump -- the right to


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run a golf course in the Bronx whichtaxpayers are spending at least $97

million to build. What amounts to apublic subsidy, says the indignant citycomptroller, "for a luxury golf course."Good grief. A handout to theplutocrat's plutocrat.

This, in a city where economicinequality rivals that of a third-worldcountry. 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 NewYorkers has an average annualincome of $2.2 million.Across America, this divide between

the superrich and everyone else hasbecome a yawning chasm and studiesindicate it may stifle jobs and growth


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for years to come. At no time inmodern history has the top one

hundredth of one percent owned moreof our wealth or paid so low a tax rate.But in neither of the two presidentialdebates so far has the vastness of thisastounding inequality gap been

discussed. Not by Mitt Romney, whois the embodiment of the predatoryworld of financial capitalism. And noteven by Barack Obama, whose partyonce fought for working men and

women against the economicroyalists.So just in time, if not too late, comesthis definitive examination ofinequality: Plutocrats: The Rise of the

New Global Super-Rich and the Fall ofEveryone Else. Its author is ChrystiaFreeland, whose journalism is steeped


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in years of covering robber baronsfrom Russia to Mexico and India.

Once deputy editor of The Globe andMail in Canada and a correspondentfor The Financial Times and TheEconomist, she is now the editorof Thomson Reuters Digital.

We're joined by the perceptive andmerciless Matt Taibbi, who has madethe magazine Rolling Stone a go-tosource for understanding the financialscandals that roil America. Who can

forget his 2009 article on "The GreatAmerican Bubble Machine," whichdescribed investment bank GoldmanSachs as quote, "a great vampiresquid wrapped around the face of

humanity, relentlessly jamming itsblood funnel into anything that smellslike money? ... Income inequality has


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soared to the highest level since theGreat Depression, with the top one

percent taking 93 percent of theincome earned in the first year afterthe recovery, the first full year after therecovery. Why are the two candidatesnot talking about inequality growing at

breakneck speed?CHRYSTIA FREELAND: You know, Ithink because it is still a taboo inAmerican political life and in Americancultural life. One of the economists I

talk to he works for the World Bank.And he said to me, you know, andhe's a specialist in income inequality.And he said, "When you go to thinktanks 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


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everybody feel good and feel thatthey're being charitable and

beneficent. But if you say, 'Actually, Iwant to study income inequality,' andeven most dangerously, 'I want tostudy what's happening at the very topof the distribution," what Branko

Milanovi? said to me is the think tanksimmediately pull away because theysay, "Our donors won't like it."And that actually challenges the wholeeconomic setup of the United States

and of western capitalism. Its very,very threatening. And I think thatthats why you've had the billionaireclass. You know, the minute BarackObama, I would actually say rather

gently suggested that the millionairesand the billionaires should pay a littlebit more, you had immediate cries of


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class warfare from the plutocrats. Andvery emotional. You know, there was

an activist investor who sent an e-mailto his friends. The subject line is,"battered wives." And in the e-mail hecompares himself and his fellow multi-millionaires to battered wives who are

being beaten by the president. Heactually uses those words.MATT TAIBBI: And I thought it wasreally interesting in your book how youpointed out that Bill Clinton, himself,

responded to Obama's criticism bysaying, "You know, I would have doneit a little bit differently. I think, youknow, you can't attack these peoplefor their success." And I think that's

very relevant because if you go backin time, it wasn't always this way.But I think the shift really began with


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Clinton and the New Democrats. Ithink after, you know, Walter Mondale

lost in 1984, the Democrats decided,"You know, we're never going to losethe funding battle again." And theybegan this sort of imperceptible shift,where they continued to campaign on

social issues the same way they hadbefore.They retained their liberalism in thatsense. But economically, they beganto side more and more with Wall

Street and more and more with thevery rich. And they've, I think we'venow reached the point where neitherparty really represents the very poor inthe way that the Democrats maybe

used to. And so, that there's, that'swhy, you know, you don't see it in thedebates, because neither party is


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guys at the top, who are making, whoare doing so, so well actually are

saying, "We need to slant the politicalsystem even more in our own favor."BILL MOYERS: Why are we sopassive about this?MATT TAIBBI: Well, I think the, first of

all the poor in this country have beenincredibly demoralized whether it's therelentless attention of, you know, billcollectors. Or if you go to poorneighborhoods, you know, I was out in

Queens last night interviewing a kidwho's been stopped and frisked 70times already. He's 22 years old. Youhave this constant interference by thepolice if you live in a bad

neighborhood.There're all these obstacles to gettingup and rising up and having your own


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voice. And also I think in the media weget these relentless messages that

being poor is actually your own faultand that people who are rich deserveto be rich. And a lot of Americans aredisillusioned about their situation.They believe, they actually do believe

on some level that if they're poor, theydeserve to be that way. I think they're,and so they're reluctant to go out andrevolt the way maybe Europeans inthe last century, early in the last

century would have.BILL MOYERS: Left unanswered, leftunanswered where does this vastinequality take America?CHRYSTIA FREELAND: Well, I think

to a very bad place. And I see two realand present dangers. One is that yousee an increase of the political


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capture.BILL MOYERS: Of what?

CHRYSTIA FREELAND: Of thepolitical capture. So of the people atthe very, very top, capturing thepolitical system. And most crucially, Ithink something that an economist, a

guy called Willem Buiter, who's thechief economist at Citigroup, he calls itcognitive 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 chiefeconomist of Citigroup. He wrote thiswhen he was an academic economist.But so it's, he's hardly, you know,

some kind of Marxist on thebarricades. His argument was thatpart of the reason the financial crisis


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happened is the entire intellectualestablishment, not just people inside

investment banks, but regulators,academic economists, financialjournalists, had all been captured bythe financial sector's vision of how theeconomy should work. And in

particular, light touch regulation.And I think there is a broader cognitivecapture of, you know, you might call itthe intellectual class, the publicintellectuals, around maybe the

inevitability of plutocracy. You know,as Matt was saying, this notion that ifyou're poor, it's your own fault. You'repart of this dependent 47 percent.Unions are very bad. All of that sort of

stuff.So I think that that cognitive captureincreases. And I think what you see


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increasingly is, you know, elites like tothink of themselves as acting in the

collective interest, even as they act intheir personal vested interest. And sowhat I think you'll end up seeing issocial mobility, which is alreadydecreasing in the United States, being

increasingly squeezed. You seeparticularly powerful sectors, finance,oil. I would say the technology sectoris going to be next in line, getting lotsof government subsidies.

And meanwhile, I think you see muchless money spent on the things thatthe middle class and the poor need.That's why have this, you know, fullbore attack on entitlements, right?

Why is the plutocracy so enthusiasticabout cutting entitlement spending?Because they don't need it. But they're


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very worried about their tax dollarsfunding it.

MATT TAIBBI: Right. Where was thatoutrage when the $5 trillion or $6trillion in bailouts was coming theirway?CHRYSTIA FREELAND: Right. So I

really worry about that. And then theother thing that I worry about is you dostart actually stifling economic growth.So, you know, if you want my dystopiascenario for the United States, it is

that America's moving into a moreLatin American structure of theeconomy.BILL MOYERS: People at the top,rich. And a lot of people

CHRYSTIA FREELAND: A fewincredibly rich, you know, having justgreat lives. And then people at the


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bottom really struggling.MATT TAIBBI: We both lived that. We

saw that in Russia and it happened inthe mid-'90s. AndBILL MOYERS: Yeah, you both cutyour teeth in journalism coveringRussia. What do you take away from

that that is relevant to what'shappening in this country?MATT TAIBBI: You know, I, thatexperience completely shaped the wayI look at the present situation in the, in

America. In the mid-'90s, suddenlywhen Russia became a "capitalistsociety" you suddenly has this instantdivision of the entire society into thisvery, very tiny group of people at the

top who had more money thananybody in the world. And then therewas everybody else who had nothing.


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AndBILL MOYERS: And they got it

through privatization, the governmentsold off the resources of--CHRYSTIA FREELAND: "Sold" inquotation marks--BILL MOYERS: Yeah. So--

MATT TAIBBI: But that was, that's thekey part that I think people don'tunderstand, is that what happened inRussian was really a merger of stateand private power that empowered this

one tiny little class. There was thismoment in Russia's history calledloans-for-shares. The loans-for-sharesprivatizations, where a few people, alot of them were ex-KGB types, were

essentially handed the jewels ofRussian industry by the people in theYeltsin government. There were


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companies that were put in charge oftheir own auctions. So they--

CHRYSTIA FREELAND: They were allin charge of their own auctions.MATT TAIBBI: They were all in chargeof their own auctions. So they, youwould have an auction for an oil

company and a bank would be put incharge of that auction. And the bankmagically, you know, would win theauction for the oil company, which wasworth, you know, billions or even

hundreds of billions of dollars. Andthat's how they instantly created thissuper wealthy class of people. Andeverybody else had nothing. This onestory, for me this image that I'll never

forget. I went to a coal mine up in theRussian arctic north where workershadn't been paid their salaries for


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nine, ten months at a time. And when Iwent to the mine, the mine owners,

the first thing they wanted to do was totake me to their bright shiny newlounge that they had built forthemselves and show off their brandnew slate pool table that they had built

with the money that they weren'tpaying to their workers.And that, to me, perfectly expressedthe divide in modern Russian society.You had these people who were living

off nothing on the one hand. And thenyou had these super wealthy peoplewho had been enabled who had justkept the money for themselves. Andthat's I think, you know, it's a

caricature of what we're experiencinghere in America. But I think that'swhere the world is drifting toward now.


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BILL MOYERS: You write about someof 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 afinancial journalist, been to Davos andother places like that. And I'm

wondering, how did you crack what isclearly a tight knit world?CHRYSTIA FREELAND: Well, I guessthe way journalists do it, just by talkingto people, writing about them. I think

you write stories that show people thatactually you're interested in whatthey're doing. And what I would alsosay is, you know, I believe incapitalism. And I also actually believe

in globalization and the technologyrevolution. If you gave me the optionof turning the clock back to the 1950s,


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I wouldn't do it. Partly because I'm awoman and things were not that great

for us then.BILL MOYERS: Well.CHRYSTIA FREELAND: And, youknow, it's important, you know, I thinka mistake that the left can make in

criticizing income inequality is tobehave as if this is entirely a politicalconfection. It's entirely about politicalcapture. There are no genuine,legitimate and actually benign

economic forces driving it. Because Ithink there are. I think the winner takeall economic dynamic is somethingthat is existing separate from thepolitics. The politics in the United

States are exacerbating that divisionrather than mitigating it.But I do think that when you pull back


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and look at the global picture, which issomething that was important for me

to do in the book, it becomes a little bitharder to say, "this particularAmerican tax break," or even, "thisparticular American financial reform isthe only thing driving income

inequality," because the reallyremarkable thing is the extent to whichthis is a global phenomenon.It's happening across the westernindustrialized world. I'm Canadian. So

I'm practically born a socialist in theview of many Americans. But even inCanada, income inequality isincreasing. It's even, you know, for awhile in the economic literature the

one outlier was France. And so,insofar as economists make jokesthey would say, "oh, the French. They


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have to be exceptional even in thisarea." But now you're seeing it

increase in France too. And you'reseeing it increase in the emergingmarket economies. So I think we dohave to accept that there are someeconomic drivers.

Now those economic drivers are partlyput in place by the politics. It waspolitics that allowed globalization tohappen. And in the United Statesreally crucially, and I think you can't

emphasize this too much. Look atwhat happened with the tax code. Imean, in the 1950s, this era whenAmerica felt itself to be a veryconservative society, and it was, the

top marginal tax rate was above 90percent.BILL MOYERS: Yeah, 91 percent, I


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believe.CHRYSTIA FREELAND: Right, just

think about that. Imagine if BarackObama had said in the debate thisweek, "You know what GovernorRomney? I think America in the '50swas a wonderful place. That was the

age of the greatest generation. They,too, faced a real budget deficit theyhad to pay off. And the people at thevery top were willing to pay a 90percent top marginal tax rate. Would

you be willing to do that, Governor?" Imean, imagine if he had said that.BILL MOYERS: You cover some ofthe same crowd that Chrystia's writingabout, but you do so with a, with

complete irreverence. Do you still gainaccess to them? Or have all the doorsbeen slammed in your face?


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MATT TAIBBI: Well, the very, very toppeople won't talk to me. You know, I

don't have access to the same peoplethat Chrystia maybe talks to. But I dotalk to a lot of people who work onWall Street. In fact I got started downthe road of this whole topic, you know,

after I wrote a couple of articles. Andthen suddenly on this there was thisoutpouring of people from Wall Streetwho suddenly wanted to talk to mebecause they were upset about the

direction that the financial servicesindustry was taking.So I'm hearing a lot from people sort offrom the middle on down on WallStreet. And what they're really upset

about is corruption. Is this merging ofstate and private power, where thelosers don't lose anymore. I think the


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people who get really upset are smallhedge funds, small banks. And they

see companies like, you know,Citigroup and Goldman Sachs andJ.P. Morgan Chase make mistakeafter mistake. And they get rewardedfor it what with bailouts and even

greater market share than they hadbefore.And so, you know, my analysis isinformed by those people. And I think,you know, I think Chrystia and I agree

about a lot of things about, particularlyabout the growing divide and howextreme it's become. My analysis justmight be a little bit angrier justbecause the, you know, from the point

of view that I'm particularly looking atis the corruption and the use of forceand state power to keep divide where


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It means that it allows them to borrowmoney more cheaply because

anybody who lends them moneyknows they're always going to get paidoff. The government if, in the worstcase scenario, they're going to getpaid off. So this gives them an

inherent financial advantage over thesmall, regional commercial bank,which does not have that impliedgovernment guarantee. And so thosepeople are furious.

They're furious that they have tocompete against these giganticmonoliths that have the implicitbacking of the U.S. government. Thenthere's the other problem of

corruption. I mean, I hear all the timefrom hedge funds you know, thesesmaller guys who believe that some of


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the big investment banks are sellingthem out to even bigger hedge funds,

that are, you know, giving awayinformation about their positions toeven bigger clients so that somebodyelse can trade against them.Or maybe the banks themselves are

front running their positions andtrading against their own clients.There's this schism developingbetween the smaller guy the mediumsize financial player and the very, very

big too big to fail companies that areperceived as getting a break, andgetting the backing of the government.And also are perceived as gettingaway with stuff that they wouldn't get

away with.CHRYSTIA FREELAND: I agree withMatt. And I think what youre really


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seeing , actually, it's sort of the battleof the millionaires versus the

billionaires because this winner takeall dynamic is not just between, youknow, the 10 percent and the 90percent or the one percent and the 99percent.

What's quite interesting and leads meto really believe that there're somedeep economic forces involved is it'shappening just as much within the topone percent. We saw it in the

recovery. You sited those statistics,Bill, about 93 percent of the recoverygoing to the one percent. Thirty-sevenpercent of the recovery went to the top0.01 percent.

So even in there, there's, you know,even more of a gap. And the peopleone layer down can be very, very


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aggrieved precisely because, youknow, they see what's going on. They

see that unfairness. And it makesthem really, really mad.You know, one of the things that Ifound as I was writing my book andtalking to plutocrats was, you know,

as Matt says, these are very, verysmart people. And many of them, notall, someBILL MOYERS: They work very hardtoo, don't they?

CHRYSTIA FREELAND: This is notDownton Abbey. These are notpeople, this is not a landed gentry.These are people who even, and evenif they're sort of a Mitt Romney or a

Bill Gates who grew up very affluent,their actual business, they did buildthemselves. They built in a society


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that was very supportive of that, butthey built it. So, you know, they're

hardworking. They have to bethoughtful about the world becausethey're making investments.And what I found was very interestingwas they were very keen to divide the

world into the good plutocrats and thebad plutocrats. And what was veryfunny was everyone was happy tomake that division. But everyone feltthat they themselves and their

particular type of business belonged togood plutocrats, and somebody elsebelonged to bad ones. So you talk tothe Silicon Valley guys, they lovetalking about this, especially after the

financial crisis because their view was,"Of course income inequality is aproblem. Of course there has been


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you bring up to them, for instance,how is it that nobody, despite this

mass epidemic of fraud that appearsto have happened before the 2008crash, how come nobody ofconsequence has gone to jail afterthat?

They always, you know, they alwaysargue against more regulation andmore enforcement because they say,"We need room to, we need air tobreathe, we need room to create jobs.

And this is just counterproductive toput people in jail. It'll cast a pall oversociety.CHRYSTIA FREELAND: If I may sayso Bill, this very sincere, absolutely,

absolutely sincere self-justification, Ithink, is one of the most dangerousthings that's happening because in our


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society, and I would say this isparticularly powerful in America.

Really since the Reagan era, therehas been this vision of the successfulbusinessperson as really a leader forthe whole society. And there has beena view that the businessperson, what

he thinks, and, by the way, all of myplutocrats are men.But, you know, what he thinks abouthow society should be ordered, weshould all listen to because he, after

all, is the hero of our time, is the heroof capitalist narrative. And I think it'sso important for us to reallyunderstand that what is good for anindividual business, particularly in this

age of very high income inequality andthe ways of thinking, the ideas that areno doubt absolutely the right ones for


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this particular business, may very wellnot be good for society as a whole.

BILL MOYERS: Both of you write indifferent ways that, with irony, thatthey threaten the system that createdthem.MATT TAIBBI: Well this was another

thing, another image from Russia thatalways stuck in my mind. And Istudied in Russia when it was stillcommunist. I remember going throughthe countryside. And you had all these

villages and people walked around inthe villages.And then suddenly in the mid to late'90s in Russia you drove through theRussian countryside. And suddenly

there were these big brick houses thathad these huge walls on the outside,these big brick walls with guards on


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the outside. It was the rich had sort ofbuilt this wall that insulated them from

the rest of society.They were living, there was onesociety on one side of those walls,and then one society on the other sideof it. And I think that's where we're

headed now. We have this kind ofcommunity of rich people who sort oflive, hop from place to place. And theynever have any sort of intercourse withthe rest of the world.

BILL MOYERS: Disconnected?MATT TAIBBI: They're completelydisconnected. And so they've built thiskind of nation where inside, it's all, youknow, nice and everything works

logically. And it makes sense to them.But they never really see what goeson on the outside.


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was recently staying at this lovelyFour Seasons Hotel. And I was beside

the pool. I was eating a melon. Andmy spoon fell to the ground. And hesaid, "Before I could summon anyone,someone rushed up to me with threespoons of different sizes on a linen

napkin so that, God forbid, you know, Ishouldn't have the wrong size spoon."And what he said was, "You know,what was amazing to me," he's talkingabout himself, "is when I reentered my

real life," he said, "I was kind of a jerkbecause I like, I expected to live a lifewhere I was constantly beingpresented with three spoons ofdifferent sizes. And I just I couldn't

deal with the frustrations of everydaylife." What makes this a totally ironicstory is here he's telling this kind of


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self-aware story about the plutocracy.But when we had been in the airport

waiting for the car, he was on thephone, screaming at someone about"Where is my car," et cetera, etcetera.So this is, you know, morning in

Heathrow. Middle of the night, youknow, in San Francisco. And he'syelling at someone there because shehasn't organized his car and we had towait for five minutes. And then he tells

me this story about how entitlementcan make you not an ideal person.That kind of says it all, right?BILL MOYERS: But political behavior'sanother thing. And there's no doubt in

either of your minds, is there, that theytilt the rules in their favor through theirinfluence and power over the


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politicians.MATT TAIBBI: Absolutely. I mean--

BILL MOYERS: I mean, our owngovernment relaxed the regulations,upended the rules, leveled the laws tomake way for them.MATT TAIBBI: They have this power

and influence over the government toand they've been continuallyderegulating the atmosphere tolegalize whatever it is that they want todo, whether it's, you know, merging

insurance companies and investmentbanks, whatever it is. The derivatives,the Commodity Futures ModernizationAct of 2000, they lobbied heavily tocreate a completely deregulated

atmosphere for that. And we saw whathappened with that in 2008 with thecollapse of companies like AIG.


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They've been incredibly successful increating their own landscape where

they get to do business the way theywant to do business.CHRYSTIA FREELAND: And what Ithink is crucial is, this is not framedas, "I want government to do this so I

can get rich and my company canprosper." This is framed as "We needto do these things for the greatergood." And this is where I thinkanother big problem in America today

is a disempowering and a devaluing ofthe role of government and of itsauthority as an independent,respected arbitrating body in thecenter of the ring. And one of the great

contrasts for me in the past decadehas been looking at what happened inbank regulation in the United States


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and looking at what happened inCanada. Matt has just spoken about

bank mergers. And with hindsight, youknow, one of the great brave decisionstaken by the Canadian governmentwas to not allow the Canadian banksto merge. They wanted to. Huge

lobbying effort. And they made thesame arguments about, "Oh, if wecan't merge, we'll never operate on aglobal scale. You know, Canada willbe left behind. We'll be a provincial

backwater." And the government justsaid no. And that decision I think flowsdirectly into the Canadiangovernment's ability to regulate thefinancial sector.

Leverage at U.S. levels was notallowed. And the consequence wasCanada didn't have a financial crisis.


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economy. People can live, you know,civilized lives. They can have bankers.

Their bankers even, maybe they're notgoing to earn $25 million. But they canearn $5 million or $6 million.They can be perfectly affluent. Andgovernment can actually stand up to

its banks and stand up to othersectors of industry and say, "Youknow what? I'm sure that would begreat for you guys. My judgment is it'swrong for the country. And you're not

going to do it."BILL MOYERS: They resent anycriticism, despite all the advantagesand entitlements they have. They alsoexhibit disdain, as Mitt Romney made

clear in that infamous or famous 47percent video. You know, when hetalked about other people being


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dependent on government.MATT TAIBBI: I've heard that attitude

more than once, and not just from MittRomney. I think it's, again, it'sconsistent with this mindset that thereis an intellectual atmosphere thatthese people I think have to work

within in order to justify a lot of whatthey do, because you have to becompletely disconnected from the realworld in order to do things like sellfraudulent mortgages to a state

pension fund. If you're actuallythinking about that, you know, you'retaking somebody's life savings awaywhen you do that. But you can't thinkabout that.

BILL MOYERS: Matt, you quoted thebillionaire Charlie Munger of BerkshireHathaway, who said that anyone who


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wants to complain about the WallStreet bailout should realize they

were, "absolutely required to saveyour civilization." What did he meanby that?MATT TAIBBI: Well, again, this groupof people believe that all of civilization

depends on their health and theirwellbeing. So when they werethreatened in 2008, when they were allabout to collapse, it made absolutesense to them that the government

should immediately intervene and givethem as much money as they needed,to not only to get back on their feet,but to restore their lifestyles to thelevel that they had been accustomed

to.CHRYSTIA FREELAND: So I'm goingto, here, step in as a voice in favor of


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the bailout. I think that Munger wasright. I do actually believe--

BILL MOYERS: Saving civilization?CHRYSTIA FREELAND: Yeah, I thinkit was. I think that the bailouts wereabsolutely essential. I think that, hadthere not been a bailout, which, by the

way, let's remember, voices on theright as well as the left were objectingto the bailout at the time. I think hadthere not been a bailout, you would'vehad a much more severe crisis. You

would've had a full financial collapseand a much, much deeper economicrecession. Now, I think where you canand should criticize is first of all, whywas the crisis allowed to happen in the

first place and the regulatory failurebeforehand. I think second of all, youknow, where were the strings


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MATT TAIBBI: Right. Right. Just to beclear, I actually agree that the bailouts

were necessary. What I completelydisagree with was the way they weredone. They just simply threw a wholebunch of money at this community anddidn't have any conditions at all. They

didn't sweep in and change any rules.You know, and after the S&L crisis, forinstance, we went in and there weremassive criminal investigations.We put 1,000 people in jail. There

were no such investigations this timearound. So this was just makingeverybody well again and restoringeverybody to the status quo, which Ithink was a major mistake because it

produced precisely the result we'retalking about now. It allowedeverybody to think that the previous


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status quo was okay.BILL MOYERS: Let me talk about the

CEO class because it seems almostevery day now there's a new story ofsome CEO, some boss of a bigcompany who's attempting to tellvoters to vote as they say.

CHRYSTIA FREELAND: If you reallysee yourself as a job creator,someone who is not just pursuing theirbusiness interest in getting richer, butsomeone who is creating jobs, doing

great things for America and for yourworkers, and you also sincerelybelieve that Barack Obama is a badguy, then you feel you have to helpyour workers to understand this. You

know, you have to let them know thatyou, the job creator, believe that thisjob creation of which they are the


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fortunate beneficiaries, you know, thatengine is going to slow down. It's

going to grind to a halt.BILL MOYERS: Do you see this asdifferent from what unions do in urgingtheir voters to go out and vote for thecandidates of their choice? Do you

see it differently?MATT TAIBBI: I think it's a littledifferent just because there's animplied threat. It's very, very vague,but, you know, if the CEO of your

company suggests to you that youhave to vote for Mitt Romney or youhave to give money to the Romneycampaign, I think the tendency to, youknow, to not break ranks, is going to

be a little stronger than maybe it wouldbe in a union.But I think it grows out of this, you


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know, companies and corporations,they're not democracies. They're

authoritarian structures. And thepeople who work in those companies--they start to adopt those attitudesafter a while. And especially thepeople at the very top.

I think they've begun to actuallybelieve that their authority extendsbeyond that. And I just think thatpeople its a little bit different whenits something your boss tells you to

do something than when your unionbrothers tell you something.BILL MOYERS: Matt, you have writtena lot about the tax code and theseplutocrats. Exactly how do they work

the tax system?MATT TAIBBI: Well the plainestexample is Mitt Romney. I mean, you


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know, if you look at his tax returns, hepaid, you know, rates of 14, 13

percent. That's totally normal in thisworld if you work in a private equityfund. Your income isBILL MOYERS: Again, he's not anexception, he's an embodiment.

MATT TAIBBI: He's an embodiment.In the financial services industry forsure, the very, very rich mostly receiveincome as capital gains or if they'reprivate equity people, as carried

interest.In both of those, the max rate is 15percent. So people who make $20million, $30 million, $50 million a yearlike Mitt Romney and like, you know,

Steve Schwarzman of whoever it is,they pay half the tax rate of, you know,a nurse or a doctor or a fireman or a


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little bit of your own money. And thegains that you make on that

investment would be treated underany definition as a capital gain taxedat 15 percent. But you also earnmoney because you are investing onbehalf of all of your investors.

That money that you earn, it's calledcarried interest. And it is treated as acapital gain in the same ways that thegains to the investors are treated.The economic arguments in favor of

the carried interest tax break are soweak. I mean, even Mike Bloomberg,who is, you knowBILL MOYERS: The tenth richestman

CHRYSTIA FREELAND: --very farfrom being a socialist. He has comeout and said he doesn't support it. And


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it says something to you about thepower of a very well heeled, very

focused lobby group. That, you know,Barack Obama is president. He isopposed to this. He says he'sopposed to it. Even Mike Bloomberg isopposed to it. So there's a body of

Wall Street opinion that thinks itshould go away. It's still there.BILL MOYERS: But when there wasan effort, when the Obama WhiteHouse and others made an effort to

revoke carried interest, the fight wasled by people like Democrat SenatorChuck Schumer, representing WallStreet--MATT TAIBBI: Its always the New

Yorkers.BILL MOYERS: Yes, the NewYorkers. Of course, that's their


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constituency, they would say if theywere sitting here. But the Democratic

Party didn't come to the aid and reliefof working people at that time.MATT TAIBBI: Well right, becauseagain, it's because you have a small,very, very concentrated lobby that is

very, very noisy and is very, veryspecific in what it wants and what itneeds. And then there's the rest of uswho, how many people are reallythinking about the carried interest tax

break? So the advocacy against thecarried interest tax break is dispersed.It's sort of random. It's not focused,whereas the advocacy for it isincredibly organized. It's disciplined.

And it has a ton of money.CHRYSTIA FREELAND: And it isbipartisan.


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BILL MOYERS: Who's looking out forthe rest of us?

MATT TAIBBI: Well, there are, Imean, there definitely are good peoplein Washington. You know, I meet andtalk to a lot of them. There are a lot ofhonest politicians who are trying to do

the right thing. But the-- myexperience, the money issue is sooverwhelming to people in Congressthat--BILL MOYERS: Raising money for

their campaign?MATT TAIBBI: Raising money for theircampaigns. It's so central to their dailylives, really. And especially in theHouse, where you have to essentially

start raising money the instant you getelected because the reelectioncampaign is only a couple years away


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that -- it's just too overwhelming formost legislators to get past that issue.

BILL MOYERS: Despite how theplutocrats have reacted to BarackObama, he does not seem to be likeFDR, taking on the economic royalistsor like Theodore Roosevelt, fighting

the guys he says are taking thecountry down. How do you explainObama's attitude toward theseplutocrats?CHRYSTIA FREELAND: Barack

Obama in many ways is one of them.He is educated the way a plutocrat iseducated. He had an opportunity tojoin the plutocracy. He could veryeasily right now be a top corporate

lawyer. And they know that.He thinks the way they do. He's atechnocrat in the accepted manner of


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the current plutocracy. And I thinkthey like that. I think that's why he had

such a strong reception in 2008. So Ithink that's one element. Anotherelement though, and I think that this issomething that sort of bothers them, ishe isn't over-awed by them. And that

kind of bugs them too, because theydo think theyre pretty great.MATT TAIBBI: To answer yourquestion about, you know, whydoesn't he take the sort of fist shaking

attitude of an FDR or a TeddyRoosevelt, I just think Barack Obamahas surrounded himself with people,like Larry Summers, like Bob Rubin.And I think he's accepted a lot of the

justifications and the arguments thatcome from Wall Street and thebusiness community.


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CHRYSTIA FREELAND: No, but he ismoving-- he is and I don't think he

says this as directly as perhaps, youknow, some of his supporters wouldlike. He is challenging this notion ofthe successful businessman as thehero and the driver of the American

narrative. And that actually is a big-- ifyou think it through to its logicalconclusion, that is a big challenge.And I think that accounts for this hurt.This seemingly completely

disproportionate emotional reaction.MATT TAIBBI: He's made a rhetoricalmistake in the way he's occasionallydescribed this community. And that'swhat's inspiring this whole reaction

against him, this feeling that we arelike battered wives because they'veoccasionally been described as rich.


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CHRYSTIA FREELAND: So it's easyto laugh about this, and we should.

But this hurt feelings, the fact that thisis really playing out in the emotionalspace as well as in the balance sheetspace, I think is really an importantpoint. I think it's hard for us civilians to

get it because it seems so absurd.You know, really? That would hurtyour feelings? Are you so thinskinned? But it is real. And I think thatit's real for a reason, which is I think

that Barack Obama, the Democraticparty, but also the political discoursemore generally is posing an existentialthreat, or certainly an existentialquestion to the plutocrats, which

makes them very, very anxious.BILL MOYERS: I haven't heard that,Chrystia.


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CHRYSTIA FREELAND: Well, I'lltell

BILL MOYERS: Barack Obama saidCHRYSTIA FREELAND:--I'll tell you what it is-- BILLMOYERS:--in the debate this week that--

CHRYSTIA FREELAND: No, but I'lltell youBILL MOYERS: --he sounded like, hesaid, "I'm for free enterprise, I'm for--"CHRYSTIA FREELAND: And I'm for

free enterprise too. But what he hadstarted to sayBILL MOYERS: That sounds verytough on them.CHRYSTIA FREELAND: No, but there

is an underlying point that he doesmake. I think he should make it moreexplicitly which is to say that American


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capitalism is not working the way itwas in the '50s. That we are not living

in a time when a rising tide is lifting allboats. That we are seeing the peopleat the very top take off. Theireconomic fortunes actually disconnectfrom those and from --

BILL MOYERS: Stratosphericallyleaving earth.CHRYSTIA FREELAND: --mosteverybody else. And they're notdependent. You know, that old Henry

Ford model, where you needed themiddle class to be well paid to buyHenry Ford's stuff, that that hasbroken down. And we can argue a lot,and we should, about the reasons. But

the facts are that it has. And to saythat, to actually state that, isprofoundly threatening because it


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starts to break down this equation ofmy wealth equals my virtue.

The size of my bank account doesn't--it isn't just good for me. It is amanifestation of my civic contribution.And that, in some ways, is MittRomney's campaign. He's saying, "I'm

a successful businessman. So I willmake a good president." And BarackObama, he is actually saying, "Youknow what? I don't think that thatequation works and is automatic." And

actually, in saying that, the plutocratsare not wrong to detect there a verypowerful ideological challenge.BILL MOYERS: If plutocrats keep onwinning, if they manage to avoid tax

reform, if they keep low regulation, ifthey get a president who issympathetic to them or even enables


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them, what's ahead for us?MATT TAIBBI: Well, I mean, I fear

that what's ahead is just a continualworsening of the situation. You know,what we've seen in our lifetime evensince we've come back from Russia isthis decimation of the middle class in

America.If we continue on this path, what we'llend up with is, you know, is Russia orsome other third world country where,again, you have this handful of people

who are protected and who haveexpanding wealth. And then there'sthis sort of massive population ofeverybody else. And that's what Iworry about.

CHRYSTIA FREELAND: I would liketo really issue a clarion call toprogressives because I think the sort


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of the progressive public intellectualsare to blame as well. I think a big

reason people aren't protesting is noone is offering sufficiently compellingalternatives and solutions.And when you think back to thehistory of the Industrial Revolution, the

Progressive Era, the New Deal, thesewere brand new ideas and brand newinstitutions designed to cope withchanged economic circumstances.What I think is the challenge for

everyone who is worried about this,and I think all of us should be worriedabout it. We should be terrified. But Ithink we need to start taking the nextstep. And we need to realize the

1950s are not coming back. Whatangers me sometimes about thesedebates is people talking about


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manufacturing jobs coming back.That-- it's just not going to happen. So

let's really face the facts of how theworld economy works. And reallycome up with what needs to be thepolitical and social response.And frankly, you know, I see the right

not interested in addressing this issueat all. And I see the left not offeringenough new thinking. And peopleknow that. And that's why peoplearen't on the barricades. There's no

manifesto to be waving.MATT TAIBBI: One caveat I would liketo just throw anytime you proposeanything that has any kind ofgovernment, you know, component to

it, there's this automatic criticism thatit's communist and socialist. So, whenyou come up with a solution, the


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boundaries are let's come with asolution that doesn't have-- that can't

be criticized as being communist orsocialist. And that is incredibly difficultfor people to work around.CHRYSTIA FREELAND: Okay, butlets at least see the new ideas. I

mean, my argument is we are livingthrough equally profound economictransformations. And we're just tryingto rehash and re-tinker with thetwentieth century institutions. I don't

think it's enough.Veteran journalist Bill Moyers is the host ofMoyers & Company, airing weekly on

public television. Check your local listings.More atwww.billmoyers.comMatt Taibbi is a writer forRolling Stone.

Documents

Bill Moyers- The Plutocracy Will Go to Extremes to Keep the 1% in Control.cwk (WP)