what i believe is the defining issue of our age inequality is an issue that the founders warned us about and i'll talk a little more about that in a second and it is an issue that i've been writing about for many years and that finally in the last three or four years has caught on with the public because the numbers about inequality in america have become undeniable so what happened to incomes well in two thousand and eleven the average income reported on tax returns and that's what tells you market incomes what people earn from their investments and what they got from their work average income of the bottom ninety percent of americans in two thousand and eleven fell back to fifty nine dollars more than one thousand nine hundred sixty six when you adjust for inflation not that anybody would notice five dollars a week different five dollars a month difference in their pay so fifty nine dollars i want you to think about that fifty nine dollars imagine it's one inch ok so if we did a graphic ninety percent americans two hundred eighty million of us in round numbers our income is up one inch after forty five years so have the one percent and by the way because my wife's an executor on a one percent in income not wealth  get the one percent you have to make about three hundred sixty thousand dollars a year thousand bucks a day while the one percent their line would come up here come up to where i am it would go over my head it would go through the ceiling it would go through the roof of this building one hundred and sixty plus feet now within that group it wasn't even really distributed however so let's look at the top tenth of one percent that group starts at about two million dollars a year of income their line is over eight hundred eighty feet but you know we can go further we can do the one percent of the one percent the one percent of the one percent that's a group by the way that mitt romney is at the bottom of it starts at about ten million dollars and that group on the same one in scale for fifty nine dollars five miles the people at the top of their tax burden has fallen almost sixty percent and tax burden is the share of your income you pay to the government not the dollars it's the percentage if you are a median wage worker half make more half make less this last year two thousand the whole two thousand and twelve you made five hundred twenty dollars a week twenty seven thousand dollars a year the median wage in this country has been stuck at between five hundred to five hundred twenty dollars a week since nineteen ninety nine and this is one of those data points on which we have fantastically good data because every single w two form you get you know what any work you do you get one of those they're all sent to detroit they're all added up and the government publishes it to the penny how much people made and it breaks it down incredibly fine categories so for example we know that one hundred fifty one million people who had jobs one hundred fifty one million people who had jobs in two thousand and twelve one third of them made less than fifteen thousand dollars and the average income of that group was six thousand dollars which tells you that many of them are part time workers they're college students they're retiree's if you're my age they're home makers who work part time and get what husbands used to call pin month meaning it's your own money not what your husband tells you you can spend in a patriarchal society half of all workers that's the median make less than twenty seven thousand three quarters make less than fifty thousand and to get to the top one percent two hundred thousand dollars only one in one hundred american workers makes two hundred thousand dollars and if you're a woman by the way and you make your thousand dollars you're in the top half of one percent on the other hand the federal government gathers this data up to the fifty million dollar salary level there about one hundred people a year in this country who make on average ninety billion dollars a year in compensation for services which is the official language of the law for getting paid for your job now all of the growth that's been taking place since one thousand nine hundred eighty when the i r s began finally slicing this data and making it available has gone to people who make over seventy five thousand dollars a year that's the top quarter in fact there's so much growth at the very top that in one thousand nine hundred the top category the government had was five million dollars and in the ninety's they raised it to ten and twenty and then fifty i suspect in my lifetime maybe i'm being an optimist how long i'm going to live will see one hundred million dollar category we live in a country that is completely out of line with the rest of the modern world there are thirty four modern economies sometimes it's called the rich countries club that belong to the o organization for economic cooperation and development and they do lots of great statistical work if you want to get lost in statistics just go to their website and start looking and you know we'll see you years from now  they if you look at their data on income inequality it's very revealing because think about some of the things you've heard about inequality in america you don't hear much more denial of it pretty hard to deny one instance five miles we have an issue so you'll hear well it's education you know people aren't getting an education well there is some merit to that argument education incomes tend to be related somewhat on the other hand when i went to college i did go to work when i was ten and full time since i was thirteen years old college was free at least in california where i grew up if i were eighteen years old today in the circumstances that i grew up in as the son of a hundred percent disabled veteran i could go to junior college it would be impossible couldn't happen and one of the things would happen to me that would have been disastrous is that i was a minimum wage worker back then with a wife and a child and by working for jobs i manage to get by today the minimum wage is two thirds of what it was in one thousand nine hundred sixty seven and i don't know how we want to make it i can't imagine that's why restoring the minimum wage not raising restoring the minimum wage  education gets people ahead there are people in this room dr briscoe who introduced me and i are good examples of people whose whole lives changed because of education but there are also lots of people who do well that much of an education but if education was a factor then inequality would be exploding in all the other modern countries now another argument is access to technology because we have access to all this technology my goodness you live in one of the great tech centers of america right i live in rochester new york which was the greatest tech center of the nineteenth century that should show up in the statistics then if the explanation is technology then that must be it and then there's taxes that must be an explanation well funny thing all these modern countries have access to the same education the same technology because of world trade the same products and yet when you plot the thirty four modern countries on inequality what you see is that down here in the lower corner indicating very low levels of inequality you get sweden and norway in the netherlands and most of western europe and japan and australia and new zealand and singapore they're all sort of clustered over here and we get a few outliers out here and the most extreme  outlier and i mean stream way up here is the united states of america now if you take a broader look at the world what you discover is that the territory that we're in our neighbors in terms of any quality our neighbors are that's a that's an oil country and that's the the new world saudi arabia venezuela that's who our neighbors are in terms of inequality you work a job you get taxed you can put away money in a retirement plan and put away seventeen thousand dollars a year if you're my age you're allowed to put away a tele turn seventy an extra six thousand dollars that's it you have pay taxes on the rest but if you're a corporate executive you're allowed to save unlimited amounts of money that are not recognized by the tax system and put them aside and i have written in the new york times and i was there about executives who had billion dollar fortunes on which no taxes have been paid by them if you're a movie star the system is open to you if you're a super highly paid sales person this system is open to you but it's not open to everybody else you are shot out of this system imagine that you decided to go into instead of this many of you are public health or medical care or some related field of service to other people is through direct action or giving us better information you decided to run a hedge fund or like mitt romney a private equity fund you're allowed to defer one hundred percent of your income in the future you don't have to taxes when you oh and how would you live in the meantime while you do the same thing that all the execs do at the high tech companies you're not in some of these high tech companies that the executive gets one hundred thousand dollars a year in income and yet you'll see a picture of him in the newspaper magazine with his private yacht or one of his mansions and they've never sold a share of stock that they pull that off how do you get two hundred thousand dollars maybe half a million dollars and you haven't sold the stock in your kind all these these toys well you go to goldman sachs and say hey i got a billion dollars worth of stock here in american widget and since i started the company it cost me ten dollars and if i sell it people will think i'm abandoning the company and goldman says all we have a solution for you you just sign the million dollars or the stock over to us and we'll put that letter with your signature in a box and then we'll short your stock and we'll take the proceeds from that you short a stock that selling a stock you don't own in the hope you can buy it back at a cheaper price in the future they short the stock they take the billion dollars they get from shorting it will be less of that with fees and things but let's keep the math simple and then they say we'll create a portfolio you now with cash and we'll buy you a mix of stocks and bonds and real estate and other investments so that you have an income so that you can buy all these baubles and you know what the securities and exchange commission doesn't even require you to tell the people investing in your company that you no longer have a financial interest in it and if the stock loses value well just take that letter out when the company goes broke buy those shares back for a penny each and we just paid a billion dollars because we sold high and bought low and if the price goes up you can't sell without our permission and we get a third of all the future increase in value up to some certain number you have an incredible income you can buy sports teams you can buy yachts you know if you're young enough and healthy enough and crazy enough you can buy six mistresses and you report t government one hundred thousand dollars of income and it's perfectly legal which is why i call the book perfectly legal that i wrote a lot of years ago so the statistics understate this one partly let's say you have a billion dollars uncle harvey or aunt martha or you know cousin greg or dies and suddenly you find out from some lawyer you have a billion dollar fortune you never after taxes again you just buy investments that don't pay dividends or interest and you borrow against your assets and right now you'll pay less than two percent interest and the cheapest tax you could pay on any growth in the value of your investments when you sell is going to be fifteen percent why would anybody pay the government fifteen when they can borrow it too and you won't show up in the statistics as being rich so people at the very top they're significantly understated when i tell you it's an inch to five month now why do you care well as dr wrote in his chapter inequality kills every day in this country forty six forty seven babies a day die who would not die if we had the infant mortality rates of sweden norway didn't mention the chapter but i went and looked up using it as my source and absolutely impeccable pro american organization the cia every day in this country cuba and they have a dramatically better infant mortality rate than we do that should scream at us that something's very wrong something is very very detailed study of spending on health care in the thirty four countries and they did it using something called p p e dollars purchasing power equivalent dollars it's very difficult to figure that out but it is the best way to measure because the different societies have different  operations internally and this is just for those so i took their report back to out the united states the other thirty three countries then i put into an index for every dollar that they spend on health care and every one of those thirty three has universal health care many of them with no out of pocket costs you know you get sick in france as i did many years ago we got to the end and i said to the doctor will america of course paperwork i for work paperwork to the point where we don't have time to diagnose what's going on with patients and take their histories if we were in kindergarten the way we run american health care and you're a kindergarten teacher you know what you do at the end of the day today i gave six blue crayons to boys and four blue crayons to girls and the reason for this difference is that's what you do that's effectively what we do and by the way if you gave more  crayons you'd get paid more money and if you gave less brown ones you get less money i mean just craziness well for every dollar that these other thirty three countries spend per capita for universal health care we spend two dollars and sixty four cents two dollars and sixty four cents now what does that mean in big terms what does that mean to you well it means first of all we're not competitive address the world economy we want to export products and things we have to build these costs into our costs and it makes the sun competitive i mean it's a great boon to the computer makers in france and germany and the biologics companies in ireland and elsewhere because we're so expensive but i'm going to give you a really telling measure i hope you never forget about this in two thousand and ten we spent seventeen point six percent of our economy on health care the french the best health care system in the world according to all sorts of experts and studies the french spend eleven point six percent that's a six percentage point difference of g d p all the goods and services produced in this country six percentage points difference between us and france and france as well most expensive systems well if we'd had the french health care system in two thousand and ten we could have got rid of the income tax because the income tax in two thousand  was six point three percent of g d p think about that think about your paycheck and what comes out of it we could have had a tax holiday and this year by the way we could get rid of more than half of the income tax all else being equal if we had the french healthcare system and we'd have universal coverage and no out of pocket costs by the way portugal has half the income of the united states portugal has universal health care people get seen by doctors in portugal at just about the same rate as here in the u s in fact there's at least one study ever that suggests you just see a doctoral quicker there how can it be that portugal half our income can afford universal health care and you can turn on fox news or as i like to call it phone news or c n n or n s n b c or al jazeera and you will see politicians every day saying we can't afford the affordable we can't afford health care for all these people and it really gives the truth to that terrible terrible statement by congressman grayson this first time in congress that he was disciplined for by the house where he said that the republicans have a health care plan in america don't get sick and if you do get sick die soon and he just cut to the real truth about that of course we have socialized medicine in america for those people are shocked by it we have it for people my age so when you are at least in economic terms of your what should be for most people your least productive years we now give you universal health care and universal health care you think you might want to give it to children in the womb and small babies might pay off just a little bit more and that's like a company saying oh we can't afford to build a new factory to build cars we're just going to fix up the hundred year old factory we have makes no sense whatsoever and in fact chrysler did that in the sixty's and the government had to bail chrysler out because didn't work but now i've been talking about incomes that's just a piece of the pie this book divided there's chapters in here contributed by elizabeth warren joe stiglitz and paul krugman nobel prize winning economists wage theft now anybody in this room who works in the primary economy the idea of wage theft is like what i have talked to all sorts of people and try to explain about wage theft and have them go i've been nobody's ever you know my paycheck is exactly what's supposed to be yeah you don't work in the bottom half of the economy we now know and you can look up if you don't believe me in the clips in the new york times by steven greenhouse and others that major american companies like pepsico and mcdonald's and wal mart have been involved in wage theft in shorting people on their pay wal mart for a long time was locking people in to stores at night the reason we have workers comp was because people were locked in the triangle shirtwaist factory in new york one hundred ago and when a fire went off lot of young women i think were over one hundred of them jumped out the windows because they'd rather die from the fall than being burned to death and the fire department is so outraged by this they lined all the bodies up on the street and made sure that photographers could shoot all the pictures they wanted to enrage the public over this the guy by the way who did this he did it again later you know went to prison he did it again later creating wealth requires enormous investments of common goods education infrastructure basic research the justice systems to settle disputes and maintain  and if you cut these expenditures and don't invest in these common goods then you are retarding wealth creation not wealth accumulation but overall increases in wealth we're using up our infrastructure dams roads bridges things like that you know we have an internet that we've invented the internet we start out as number one depending on how you measure we're now sorry tween twenty six and sixty four years in this country finance accounted for fifteen to twenty percent of all corporate profits in america in one recent year they were fifty one percent the average now is well into the mid fort and finance does not create wealth finance is the oil that lubricates the engines that create wealth but it is not a wealth creator by itself it is an accumulator and what is our government's policy here have you seen anybody prosecuted for the crimes that brought down our economy where there are all sorts of people eager to testify about how they were told to fake documents lie on documents send things through the mail and send money by wire tons of crimes in the savings and loan crisis three thousand felony convictions a thousand on the high level insiders eight hundred plus prison sentence among the insiders in the current scandal the obama administration's prosecutions now to be fair they have gone after some people they've gone after one hundred seven people like a little borg and broker in tampa florida and the total amount of money involved is hold your breath ninety five million dollars now exacerbating all of this are all sorts of policies that you never hear about unless you read my books or read my columns in newsweek or an al jazeera of policies that take from the many to give to the few and i'll give you a simple example of that the one nine hundred eighty six congress exempted the pipeline industry you know the keystone pipeline  seventy five big pipeline companies in america they were exempted from corporate income tax but they're monopolies so i called monopolies they have to collect from their customers all their costs there's an old joke in the electric utility industry that it's the only business in the world where you can increase your profits by redirecting redecorating the c e o s office because it raises your rate base and therefore you get to earn a bigger profit so the pipeline companies they don't just get to collect the corporate income tax of thirty five percent they get to collect what's called the gross up tax so the government says your pipeline should make a billion dollar profit we're going to give you three hundred fifty million to pay the tax at thirty five percent but wait a minute now you got to pay taxes on the three hundred fifty million sets of about  hundred million more so we're going to give you four hundred fifty million away to we've got to pay taxes on that and by the time you gross it out it's closer to sixty percent it's about one point six billion for them to net one billion all right that's a cost of doing business we just have to live with it except they're exempt from the corporate income tax they're exempt and they get to collect it and so the way to think about that is if your rate of return that produced a billion dollars is ten percent and you actually get one point six billion you just got a sixteen percent return on your capital and every one of you in this room pays this every time you put gas in your car you pay on average three cents a day anybody here want to get start a movement we're going to stop the three saturday rip off but if you're on the receiving end by my calculation it's about three point four billion dollars a year because if you get a penny a day from every person in america at the end of the year you'll have one point one billion dollars and that's on top of really lavish profits and there are hundreds and hundreds of these rules that have been put in place by the by our elected leaders because our elected leaders under our current system can only stay aleck did it have to be all of barks want them to stay there call the local district office and say hi i'm so and so i'm constituent i would like a five minute private meeting with my congressperson at their convenience anytime in the next ninety days inequality is created by us we chose the inequality that we have by the people we elected if you didn't vote you chose we can change this all we have to do is change the people who are representing us in office we have to elect people who recognize that inequality is bad for health that inequality is bad for social cohesion that inequality is bad for everything