John Feinstein is the author of 35 books, including two #1 New York Times Bestsellers: A Season on the Brink and A Good Walk Spoiled. His most recent non-fiction book, Where Nobody Knows Your Name, was his 23rd New York Times bestseller. He is interviewed by Mike Tirico, an NBC sportscaster and commentator. Tirico was recently named the studio host of NBC’s Football Night in America, the most-watched studio show in sports. The interview was recorded at the University of Louisville Kentucky Author Forum.
Following World War II, the U.S. economy has evolved through three distinct eras, according to Pulitzer Prize-winning journalist and author Tom Friedman. From 1945 to the early 1970s, he says, “high-wage, low-skilled” jobs were plentiful for Americans with high school educations as government and private investment in the country boomed. Starting in the 1970s, that investment began to decline, but the economy generally hummed along as more people bought homes, credit card use became commonplace, and more women entered the workforce to provide a second income to families.
In 2008, Friedman points out, everything changed abruptly: home values plummeted, personal debt became crippling for many, and most importantly, the emergence of new players in the global economy such as China and accelerating technological change permanently eliminated many of the high-paying, limited-skill jobs that once were the bedrock of the American middle class.
The country is still reeling from the schism of roughly ten years ago, Friedman says, and troubling social, economic, and political divisions that had been growing in intensity became manifest when anti-establishment candidate Donald Trump was elected president last fall. Arguing against the current trends of isolation and retrenchment, Friedman believes that the most pressing concern in American society today is remolding our political and social systems to fully engage, rather than retreat from, the rapid technological change that is transforming human existence.
The New York Times columnist recently visited Louisville to discuss his 2016 book “Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations” as part of the University of Louisville’s Kentucky Author Forum series. He was interviewed by U.S. Rep. John Yarmuth (D-3rd District), and the program was filmed by KET for Great Conversations.
“My book is built around the theory that the world is not just changing, it is being reshaped,” Friedman says. “And there’s a big difference. When the world gets reshaped, everything needs to be reshaped – education, the workplace, politics. Basically, I argue that it is being reshaped by these three giant forces – what I call the market, Mother Nature, and Moore’s Law.”
Moore’s Law was first posited by Gordon Moore, chairman of Intel, in a 1965 magazine article. He estimated that the power and speed of microchips would double roughly every 24 months. Friedman says that over the next 52 years, Moore’s Law has been upheld – and now, the exponential advances are occurring at a dizzying pace, to the point where many in Silicon Valley believe that a major autonomous motor vehicle revolution is only a few years away.
In his book, Friedman spotlights 2007 as a pivotal year in technology, when the principles behind Moore’s Law could be seen in a variety of product launches and business start-ups that permanently changed daily life for humans everywhere. That year,
- Apple unveiled the iPhone
- Facebook opened up to the general public
- Twitter went global
- Google launched its Android operating system and bought YouTube
- IBM introduced its Watson computer
- solar energy use and natural gas production in the U.S. became more commonplace
- several other important signposts in the tech and energy sectors occurred.
“My view is that 2007 was … the single greatest technological inflection point since Gutenberg,” Friedman says. “And we completely missed it because of 2008.”
Talking with Mother Nature
According to Friedman, the global recession in 2008 staggered national governments so severely that they were unable to formulate the significant reforms needed to make their countries adapt to the ongoing “climate changes” transforming society.
Friedman identifies three of these epochal changes, 1. actual climate change affecting the planet; 2. a transformation of the global economic order; and 3. the innovations in technology. In order to help businesses and individuals meet these challenges, he argues, we must develop policies based on the qualities of resilience and propulsion. And the best role model to emulate in order to instill resilience and propulsion in American life, Friedman says, is “Mother Nature,” or Earth itself.
Freidman relates a key passage from “Thank You for Being Late,” where he “interviews” Mother Nature to learn more about how she has managed to flourish despite millennia of random and colossal changes. Earth’s natural order possesses important characteristics that are essential to survival, Friedman says. First, nature is “incredibly adaptive,” he says, “in a brutal way, through natural selection. Only the adaptive survive.”
Second, Friedman says is that nature is pluralistic. Biological diversity is essential to the survival of the planet, and the most diverse ecosystems on Earth are the most resilient.
Third, nature is “incredibly entrepreneurial,” Friedman says, creating plants or animals to fulfill specific niches in the ecosystem.
Nature’s fourth characteristic is sustainability, exemplified by the ongoing cycle of seed-plant-food-waste that propels life.
Fifth, nature is “hybrid and heterodox,” with species interacting in novel and beneficial ways that may deviate from prior norms and thus create new life forms.
The final characteristic of ‘Mother Nature,’ Friedman says, is a “belief in the laws of bankruptcy.” If a species or ecosystem ceases to exist, its energy is transferred into further evolution and progress. “My point is that I think in this age of acceleration – where we have a huge adaptation challenge – the party, the community, the country that most mirrors Mother Nature’s strategies for building resilience and propulsion when the climate changes is the one that will thrive.”
‘Applied Hope’ for the Future and the Importance of Trust
Friedman’s own political orientation, exemplified by his Mother Nature Party, is informed by these six values and the goals of resilience and propulsion. He believes that the current political system in the U.S. is designed to engage with an economic and social order that is near extinction. For example, Friedman points out that an ideal government policy platform for the 21st-century economy would combine both conservative and progressive policies. This hybrid approach would call for vigorous support of entrepreneurial capitalism through the elimination of corporate taxes as well as single-payer health insurance to bolster the social safety net.
During his current book tour, Friedman says that he has found that “people are starved for navigation. They know that the ground is shifting under their feet, they know the ground is shifting under their kids’ feet. And at the national level, they’re just not getting it. And they are so anxious because of that, and also so aroused.”
Friedman relates a favorite quote from one of his former professors: “Trust is the only legal performance-enhancing drug.” To Friedman, once trust is established in a relationship – in business, government, or personal life – then incredible progress can be made. Trust does not exist on a national level right now, Friedman says, but he is encouraged by what he’s seen in some state and local governments and within community organizations.
These bright spots in current civic life recall Friedman’s own upbringing in St. Louis Park, Minn., a suburb west of Minneapolis. As recounted in “Thank You For Being Late,” Friedman’s family moved to St. Louis Park from a ghetto in north Minneapolis during the 1950s along with many other Jewish families, and integrated with the suburb’s existing population, which was largely comprised of Protestants of Scandinavian descent. St. Louis Park, a fertile incubator of creative and political talent, produced the filmmaking Coen brothers, comedy writer and current U.S. Sen. Al Franken, political scientist Norm Ornstein, and several others. Friedman says that St. Louis Park prospered during the 1950s and 1960s, and still does today, despite religious and ethnic differences, because of a community-wide ethos of trust, responsibility, and collaboration.
“Right now, the federal government is just too paralyzed for this age of acceleration,” Friedman says, “and the single family at the other extreme is way too weak, especially because we have way too many single-parent families. So, I’m arguing in my book – and that’s why my community is in there – that the healthy community is the right governing unit for the 21st century.”
As Friedman sees it, people will only become committed to political and social change when they feel that they have a true voice in the process. “When ownership is present, good things happen,” he says. A disconnect currently exists between Americans and the national government, but elsewhere, local governments, communities, schools, and businesses are enacting the sort of programs and policies that Friedman believes will become publicly supported and self-sustaining as the accelerations of our technological age continue.
More than anything, Friedman declares that our concept of education will have to be rebuilt, and extended throughout a person’s lifespan, in order to handle the challenges of a 21st-century economy. He discusses a program currently being developed by AT & T, which offers to subsidize specialized courses for current employees to ensure they are qualified for the company’s jobs of the future, as an example of what will be required from other institutions.
Friedman concedes that there is a lot of troubling news in America, and that the political divisions shown in last year’s Presidential election are deep, but while writing “Thank You for Being Late,” he says he found a lot of positive signs. Ultimately, Friedman believes in what one of his friends calls an “applied hope” in our ability to work together and take the reins of this disorienting, but exciting, modern world.
“What encourages me as I go around the country, there are a lot of problems that need solving, but, my God, there are a lot of people who want to get caught trying,” he says. “There are a lot of people who are applying hope.”
Rising inequality was front and center in last year’s presidential election. Democratic primary candidate Bernie Sanders based his outsider campaign largely on policies aimed at resurrecting the American middle class, and Republican Donald Trump won the general election in an upset when four Rust Belt states – Ohio, Pennsylvania, Michigan, and Wisconsin – switched from Democrat to Republican in 2016 partially in response to Trump’s message of economic populism.
Since the recession of 2008, the U.S. economy has recovered in many areas – the stock market and the unemployment rate, for example – but most of the actual monetary gains have gone to those in the highest income brackets. Nobel Prize-winning economist Joseph Stiglitz has studied the economic roots of inequality for decades, and he has a set of proposals to alleviate what he sees as the greatest challenge to 21st-century capitalism at home and abroad.
Stiglitz was interviewed by Financial Times columnist and author Rana Foroohar in April at the University of Louisville as part of the Kentucky Author Forum series. Their discussion was filmed by KET for its Great Conversations series.
Stiglitz is a professor at Columbia University’s Business School and has been a leading expert in global economics for over 40 years. His best-known general audience books include Globalization and Its Discontents (2002), The Great Divide: Unequal Societies and What We Can Do About Them (2015), and his most recent book, The Euro: How a Common Currency Threatens the Future of Europe (2016). Stiglitz served as the senior vice president and chief economist of the World Bank from 1997-2000 and received the Nobel Prize in Economics in 2001.
Foroohar previously was a columnist and assistant editor with Time magazine and is the author of Makers and Takers: The Rise of Finance and the Fall of American Business (2016). She begins the discussion by recalling how Stiglitz first came to prominence as an economist. After conducting extensive research and using a series of mathematical equations, Stiglitz established a fact of contemporary economics that challenged previous orthodoxy. “Today it seems obvious, but when you first came up with it, it was not – which is that markets aren’t always efficient,” Foroohar says. “It’s pretty basic, but nobody was saying it back then.”
Inequality’s Rise and its Impact on Society
Stiglitz says that his breakthrough was based on the imperfection, or asymmetry, of information in economic systems. He says that, from the days of 18th century economist Adam Smith onward, most models relied on the assumption that agents relayed accurate information to one another in order to facilitate economic activity. But that turned out not to be true, Stiglitz says.
“The result of my research – I like to summarize it in one sentence,” he says. “Adam Smith talked about the ‘invisible hand’ – the pursuit of self-interest leads the economy as if by an invisible hand to the well-being of everybody in society. What I showed was that the reason that the invisible hand was invisible was that it wasn’t there.”
The inefficiency of contemporary markets is most evident in the widening inequality between the wealthy and the middle and lower socioeconomic classes, Stiglitz says. The U.S. does not have, and has never had, a pure market economy, he explains; the nation’s economy has always been managed through government laws and monetary policy. And over the past 40 years, he says, “We re-wrote the rules of the American economy.”
This gradual shift in government management of the economy began during the Jimmy Carter administration in the late 1970s and continued through both Democratic and Republican administrations, Stiglitz says. It has resulted in policies that favor tax relief for the richest Americans as well as deregulation of major economic sectors such as finance.
Stiglitz says that, in the first few years following the 2008 recession, the stock market rebounded and many corporations reported record profits, but middle-class Americans saw little to no improvement in their own financial fortunes. “And that disjunction between what our leaders were saying and what was being experienced on the ground, I think, led to a lot of anger in some parts of the country. A lot of what I saw in 2016 was a reflection of what was going on in the data that I had looked at.”
One example of how the modern U.S. economy has changed can be seen in how bankruptcy laws treat capital investments versus student debt. Stiglitz observes that financial firms and real estate investors are able to easily discharge failing acquisitions from their portfolios, while student debt in America, which has exploded to over a trillion dollars, is permanent. “There’s something iniquitous about that,” Stiglitz says, and he argues that it has a stifling effect on social mobility and economic growth.
Stiglitz isolates the financial sector as a particularly troubling force in modern economic instability. He recalls working with members of the Bill Clinton administration during the late 1990s and advising them against their plans to repeal the Glass-Steagall Act of 1933, which separated commercial banking from investment banking. The 1999 repeal of Glass-Steagall contributed to the mid-2000s housing bubble and subsequent recession, Stiglitz argues, as banks repackaged risky mortgages into securities and traded them with little to no oversight.
Stiglitz says that there was an opportunity for government officials to re-introduce a more equitable system of economic management in the months following the 2008 collapse, but he argues that the “too big to fail” mentality led Washington to give the major financial banks most everything they requested, at the expense of smaller community banks across the U.S. “While we re-capitalized the big banks, we didn’t re-capitalize the small ones,” he says. This has resulted in reduced lending activity that remains in place eight years after the recession. This is especially harmful to potential homeowners, who have far less ability to secure a mortgage, traditionally the economic foundation of a middle-class lifestyle.
The False Promise of Globalization
Stiglitz expands his analysis of the current U.S. economy’s condition and relates it to the situation in Europe, which is highly unstable due to failing support of the euro among European Union member nations. “This morality play in Europe is a scene I’ve seen over and over again,” he says, “except it has one further aspect to it. When the countries signed together to have a single currency, they didn’t think about what would happen if there was a crisis. In the United States, if a bank, say in the state of Washington, has a problem, the federal government resolves it, comes to the rescue, and the depositors are protected. If the state of Washington had to bail out that bank, the state of Washington would be bankrupt. But in Europe, if a bank in Greece or a bank in Spain has trouble, the country has to bail it out.”
Europe may not be in recession, Stiglitz notes, but its current economic growth rate is an anemic 1 percent. He says the malaise in Europe is similar to our own in that a large segment of society has been left behind as companies once focused on domestic production and employment became international conglomerates. This transformation has affected all Western democracies, even accounting for the fact that most European countries have a stronger social safety net compared to the United States.
“The workers were told that globalization is great, it’s going to make all of us better off, we’re going to grow the economy and trickle-down economics mysteriously is going to make sure that everybody gets the benefits … and it didn’t happen,” Stiglitz says. “And it’s even worse because not only did workers’ wages go down, they’re then told that you have to accept cutbacks in government services so that we can compete, and we have to lower taxes on the rich and on corporations, or otherwise they’ll leave. And people start scratching their heads and saying … this doesn’t add up.”
This false promise of globalization, Stiglitz believes, has contributed to the public’s loss of confidence in political and economic elites in both the U.S. and Europe. He adds that some economists did predict that globalization would lead to inequality unless it was accompanied by stronger government policies regarding fair trade, job re-training, and incentives for entrepreneurship. “We got one side of that deal,” he says, “which is the opening up of trade and the job losses, but we didn’t do the other side of the deal.”
Solutions to Current Crises
Stiglitz sees a similar wrongheaded approach to inequality in the current congressional push to repeal the Affordable Care Act, which according to the Congressional Budget Office will result in 23 million Americans losing their health insurance while giving high-income earners a large tax cut.
He also says that a lot of the current rhetoric regarding the U.S. government’s ability to “bring back” manufacturing jobs is misleading since it does not accurately reflect the current and future growth sectors in the global economy. He points out that globally, manufacturing jobs are in decline, primarily due to automation.
“Basically, it’s very simple: if productivity increases rapidly, more rapidly than demand, employment will go down,” he says. He makes a comparison between the state of manufacturing today in the U.S. and that of the agricultural sector at the start of the 20th century. Back then, Stiglitz notes, 70 percent of all Americans were engaged in agriculture. Today, that number is 3 percent. Manufacturing filled the employment gap to a large extent during the early years of the 20th century, with a major boost during World War II. Stiglitz says that our goal today should be to train new workers, and re-train existing workers, for jobs in the modern, technologically driven service economy.
In closing, Stiglitz and Foroohar observe that the global capitalist economy is at a crossroads, as technological advances eliminate jobs even in developing markets such as China, and growth rates are modest at best. This uncertain situation calls for a major reassessment of corporate governance and, even more importantly, government economic policy both in the U.S. and in other countries, Stiglitz says. Such a change in mindset would forsake obsessing over short-term profits and instead value long-term growth and stability. The new approach should also prioritize job sectors that benefit the public good such as health and education, Stiglitz argues, and he reaches back into not-too-distant history to illustrate his point.
According to Stiglitz, what many Americans think of as the nation’s golden era – the postwar years of the 1950s and 1960s marked by uninterrupted growth and an expanding middle class – came about due to specific government policies such as major infrastructure projects, progressive taxation, and broad investment in human capital such as the G.I. Bill.
“We were a much poorer nation in 1945, after World War II – we had a debt-to-GDP ratio of 130 percent,” Stiglitz says. “But our response to that was not to shrivel down and say, ‘We can’t do anything.’ Our response was to grow the economy. … We were a poor country then, relative to where we are now, and we said we could afford it. And now we say we can’t even provide two years at a community college for free? So, it’s not a question of what we can afford, it’s what we choose to do.”
The author of such bestsellers as Parliament of Whores and Give War a Chance, discusses his latest book, How The Hell Did This Happen?, about the 2016 presidential election. He is interviewed by Robert Siegel, senior host of NPR’s All Things Considered.