it is so it is so great to be in seattle and i love seattle i love town hall you are so fortunate i mean not fortunate for tonight your pour your for just fortunate to be here and to have this wonderful  facility i'm here in seattle this time because of a book i'm flogging a book you know it flogging means that the title of this book i've been on the road for two weeks started that the title of this book has a well i was in cincinnati just a week before last and several people were offended they said the title saving capitalism it sounds like there's something wrong with capitalism you want to save it but it's perfect why are you going to save it and then of course when i got home to berkeley might the title i chose actually has offended everybody which is sort of a good thing because if you want to get people riled up and talking you want to title it does empathy but the subtitle is actually the most important thing for the many not the few that's what i really wanted emphasize and the reason i'm going to put this down here the reason that both those people who are offended because it sounds like i'm critical of capitalism and both those who say why save it may not quite get the central issue which is making the system work for everybody is because we have been for years involved in a debate that i think is increasingly irrelevant and i i'm i've been part of the debate i mean i very often i come out i debate people i debate usually conservatives or republicans were people who describe themselves that way and we start debating whatever it is climate change or education or i mean you name it foreign policy it doesn't matter because within about five minutes the issue comes down to whether to trust the markets more or do you trust government or who do you trust leasts market or government and we get into that and i and i for years have sort of thought well wait a month there's something really fundamentally wrong this is  this has to be a distraction from the real issue because it's not possible to have a market without government i mean if you think about it there's no there's no markets in a state of nature it's just survival of the fittest and the biggest i remember when i was a kid on the playground that was not a markets a market is a market is a mark of civilization in the sense that there are rules you need rules to have a market you need rules about even the most basic fundamental things what is what is property and we think we know what property is what no we change our minds collectively about the meaning of property over time one hundred fifty years ago a lot of people assumed that it was possible to own other people and we had a big civil war over that definition of property now with the most important form of property is intangible property it's in fact it's property this called intellectual property and the rules governing intellectual property what is intellectual property i mean can the genome be own class but you see all of these rules and the rules governing everything in the basic building blocks of capitalism a contract and and property and bankruptcy all of these things we take for granted but they are constantly being they're constantly being revised and adapted and altered not only by judges but also by legislators at the state level at the federal level also by administrative agencies without all of this activity by government trying to define and enforce a market we wouldn't have a market more government creates the market so when i get into these debates with conservatives over whether i prefer a market or government and i start thinking this is a profound distraction from something else what's it a distraction from it's a destruction it's a distraction from debating what we really ought to be debating which is does this system this government market system this political economic system is it working for most of us or is it not working for most of us and if it's not working for most of us why isn't it working for most with who is it who is it working for and why is it working for them and not for most of us that's what we ought to be debating but we're not debating it you know very often i i go through airports as i did this morning coming into seattle and people who i don't complete strangers come up to me and this morning i was passing i was i was i was coming out of the gate and somebody came up to me i didn't i didn't know who she was she said to me can you believe it now i think the reason people come up to me who i don't know is that i'm rather conspicuous because last week again i was coming out of cincinnati and somebody a fellow who i had never seen before  came up to me and said what's going to happen and i want you to put yourself in my place i mean you're walking through places airports public places and people are coming up about three weeks ago somebody said what are we going to do now i have decided that actually what all of this is and it's been going on it's actually been increasing over the last year but it's it's kind of my own version of a free floating focus group and what people are doing when they're coming up to me and saying they saying can you believe it or what's going to happen or or what are we going to do or how is it get it how how  get this bad or whatever these this is this is people simply expressing a lot of anxiety and worrying and they're not specifically focusing on one aspect of this political economic system they're talking more generally to themselves or to me or however they're talking and what they're actually saying i've come to understand is there is something profoundly wrong whether it's that our democracy isn't working or the economy is it working there's something profoundly wrong they know this most people and if you go to opinion polls official opinion polls you see the same thing increasingly people sense that the system is not working now part of that gradual dawning understanding is that most people know that even at this point in the economic recovery and we're in we are since two thousand and nine we've been in a recovery looking incredulous no i'll tell you why we've been getting better but most people do not feel that they've been in an economic recovery that's the reality in fact the median wage has barely budged household median household income is actually below what it was in two thousand  and sometimes when i talk about the median people are a little confused because they somebody said to me recently well the average income has gone up hasn't it and i say yes the average has gone up but the median has and there's a difference the basketball player shaquille o'neal and i have an average height of six foot two to do you get my drift you see the the the people at the top can bring up the average but that doesn't reflect necessarily where most people are and what has happened over the last really the last thirty five years but it's only become very apparent to people after the great recession started is that almost all the economic gains have gone to the top everybody else has been pretty stagnant now sometimes when i say this people get very nervous they used me of being a class warrior i am not a class warrior i'm a class worrier there is a difference not just a couple of letters i worry because the trend that we've been on which is not again just not it's been apparent the last few years of the recovery but it's been going on for much longer than that the trend we're on is not sustainable it's not sustainable economically because when almost all of the economic gains go to the top the middle class which used to be the vast middle class it still is pretty vast and the poor don't have enough purchasing power to keep the economy going and that's one reason this recovery has been so anemic it's been just about the most anemic recovery on record what you normally expect when the economy goes down into the ditch or into a recession is that you get a recovery that is sort of the mirror image of how far down the economy went so that for example in one thousand nine hundred thirty two nine hundred thirty three the economy was in a very very deep deep deep hole and then in one thousand the end of thirty three thirty four thirty five there was a lot of economic growth coming out of that deep deep trough so many people naturally predicted that although the two thousand and eight and beginning two thousand and nine dicks was not nearly as deep as one nine hundred thirty two nine hundred thirty three still the assumption was it was deep enough it was that second deep as trough we've tripped in we've gone in there would be a fairly strong and brisk recovery but there wasn't and one of the main reasons there hasn't been is because the middle class has not had very much purchasing power you know see this goes back to the notion of who creates jobs you know one of the mythologies that i address in the book but you need to understand if you don't already you probably do that is c e o s and businesses and wall street they don't create jobs they are not the job creators can i make that absolutely crystal clear the job creators are people who are buying goods and services and that's being lee has been historically the middle class and the poor because they're the ones who spend their money if all of the money or most of the economic gains go to the top and this is here i'm not making an accusation i'm not blaming anybody i'm just making an economic truism stating a truism not making a truism that if that all the gains go to the top then you know people the top don't spend all of their money and that's fine they they can save it that's lovely i'm glad that they can save it but that doesn't create a lot of economic activity it doesn't create jobs jobs and so what you want to do is you want to arrange and organize the economy in such a way that you have more widespread prosperity not only in ethical and moral terms but also because it keeps the economy going the other problem with the widening inequality we have had an experienced and we still are experiencing it as the people at the top don't just save their money they also invest it in politics and i use the word investment advisedly because it's not that a lot of people i'm sure some people are spending fortunes on politics out of the goodness of their hearts because they just they feel very strongly about rubio or whomever maybe they do i don't know but but but the but the point i want to make is that is that many people who have a great deal of money aaron are putting a great deal of money into politics are not doing it out of the goodness of their hearts they're doing it because they expect a return on that investment now a few years ago when anybody asked me why we have are seeing such widening inequality why we made the biggest u turn in america from the twenty thirty five years between the center second world war and hundred eighty when prosperity kept on widening and more and more people part and took advantage of n and gained a foothold in the new economy why we took a we took a big big  u turn and then the next thirty five years we seemed to go in the opposite direction i would basically attribute the change to two things one would be globalization rarely in history has a word gone so directly from obscurity to meaninglessness without any intervening period of coherence as globalization but what i'm essentially talking about is that you know when we globalized when the united states became more integrated into a global economy beginning in the late sixty's one nine hundred seventy s with containerships cargo ships satellite communication technology all of that inevitably jobs were outsourced the production process became parceled out to wherever people could do things most cheaply and some americans lost their jobs or lost good jobs and i would also talk about technology technology and technological change would also displace a lot of people and those were the two culprits that i always talked about technological change but in recent years i could not ignore the third big factor which has to do with the ability of big corporations and big wall street banks and very wealthy people to get changes in the rules of how the market is organized that benefit them that enhance their wealth and you see what happens you get into a compounding kind of circle a vicious cycle in which as more and more money money from the top becomes relevance in setting the rules those rules become more and more favorable to the people at the top and that further enhance is their income and their wealth and their ability to fix the rules now that in turn means that if you followed my argument so far there are a lot of internal what i might call three distributions upward that we don't see that are inside the market that most of us actually are redistributing are pretty disturbing i like the word produced riveting because when we talk about redistributing that sort of after all of the market transactions are finished but the previous tribulations happened in side the market let me give you an example americans pay more for pharmaceuticals than any the citizens of any other rich nation now why do we pay more for pharmaceuticals apparently we pay more for pharmaceuticals because for example the rules i want to come back to the rules the rules of the market one set of rules says it's perfectly ok in the united states for proprietary drug manufacturers to pay off generic drug manufacturers to delay the introduction of generic versions of the proprietary drugs even when the patents are finished it's called pay for delay that is knots legal in most other advanced countries it is legal here why is it legal here class it's legal here because it does large pharmaceutical company is and a lot of others who have an interest in maximising the profits of those companies have a lot of influence in the congress and a lot of influence in terms of shaping the rules of the game there was a time not long ago when it was possible for seniors or for anybody for that matter to buy their farms who goes from canada it's much harder to do that now why and we could go on and on all specific rules that are different here than they are in other places of the government in the united states cannot use by law cannot use its huge bargaining leverage with medicare to get lower drug prices cannot use that bargain leverage to negotiate lower drug prices in the united states why not class we want to have a repeating cadence but it's almost everywhere you look we are paying you are paying i'm paying more for internet access then the citizens of any other advanced industrial country and we're having we get slower internet service than anybody else have you i don't know whether that's true in seattle is it well no that also is what i would call a pretty distribution upward pharmaceuticals the fact that we're paying more because the law because the laws and rules have been tilted in the direction of the pharmaceutical companies that it's really that's more money out of our paychecks that goes upward to c e o s and to executives and to big shareholders that is a plea distribution upward with regard to internet service it's exactly the same thing that's a pretty distribution from our paychecks upward eighty percent of americans have no choice of internet service provider now why is that cl or take really almost end the industry or almost anything that we would consider to be kind of inevitable kind of part of the market part of the market the market is just inevitable the market is doing all of these things  market is not doing all of these things the five largest wall street banks in one nine hundred ninety just as i was about to become secretary of labor i was interested in and wall street banks and finance i had been at the federal trade commission so i was following these things the five largest wall street banks in one thousand nine hundred had about ten percent of all of the banking assets of the united states now if you move forward in time to the year two thousand you find that the five largest banks had by then twenty five percent of all banking  and now today at the five largest banks remember we've gone through a banking crisis we had to remember we had a taxpayer financed bailouts under the rubric called it was called tarp t a r p never have i heard an acronym that so accurately reflected the hidden the hidden aspects of something well today the five largest banks have forty four percent of all banking assets which gives them a huge amount of market power which enables them to not only charge more in ways that escape most of our notice quite frankly but also at the same time gives them a lot of political power have you noticed for example that none of the big banks on wall street passed the tests of whether they could be engaged in an orderly winding down of their operations if they got into trouble none of them none of them passed the test and what was the consequence of none of them passing the test nothing how many bank executives have gone to jail for anything that occurred in two thousand and seven or eight or nine or none and why is that class you see you see what i'm getting at here that is the entire markets instead of making instead of thinking of it choice between market and government we really have to understand that it is government setting the rules and the question is are the rules being set in favor of all of us or in favor of a small number and is that small number really in the game in ways that cost us and the answer is yes washington is awash in money i first came to washington in one thousand sixty seven i was an intern for robert f kennedy and his senate office my job for months was to run his signature machine it was not the most dramatic and exciting or even important job in washington it had there was a pen at the end of a long wooden kind of arm that was connected to a little motor and i had my job was to take all of the letters that the secretarial pool as we called it in those days had written to all of the constituents of robert f kennedy in new york state under his signature and line them up carefully so that when i turned it on press the button that robert f kennedy was exactly in the position it needed to be this was an important i kept telling myself job and i was so bored that about two months into the job i i actually came into the office i hate to keep it in this room if you would because i i could get into trouble even now i would write letters on his official stationery i would i would cite them letters and then one day i was i was standing there in the center hallway and he robert f kennedy came out of the bank of elevators right in front of me i was i was stunned i had seen him only rarely and he was surrounded by his aides and he stopped for a minute when he saw me and he said how's this summer going bob he knew my name i was floored i i wanted to say something but my mouth opened and i couldn't i was a but had he asked me at that moment to run his signature machine for the next six months i would have said yes washington was an exciting place it was not necessarily a great time in our nation's history i mean the cities were starting to burn the next year martin luther king was assassinated and robert kennedy himself was assassinated and we were into vietnam and we were then elected richard nixon these were not great times in america but being in washington in the middle of some of it even running a signature machine i felt was somehow ennobling and washington was not a beautiful rich restaurant infested you know with thick napkins and heavy silverware no in fact on the rare occasion when somebody from industry wanted to take me out to lunch i would choose a a cockroach infested restaurant on pennsylvania avenue and they would never bother me again these people it was a it was a kind of well it was not it it was not a beautiful city but it was a city that had its own sense of doing the public's business in those days only about six percent or retiring members of congress went into lobbying six percent today fifty percent of retiring members of congress regardless of party go into lobbying why the difference because there is so much more money to be made and so the question really becomes how can we unregular this system i could stand here and give you all sorts of public policies that i think are important public policies that is not really the issue we could all agree in this hall we could all agree on maybe a dozen public policies we could say these are good ideas let's make sure that they are done but that even that agreement would not go very far because of the moneyed interests are in as much control as they are even the best public policies are just are just words and so i devote the last third of the book to what we do where we are going and what must happen and it seems to me almost inevitable that we are on the cusp of in fact we may already be living through and not know it sometimes these things happen a change that is very fundamental in our politics in the book that i wrote really most of it about a year ago i said the big division in the future is not going to be tweaked between republicans and democrats or even liberals and conservatives the big change and the big division in the future is going to be between the establishment and the anti establishment that is between people who have run things for a long time and are the habit of running things and people on the other hand who don't want things to be run the way they have been are more let's use the term populist now that was long before people like bernie sanders you know a year ago i i don't know about you i i like to i like to think of myself as somebody who understands politics i've been in and out of politics for most of my adult life and i kind of assumed that hillary clinton and and jeb bush would be would be a shoo in as i didn't you i mean that that i mean it was it was it was even i was making the argument that there was a certain odd efficiency to it because we could use all of the old bumper stickers all over but something is happening again sometimes we don't know it until we look back on it years from now but all of those people who stopped me in airports and say what are we going to do all of the people who are sensing that the system is filled with upward redistribution they don't actually see them but they feel them they sense them they feel like the game is rigged to hillary clinton when she started her campaign i've never heard a presidential campaign starts by somebody who said they get this the deck is stacked in favor of those at the top those are the words she actually used her husband in hundred ninety two i was there in little rock when he stopped started his campaign the idea that he would say anything of that sor would just be out of the question the interesting thing to me also is that when i talk and i've been on this book tour now for a couple weeks as i said i've been in cincinnati and st louis and kansas city and iowa city and i've been to places that i don't normally go to sell but when i've talked about the importance of busting up the big banks or getting rid of corporate welfare or getting rid of crony capitalism or opposing the trans pacific partnership you know that every one of those issues i just mentioned was overwhelmingly positively greeted by people who told me they were conservative republican something is happening i am by nature a very optimistic i am i've always been optimistic but i'm particularly optimistic now and people when i say that people look at me almost cross eyed how can i be optimistic when i've just given you a bill of particular about how we're getting more and more unequal how almost all of the economic gains are going to the top how we are seeing a vicious cycle in which more and more power is being translated into abilities to gain more and more of the economic gains because of the rule changes and i give you what gave you a small sample there many many others i have to give you one more i just thought of one that i wanted to share with you and then i'll get back to my optimism bankruptcy now some of your eyes just glaze over when i said that let me know bankruptcy is very interesting and it's very important because the rules a bankruptcy we have a bankruptcy code and according to the bankruptcy code if you are a big corporation if you are a certain presidential candidate who has a allegedly a certain amount of money you can declare bankruptcy repeatedly and shield your assets from the your the consequences of risks that you take but if you are for example say a homeowner who gets caught in the downdraft of a recession a big recession and you owe more on your house than the house is worth you cannot use bankruptcy to reorganize that mortgage debt or if you are a former student laden with student debt recently i ran into somebody who was sixty five years old and she still had student debts and fact her student debts were growing they weren't shrinking they were growing because she was behind the curve and she was afraid she had just heard that her social security was going to be garnished so why is it that bankruptcy is sort of selective why does the bankruptcy code make those kinds of distinctions class so back to my optimism i'm optimistic number one because if you look back in american history what you see repeatedly about every forty or fifty years is a pattern that capitalism gets off track it gets off track in the ways in which we've witnessed that is more and more of the gains start going to people at the top and then you have an upsurge of reform in the eighteenth thirties the jacksonian were not against capitalism they were against our stock recy and they made many changes and the weight corporations can be formed and also in suffrage and various other things we don't really talk about anymore nobody even remembers what that jacksonian did but we do remember the progressives after that first gilded age of the eight hundred ninety s when you had the captains of industry basically running america putting sacks of money down on the desks of pliant legislators at the same time we had extraordinary poverty in our cities immigrants teeming we had corruption we had inequality much much greater than we have today well what did we do if we were together in this hall in one thousand nine hundred we would sort of be saying well there's nothing that can be done is there i mean it's just out of control the system stinks we can't save capitalism throw it out but then came one thousand or one and almost by accident nobody even assumed that teddy roosevelt had anything in him that's why he was stuck in there as vice president but he became president accidentally and he didn't lead progressivism he allowed progressivism to explode but we had advances in civil rights and voting rights and we took seriously our obligation not only to overcome racial segregation but also to expand the circle of prosperity and we worked very very hard we didn't succeed but we never have succeeded entirely we made the effort medicare medicaid we had huge amounts of poverty among seniors until medicare and medicaid and then in one thousand nine hundred seventy the environmental protection act people forget how much energy how much reform is energy was let loose in the mid sixty's up to one nine hundred seventy what i want to stress with you is that my optimism comes from our history when things get off track we put ideology aside we roll up our sleeves and we get on with what needs to be done we don't get hung up on false debates about government or market we don't obsess about false debates about redistribution after the market has completed its work we actually start looking at the structure of our economy and we will do that again we're already starting my optimism also comes from a second source and that is that when i have not been in government i have been teaching and i surround myself these days as i have tried to for many many years with people who are aged between eighteen and twenty five most of them i defy anybody in this room the possibility of staying cynical when you are surrounded by people who are eighteen to twenty five because this current generation and i don't mean only at the university of california berkeley because i spend time i was at the university of texas about a month ago i was at the university of chicago two weeks ago what i find is an idealism and a commitment to public service i have not seen in decades that also makes me optimistic and the third reason i'm optimistic is because i don't like the alternative one of the hardest things for any of us to do is to get out of our bubbles now i know seattle is not in a bubble but berkeley and san francisco are sort of in a bubble you know i moved up ten years ago i used to be in cambridge massachusetts i used to teach at another institution whose name shall remain  anonymous and i i drove across the country three thousand miles and i and that that that cambridge massachusetts is a bubble that is a bubble that's a bubble inside a bubble and i drove three thousand miles across the country and i got to berkeley and i discovered that i was in the same bubble one thing we need to do is to talk to people who disagree with us that's the only way we learn anything that's right so my students and it's true what will discover as we start talking across party lines across ideological lines is that there are degrees of agreements we had not imagined when i drove my i drove a mini cooper actually ten years ago across the country i discovered there are no many hoopers in  oklahoma at least there weren't ten years ago i drove i was actually in a gas line in just outside oklahoma waiting for gas and these truckers came up to my mini cooper and they tapped on the window and i put down the window and i said can i help you and they said what is  this i said it's a mini cooper and then one of them said how does anybody fit in there i did i open the door and i got out and i stood there and i said no problem then i said i'm from massachusetts we're all under five feet tall they turned around mumbling something but we have to get out of our out of our bubbles it is critically important so i wrote saving capitalism for the many not the few in part as a guidebook for finding how to begin that conversation and what to look for in seeing what i see as that inevitable turning point that a never never to bow tipping point that we are already in the midst of now one final point i want to make is that populism can take two different forms and i don't think it is it is good to get mixed up between the two different forms one form of populism and i'll use populism simply as a generic way of expressing a sense that the people need to fundamentally change what is going on the status quo the ruling class one form of populism we have seen historically in the united states in the examples i gave you let's call reform populism reform populism stands for the simple proposition that we've got to make our democracy work and making it work also makes our economy w as louis brandeis the supreme court justice once said we can have vast wealth in very few hands or we can have a democracy but we can't have both but the second populism that kind of populism is as angry as reform populism is as committed to fundamental change as is reform popul but authoritarian populism is not about democracy it's about following a strong man who says don't worry i will do it i'm strong enough and big enough and tough enough i will do it don't even ask questions and by the way the most of your problems are because of them authoritarian populism is about scapegoating now again in this country we have not seen that much in every every one of the periods that i suggested to you there were authoritarian populists around i remember when i was a boy sitting watching television we had a little television i think it was the screen was about this big and i remember with sitting with my father and we were watching the army mccarthy hearings joe mccarthy was sounding off and i remember my father who was not the kind of person who would explode in anger but i was only about eight years old i think or maybe seven years old and he sitting next to me scared me because my father said son of a bitch i didn't know what it meant but it sounded horrible and he was talking about joseph mccarthy and then some of you may remember a man named jo who said have you no decency have you no shame and edward r murrow and the country basically put an end to that kind of that type of that brand of authoritarian populism i bring it up only because it is part of the story we are now in as well and i don't have to citizenship requires more than voting and paying your taxes and serving on juries citizenship requires active participation active participation this is what i tell my students if we're going to have a successful reform populism it means you have got to be directly involved thousand thirty six franklin d roosevelt was running for reelection and the story goes a lady came up to him and said mr president if you are reelected and i will vote for you if you promise to do this and this and this and this and this and she gave him five things she wanted getting to get done and he said to her ma'am every one of those five things i would like to do but if i'm reelected you must make me and what he meant was something that i discovered every time i served in washington you can have the best people in washington but the moneyed interests even before citizens united the moneyed interests in the status quo interests and the special interests will prevent good things from happening unless good people outside of washington are mobilized and organized and activated and energized to make sure the good people inside washington make them happen it's not a spectator sport you here in seattle have accomplished a great deal i was here about a year ago congratulating you on getting a fifteen dollar minimum wage not eas and that was citizen activism it was moving organizing mobilize the challenge in front of us is huge but if history is any g we will prevail thank you now we have time for some questions but my question is what is it about t p p that is so much more vile to a lot of people the nafta was and i suppose somewhat out of ignorance well i'll tell you why i think i always had and i'll be very candid with you inside the administration i had a lot of problems with nafta because i didn't think that the labor protections were strong enough but when you're inside of ministration you have a choice you can either work inside and make the best case you can inside and try to argue the administration's position outside or you can leave and i made that choice the trans pacific partnership though is a much bigger problem and that problem has to do with two things both of which i've touched on a little bit tonight one has to do with intellectual property from what has been leaked and i say what has been leaked we don't know and it were not for the leaks and wiki leaks we would not have any clue what is in the transpacific partnership but from what's been leaked we know that it gives the pharmaceutical industry even more intellectual property protection internationally and even arguably inside the united states secondly it creates something that was just a little bit of a an acorn in nafta but really has become a huge giant oak tree that is very threatening in the transpacific partnership and that is a special panel that is outside the jurisdiction of any individual nation that allow those global companies to assert that their profits have been hurt by health safety environmental or even labor legislation that has been passed in any particular country and in that panel get damages against that country for those health safety environmental or labor regulations now i consider that very dangerous  what can we do about it when i keep thinking it's dead and then it's like one of those monsters that keeps on opening its eyes again i i thought it was dead originally i didn't think that there was going to be fast track there was huge opposition of fast track and then it was cobbled together enough votes to get by fast track and then i thought it was dead because a lot of these signatures didn't like it  and then it has got back to the vote there ninety days congress has ninety days once he gets a final copy essentially of that treaty ninety days to decide on it i still believe it unlikely that there are going to be enough votes for it hillary clinton coming out against it i don't care whether she was sincere or insincere she took the rug out from under barack obama and the this case i think it is a very important blessing so i let them know that let you or members of congress know exactly how you feel and if you have any relatives or friends in the brassica oklahoma iowa ohio do you well talk to them and make sure they also register their view